Math doesn’t work on privatizing Social Security
Over the years, most if not all of the current Republican presidential field have advocated reforming Social Security by guaranteeing the benefits of those in or approaching retirement while giving younger Americans the option of putting at least some of their contributions in personal or private accounts.
Rick Perry, for example, has called Social Security “a monstrous lie” for young people, although he has backed off that recently. Michele Bachmann last year also talked of wanting to wean younger Americans off the program, although she too has softened that rhetoric. In the 2008 primaries, Mitt Romney repeatedly endorsed the privatization approach suggested by President Bush, repeating that support in his 2010 book. (Yes, he too has now changed his tune to a degree.) And Herman Cain has consistently advocated using the example of Chile as a model for how to privatize the program here in the United States.
Like President Bush in 2005, however, none of the candidates addresses the enormous financial challenges of such a transition. It’s just an idea that they throw out there, with no evidence of serious thought.
Here’s the problem: To finance benefits at promised levels for those 55 or older, we would need to continue to collect payroll taxes from today’s working-age population. However, we would also propose to divert a significant share of those payroll tax into personal accounts. In effect, we would be trying to spend the same dollar twice, and we would do it trillions of times.
When Chile made that transition in 1981, it was being ruled by the brutally repressive Pinochet military dictatorship, which took the need for political compromise right out of the picture. The country also enjoyed a budget surplus at the time of more than 5 percent of its GDP, which is not exactly the financial situation we enjoy today.
Chile’s plan requires that workers deposit 13.3 percent of their monthly pay into private accounts, including 3.3 percent to cover mandatory purchase of private disability and life insurance. That’s right: I doubt he realizes it, because I doubt he’s actually looked at it seriously, but the Chilean plan cited by Cain as his model includes — gulp — a government mandate for the purchase of insurance.
To offset that additional cost to workers, private employers in Chile were ordered by the military junta to increase wages across the board by 18 percent. The Chilean government also went deeply into debt to finance the transition to the new system while trying to honor commitments under the previous system.
In a study exploring the possibility of copying the Chilean example here in the United States, the Congressional Research Service outlined some of the major obstacles:
Absent other measures, keeping Social Security’ s commitments would require the government to raise taxes, cut spending on other programs, or borrow more from private financial markets. Put another way, a generation or two would have to pay twice, bearing both the cost of pre-funding the new system and the costs of benefits under the old system.
The United States already is faced with chronic budget deficit problems, leaving little or no room for the massive tax hikes or public borrowing that would be necessary (the Social Security Administration estimates if all workers currently under age 40 were to stop paying into Social Security, the system would need an infusion of $6.9 trillion in order to pay promised benefits to those remaining in the system).
That was written in 1998, at a time when — to put it mildly — our nation’s finances were in considerably better shape than they are today. That $6.9 trillion figure would also be considerably higher today, considering inflation and the fact that the Baby Boomers are now 13 years closer to retirement than they were in 1998.
All in all, a reasonable ballpark estimate of $10 trillion in additional resources would probably be needed to finance such a transition. So until you identify a source for that kind of money, talk of personal or private accounts is mere wishful thinking.
– Jay Bookman
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518 comments Add your comment
Jm
September 26th, 2011
4:40 pm
Granny u can make that argument if you want
I disagree and frankly don’t care
Kamchak
September 26th, 2011
4:40 pm
Joe Mama
I hope “over rice” is the only thing that Hawaiians do.
Be a damn shame to put pineapples in chili.
josef
September 26th, 2011
4:42 pm
jm
80% of WHOSE life expectancy? Is there a sliding scale here? Do men get their bennies earlier than women? Do European Americans have to wait longer than African Americans? Can fat folks get in line ahead of skinny folks?
getalife
September 26th, 2011
4:43 pm
Never ever let corrupt congress get their hands on our programs.
You are scaring the Seniors.
Stop.
“They want to play politics with human beings,” he said. “I would blame both parties.
“There’s plenty of money in Washington, D.C. to offset anything that we need to spend on FEMA. I would make sure that FEMA got the money that it needed, and if I have to go find the offsets later, find it later.”
And he blasted the behavior of Congress saying, “Stop playing with people’s tragedies.”
Good move Cain.
Jm
September 26th, 2011
4:46 pm
Josef 4:42 average, same as it is today
That way u can’t accuse me of gaming the system, which already screws men in favor of women, and screws black people in favor of white people
Jm
September 26th, 2011
4:47 pm
Josef if u don’t want to screw people who live shorter lives, then u should be in favor of private accounts
Trotsky Foxtrot
September 26th, 2011
4:49 pm
Bosch, our Roman virtue must be preserved!
Jm
September 26th, 2011
4:50 pm
“go find it later”
Congress never does mr Cain
Jay
September 26th, 2011
4:53 pm
jm, that doesn’t even begin to cover the cost of a.) financing a system that is allegedly (but falsely) “unsustainable” financially AND b.) funding a separate, parallel system of personal accounts on top of that.
And you know it. Once again, you’ve followed a little trail of bread crumbs into a box canyon with no escape.
AmVet
September 26th, 2011
4:53 pm
One point I want to “clarify” in regards to Gordon’s comment that the botched Iraq war “costs do not project into the future.”
Not true.
WASHINGTON – A group of noted physicians predicted yesterday that healthcare for Iraq veterans could top $650 billion, another warning of a looming social crisis as thousands of veterans struggle with mental and physical disabilities and other disruptions to family life.
http://www.boston.com/news/nation/articles/2007/11/09/iraq_veteran_healthcare_could_top_650b/
The war-lusting chickenhawks have left behind tens of, perhaps even hundreds of thousands of maimed Americans, including those with PTSD, and financially ruined families.
The second cost is the higher price of oil, which has had a devastating effect on our economy. When we went to war in Iraq, the price of oil was under $25 a barrel, and future markets expected it to remain around that level. With the war, prices started to soar, by 2008 reaching $140 a barrel.
http://www.gpo.gov/fdsys/pkg/CHRG-111hhrg61761/html/CHRG-111hhrg61761.htm
That adds up to HUGE losses going forward.
All because some dipsh*t from Texas wanted to clear his daddy’s name, play toy soldier and convinced millions in the 101st Chairborne that he had an inkling of what he was doing…
Jm
September 26th, 2011
4:55 pm
Perry can’t be looking forward to the next debate
He’s regretting this idea of his supporters….
Shawny
September 26th, 2011
4:55 pm
SS….grrrrrrrrrr
Medicare………grrrrrrrrr
Not to us; no more entitlements. They only get more expensive per dollar of income over the years (even at the same base rate).
josef
September 26th, 2011
4:57 pm
jm
So, what’s to complain…if everybody’s getting screwed!
Seriously, though, so far I’ve not seen anything any better than what we’ve got now…flawed though it may be…
And while I was just kidding about the life expectancy thing, once it goes into the private sector, I can see that kind of “death panel” being set up. The insurance companies already do it.
Kamchak
September 26th, 2011
4:58 pm
All because some dipsh*t from Texas wanted to clear his daddy’s name, play toy soldier and convinced millions in the 101st Chairborne that he had an inkling of what he was doing…
But…but…but…WMD, the smoking gun is the mushroom cloud, it won’t last six months and besides it’ll pay for itself, we’ll be treated as liberators….
Jefferson
September 26th, 2011
5:00 pm
Nothing wrong with the social program we have, just as thing change so will the funding need changing. This is a great program that services many americans. Only the greedy don’t want to play.
Jm
September 26th, 2011
5:04 pm
Jay 4:53
Wrong
All dependson where one sets the means testing limits. Which you yourself USED to be in favor of (means testing)
Furthermore, if u want to debate this further then you’ll have to go hire an actuary that can mediate
Which you’re not going to do
TaxPayer
September 26th, 2011
5:04 pm
And you know it. Once again, you’ve followed a little trail of bread crumbs into a box canyon with no escape.
Wait! What’s that. A sign post up ahead. It says “Cliff.” Republicans proceed straight over the edge thinking that they are just on their way to visit a friend.
Soothsayer
September 26th, 2011
5:05 pm
Social Security
Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.
Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable wages will grow rapidly from 11-1/2 percent in 2007, the last pre-recession year, to roughly 17 percent in 2035, and will then dip slightly before commencing a slow upward march after 2050. Costs display a slightly different pattern when expressed as a share of GDP. Program costs equaled roughly 4.2 percent of GDP in 2007, and are projected to increase gradually to 6.2 percent of GDP in 2035 and then decline to about 6.0 percent of GDP by 2050 and remain at about that level.
The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.22 percent of taxable payroll, up from 1.92 percent projected in last year’s report. This deficit amounts to 17 percent of tax receipts, and 14 percent of program outlays.
I don’t how many times I have to post this, but I’ll keep posting as long as I have to. (Medicare follows)
Jm
September 26th, 2011
5:07 pm
4/10 of SS beneficiaries have incomes over $60k per year and don’t need SS in my book
Boom. Huge savings.
Jay prefers cutesy language to divert and deflect
Joe Mama
September 26th, 2011
5:07 pm
Kamchak — “I hope “over rice” is the only thing that Hawaiians do. Be a damn shame to put pineapples in chili.”
I didn’t see pineapples used in anything freaky out there, though they do use the cores as swizzle sticks in drinks. Take the core and slice it in quarters lengthwise. They’re too fibrous to eat, but they can flavor a drink.
Grilling them and putting them on sandwiches was about the weirdest thing I saw done with them. They’re too sweet and tasty to waste on anything weird.
Hawaiian pizza does not = ham + pineapple. Hawaiian-style pineapple is ALL THE MEATS YOU CAN FIND, including some you can’t usually get on the mainland.
AmVet
September 26th, 2011
5:07 pm
Kam, the entire thing just makes me want to spit. Even all these years and corpses down the road.
And the gutless neo-con cheerleaders have never, ever truly held that bungling idiot’s feet to the fire on any of it.
And these louts here think Carter is even in the same league as that deadly buffoon and his cast of lying imbeciles?
Puhleeze…
Jay
September 26th, 2011
5:09 pm
1. Private accounts tend to harm lower-income beneficiaries compared to SSI, which offers them a better deal.
2. Life expectancy increases have been concentrated among high earners. At 60, a high-earning male born in 1941 had a life expectancy of 85.4. His counterpart among low earners would have a life expectancy of 79.6.
3. Longer life expectancy does not translate into longer ability to perform labor.
josef
September 26th, 2011
5:09 pm
“Furthermore, if u want to debate this further then you’ll have to go hire an actuary that can mediate”
I read that the first time as can mediTATE! That, too!
Lord Help Us
September 26th, 2011
5:10 pm
‘read that the first time as can mediTATE!’
or MEDicate…
Soothsayer
September 26th, 2011
5:11 pm
Medicare
Relative to the combined Social Security Trust Funds, the Medicare HI Trust Fund faces a more immediate funding shortfall, though its longer term financial outlook is better under the assumptions employed in this report.
Medicare costs (including both HI and SMI expenditures) are projected to grow substantially from approximately 3.6 percent of GDP in 2010 to 5.5 percent of GDP by 2035, and to increase gradually thereafter to about 6.2 percent of GDP by 2085.
The projected 75-year actuarial deficit in the HI Trust Fund is 0.79 percent of taxable payroll, up from 0.66 percent projected in last year’s report. [The current Medicare tax is 2.9%. Thus, an increase in the Medicare tax to 3.69% of payroll would render Medicare solvent for the foreseeable future.] The HI fund fails the test of short-range financial adequacy, as projected assets drop below one year’s projected expenditures early in 2011. The fund also continues to fail the long-range test of close actuarial balance. Medicare’s HI Trust Fund is expected to pay out more in hospital benefits and other expenditures than it receives in income in all future years. The projected date of HI Trust Fund exhaustion is 2024, five years earlier than estimated in last year’s report, at which time dedicated revenues would be sufficient to pay 90 percent of HI costs. The share of HI expenditures that can be financed with HI dedicated revenues is projected to decline slowly to 75 percent in 2045, and then to rise slowly, reaching 88 percent in 2085. Over 75 years, HI’s actuarial imbalance is estimated to be equivalent to 21 percent of tax receipts or 17 percent of program outlays.
Jay
September 26th, 2011
5:12 pm
“4/10 of SS beneficiaries have incomes over $60k per year and don’t need SS in my book
Boom. Huge savings.
Jay prefers cutesy language to divert and deflect.”
Sure, jm. You go sell the politicians on that one. See if Romney will support you. Or Perry. Or Bachmann. You know they will run from that as fast as possible.
Again, if the proposals you offer are politically impossible, you have no proposals in the first place, just pipe dreams.
Joe Mama
September 26th, 2011
5:13 pm
Correction to above — Hawaiian-style pizza is ALL THE MEATS YOU CAN FIND, including some you can’t usually get on the mainland.
josef
September 26th, 2011
5:15 pm
LHU
That, too!
josef
September 26th, 2011
5:17 pm
OK…chili is not a dish. It’s a sauce.
Soothsayer
September 26th, 2011
5:18 pm
One thing I have noticed consistently is the use of ad hominen attacks by the Righties on this blog.
When confronted with an undeniable truth, the attack the other poster. I don’t how many of the Righties on this blog realize that such personal (ad hominen) attacks are simply an acknowledgement of defeat to those who know what to look for.
You may want to think about it before you attack someone personally in the future.
Scooter
September 26th, 2011
5:19 pm
Jay, I would love to tell it to my grandparents but they’re dead. They paid into SS their whole lives and died before receiving one red cent from it. The politicians won!
Jm
September 26th, 2011
5:20 pm
Jay 5:12
I realize u can’t change overnight
Which is why EVERYONE including republicans have said current retirees are protected
Phase it in over 15 years for people who are not within 5 years of retirement
Kamchak
September 26th, 2011
5:20 pm
Hawaiian-style pizza is ALL THE MEATS YOU CAN FIND
A lot like Brunswick stew in that regard.
Bosch
September 26th, 2011
5:21 pm
Chili (con carne) is actually just meat stew-meat, onions, peppers,and water- anything else it’s not actually chili
Kamchak
September 26th, 2011
5:22 pm
OK…chili is not a dish. It’s a sauce.
Shorthand for chili con carne.
Jay
September 26th, 2011
5:23 pm
Once again, jm:
Funded how?
Your claim is that we can’t afford the system we’ve got, yet we can somehow afford to fund TWO systems. It makes no sense.
Bosch
September 26th, 2011
5:23 pm
Scooter
Yeah my mom got almost one whole year of hers before she died.
yomama
September 26th, 2011
5:24 pm
3. Longer life expectancy does not translate into longer ability to perform labor.
Every time some politician says “raise the age”, I have to remind people that this means 69-year-olds commuting to work at manual labor jobs.
I have known 80 year olds that could easily handle a 40 hour work week, and 60 year olds that were on their death beds.
When the retirement age was 59, nearly every single person could work to the retirement age. At 69, this is not true.
If a 50 year old loses his job, there is still at least the possiblity that he can get a job in his field. How many people are going to hire an out of work 60 year old as the chief engineer on a bridge, or a high rise building, or for a new software development project? Ageism is alive more today that at any time in our history. There are no high-tech high-paying jobs waiting for the unemployed 65 year old.
The idea of raising the retirement age is a farce. Try again.
Joe Mama
September 26th, 2011
5:24 pm
Kamchak — “A lot like Brunswick stew in that regard.”
I’ve had goat and wild boar on pizza out there, and I don’t doubt they’d be equally at home in Brunswick stew.
dbm
September 26th, 2011
5:25 pm
Social Security definitely needs to be abolished, for at least two reasons. Should it be abruptly cut off or gradually phased out? Ethically, it is possible to argue for either position; this is an example of how improper government action creates difficult binds. Will it be abruptly cut off or gradually phased out? The latter will probably be politically feasible long before the former is. But even the latter will not be politically feasible until one of two things happens.
It may be politically possible to eliminate Social Security, one way or another, if the system has a catastrophic collapse. That doesn’t seem to be imminent, but it may happen down the road.
It will be politically possible to eliminate Social Security if enough people come to understand the nature of government and what this implies about government’s proper functions. We are very slowly moving in that direction. I don’t expect to live to see it. Maybe nobody reading this will live to see it. That doesn’t mean it won’t happen.
TaxPayer
September 26th, 2011
5:26 pm
If we get rid of social security and use the savings to give the job creators a tax break, then we can use the extra tax revenue to fund social security. I think that is pretty much the Republican plan, in a nutshell.
Bosch
September 26th, 2011
5:27 pm
And if you have any friends from Texas, don’t ever make the mistake of putting tomatoes in chili while they are present.
Joe Mama
September 26th, 2011
5:29 pm
What happens if you do that, Bosch?
Bosch
September 26th, 2011
5:30 pm
I don’t think the attitude of the country has changed since 2005 when Bush went on his “Privatize SS Magical Mystery Tour” and was laughed off the figurative stage. If anything, I’m willing to wager support for SS has increased since then.
josef
September 26th, 2011
5:30 pm
No. It’s salsa chili…chili con carne, is beef (usually) with salsa chili, chile con pollo, chili con frijoles, chili con guajilote, chili con queso, chili con huevos…
Bosch
September 26th, 2011
5:32 pm
Joe,
I think it’s a cardinal sin to most Texans to put tomatoes in chili, at least it is to my friend and he gets a little testy.
yomama
September 26th, 2011
5:32 pm
BTW folks, there are two things plaguing SS:
1) SS disabililty. (enuff said)
2) “little old white lady” syndrome. By this, I cite my ex-wife’s mother. Her husband died at age 49 after working the minimum required time to collect SS. He never had a consistent job in his life. When he died, his wife was 42 with three children. She has now collected Social Security going on 50 years. (she is 92). I once estimated that she had collected (between SS and Medicare) nearly $750k in her lifetime, and her husband had put in a mere $10k.
As long as we allow folks to collect 10x or 100x or 1000x what they put into the system, It will fail.
Kamchak
September 26th, 2011
5:32 pm
Joe Mama
I’ve been scouring the interwebs looking for a Brunswick stew recipe and regardless of who claims to be first with the concept, squirrel meat was one of the original ingredients along with pork and chicken.
I think it has evolved into a stew that Bar-b-que joints can sell to use up left over chicken, pulled pork, and ribs.
While the pork they use isn’t wild it is still technically the same animal as boar. I’d bet wild boar is quite a bit gamier than domesticated pigs, probably stringier too.
Schrodinger's cat
September 26th, 2011
5:33 pm
Bosch – That sounds more like competition chili…meat, chilis, and water
Jm
September 26th, 2011
5:34 pm
Jay 5:23
True, we need to fix what we have.
Then, over time, the current generation of workers (me) will also have to engage in forced savings (similar to chile) on top if SS payments. Simultaneously and gradually, a portion of the SS tax would be phased down in size, but not eliminated.
Its just math and all about how much of this or that you want and how fast. It can be done.
pogo
September 26th, 2011
5:34 pm
But Jay, what you failed to mention is many of us never did believe the government lie about them providing our “social security” and we worked and we saved and we provided for own. It’s called self-reliance, something you liberals will never understand. What is sad about our society is that so many are willing to leave their lives in the hands of politicians and all of their lies. I know up to a point we have to have government for our national security but anyone that relies upon the
government for their fiscal livelihood and that plan their life around their lies are either naive or lazy.
Starting in 2013, the “baby boomers” are going to find out just how big a lie they have fallen for.
Bosch
September 26th, 2011
5:35 pm
yomama
While I agree with that in theory, there are those like my mother who died way young and didn’t get hardly anything from it, now I don’t think there are more cases like my mom, but it does happen, and that offsets some of that problem.
Joe Mama
September 26th, 2011
5:36 pm
Kamchak — “I’d bet wild boar is quite a bit gamier than domesticated pigs, probably stringier too.”
I’ve had it many times, and the best description I can come up with is this — you know the difference between white meat chicken and dark meat chicken? It’s the same difference between domesticated pork and wild hog. The wild product tastes like ‘dark meat’ pork.
Generation$crewed
September 26th, 2011
5:37 pm
Bosch
I have seen that study before. But that is not what my question was.
If I wanted to could I not pay my ss tax without there being a legal problem? Even if I invested an equal amount of my own money into my own investments and swore to never take a penny from any ss fund? Is that legal?
If it is illegal, why? Seems less people on the roles would be a good thing, and I don’t make much so it shouldn’t hurt the fund too much…. unless I am somehow paying for the retirement of someone who makes even less than me, and thus ain’t contributing much to the pile at all.
thewindwhistler
September 26th, 2011
5:39 pm
I receive $419.00 a month and i live like a middle east potentate. Have it all, there is a secluded little village south of the border where sea side home and maid is 200a month. mangoes and papayas for breakfast, broiled sea bass for lunch and crabs casino for dinner. Have a absolutely perfect girl for my personal trainer. At the end of the month i put a little in the bank for a rainy day and it never rains.
AmVet
September 26th, 2011
5:40 pm
Hello?
Is anybody home?
Wall Street just pulled off the Crime of the Century and “disappeared” $3,000,000,000,000.00 of other people’s money and you gullible nuts want them to have complete control over your destiny when you’re old and broken down?
Wow.
To call you boys slow learners is an insult to slow learners…
Jm
September 26th, 2011
5:40 pm
Jay why soupy rhomboid generation puts $ in 401ks and ira’s? We know SS won’t be around because DC is too incompetent and entrenched AARP interests with dems
Jm
September 26th, 2011
5:42 pm
Oh lord autocorrect
josef
September 26th, 2011
5:42 pm
Wild hogs depend on where they’re from as far as taste, texture of meat, etc. Also has to do with how they’re dressed. Wild sow or shoat is not much different than the domestically raised, the boar, though, is different and so is its proper preparation due to not being castrated…
One of my life’s “magic moments” was when I was on Corsica doing a translation of a Holocaust memoir and “in my honor” a friend of the author’s, herself a member of the Resistance, and a restauranteur, contracted for a wild boar (the hunt is seriously limited) and fixed it for me…her restaurant was facing Napolean’s birthplace! Even the dogs strolling in and out with their unwashed owners were part of the romance of that day…
Kamchak
September 26th, 2011
5:44 pm
Joe Mama
As to the goat thing — if it’s anything like lamb, count me out. Way too rich for my simple palate.
Bosch
September 26th, 2011
5:46 pm
GS
Again, I think it’s simple theory v. reality- in theory yes, it would be nice if we could do what we want with our own money, but the reality is that the markets are so uncertain and it would be more inefficient to have two systems, plus not to mention that SS is the most efficiently administered “pension plan” there is.
And there will always be a bigger segment of the population who will just not be able to save enough for retirement which in the long run hurt our economy far worse for many reasons. Think about simple demand- today we see a drop in demand due to stagnant wages, and that stands to worsen if you don’t subsidize the working force.
I think that’s what many people fail to see when considering entitlements, forget the morals, if you look at pure finances, it simply makes more sense to subsidize the middle and lower class to keep a larger pool of viable consumers- that money gies straight back into the economy.
ODD OWL
September 26th, 2011
5:48 pm
Rick Perry’s presidential bid is analogeous with that piece of space junk that fell back to Earth the other day… Ricky Perry soared high and mighty for a short period of time. Then his orbit begin to deteriorate and finally he fell back to Earth, crashed and burned. S.S. is well funded and solvent for the next 26 years. We the People will allow a later Congress to make any reforms if they’re needed. (tax the rich people for every dollar they earn) Herman Cain is in great shape to win the Republican nomination for President. Democrats have stealth candidates running as Republicans.
Soothsayer
September 26th, 2011
5:48 pm
The main thing I have noticed on the part of the Righties on this blog relative to the Social Security debate is this cavalier attitude about Social Security when they retire.
I’d be willing to bet my last dollar that the Righties who complain the loudest about Social Security now will be the first in line when it comes time to collect.
Oh, and that example of the lady who husband died: she can only collect Social Security based on the amount her husband paid in. Just like all the rest of us.
Take my word for it. Even the most “independent” Righties on this blog will welcome that Social Security check when you’re old and feeble and can’t work any more.
Soothsayer
September 26th, 2011
5:52 pm
Come to think of it, there was a “wild bore” at our dinner party the other night! Just wouldn’t quit talking!
josef
September 26th, 2011
5:53 pm
Sooth
They’re not on the endangered species list, are they?
Brad Spencer
September 26th, 2011
5:55 pm
Re: means testing.
It already exists. I receive Social Security. If a recipient has other income over a certain amount then the Social Security benefits are subjected to a special tax. I pay that.
I’m not complaining: it’s not a bad idea. I am simply pointing out that as constituted Social Security already has means testing. This also means that for Social Security recipients the incremental tax rate can be far more severe than for anyone else.
If I have a gripe it is with those who chant “means testing, means testing” while obviously totally ignorant of the fact that it is part of the current system.
Generation$crewed
September 26th, 2011
5:56 pm
Bosch
September 26th, 2011
5:46 pm
“I think that’s what many people fail to see when considering entitlements, forget the morals, if you look at pure finances, it simply makes more sense to subsidize the middle and lower class to keep a larger pool of viable consumers- that money gies straight back into the economy.”
But at what point is the ratio of those providing the entitlments to those who are getting them a negative effect on the economy?
Guntrisha
September 26th, 2011
6:01 pm
In addition to increasing the income threshold to $150K and tweaking the COLA formula (Jay’s suggestions) SS should be strictly limited to the people it was intended to benefit – retirees, survivors and their eligible children, and the truly disabled.
Walk into the waiting room of the SS office downtown on W. Peachtree. You’ll see where the $ is really going.
Gordon
September 26th, 2011
6:03 pm
Lord Help Us,
It wasn’t Clinton’s Deficit Reduction Bill that did most of the work in balancing the budget, it was a doubling of the stock market in a very short time due to the dot com bubble. That was a unique event (stocks trading at 400 times earnings). Once that stopped, the deficits came back very quickly BEFORE anything that can be blamed on Bush had time to take effect. And I by no means defend Bush’s spending and never have.
kayaker 71
September 26th, 2011
6:03 pm
On Jan 18, 1981, Galveston County Texas opted out of the social security system and established a system of their own. It was entirely voluntary, collected the exact amount of money that traditional SS collected and provided benefits to retired personnel. Each contribution was kept in the name of the contributor and careful records were kept to ensure that monies that were contributed were allocated to those that made the contribution. Benefits could be collected any time and at any age but were encouraged to be taken after age 62.
Estimated payments for a worker making about 24,000/yr under traditional SS are about 415/mo. Under the Galveston plan, they were triple that. For those making upwards of 65,00/yr, the monthly rate of return was just under 3,500. For those in the top tier making upward of 100K/mo, benefits were as high as 6.000/mo. whereas, under traditional SS, they would be no higher than 2,500/mo.
And one of the best parts of the plan….. if you didn’t use all that you had contributed, your estate was given the remainder.
There were no politicians stealing all of the money, there were financial planners hired to invest the money wisely and participants were given monthly statements confirming that the planners were doing their job. One difference…. there were no payments made to dependent children. The plan favored couples with no dependent children.
The report was written by Theresa Wilson, Office of Policy, the SS Administration and is on Google for your review. The plan is working to this day with lots of very happy retirees from Galveston, TX. It would appear after reading this report seeing the results that there are indeed credible alternatives to traditional SS…… payment on the interest on the debt alone would make it very attractive.
Joe Mama
September 26th, 2011
6:06 pm
G$ — “If I wanted to could I not pay my ss tax without there being a legal problem? Even if I invested an equal amount of my own money into my own investments and swore to never take a penny from any ss fund? Is that legal?”
No. And you’re thinking about this the wrong way. SS isn’t an investment. It’s insurance.
Kamchak
September 26th, 2011
6:06 pm
Ah yes, the Galveston plan……..been addressed here many times.
Gordon
September 26th, 2011
6:07 pm
AmVet,
How does the Iraq war account for higher oil prices? Many other factors account for that. Why haven’t they come down since the end of the war? Think the economies of China and India have anything to do with it?
And even taking those things into account, you are not in the same ballpark as entitlements. Not even close. That was my original point.
Bosch
September 26th, 2011
6:08 pm
GS
I’ll leave that question for someone smarter than me, but it seems to me that if you stop these programs, the impact to our economy will be catastrophic- again, it just seems smarter in the long run to ensure a bigger chunk of the population has some money to spend.
Bosch
September 26th, 2011
6:11 pm
“Walk into the waiting room of the SS office downtown on W. Peachtree. You’ll see where the $ is really going.”
And unless you have reason other than your own prejudices to believe otherwise, or a magic crystal ball, that is who those people in the SS office are.
Jm
September 26th, 2011
6:14 pm
Brad u r correct, but its not a very big part
Gordon
September 26th, 2011
6:16 pm
“The idea of raising the retirement age is a farce. Try again.”
The purpose of the program was NEVER to pay for someone’s retirement. It was to make sure people weren’t destitute in their final years. No one expected SS to pay for their retirement. This is the best case of why entitlement programs are a disaster. They create dependency, and morph into something they were never intended to be. There have been calls for HOPE to be needs based, but it was intended to be merit based. Social Security was supposed to be there for EVERYONE who contributed, now people want it to be needs based as well. Can’t you see how where this leads? You’re setting up a system that rewards failure and punishes success, so naturally you get more failure and less success.
Bosch
September 26th, 2011
6:18 pm
Wow. Kayaker is advocating for a small localized system to be imemented on a national scale- where else have I heard of such a thing? Help me out here, it was started by a Republican whose name rhymes with Womney and the wingnuts refer to it as Obamacare….interesting.
Too bad the wingnuts are allergic to the concept known simply as “consistency.”
Frankiev
September 26th, 2011
6:18 pm
Bookman is obviously a tool for the Dumbocrats. Republicans on stage refused to acknowledge the hecklers for their racist views. Good for them. And I think Republicans are known to be more supportive of the military than their appeasers on the left.
Joe Mama
September 26th, 2011
6:21 pm
K71 — “The plan is working to this day with lots of very happy retirees from Galveston, TX. It would appear after reading this report seeing the results that there are indeed credible alternatives to traditional SS…… payment on the interest on the debt alone would make it very attractive.”
If you’re not a high earner, the difference isn’t that sweet. The report you speak of discusses payout levels for people approaching *30 years* in the program, which is plenty of time for *any* retirement plan that relies on compound interest to produce good results. The participants could have done as well by taking part in a qualified 401k plan.
The negative difference comes from what happens if you get disabled on the job, because by opting out of the SS system, you’re also opting out of SS disability benefits. The disability benefits for middle- and high-wage earners were better, but the bennies for low-wage earners were worse. Plus, and more ominously, there were *time limits* on how long you could collect for certain kinds of disabilities — time limits that don’t exist for OASDI.
Go ahead, read the GAO’s analysis for yourself.
http://www.gao.gov/archive/1999/he99031.pdf
Kamchak
September 26th, 2011
6:21 pm
Bookman is obviously a tool for the Dumbocrats.
Aannnnnnnnnnnd I quit reading.
Thomas
September 26th, 2011
6:26 pm
OPM commits to stopping payments to dead people
Oh goody. You really can’t make this stuff up.
Doggone/GA
September 26th, 2011
6:26 pm
“As to the goat thing — if it’s anything like lamb, count me out. Way too rich for my simple palate”
It isn’t, it’s more like deer meat
Soothsayer
September 26th, 2011
6:29 pm
“Estimated payments for a worker making about 24,000/yr under traditional SS are about 415/mo. Under the Galveston plan, they were triple that.”
So, let me see if I’ve got this straight: a worker making $2,000 a month places $1,245 of that gross amount into a retirement fund. Leaving just $755 a month to live on. Are you sure about that?
Once again, a Rightie trots out some obscure example that is supposed to “prove” their argument relative to a much larger issue. Give me a break!
Brosephus™ - Browning America Since 1973
September 26th, 2011
6:30 pm
I’m not even gonna read the posts, as I’m sure I’d feel like I wasted time afterwards.
When it comes to SS, there’s two ways of looking at it…
1 – Money going into SS is used to purchase US Treasuries. That, in turn, gives our government money to function. When it’s time for your benefits, the government is still there, and you receive your benefit.
2 – Money diverted into private accounts will go towards funding companies. There is no guarantee of any type of return and/or benefit when you retire. Your money is at the mercy of the market, and we’ve seen how trillions can be wiped out of the market in a matter of moments.
If your retirement years required you to depend on your SS check, which system would you choose?
Kamchak
September 26th, 2011
6:30 pm
Doggone/GA
Deer meat, huh?
Yummy.
Soothsayer
September 26th, 2011
6:31 pm
For those who elected George W. Bush, I’d be careful how I use the word “dumb.”
Brosephus™ - Browning America Since 1973
September 26th, 2011
6:32 pm
AmVet @ 5:40
My thoughts exactly on privatizing SS. The people who need it most can not afford to get screwed by Wall Street. Those SOB’s won’t be happy until they control 100% of our economy/finances.
Jm
September 26th, 2011
6:32 pm
Sooth u don’t understand what he was saying
Kamchak
September 26th, 2011
6:34 pm
Your money is at the mercy of the market, and we’ve seen how trillions can be wiped out of the market in a matter of moments.
Up or down, the players will still take their transaction fees.
Brosephus™ - Browning America Since 1973
September 26th, 2011
6:36 pm
Up or down, the players will still take their transaction fees.
And the gullible who advocate private accounts don’t have a friggin’ clue. They don’t give a sh*t whether you make money or lose money because they’re paid either way.
josef
September 26th, 2011
6:36 pm
Galveston is a city of 50,000, pretty well off and fairly well educated. What may work there is not applicable in another, larger, less economically privileged and less educated society.
AmVet
September 26th, 2011
6:37 pm
I understand your point Gordon, albeit your “omitting” the gargantuan, fraud-riddled, terminally corrupt, redundant, abusive and hyper-wasteful DoD budget in the equation.
My point was that your contention about there will be no costs “going forward” related to Iraq, was dead wrong. (Probably a poor choice of adjectives given the tragic and needless American loss of life caused by the inept neo-cons, huh?)
As for the rapid increase in oil prices after the bungled shock and awe, take it up with esteemed gentlemen who wrote the paper I linked.
i presume you looked at it?
If not:
In our conservative $3 trillion estimate, we attribute only $5 to $10 of the per-barrel-price increase to the war. However, we now believe that a more realistic estimate of the impact of the war on the oil price over a decade is at least $10 to $15 per barrel. That translates into at least an additional $250 billion increase in the cost of war above the numbers in our book.
Thirdly, the war added substantially to the Federal debt. It is the first time in America’s history where a government cut taxes as it went to war, even in the face of continued government deficits. When the crisis began, the global financial crisis, the debt reduced our room to maneuver. It does so even more today, with the results of a deeper and longer recession.
But the link between the war and the crisis is even stronger than that. The crisis itself was, in part, due to the
war. The increase in oil prices reduced domestic aggregate demand. Money spent buying oil abroad was money not available for spending at home, for instance. Loose monetary policy and lax regulations kept the economy going through a housing bubble, whose breaking brought on the global financial crisis.
Simply put, George Walker Bush was arguably one of the absolutely worst presidents ever. In every measurable way and in every aspect of governance.
And the historians all agree…
Frankiev
September 26th, 2011
6:40 pm
W had the guts to kick ass in Iraq.Medicare part D a great program for elderly that has come in at 25 percent of CBO cost projections. Tax cuts were great for economy until Barney and friends ruined housing. But if Florida had not voted the right way, we would have utility bills four times greater than now, tax rates more excessive for people who choose to work, and we would have tried appeasement as a solution to the bombing of the World Trade Center.
ragnar danneskjold
September 26th, 2011
6:41 pm
This is not a math issue, but a moral one. The source of the funds is the democrat-advocated “lockbox” for those contributions of those for whom the system will not change; if that promise was untrue, as I suspect most of us suspect, that is not the fault of the reformers. And I suspect almost anyone under age 40 would welcome the opportunity switch system.
As to the fundamental question, mere abolition of a lot of the regulatory forces will provide sufficient funding for the shortfall. You would not have to make it up in one year, so we should prepare ourselves for a generation without an EPA and an SEC and an FDA.
Soothsayer
September 26th, 2011
6:41 pm
The payments under a traditional SS arrangement would be $306 a month — including Medicare. (using the old rules, i.e. before the “reduction.”) Please explain where you get $415 a month. Why on Earth would anyone put $1,245 of a $2,000 a month salary into a retirement account?
Jm: please explain to me what I don’t “understand.”
AmVet
September 26th, 2011
6:43 pm
And I think Republicans are known to be more supportive of the military than their appeasers on the left.
Not meant to be a factual statement.
Unless by supportive one means getting thousands and thousands needlessly KIA’d and maimed to feel good about their never-served selves.
And then screwing with veteran’s benefits and generally making the families’ lives a living hell.
Nope, in my extensive reading and experience on the topic, these craven neo-cons are absolutely the worst enemy the troops and vets can have…
Joe Mama
September 26th, 2011
6:44 pm
josef — “Galveston is a city of 50,000, pretty well off and fairly well educated. What may work there is not applicable in another, larger, less economically privileged and less educated society.”
Not to mention that the GAO considered people with 35- and 45-year careers with the applicable county governments. I don’t wish unemployment on anyone, but good luck keeping *any* job that long in your life. It’d be hard even to stay in the military that long unless you were an E-9 or a flag officer (general- or admiral-grade, for you civilians).
josef
September 26th, 2011
6:46 pm
Frankiev
Were you on the ground in Iraq, kicking ass?
It was only Barney and friends? He must be a really popular guy…
If people in Florida what? If the Supreme Court hadn’t voted “the right way, maybe…”
I doubt we would have gone for “appeasement” following the WTC. I suspect whoever else was in would have followed much the same plan…as they have since the change of regimes in DC…
Soothsayer
September 26th, 2011
6:49 pm
“W had the guts to kick ass in Iraq.Medicare part D a great program for elderly that has come in at 25 percent of CBO cost projections. Tax cuts were great for economy until Barney and friends ruined housing. But if Florida had not voted the right way, we would have utility bills four times greater than now, tax rates more excessive for people who choose to work, and we would have tried appeasement as a solution to the bombing of the World Trade Center.”
“W” led us into a war costing $trillions of tax dollars on false pretenses
Medicare part D is a costly giveaway to Big Pharma that helped W double the national debt in just 8 years.
Tax cuts helped double the national debt in just 8 years.
The so-called World Trade Center “bombings” were the “New Pearl Harbor” devised by the PNAC (Project for a New American Century) to draw us into a never-ending war costing and estimated $4,000,000,000,000.00 to date to benefit the materiel suppliers who run this country.