Balanced Budget Amendment and Social Security
Karl Wee
biggest deliberate distortions in recent history is being perpetrated
without the electorate's awareness at all.
In the last few days of the BBA debate, Democrats
brought Social Security into the debate, saying that they would not
vote for the BBA unless the BBA would explicitly protect the Social
Security Trust Fund from being used to balance the budget.
Let me first explain some basics. Social Security has long been running a
surplus, not because the government makes a profit on an individual basis
(in fact, the average retiree takes from SS a few times more than he puts
in,) but simply because the number of retirees is relatively small so far.
The surplus will be needed for the future, much larger group of retirees.
But the government has made all this surplus into a "SS Trust Fund" that
is obligated to buy special IOUs from the government. There is no
money in the Trust Fund other than the government's promise to pay back.
If the government had been more honest, it would have simply taken the
surplus from SS and promised to pay back. But it goes through this elaborate
scheme in an attempt to fool the taxpayer into thinking that SS is safer
than it is. There is no actual difference: whether
it's a trust fund or a simple promise to pay back, the SS money is protected
by nothing more than the government's ability to find money by raising
taxes or cutting spending when the government runs out of cash.
What's even worse, the surplus from SS is used to HIDE the actual federal
deficit each year. The deficit figures they give us is the number AFTER this
surplus has been taken by the government as normal revenue. You can see
this plainly by looking at the back of your Form 1040 instructions. Thus,
in practice, in spirit and in name, SS money is not separate from
general revenues and expenses. SS as a separate, protected entity has been
so far gone from salvageability that no one, Democrat or Republican, has
even mentioned protecting it again.
Now, all of a sudden, we hear Democrats saying that they won't vote for the
BBA if the trust fund is not re-protected. Protecting the trust fund would
be nice (even if it's fairly useless given that retirees take out so much
more from SS than they've put in), but it would make balancing the budget
before 2002 impossible. We would be really lucky if the government could, by
2002, balance the books under the current rules of taking the SS surplus as
normal revenue. Achieving this less ambitious goal would at least be a
beginning of fiscal discipline. The passing of the BBA would give powerful
political protection for Congress to cut spending. It would put the issue
of the deficit squarely into every funding debate and force the nation
to come to the day of reckoning: deciding if it wants tax hikes or service
reductions, but not neither. Now, the Democrats are saying that if the
more ambitious (actually impossible) goal is not set, they won't vote for
the less ambitious goal either!
In other words, we're on a train that will crash in 1 mile. If we apply the
brakes now, we'll be lucky if we can stop at 30 yards within the crash, but
will at least soften the crash. But the Democrats are saying that if the
brakes can't stop the train at 500 yards from the crash, they won't vote for
applying the brakes at all!
The Democrats know that, this way, they can get old voters' support.
Perhaps they also understand that, when the nation is faced with the
final hour of reckoning, it will choose spending cuts over tax hikes, and
their various power bases will be gone.
It's a truly sad day for the country when politics has sunk to this level.
Gary L. Dare
: There is no actual difference: whether it's a trust fund or a simple
: promise to pay back, the SS money is protected by nothing more than
: the government's ability to find money by raising taxes or cutting
: spending when the government runs out of cash.
What if all other pork were cut in the interests of the latter?
Would you have funds from current tax receipts to pay the IOU's?
Just asking, thanks for a good article ...
gld
--
~~~~~~~~~~~~~~~~~~~~~~~ Je me souviens ~~~~~~~~~~~~~~~~~~~~~~~~~~
Gary L. Dare g...@prairienet.org
"Support NAFTA - Eat Mexican!" uk...@freenet.victoria.bc.ca
(El Teddy's ad, NYC) (formerly g...@columbia.edu)
Lance Visser
+>What's even worse, the surplus from SS is used to HIDE the actual federal
+>deficit each year. The deficit figures they give us is the number AFTER this
+>surplus has been taken by the government as normal revenue. You can see
+>this plainly by looking at the back of your Form 1040 instructions.
Its actually not all that plainly on the 1040 form.
1. They use "net intrest" paid by the government on the expenditure
side. The surplus from SS is lumped into "undistributed offsetting
receipts" I believe which is the "-" in the net intrest. They
dont count all "UOR" against interest. They leave some things
out.
+>Thus,
+>in practice, in spirit and in name, SS money is not separate from
+>general revenues and expenses. SS as a separate, protected entity has been
+>so far gone from salvageability that no one, Democrat or Republican, has
+>even mentioned protecting it again.
In practice, social security witholding on a yearly basis is a
highly regressive tax on the poor and lower middle class used to reduce
the deficit by 10's of billions.
My proposal to fix the program is the following:
1. End the trust fund fiction and go to year-to-year payment on
the program.
2. Tie SS taxes directly to COLA increases. If COLA's go out,
taxes must go up.
3. Cut SS taxes back to where they pay for the yearly cost
of the program. Raise the normal income tax until the money
lost from SS is made up.
The current SS system is the most abusive tax there is toward
the poor and working classes.
+>Now, all of a sudden, we hear Democrats saying that they won't vote for the
+>BBA if the trust fund is not re-protected. Protecting the trust fund would
+>be nice (even if it's fairly useless given that retirees take out so much
+>more from SS than they've put in), but it would make balancing the budget
+>before 2002 impossible.
The democrats don't want a balanaced budget. They never, ever have.
Bill Clinton runs around saying that starting another medicare-sized program
is somehow going to cut the deficit. The sad truth of health care is that
the only way your ever going to cut costs is to start cutting services.
All government-controlled health care does is cut services by removing
the option of cost-shifting.
+>We would be really lucky if the government could, by
+>2002, balance the books under the current rules of taking the SS surplus as
+>normal revenue. Achieving this less ambitious goal would at least be a
+>beginning of fiscal discipline.
The problem is that the news media and the democrats dont want
people to understand the reality of how social security and the deficit
are related.
+>The passing of the BBA would give powerful
+>political protection for Congress to cut spending. It would put the issue
+>of the deficit squarely into every funding debate and force the nation
+>to come to the day of reckoning: deciding if it wants tax hikes or service
+>reductions, but not neither. Now, the Democrats are saying that if the
+>more ambitious (actually impossible) goal is not set, they won't vote for
+>the less ambitious goal either!
They dont want anything done. The dollar goes into the tank
this week and the party is worried about breakfast cerial costs.
+>In other words, we're on a train that will crash in 1 mile. If we apply the
+>brakes now, we'll be lucky if we can stop at 30 yards within the crash, but
+>will at least soften the crash. But the Democrats are saying that if the
+>brakes can't stop the train at 500 yards from the crash, they won't vote for
+>applying the brakes at all!
They have their real "secret" plan all prepared. Its called
hyperinflation. We are going to fix the deficit by inflating our way
out of it. This week has convinced me that the inflation spiral is
starting to crank up again. The dollar is in free-fall. Clinton does
nothing. The fed does nothing.
+>The Democrats know that, this way, they can get old voters' support.
+>Perhaps they also understand that, when the nation is faced with the
+>final hour of reckoning, it will choose spending cuts over tax hikes, and
+>their various power bases will be gone.
When you talk about the democratic party these days, the major
groups in it are:
1. Government workers
2. Trial Lawyers - Their incomes are typically such that they have
no comprension of what tax increases do to other people.
3. Public School Teachers
4. The welfare support structure
(big city governments, businesses that prosper off the
welfare system, slumlords).
None of these groups has any intrest in reducing the deficit.
It doesn't matter to them. They want a bigger public section,
not a smaller one.
Gary Forbis
|> The passing of the BBA would give powerful
|> political protection for Congress to cut spending. It would put the issue
|> of the deficit squarely into every funding debate and force the nation
|> to come to the day of reckoning: deciding if it wants tax hikes or service
|> reductions, but not neither. Now, the Democrats are saying that if the
|> more ambitious (actually impossible) goal is not set, they won't vote for
|> the less ambitious goal either!
The BBA as written favored reducing outlays as it required a supermajority
to raise taxes. If we do not balance the budged by 2010 when the SS starts
running a deficit we would have to cut outlays and what outlays would be
cut? Isn't the rhetoric use by the Republicans "entitlements?" I retire
in the year 2017 (if 65 is still correct, though I believe there is a switch
to 67 in 2015 so I'm probably not correct.) The Republicans want to protect
current benefits and even whine about requiring retirees making more than
50% of the population having to pay income tax on 75% of their soc sec benefit.
If we are going to make social security just another line item on the budget
then let's be honest about it and fold the tax in with income tax and not
cap it at $61k.
--
--gary for...@u.washington.edu
Gary L. Dare
: All government-controlled health care does is cut services by
: removing the option of cost-shifting.
That's presuming a monolithic public HMO or even public insurance ...
rather than a voucher-like programme (subsidy or benefits) combined
with private health insurance.
Karl Wee
Gary L. Dare <g...@prairienet.org> wrote:
>Karl Wee (win...@world.std.com) wrote:
>
>: There is no actual difference: whether it's a trust fund or a simple
>: promise to pay back, the SS money is protected by nothing more than
>: the government's ability to find money by raising taxes or cutting
>: spending when the government runs out of cash.
>
>What if all other pork were cut in the interests of the latter?
>Would you have funds from current tax receipts to pay the IOU's?
>Just asking, thanks for a good article ...
>
pay the IOU's. Anyway, even paying all the IOUs won't be enough, as
each person is "entitled" to much more than he put in. What a system....
Karl Wee
Gary Forbis <for...@cac.washington.edu> wrote:
>
>The BBA as written favored reducing outlays as it required a supermajority
>to raise taxes. If we do not balance the budged by 2010 when the SS starts
>running a deficit we would have to cut outlays and what outlays would be
>cut? Isn't the rhetoric use by the Republicans "entitlements?" I retire
>in the year 2017 (if 65 is still correct, though I believe there is a switch
>to 67 in 2015 so I'm probably not correct.) The Republicans want to protect
>current benefits and even whine about requiring retirees making more than
>50% of the population having to pay income tax on 75% of their soc sec benefit.
I don't think the requirement for a supermajority to raise taxes went through.
As for cutting outlays, we must do it and it's much easier the earlier we
start planning.
>
>If we are going to make social security just another line item on the budget
>then let's be honest about it and fold the tax in with income tax and not
>cap it at $61k.
I have no problem with this. There's no way anyone can hold the line on
this anyway, when the version of the Balanced Budget Amendment called "real
world" kicks in.
>
Lance Visser
+>Lance Visser (vis...@convex.com) wrote:
+>: All government-controlled health care does is cut services by
+>: removing the option of cost-shifting.
+>That's presuming a monolithic public HMO or even public insurance ...
+>rather than a voucher-like programme (subsidy or benefits) combined
+>with private health insurance.
I'm also assuming that spending is to be reduced overall by
the health care "reform". The overall point is that reform by itself
doesn't cut costs and that the only way costs get cut is to cut services
or to raise rates.
Whatever the other merits of a voucher-like program, I still dont see
"cost reduction" a likely result of implmening such a system.
Tom Spillman
>
>America seems so paralysed by media bias to the left that one
of the
>biggest deliberate distortions in recent history is being
perpetrated
>without the electorate's awareness at all.
>
>In the last few days of the BBA debate, Democrats
>brought Social Security into the debate, saying that they would
not
>vote for the BBA unless the BBA would explicitly protect the
Social
>Security Trust Fund from being used to balance the budget.
>
>(in fact, the average retiree takes from SS a few times more
than he puts
>in,) but simply because the number of retirees is relatively
small so far.
>The surplus will be needed for the future, much larger group of
retirees.
>
>
(SNIP.....)
>
>The Democrats know that, this way, they can get old voters'
support.
>Perhaps they also understand that, when the nation is faced
with the
>final hour of reckoning, it will choose spending cuts over tax
hikes, and
>their various power bases will be gone.
>
>It's a truly sad day for the country when politics has sunk to
this level.
--
While I have no arguments in general with the preceding
comments, there are a few comments I think I'd like to make.
The statement about receiving many times what was paid in is
true to some extent, since the government pays no interest on
the trust fund and, further, since there are tremendous
differences in purchasing power between dollars paid into the
fund in the past and current dollars.
When my wife and I were married in 1958, I was making $345 per
month, which was considered a very reasonable salary at the
time. Obviously, the amount of FICA paid in was relatively
small in terms of todays dollars, In fact, I've paid in the
legal maximum every year since 1955, when I started my career.
Even later, in 1970, after the inflationary government policies
of the 1960's really pulled the bottom from under the dollar, we
were able to buy a brand new BMW 2000, the equivalent of today's
5xx series, for $4,700. Our first house, purchased in 1961,
cost $18,000, less than the average price of new cars today.
Even though we were told all along that the SS system was
actuarily sound, which to me certainly implies the accumulation
of interest, we recognized that Social Security was not a
particularly good idea. We knew that we would be better off if
we had the option of taking our money and investing it ourselves
and providing for our own security.
This was not an option available to us, although we were told
that it would always be there for us, it could never be taken
away, regardless of what our income was and all of the other
catch phrases of government.
Now my wife and I have reached the point where we are beginning
to think about retirement. After paying into the fund for over
forty years, often to the point where it was very difficult when
our children were small, we're told that we're greedy and that
we're not considerate of our children's future.
The Democrats have controlled Congress for most of this 40 year
period. I suggest that anyone who's considering letting
government control health care review what's happened to Social
Security. Unlike the comment above that "The Democrats know
that, this way, they can get old voters' support", the Democrats
cannot count on my vote...
tms
**********************************************************
Tom Spillman : Standard Disclaimers re: me *
Technology Architecture : and my employer... *
tspi...@tad.eds.com : *
**********************************************************
Andrew Hall
>>>>> Tom Spillman writes:
Tom> -- While I have no arguments in general with the preceding
Tom> comments, there are a few comments I think I'd like to make.
Tom> The statement about receiving many times what was paid in is
Tom> true to some extent, since the government pays no interest on
Tom> the trust fund and, further, since there are tremendous
Tom> differences in purchasing power between dollars paid into the
Tom> fund in the past and current dollars.
The calculations that determine the incredible amount more
taken out than put in by the average retiree DO credit
interest to the contributions. The current retirees paid in far
too little to cover.
Tom> When my wife and I were married in 1958, I was making $345 per
Tom> month, which was considered a very reasonable salary at the
Tom> time. Obviously, the amount of FICA paid in was relatively
Tom> small in terms of todays dollars, In fact, I've paid in the
Tom> legal maximum every year since 1955, when I started my career.
In 1958 you contributed a grand total of $84. (Your employer added
another $84).
Tom> Even later, in 1970, after the inflationary government
Tom> policies of the 1960's really pulled the bottom from under the
Tom> dollar, we were able to buy a brand new BMW 2000, the
Tom> equivalent of today's 5xx series, for $4,700. Our first
Tom> house, purchased in 1961, cost $18,000, less than the average
Tom> price of new cars today.
Tom> Even though we were told all along that the SS system was
Tom> actuarily sound, which to me certainly implies the
Tom> accumulation of interest, we recognized that Social Security
Tom> was not a particularly good idea. We knew that we would be
Tom> better off if we had the option of taking our money and
Tom> investing it ourselves and providing for our own security.
Tom> This was not an option available to us, although we were told
Tom> that it would always be there for us, it could never be taken
Tom> away, regardless of what our income was and all of the other
Tom> catch phrases of government.
Tom> Now my wife and I have reached the point where we are
Tom> beginning to think about retirement. After paying into the
Tom> fund for over forty years, often to the point where it was
Tom> very difficult when our children were small, we're told that
Tom> we're greedy and that we're not considerate of our children's
Tom> future.
Tom> The Democrats have controlled Congress for most of this 40
Tom> year period. I suggest that anyone who's considering letting
Tom> government control health care review what's happened to
Tom> Social Security. Unlike the comment above that "The Democrats
Tom> know that, this way, they can get old voters' support", the
Tom> Democrats cannot count on my vote...
If you are healthy and live for 10 years (5 for the average retiree)
you will get out much more than you put in. However, your children
will get out far less than what they put in.
ah
Russell Anderson
In article <3jklbo$a...@mikey.convex.com>, vis...@convex.com (Lance Visser) writes:
> In <D53yu...@world.std.com> win...@world.std.com (Karl Wee) writes:
> +>We would be really lucky if the government could, by
> +>2002, balance the books under the current rules of taking the SS surplus as
> +>normal revenue. Achieving this less ambitious goal would at least be a
> +>beginning of fiscal discipline.
>
> The problem is that the news media and the democrats dont want
> people to understand the reality of how social security and the deficit
> are related.
This assumes that "the news media" understands the social security system
and basic economic concepts. There is little evidence that "the news media"
(with few exceptions) understands basic economic concepts.
It's not a consperacy, just ignorance...
--
Russ Anderson | Disclaimer: Any statements are my own and do not reflect
------------------ upon my employer or anyone else. (c) 1994
EX-Twins' Jack Morris, 10 innings pitched, 0 runs (World Series MVP!)
Gary L. Dare
: Whatever the other merits of a voucher-like program, I still dont
: see "cost reduction" a likely result of implmening such a system.
Besides our having a less litigious society up north, with little in
the way of defensive medicine and its effects like too many MRI's (to
checkpoint patients, not actually involved actual medical care), that
people have a basic health insurance means they'll get things treated
early and cheaper, rather than rush the ER for expensive care of an
advanced condition later. Spend a penny, save a pound ...
Alan Bomberger
>America seems so paralysed by media bias to the left that one of the
>biggest deliberate distortions in recent history is being perpetrated
>without the electorate's awareness at all.
>In the last few days of the BBA debate, Democrats
>brought Social Security into the debate, saying that they would not
>vote for the BBA unless the BBA would explicitly protect the Social
>Security Trust Fund from being used to balance the budget.
>Let me first explain some basics. Social Security has long been running a
>surplus, not because the government makes a profit on an individual basis
>(in fact, the average retiree takes from SS a few times more than he puts
>in,) but simply because the number of retirees is relatively small so far.
>The surplus will be needed for the future, much larger group of retirees.
>But the government has made all this surplus into a "SS Trust Fund" that
I don't even think this is true. The Trust Fund is a myth much like the
$50,000 a year that I save (and of course borrow back to pay my bills).
Ask your congresscritter to show you the line item on the budget
Contribution to Trust Fund
It ain't there and if it were the deficit would be 80 billion larger
Ask your critter to point to the Trust Fund.
Ask your critter how "masking the deficit" (admitted to by Panetta on
Brinkley) differs from "raiding the trust fund" quoted as the agenda
of the Republicans.
Sad that dittoheads are accused of not thinking but Jenningsheads
are not. SS is a ponzi scheme. Go back and read about Moynihan's
efforts to take SS off budget and actually bank the surplus (or
reduce the tax) and face the real deficit. There ain't no Trust Fund
to raid! It's gone, spent, just like that 50 grand a year I save.
--
Alan Bomberger | (408)-992-2748 | al...@oes.amdahl.com
Amdahl Corporation | Opinions are free, worth it, and not Amdahl's
It is seldom that liberty of any kind is lost all at once. - David Hume
Richard Foy
>
>It's a truly sad day for the country when politics has sunk to this level.
Yes it is but it ahs een this bad for many years. The only difference
is that each year the pain of fixing things gets worse and wrose so
there is less real effort to fix it.
--
"It is dangerous to be right in matters on which the established
authorities are wrong." --Voltaire
Richard Foy ftp://ftp/netcom.com/pub/rf/rfoy/bkpo.html
Richard Foy
>>
>I don't have the exact numbers. My hunch is that it won't be able to
>pay the IOU's. Anyway, even paying all the IOUs won't be enough, as
>each person is "entitled" to much more than he put in. What a system....
The Cato Institute, I believe a libertarian think tank, says this
isn't true. For infromation from a study they did on this subject
see URL:
ftp://ftp.netcom.com/pub/rf/rfoy/socialsec.html
B. Scott Ferguson
: win...@world.std.com (Karl Wee) writes:
:> Thus, in practice, in spirit and in name, SS money is not separate
:> from general revenues and expenses. SS as a separate, protected
:> entity has been so far gone from salvageability that no one, Democrat
:> or Republican, has even mentioned protecting it again.
: In practice, social security witholding on a yearly basis is a
: highly regressive tax on the poor and lower middle class used to reduce
: the deficit by 10's of billions.
So turn it into a real pension fund.
: My proposal to fix the program is the following:
: 1. End the trust fund fiction and go to year-to-year payment on
: the program.
: 2. Tie SS taxes directly to COLA increases. If COLA's go out,
: taxes must go up.
: 3. Cut SS taxes back to where they pay for the yearly cost
: of the program. Raise the normal income tax until the money
: lost from SS is made up.
Ulg. The census bureau predicts the percentage of retirees to increase
50% by 2020. Under your scheme we would be paying 22% FICA in 2020.
At least I would be paying 22%. Is this some sort of generational
sneak attack? :-)
: The democrats don't want a balanced budget. They never, ever have.
: Bill Clinton runs around saying that starting another medicare-sized
: program is somehow going to cut the deficit. The sad truth of health
: care is that the only way your ever going to cut costs is to start
: cutting services. All government-controlled health care does is cut
: services by removing the option of cost-shifting.
Is there any data from the Oregon medicare rationing proposal yet? It
did go into effect in 1992, didn't it?
--
Scott Ferguson
fer...@netcom.com
21012d
Is it possible that some of the current
economic shifts, are rational attempts
to position large institutions for
the "success" of the republicans first 100 days
and beyound.
Tom Spillman
ah...@cs.uml.edu says...
(Snip - removed my original comments)
>
>The calculations that determine the incredible amount more
>taken out than put in by the average retiree DO credit
>interest to the contributions. The current retirees paid in
far
>too little to cover.
>
(Snip - removed some more...)
>
>In 1958 you contributed a grand total of $84. (Your employer
added
>another $84).
First, at 6% compunded monthly for 39 years (a conservative
rate, considering the periods when 12% was available), the $168
would now be worth $1,733.91, or a growth of over ten times. In
1958 dollars, that's almost half my annual salary at the time
the government got the money. Which is one of my points: the
presently popular calculations usually ignore the changes in
purchasing power in order to make a political point.
>
(Snip... and yet some more of my comments)
> Tom> The Democrats have controlled Congress for most of this
40
> Tom> year period. I suggest that anyone who's considering
letting
> Tom> government control health care review what's happened
to
> Tom> Social Security. Unlike the comment above that "The
Democrats
> Tom> know that, this way, they can get old voters' support",
the
> Tom> Democrats cannot count on my vote...
>
>If you are healthy and live for 10 years (5 for the average
retiree)
>you will get out much more than you put in. However, your
children
>will get out far less than what they put in.
>
>
>ah
--
Besides my point about ignoring the changes which have taken
place in the purchasing value of the dollar, I attempted to make
another point. We were aware at the time that Social Security
was not a good option, but Congress in it's wisdom would not
allow us to opt out.
Now that the piper must be paid, those of us who paid in for
forty or fifty years based on Government promises will probably
bear the brunt through 'means testing' and the like. I
recognize that my generation has some responsibility since we
did not vote the guilty parties out of office (although some of
us tried).
However, remember this when you hear the Government say things
like "coverage for all that can't be taken away" and the like.
What the government says today is probably *not* going to be
what they'll say tomorrow when the bill comes due...
Baird Webel
>Now that the piper must be paid, those of us who paid in for
>forty or fifty years based on Government promises will probably
>bear the brunt through 'means testing' and the like. I
>recognize that my generation has some responsibility since we
>did not vote the guilty parties out of office (although some of
>us tried).
yeah, right, given the political clout of those of you who paid in for 40
or 50 years, I seriously doubt that you will bear the brunt. It seems
far more likely to me that it will be the younger workers who will pay
the taxes and then see very little of it in the end.
baird
--
***************************************************************************
* Baird Webel 1312 35th St. NW *
* web...@gusun.georgetown.edu Washington DC 20007 *
***************************************************************************
Sheldon Jolson
>While I have no arguments in general with the preceding
>comments, there are a few comments I think I'd like to make.
>The statement about receiving many times what was paid in is
>true to some extent, since the government pays no interest on
>the trust fund and, further, since there are tremendous
>differences in purchasing power between dollars paid into the
>fund in the past and current dollars.
This is not really true. The trust fund might not exist in a
physical form (ie, you can't go to the bank and see it), but
it does exist indirectly. Suppose that Social Security was
removed from the budget. Since it runs a surplus, it has a
large cash position. This cash position is exactly equal to
the increase in the deficit caused by removing Social Security
from the Budget. This causes the government to issue more
bonds equal to the increase in the deficit. These bonds are
purchased by Social Security, and earns interest for Social
Security. Therefore, by having Social Security on budget, the
gevernment reduces its borrowings and pays less interest. The
cumulative amount of the reduced borrowings can be thought of
as the trust fund, and the cumulattive saved interest can be
thought of as the total interest paid the trust fund. Now this
isn't _exactly_ the same as having a trust fund, but for all
practical purposes, it is.
--------------------------------------------------------------------------------------
@date@
@time@ - SBJ -
s...@panix.com <Look here for a yet another web site - coming soon>
Sheldon Jolson
>If you are healthy and live for 10 years (5 for the average retiree)
>you will get out much more than you put in. However, your children
>will get out far less than what they put in.
The expected life time of a 65 year old retiree is significantly
higher than 5 years.
-----------------------------------------------------------------------------------
@date@
@time@ - SBJ -
s...@panix.com <Check here for yet another web site - coming soon>
Karl Wee
Tom Spillman <tspi...@tad.eds.com> wrote:
> ....
>The statement about receiving many times what was paid in is
>true to some extent, since the government pays no interest on
>the trust fund and, further, since there are tremendous
>differences in purchasing power between dollars paid into the
>fund in the past and current dollars.
This is news to me. Since I don't have the actual numbers, I can't
tell who's come out ahead, the government or the retirees. But therein
lies the fundamental flaw of SS: unlike many countries where each
individual has "his money" in the government retirement fund, with interest,
in SS all the money is pooled and the government uses a complicated formula
to determine how much each person gets. This is inherently prone to
politicking and abuse and we're now tasting the fruit of what Americans
voted for (or at least didn't oppose) in the past.
>Even though we were told all along that the SS system was
>actuarily sound, which to me certainly implies the accumulation
>of interest, we recognized that Social Security was not a
>particularly good idea. We knew that we would be better off if
>we had the option of taking our money and investing it ourselves
>and providing for our own security.
>
>This was not an option available to us, although we were told
>that it would always be there for us, it could never be taken
>away, regardless of what our income was and all of the other
>catch phrases of government.
>
>Now my wife and I have reached the point where we are beginning
>to think about retirement. After paying into the fund for over
>forty years, often to the point where it was very difficult when
>our children were small, we're told that we're greedy and that
>we're not considerate of our children's future.
The only people who benefited from the whole fraudulant scheme were
the politicians who managed to stay in power using SS as a carrot. They
were able to capitalize on people's temptation to believe in "something
for nothing". I'm sure on many social gatherings of people about to
retire, there were talks about "look what Joe's getting, isn't sociala
security great?" In the end we all suffer from this, except people
who died quickly enough to escape :) The question still remains,
however, what we should do about this mess now before it's too late.
Peter Nelson
: Is it possible that some of the current
Is it "possible"? It might be "possible" but how would
you propose to separate out those effects from all the
other ones?
That's the whole problem with that kind of thinking
(very common in economic discussions because we have
so little really concrete to go on and we all like to
shoot the shit, it's just that economists get paid for
it!): The mark and the yen take off like rockets
(self-centered USAians call it a "falling dollar"),
or the DJIA cracks 4000 and immediately everyone either
trots out their favorite heroes or flogging horses:
lack of a balanced budget, Contract with America,
The FRB, low savings rates, education, tort reform,
space aliens, lunar cycles, God-knows-what.
The FACT is that all of it is SPECULATION!! There
simply isn't enough of a science to this stuff for
it to be otherwise. Look at the BBA: major, prominent,
Nobel-winning economists were lined up all over the
debate (it looked like mostly on the anti- side, but
science isn't a democracy).
Recently in the popular press (Atlantic Monthly and the
New York Times) there have been articles about how
little economists REALLY understand. And lately the
press has been prominently quoting economists remarking
that they were "surprised" by, say, the magnitude of
recent currency swings. So maybe we are on the verge
of a sudden awakening of awareness of this problem by
the public.
---peter
Andrew Hall
Tom> In article <AHALL.95M...@remus.cs.uml.edu>,
Tom> ah...@cs.uml.edu says... (Snip - removed my original
Tom> comments)
>> The calculations that determine the incredible amount more
>> taken out than put in by the average retiree DO credit interest
>> to the contributions. The current retirees paid in far
>> too little to cover.
Tom> (Snip - removed some more...)
>> In 1958 you contributed a grand total of $84. (Your employer added
>> another $84).
Tom> First, at 6% compunded monthly for 39 years (a conservative
Tom> rate, considering the periods when 12% was available), the
Tom> $168 would now be worth $1,733.91, or a growth of over ten
Tom> times. In 1958 dollars, that's almost half my annual salary
Tom> at the time the government got the money. Which is one of my
Tom> points: the presently popular calculations usually ignore the
Tom> changes in purchasing power in order to make a political
Tom> point.
But the interest rates one used to credit interest do account for
inflation. A nominal rate interest is compounded of the inflation
part and the real part. When inflation is going up, so do interest
rates.
If we had had zero inflation all that time the credited interest rate
would be more like 2%. 3% is a very high real rate for risk free
instruments.
Tom> (Snip... and yet some more of my comments)
Tom> The Democrats have controlled Congress for most of this 40
Tom> year period. I suggest that anyone who's considering letting
Tom> government control health care review what's happened to
Tom> Social Security. Unlike the comment above that "The Democrats
Tom> know that, this way, they can get old voters' support", the
Tom> Democrats cannot count on my vote...
>> If you are healthy and live for 10 years (5 for the average retiree)
>> you will get out much more than you put in. However, your children
>> will get out far less than what they put in.
Tom> Besides my point about ignoring the changes which have taken
Tom> place in the purchasing value of the dollar, I attempted to
Which is not done, see comments about interest rates and inflation.
Tom> make another point. We were aware at the time that Social
Tom> Security was not a good option, but Congress in it's wisdom
Tom> would not allow us to opt out.
Yes this is unfortunate.
Tom> Now that the piper must be paid, those of us who paid in for
Tom> forty or fifty years based on Government promises will
Tom> probably bear the brunt through 'means testing' and the like.
Tom> I recognize that my generation has some responsibility since
Tom> we did not vote the guilty parties out of office (although
Tom> some of us tried).
Tom> However, remember this when you hear the Government say things
Tom> like "coverage for all that can't be taken away" and the like.
Tom> What the government says today is probably *not* going to be
Tom> what they'll say tomorrow when the bill comes due...
This is quite true.
ah
Donald Edwards
" When you talk about the democratic party these days, the major
"groups in it are:
" 1. Government workers
" 2. Trial Lawyers - Their incomes are typically such that they have
" no comprension of what tax increases do to other people.
" 3. Public School Teachers
" 4. The welfare support structure
" (big city governments, businesses that prosper off the
" welfare system, slumlords).
Excuse me, but in general groups 3 and 4 consist primarily of people
who are paid by the government to provide some service for people
who are unwilling and/or unable to pay for it themselves. Which
puts them in the same category as group 1, government workers.
I would include "civil rights" "leaders", such as the people
demanding multilingual education for other people's kids in
tax-funded public schools, in the same group for similar
reasons.
On the other hand, I would add a third and largely unrelated
group: those who want the government to keep their possible
competitors down. The mercantilists -- merchant princes
in the worst sense of the term.
Donald Edwards
": Whatever the other merits of a voucher-like program, I still dont
": see "cost reduction" a likely result of implmening such a system.
"Besides our having a less litigious society up north, with little in
"the way of defensive medicine and its effects like too many MRI's (to
"checkpoint patients, not actually involved actual medical care), that
"people have a basic health insurance means they'll get things treated
"early and cheaper, rather than rush the ER for expensive care of an
"advanced condition later. Spend a penny, save a pound ...
Problem: per capita medical care costs have risen at essentially
the same rate in Canada as in the US, since Canada implemented
socialized medicine.
Problem: availability of medical care in Canada has *not* kept
pace with the US, and in the last decade has been declining in
some important areas. For example, Canada has both longer
average hospital stays and fewer hospital beds per capita,
both of which statistics have gotten worse in the last 10 years.
(In fact, I believe there has been a net decline in the number
of beds in the last 10 years.)
So if your costs are going up just as fast, but your care is
not improving as fast and in some measures is getting worse,
where is the offsetting benefit?
Brian Dell
: Recently in the popular press (Atlantic Monthly and the
: little economists REALLY understand. And lately the
: press has been prominently quoting economists remarking
: that they were "surprised" by, say, the magnitude of
: recent currency swings.
Einstein was in the queue before the Pearly Gates.
He asked a few people around him what their IQ was:
"190" the first person said.
"Good, we can talk about my theory of relativity!"
"150" said the second.
"I look forward to discussing the prospects of world peace with you!"
"50" mumbled the third.
"So what do you forecast will be the growth in the economy next year?"
--
Brian Dell
http://gpu.srv.ualberta.ca/~dellb/index.html
Doug Fierro
>
> Lance Visser (vis...@convex.com) wrote:
>
> : Whatever the other merits of a voucher-like program, I still dont
> : see "cost reduction" a likely result of implmening such a system.
>
> Besides our having a less litigious society up north, with little in
> the way of defensive medicine and its effects like too many MRI's (to
> checkpoint patients, not actually involved actual medical care), that
> people have a basic health insurance means they'll get things treated
> early and cheaper, rather than rush the ER for expensive care of an
> advanced condition later. Spend a penny, save a pound ...
>
> gld
Now Gary,
You always are quick to correct the U.S. misconceptions of
Canadian health care, yet you espound the much-abused excuse
that health care cost increases in the U.S. are tied to lawsuits.
The facts are, the cost of malpractice in the U.S. as a percentage
of total health spending is maybe 3% at most. There are much
bigger players in the U.S. healthcare industry that contribute to
higher costs.
This should not be construed to be interpreted that I am
against tort reform, but if you want to cut costs, go where
the big spending is. It's kind of like trying to balance
the U.S. budget by attacking welfare and food stamp programs
while ignoring S.S. and Medicare. :-)
Doug
Doug Fierro
|\ Legent Corporation
O __________|_\______ Consulting Services
\_.______________________| * * * * * * * * */ fie...@sv.legent.com
__\____ |=================/ (408) 730-3500
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Amit P. Rege
From alt.politics.economics:
> tspi...@tad.eds.com (Tom Spillman) writes:
> >Now that the piper must be paid, those of us who paid in for
> >forty or fifty years based on Government promises will probably
> >bear the brunt through 'means testing' and the like.
Baird Webel (web...@gusun.acc.georgetown.edu) wrote:
> yeah, right, given the political clout of those of you who paid in
> for 40 or 50 years, I seriously doubt that you will bear the brunt.
> It seems far more likely to me that it will be the younger workers
> who will pay the taxes and then see very little of it in the end.
I would like to respectfully disagree with BOTH of you! If something
is done today, we could save the payments to the elderly, and still
design a way to accumulate substantial amounts in individual accounts
owned by tomorrow's retirees.
I have heard of proposals that will incorporate the following
elements:
- gradual (20 year?) phase-out of government payments on an
entitlement basis. After that, the government pays only on a
means-tested basis, out of welfare budgets to the needy.
- IN ADDITION, people get to keep most of their money in a Super-IRA,
in their own name and manage it. People over 40 today, get plenty of
warning.
- Super-IRA workers (younger workers) are still taxed for elderly
benefits reducing the tax portion gradually UNTIL at the end of
the phase-out it becomes ZERO.
(Source: Social Security: Prospects for Real Reform, edited by
Peter Ferrara)
Note that with this method, people like Tom Spillman, who were forced
into the pyramid scheme of today, will still get their payments. It
is hardly their fault! Who, among us, would have voted against a
government-obfuscated and sponsored pyramid scheme IF IT WAS IN THEIR
FAVOR? That was how it was promised 60 years ago...
(Pay $50 per year NOW, then get hundreds of dollars per month after
retirement for life; survivors, widows, NO PROBLEM! Backed by the
full faith and credit of the United States Treasury.)
- Amit
--
Amit P. Rege | Rege Systems,
e-mail: amit...@netcom.com | Fremont, CA 94538-4161
At the OTHER end of every government program is a tired taxpayer!
News brief I am looking for (write to me if you see this anywhere):
The California Attorney General's office is suing the US Government to
cease-and-desist from using the misleading phrase "backed by the full
faith and credit of the US Government" in the advertisements for US
Savings Bonds and Social Security literature. They suggested instead
the phrase "backed by the willingness and ability of future US
taxpayers to pay higher taxes; subject to legislative change".
Repeal FICA Taxes! Dismantle the Social Security Pyramid scheme!
SLAVE TO THE GRIND
>I hate to break it to those wishing to privatize Social Security, but...
>Private plans are no more secure than Social Security. In either case the
>generation after will have to pay for the benefits. Maybe some ways makes
>some feel more comfy than others--the effects are the same.
>
>--gary for...@u.washington.edu
But the generation after wouldn't have to pay for squat if individuals
were responsible for their own retirement. Forget privatization, we
need to eliminate it completely. Now before you hypersensitive ones
out there accuse me of hatred for the elderly. . .
A phase out of SS would have to be slow. I don't have a problem with that.
It should begin soon, however, because the situation isn't going to
cure itself. Even if it takes 25 years to get our population (read
"addicts") off of this drug, the process needs to start sometime. It
is not a proper function of government to provide a retirement plan for
it's people. Just say no to SS.
--
Derrick Olliff | An island of rigorous logic
Computational Micromechanics Lab | surrounded by a sea of
Georgia Institute of Technology | emotional propaganda.
Atlanta, Ga. 30332 |
Baird Webel
>Moynihan still claims it is the most successful social
>program ever. Of course he does. He's got a six-figure
>pension coming from the taxpayers, and he'll retire well
>before SS goes belly up. On MY hard earned money.
it arguably was the most successful social program, but not as a
retirement program. When it came into effect, the elderly had the
highest poverty rate of any age category, now I suspect they are close to
the lowest. SS is and always was a welfare program, just dressed up to
gain middle class support.
Gary Forbis
Private plans are no more secure than Social Security. In either case the
generation after will have to pay for the benefits. Maybe some ways makes
some feel more comfy than others--the effects are the same.
Look Social Security is also an insurance plan. It's hard to get one's money
and one's life to always come out even. Are people supposed to kill themselves
when their money runs out? We need to cover our own needs in the aggregate
as well as individually. The difficulty would be to find a formula that didn't
once again favor the more wealthy (who have longer life expectancy as well
as larger payouts.)
We need to balance the budget and we need to make social security sound.
We do not need to privatize social security and to do so could place it at
risk every much so as keeping it public.
--
--gary for...@u.washington.edu
Rex Ridgeway
----------------------------------------------------------------
The recent sham of some politicians claiming they were
protecting Social Security by voting down the Balanced
Budget Amendment should be rejected for the fraud it is.
LBJ instituted the unified budget to help hide the cost
of the Vietnam war and Great Society programs. This
process continues today with the Clinton administration's
proposed budgets.
The bigger fraud is the Social Security system itself
where today's and future workers are concerned. Consider
this taken from the book _Social Security: Prospects for
Real Reform_ edited by Peter J. Ferrara (CATO Institiute,
1985), page 13:
"Those who retired in the early years of Social
Security received high, above-market returns
through the program on the limited social security
taxes they paid during their working years.
Although today's retirees are receiving less of
a good deal, they are still enjoying above-market
returns. But those now entering the work force
will receive unacceptably low, below-market returns,
negative in many cases, even in the unlikely event
that they receive all the program's currently
promised benefits."
Just how good the early and current retirees have it and,
therefore neccesarily, how bad today's and future workers
will be treated has been estimated by several economists
and actuaries. For example, from _Social Security_ edited
by economist Charles W. Meyer, (Lexington Books, 1987) we
find the following on page 52:
"...rates of return were calculated for a sample
of workers who retired during the years 1967-70
...For workers who retired at age 65, average
real rates of return for men ranged from 23%
in the lowest earnings quartile to 8.6% in the
highest. For women the corresponding range
was from 29% in the lowest earnings quartile
to 9.8% in the highest."
By way of comparision, historically the real rate of return on an
average stock fund, the "market rate of return", has been about 6%
(the nominal rate of return would be about 9%; 6% plus 3% for
inflation). From a more recent publication from the liberal Urban
Institute entitled _Retooling Social Security for the 21st Century_
by C. Eugene Steuerle (Urban Institute press, 1994), we find
starting on page 123 the following estimates for a two-earner
couple with a income of about $83,000 per year --- one earning
near the maximum earnings subject to OASI taxes of, currently,
about $60,000, the other earning an "average" wage, about $23,000
per year for this study (all figures are in 1993 dollars):
"[such a] couple turning 65 in 2030 pays about
$350,600 more in taxes and premiums to support
OASI and Medicare over a lifetime than the benefits
are worth to them, OASI and Medicare together
redistribute about 5.6% of this couple's lifetime
income to other people."
Similar estimates of net income redistributions of about $350,000
is also obtained for cohorts of Single Females and Single Males
with wages of about $60,000 per year who will reach age 65 in 2030.
Single Males, due in part to their shorter lifespan compared to
females, earning just the average wage assumed in this study,
end up making a net transfer to other people in the SS/Medicare
system of about $37,000 over their lifetime where similarly
earning Single Females RECEIVE net transfers of about $45,000.
One Earner Couples turning 65 in 2030, with an average income
in this study (again about $23,000/yr in 1993 dollars) benefits
from a net transfers of about $335,000 over their lifetime in the
system.
These three references from researchers whose political views
span then entire spectrum from conservative to liberal clearly
indicate that Social Security and Medicare is not only unfair,
but is a train wreck in the making.
A couple more sobering facts are to be found in the final
report of the Bipartisan Commission on Entitlement and Tax
Reform (chaired by Senators Robert Kerrey and John Danforth).
First, from pages 77-79, the current unfunded liabilities
of the promises, unsustainable promises, to today's workers
for Social Security is $7.3 Trillion and for Medicare it is
$5.7 Trillion. Now, if we really are going to pay out all of
these unfunded benefits, the Social Security and Medicare taxes
as a share of Taxable Worker Payroll (i.e. FICA taxes) will have
to rise from the current 15.2% to somewhere between 37.9% and
a high-cost projection of 61.8% by the year 2040 (costs includes
employer SS contribution and parts A and B of Medicare; very
roughly it would be a 60/40 split between Medicare and Social
Security respectively). The numbers are relentless --- balancing
the budget by just eliminating "waste, fraud, and abuse" and
foreign aid is a fantasy of fools who have never looked at the
facts, the delusions of those who are unable to face reality,
or the propaganda of demagogue politicians of both parties and
the AARP.
Now, if we add in the bite from the regular Federal Income
Tax and State and Local government taxes, it is easy to see
how the total lifetime tax rate on workers in the middle of
the 21st Century would rise to the 80% as estimated in
President Clinton's 1994/95 Budget Estimates (page 25).
The American Revolution was over tax rates well below these levels.
Social Security and Medicare IS that "giant sucking sound" and
it is vacuuming the money out of young workers' pockets and of
your grandchildren and your neighbors grandchildren's pockets.
Voting for politicians who continue to make such promises as
those in these widely popular entitlement programs is REALLY
as easy as taking candy from a baby!
The only objectively fair and workable long term solution is to
transition to a system where each person invest the payroll taxes
paid (including the employer component) into a self-directed,
employee owned "Super IRA" account. The problem with this is
that the foolish, grasping, or socialist voters and their more
than willing political allies don't believe in this solution
because it would keep them from implementing or expanding their
government enforced income redistribution programs that has got
all of us in yet another fine mess.
------------------------------------------------------------------
--
Rex Ridgeway
re...@freenet.fsu.edu
An-Jen Tai
(Gary Forbis ) wrote:
> I hate to break it to those wishing to privatize Social Security, but...
>
> Private plans are no more secure than Social Security. In either case the
> generation after will have to pay for the benefits. Maybe some ways makes
> some feel more comfy than others--the effects are the same.
>
This is just silly. With a pay as you go public plan you are always at
the whim of politics because it is a simple income transfer scheme from
the young to the old. With a private plan you have ownership of REAL
assets which produce REAL revenues. Unless this country decides to outlaw
private property, I fail to see how the effects are the same.
> Look Social Security is also an insurance plan. It's hard to get one's money
> and one's life to always come out even. Are people supposed to kill
themselves
> when their money runs out? We need to cover our own needs in the aggregate
> as well as individually. The difficulty would be to find a formula that
didn't
> once again favor the more wealthy (who have longer life expectancy as well
> as larger payouts.)
You are ignoring the fact that there are annuities, offered by insurance
companies, that provide everything from lump sum payments to lifetime
benefits with adjustments for inflation (and everything in between). Such
a program is available with my employer's pension program. (It has always
puzzled me why annuities aren't more popular.) My wife's grandmother set
up such an annuity contract for all of her grandchildren.
>
> We need to balance the budget and we need to make social security sound.
> We do not need to privatize social security and to do so could place it at
> risk every much so as keeping it public.
I would argue that you cannot make social security sound unless you
privatize it. I'm not saying there is no role for government. (I favor a
mandatory retirement program like that in Singapore.) But Social Security
is a giant Ponzi scheme that is unstable with respect to changes in
demographics.
>
> --
> --gary for...@u.washington.edu
--
An-Jen Tai
at...@ida.org
"Life, liberty, and the pursuit of property"
David Meyers
<snip>
time. Obviously, the amount of FICA paid in was relatively
small in terms of todays dollars, In fact, I've paid in the
legal maximum every year since 1955, when I started my career.
Yup. So have lots of other folks. Congrats on having had
a pretty successful career.
Even though we were told all along that the SS system was
actuarily sound, which to me certainly implies the accumulation
of interest, we recognized that Social Security was not a
particularly good idea. We knew that we would be better off if
we had the option of taking our money and investing it ourselves
and providing for our own security.
You were told one thing - that it was "sound". You KNEW that
there was a better way (to invest on your own). You still paid
in (because you had no choice). The natural question, then,
is: Did you do anything to try to STOP the system? Or did
you support it by voting for politicians who promised to keep
the system going? (Take none of this personally. The questions
are more a generational thing.)
This was not an option available to us, although we were told
that it would always be there for us, it could never be taken
away, regardless of what our income was and all of the other
catch phrases of government.
You were lied to. Did you believe them then? Do you believe
them now? The money was no more "there for you" then than it
is now. It was immediately given to other people. You were
given an IOU, not an interest or an ownership in anything.
The IOU was written by the generation ahead of you, to be
paid off by the generation behind you.
It said, "Do no feel bad that we are taking your money now
and giving it to other people. Later on, we promise to take
money from other people and give it to you. Now go and feel
warm and fuzzy all over."
Now my wife and I have reached the point where we are beginning
to think about retirement. After paying into the fund for over
forty years, often to the point where it was very difficult when
our children were small, we're told that we're greedy and that
we're not considerate of our children's future.
Admittedly, some of us who want SS ended do indeed feel that
you knew what you were getting into - a pyramid scheme, and
deserve to be without any return on the theft to which you
(or the government, theoretically with your consent) subjected
you. I am not one of those.
However, I will NOT be taken advantage of, not without protest.
The SS system MUST be ended. While cold turkey would be
effective, it would be brutal to all those who planned on
living off the young people's wages. I'm not heartless.
My proposal for its end does indeed allow for the continuance
of payments to those who would be completely impoverished
without it. Essentially, its like this: The employee contributions
no longer go to FICA, but instead directly to PRIVATE
Individual Retirement Accounts (essentially IRAs, but with
some additional provisions, like the purchase of disability
insurance thrown in. This is what Chile has). The employer
contributions are used to pay out the existing level of
benefits to currently retired folks, with those levels
scaled down over time to people who are still paying in,
eventually to be eliminated altogether. Moreover, the
employer contributions cease at that time. Finally, the
payouts from the employer contributions get means-tested -
no payments to the wealthy (I know - effectively it penalizes
those who did adequately prepare for their own retirement --
but whether they prepared or not, they really have no right
to demand money from the young and working, so it is not
a punishment to the wealthy as much as its a bone for
the poor). (Actually, I'd make the employer contributions
smaller immediately, and possibly increase the mandated
employee retirement savings - the better to make sure
that current workers prepare for their own retirement).
There would be strict time-limit for the elimination
of the payouts and employer contributions. Finally, the
entire thing would be immediately OUTSIDE the federal
budget, with no possibility for the use of any surplus
to hide the federal defecit. Any surplus is used to
purchase treasury securities (as now, but the purchased
securities DO count towards the debt, unlike now). And
with no possibility for increases in the appropriated
money - only for decreases. The entire thing would have
to be gone within, say, 20 years, leaving only private
IRA accounts.
The Democrats have controlled Congress for most of this 40 year
period. I suggest that anyone who's considering letting
government control health care review what's happened to Social
Security. Unlike the comment above that "The Democrats know
that, this way, they can get old voters' support", the Democrats
cannot count on my vote...
I just got a letter from Senator Moynihan, the self-avowed
watchdog of the Social Security trust fund. In it, he
proudly proclaimed that the system will be liquid until
2029. Oddly enough, it will be bankrupt, even by his
standards, before I am old enough to qualify.
And his projections are very optimistic. The projection
by the rest of congress (their commission on entitlement
reform) said it would be bankrupt in 2010.
I hate to be the bearer of sad news. I'm sorry. You
were duped. Social Security as we've built it is
inherently unsustainable. Pay-as-you-go (meaning that
current payers' money goes to current recipients and
theoretially recieve future payers money later) has been
discredited completely.
Social Security MUST be eliminated. Individual, PRIVATE
investments are the only sustainable way. The only
difficult thing about this is how do we engineer the
transition. Not "should we?". It is "how do we?"
The first step is getting some elected officials honest
enough to admit the utter failure of the current system.
Moynihan still claims it is the most successful social
program ever. Of course he does. He's got a six-figure
pension coming from the taxpayers, and he'll retire well
before SS goes belly up. On MY hard earned money.
--D
David Meyers
I should have said, "the generation after will have to provide the goods and
services...." The age demographics will be the same independent of retirement.
Those who work ALWAYS provide goods and services to those
who don't regardless of their ages. It just happens that
more young people work and more old people don't. This
is completely irrelevant.
The discussion is about the source of the funding for
the goods and services that the non-working use. In
one case, it is the return on privately chosen investment.
In the other case, it is the transfer of income from
the working to the non-working. I think the first method,
through investment, is a good thing. The second method,
even though it is what we presently use, is immoral.
|> Forget privatization, we
|> need to eliminate it completely. Now before you hypersensitive ones
The system of privatization which would be favored,
I think, would be one like Chile, wherein there is
no "social security system". There are simply several
mutual-funds (well, with some minor differences), and
people simply have to put some of their income into
their retirement fund accounts. You could call this
system a privatization of the SS system, or you could
call it the elimination of it. Essentially, it makes
no difference. As long as the government doesn't have
control of your retirement funds, that is.
Not everyone will be able to provide for their own retirement. What do you
propose be done with people who cannot provide for their own retirement?
How about those who could have but didn't?
Not everyone can provide for their own food or shelter
when they are young either.
The AGE of the person is irrelevant. Welfare is welfare.
If you want a WELFARE system, fine. But to set up a
welfare system and call it a pension fund is fraud.
If everyone put 10% of their income into an IRA (and
got appropriate tax deductions, which would make it
about the same as the current out-of-pocket 7+%),
even assuming conservative investments, they'd come
out with a healthy retirement fund. Those who are
not so saving, are also those who are not working now.
How are they supporting themselves now?
If they are on welfare now, I suppose they'll be on
welfare when they get old, too. Entitlements for
those who are poor and starving and unable to work
are a completely separate discussion from Social
Security.
--D
--
dme...@panix.com
David Meyers
dme...@panix.com (David Meyers) writes:
>Moynihan still claims it is the most successful social
>program ever. Of course he does. He's got a six-figure
>pension coming from the taxpayers, and he'll retire well
>before SS goes belly up. On MY hard earned money.
it arguably was the most successful social program, but not as a
retirement program. When it came into effect, the elderly had the
highest poverty rate of any age category, now I suspect they are close to
the lowest. SS is and always was a welfare program, just dressed up to
gain middle class support.
Sure it is successful. If you define success as taking
a substantial part of the income from those who are
working and transfering it to those who are not. Oddly
enough, those who are not working, but getting money from
those who are suddenly have the lowest poverty rate of any
age category. They are also the same age category who
have the highest rate of homeownership.
And the ones who are working and paying for these
things are the same ones who cannot afford to buy
homes anymore.
This is good?
As you say, SS is and always was a welfare program. Since
it is, the discussion of it needs to be on the true terms.
Moynihan, in particular, screams loudly that it is NOT
welfare, nor an entitlement, and that it is a separate
and distinct trust fund, which will provide income to those
who worked and put money in. Entitlements have no such
requirement that the recipients previously contributed.
Decide which it is, and discuss it on the terms of what
you've figured out. Is it welfare? If so, then the lie
about a "trust fund" needs to be eliminated. And real,
hard means-tests need to be employed. And the separate
taxation for it needs to be eliminated. Is it a retirement
fund? If so, then it simply needs to be privatized
altogether into IRAs.
--D
Gary L. Dare
: ": Whatever the other merits of a voucher-like program, I still dont
: ": see "cost reduction" a likely result of implmening such a system.
: "Besides our having a less litigious society up north, with little in
: "the way of defensive medicine and its effects like too many MRI's ...
: Problem: per capita medical care costs have risen at essentially
: the same rate in Canada as in the US, since Canada implemented
: socialized medicine.
The Canadian "system" is not a public HMO like Britain's and the
various provincial implementations have taken various forms. The
medical sector remains private. Right now, implementations range
from fairly restrictive PPO's in the Atlantic provinces and now in
Ontario, and looser ones elsewhere especially in the emerging (or
rather, RETURNING) voucher approach of Alberta's (i.e., floating
rates, not PPO, and broader private supplementary coverage to get
back price feedback).
: Problem: availability of medical care in Canada has *not* kept
: pace with the US, and in the last decade has been declining in
: some important areas. For example, Canada has both longer
: average hospital stays and fewer hospital beds per capita,
Those are not problems ... longer hospital stays mean that Canadians
are not getting rushed out due to health insurance co. or HMO policy
dictated by accountants. Canadian metro areas are not large by U.S.
standards; the PROVINCE of Quebec has fewer people than metro Chicago.
Many hospital beds have disappeared because the Conservatives cut back
on "operating grants" (corporate welfare) and the market says that all
those extra beds were not needed, just pork.
gld
--
~~~~~~~~~~~~~~~~~~~~~~~ Je me souviens ~~~~~~~~~~~~~~~~~~~~~~~~~~
Gary L. Dare g...@prairienet.org
"Support NAFTA - Eat Mexican!" uk...@freenet.victoria.bc.ca
(El Teddy's ad, NYC) (formerly g...@columbia.edu)
Gary Forbis
|> In article <3k2age$3...@nntp3.u.washington.edu> for...@cac.washington.edu (Gary Forbis ) writes:
|> >I hate to break it to those wishing to privatize Social Security, but...
|> >Private plans are no more secure than Social Security. In either case the
|> >generation after will have to pay for the benefits. Maybe some ways makes
|> >some feel more comfy than others--the effects are the same.
|> >
|> >--gary for...@u.washington.edu
|>
|>
|> But the generation after wouldn't have to pay for squat if individuals
|> were responsible for their own retirement.
I should have said, "the generation after will have to provide the goods and
services...." The age demographics will be the same independent of retirement.
|> Forget privatization, we
|> need to eliminate it completely. Now before you hypersensitive ones
|> out there accuse me of hatred for the elderly. . .
|> A phase out of SS would have to be slow. I don't have a problem with that.
|> It should begin soon, however, because the situation isn't going to
|> cure itself. Even if it takes 25 years to get our population (read
|> "addicts") off of this drug, the process needs to start sometime. It
|> is not a proper function of government to provide a retirement plan for
|> it's people. Just say no to SS.
Not everyone will be able to provide for their own retirement. What do you
propose be done with people who cannot provide for their own retirement?
How about those who could have but didn't?
--
--gary for...@u.washington.edu
Alan Bomberger
>I hate to break it to those wishing to privatize Social Security, but...
>Private plans are no more secure than Social Security. In either case the
>generation after will have to pay for the benefits. Maybe some ways makes
>some feel more comfy than others--the effects are the same.
Why don't you finish your education before showing your ignorance.
Private annuities are well thought out. If they weren't the companies
would fail. They are not ponzi schemes, that is illegal (except when
the government does it). You buy an annuity and the company pays you
a fixed amount for your life. They know how to do that. They make
money doing it.
--
Alan Bomberger | (408)-992-2748 | al...@oes.amdahl.com
Amdahl Corporation | Opinions are free, worth it, and not Amdahl's
It is seldom that liberty of any kind is lost all at once. - David Hume
Gary Forbis
In article <alan.79...@amdahl.com>, al...@oes.amdahl.com (Alan Bomberger) writes:
|> for...@cac.washington.edu (Gary Forbis ) writes:
|>
|> >I hate to break it to those wishing to privatize Social Security, but...
|>
|> >Private plans are no more secure than Social Security. In either case the
|> >generation after will have to pay for the benefits. Maybe some ways makes
|> >some feel more comfy than others--the effects are the same.
|>
|> Why don't you finish your education before showing your ignorance.
|>
|> Private annuities are well thought out. If they weren't the companies
|> would fail. They are not ponzi schemes, that is illegal (except when
|> the government does it). You buy an annuity and the company pays you
|> a fixed amount for your life. They know how to do that. They make
|> money doing it.
I was under the impression that part of the last minute negotiation of the
gatt bill involved the government absorbing some retirement plans. I'm just
starting to get acquainted with my government and don't have much knowledge
about such matters. It looks like Thomas has the text of bills of the 103rd
congress so I looked out there to see what I could see. Well, I don't know
exactly what I'm reading here, but here's part of what I found:
3>SEC. 769. SPECIAL FUNDING RULES FOR CERTAIN PLANS.
(a) Funding Rules Not To Apply to Certain Plans: Any changes made by
this Act to section 412 of the Internal Revenue Code of 1986 or
to part 3 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 shall not apply to--
(1) a plan which is, on the date of enactment of this Act, subject
to a restoration payment schedule order issued by the Pension
Benefit Guaranty Corporation that meets the requirements of
section 1.412(c)(1)-3 of the Treasury Regulations, or
(2) a plan established by an affected air carrier (as defined
under section 4001(a)(14)(C)(ii)(I) of such Act) and assumed by a
new plan sponsor pursuant to the terms of a written agreement with
the Pension Benefit Guaranty Corporation dated January 5, 1993,
and approved by the United States Bankruptcy Court for the
District of Delaware on December 30, 1992.
Now, I didn't know PBGC existed and I don't know its relationship to the
federal government.
One of my fellow workers had the unfortunate experience of working for a
company that controlled the workers retirement funds (or so I believe) and
when the company went under so did the retirement fund. So it goes.
Is there any assurance that retirement plans aren't built on a house of cards?
Maybe I'm too darn fiscally conservative for my own good. I worry about the
coming time when lots of people will be pulling funds out of their savings
to pay for monthly expenses. Maybe some nice economist can explain to me
why this won't have a substantial effect on the markets. I'd also like to
know why all these forty-something boomers attempting to save for their
retirement isn't affecting the market right now.
--
--gary for...@u.washington.edu
Gary Forbis
|> In article <3k34us$a...@nntp3.u.washington.edu> for...@cac.washington.edu (Gary Forbis ) writes:
|> >Not everyone will be able to provide for their own retirement. What do you
|> >propose be done with people who cannot provide for their own retirement?
|> >How about those who could have but didn't?
|> >
|>
|>
|> Your second question is certainly more applicable than your first.
|> Virtually anyone can provide for their own retirement. There really
|> are very few legitimate excuses for not doing so. I make about $750
|> per month to support myself in grad school. Very few people out in
|> the "working world" have a paycheck that small. Even with this small
|> paycheck, I manage to save about $700 per quarter for tuition. Anybody
|> in the "working world" can save 10% of their income for a 401K or
|> something similar.
I guess you're right. I'm wondering how you came to afford grad school.
How much are expenses a month anyhow?
In 1979 I was making $650. 10% would be $65. Now let me see. What would
that $65 be worth today at a 5% annual rate of growth? (I'm not sure people
can expect to beat inflation by 5%. I think many don't even meet inflation.)
Now let's say that I want to take $650 a month in retirement and I don't
want to touch my principle. How many years would I have to save assuming
no inflation and 5% annual return on investment?
I'm making more that $650 now, but that won't affect the amount saved then.
[text deleted]
|> Therefore, if someone could have provided a
|> personal retirement plan but didn't, I guess he/she will have to
|> continue working. That is the choice that he/she made. Big daddy
|> (government) can't be expected to cover all of our stupid choices with
|> a fluffy safety net.
Well, I hope you never made or ever will make any stupid choices. I hope
you never have a recoverable expensive illness. I hope everything turns out
rosy.
I know I've made some stupid choices. Heck I'm still paying for a mistake
I made fifteen years ago (no, not a kid.) I'll still be paying 10 years from
now, that'll give me a little over 10 years to build that nice little nest
egg for my retirement. Sure I could walk away from a mistake I made in my
late twenties but that would just make it someone elses problem.
--
--gary for...@u.washington.edu
Amit P. Rege
: In article <D55rz...@world.std.com>, Karl Wee <win...@world.std.com> wrote:
: >I don't have the exact numbers. My hunch is that it won't be able to
: >pay the IOU's. Anyway, even paying all the IOUs won't be enough, as
: >each person is "entitled" to much more than he put in. What a system....
Richard Foy (rf...@netcom.com) wrote:
: The Cato Institute, I believe a libertarian think tank, says this
: isn't true. For infromation from a study they did on this subject
: see URL:
: ftp://ftp.netcom.com/pub/rf/rfoy/socialsec.html
I read your collection of previous newsposts on your home-page.
It is hard to figure out what you are saying.
I will try to state a few points which I gathered and comment on them.
1. In the quoted para above, you say that today the government does
not promise people a good return. This is true for anybody paying
into the system today...
2. But then, in your "home-page", you state that "government already
screwed people who are retired today". THAT IS FALSE!
They got above-market returns for the pittance they paid into the
system. Look at the graph in today's Time magazine article (Mar 13,
page 29) The payments INTO the system shows clearly that it is a
pyramid scheme. Early "exitees" of a pyramid scheme are paid off
handsomely.
Yet, you oppose lowering anybody's benefits, from the mistaken belief
that they got LOW returns. There should be some relationship
between what they paid into it, and what they get out.
However, I oppose lowering current retiree benefits EXCEPT through
means-testing, restricting payments for people who earn far more than
their Social Security payments. We will have to give people time to
adjust.
MY FOCUS is on lowering our taxes into the system. Those taxes are
killing our ability to save for the future. A "solution" that calls
for raising those taxes is NO SOLUTION in my book.
- Amit
--
Amit P. Rege | Rege Systems,
e-mail: amit...@netcom.com | Fremont, CA 94538-4161
At the OTHER end of every government program is a tired taxpayer!