15-01-2005 03:46									#61
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Wall Street isn't too hot on it. They were wanting a system like the Brits have, where the Wall Streeters would get substantial fees. But the Thrift Savings Plan wouldn't benefit them much at all (indeed, it might hurt them marginally), so they have cooled on it.

	15-01-2005 03:50									#62
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quote: We can just as well take them out of the general fund.

The problem with that proposal is that Social Security benefits are tied to the amount in taxes that you pay into the system. Paying benefits through the general fund would fundamentally alter the nature of the system.

	15-01-2005 03:54									#63
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quote: Originally posted by DanS The problem with that proposal is that Social Security benefits are tied to the amount in taxes that you pay into the system. Paying benefits through the general fund would fundamentally alter the nature of the system.

The amount you get from the system and how much you put in have not been in sync for decades- the only question has been whether you paid a certain minimum of payroll taxes, and if you did, you get the benefit. using general funds to avoid cuts in benefits, or having to raise a regressive tax would be just fine.

	15-01-2005 04:26									#64
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The problem with Social Security, pure and simple, is that you get to collect it at 65, or 62, or even in some cases 60.

It shouldn't work like that. Social Security isn't a pension scheme, nor was it meant to be. It's an insurance scheme, designed to insure that if you don't have much money and are so old that you can't work anymore, you'll get some dough from Uncle Sam. You pay every year, regardless; if you make it to 65, you get to collect, and if you don't you're SOL.

The problem is that, when Social Security was started, making it to 65 -- especially if you were working-class -- was a bet that favored the house. So few men did it that it made SS make sense -- somewhat like fire insurance for homes. Two generations on, however, you have to be deeply unlucky or actively self-destructive not to make it to 65. The bet no longer favors the house. Nobody issues insurance under those conditions.

The solution is to return SS to what it was: insurance against getting old. But "old" needs to be redefined; the definition from the 30's is no longer adequate, and that's what's killing the system.

And if you don't want to work until you're 70 or 75? Then don't buy the SUV, the big-screen TV, the lotto ticket every day, and start saving instead.

	15-01-2005 04:51									#65
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I broadly agree with Rufus. Some of the money saved would just go toward disability instead, however.

Also, while today's new retirees can start drawing at ~ 66 years. I won't be able to draw until about ~ 69.

But all of the points stand.

	15-01-2005 06:41									#66
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I have no problems uping the retirement age: I have said that time and time again. That will save the system, not borropwing trillions of dollars for ideologically driven, economically unproven actions.

	15-01-2005 07:04									#67
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As it happens, the UC census bureau has posted a comparison of the 1930 and 2000 censuses (censi?), which shows that average life expectancy in 1930 was 59.7 years, while in 2000 it was 77.1 years. Obviously, those figures are more useable if you break them down by sex and adjust for the dramatic drop in infant mortality. Nevertheless, you could say that SS was designed to kick in only after you'd lived 8-10% longer than you were expected to. Using those rates, the only people collecting SS now should be 80+ years old. We can afford that.

	15-01-2005 07:35									#68
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	15-01-2005 09:39									#69
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quote: As it happens, the UC census bureau has posted a comparison of the 1930 and 2000 censuses (censi?), which shows that average life expectancy in 1930 was 59.7 years, while in 2000 it was 77.1 years...

What that essentially tells everyone who thinks about it is that Social Security was set up to collect taxes, not to pay benefits... or else why set up a retirement plan when the benefits kick in 6 years after you're dead?

	15-01-2005 09:53									#70
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quote: Originally posted by JohnT quote: As it happens, the UC census bureau has posted a comparison of the 1930 and 2000 censuses (censi?), which shows that average life expectancy in 1930 was 59.7 years, while in 2000 it was 77.1 years... What that essentially tells everyone who thinks about it is that Social Security was set up to collect taxes, not to pay benefits... or else why set up a retirement plan when the benefits kick in 6 years after you're dead?

Because it's not a retirement plan!!!

It's an insurance plan. All insurance plans work on one (or both) of two assumptions:

1) Even if an insurance plan pays out more than was put into it, more people will buy insurance than will ever need it (the logic of fire insurance); or
2) People will pay for the insurance, year after year, and by the time they really need it the company will have profited from investing the interim payments (the logic of term life insurance)

Social Security started as scheme #1. Because it was allowed to mutate into scheme #2, the discussion has long been about how best to grow the money being held until the policy pays off. If it were to return to being a version of scheme #1, that discussion would be moot.

	15-01-2005 10:38									#71
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Well, yeah. But try explaining that to a bunch of people when you propose raising the retirement age to 83.

	15-01-2005 10:39									#72
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quote: Originally posted by DanS Yes. And let's consider the math you did. Right now, the increase needed for long-term solvency would be about $50 billion per annum. But consider that at least roughly half of the income you quoted is not subject to payroll taxes at all, since payroll taxes top out at $90,000 in income. $50 billion on $2.5 trillion is in the 2% range, not the 1% range that you quoted. Since social security payroll taxes are 12.4% of the first $90,000 in income, a 2 percentage point increase represents a 15% increase in the payroll taxes. Then consider that this assumes that we fix the problem right now and start pre-paying 2 percentage points additional in payroll taxes in order to just stay above water (i.e., nobody's going to be getting any additional benefit). If we put off fixing social security, and end up with the same system that we have now, we will have to pay very roughly 4 percentage points in additional taxes starting in 35 years -- a 30% increase in the payroll taxes. (Even if you pre-payed the 2 percentage point increase, in 70 years people still would be paying 4 percentage points extra). Then let's discuss the extra $1.5 trillion that is shown as "funded." Let's face it, this money has been spent by the congress (or more accurately, it already offsets money that has been spent by the congress). It's not coming back. So in addition to the 4 percentage point increase, you have a 1.5 percentage point increase to make this program sustainable. Adding it all up, we're talking about a 45% increase in payroll taxes, to a total of 18%. Increasing payroll taxes is a bad idea. It's a regressive tax. Progressives should be apalled at the prospect of an increase in this tax. Further, research shows that a smaller portion of our population will choose to work as taxes increase. This will just exaccerbate the problem of fewer people supporting more retirees.

This is compelling to me.

quote: It's an insurance plan. All insurance plans work on one (or both) of two assumptions: 1) Even if an insurance plan pays out more than was put into it, more people will buy insurance than will ever need it (the logic of fire insurance)

I'm not working until I'm 83...period.

quote: 2) People will pay for the insurance, year after year, and by the time they really need it the company will have profited from investing the interim payments (the logic of term life insurance)

With the stock market showing an average yearly return of nearly 12% for the last 70 years and with the security of investing in Government backed bonds, The privitization is beginning to sound pretty good.

	15-01-2005 10:55									#73
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quote: Well, yeah. But try explaining that to a bunch of people when you propose raising the retirement age to 83.

Yes, well, that is the real issue.

quote: I'm not working until I'm 83...period.

Good on you. The question is, is retiring a right or a privledge? Under the original SS, it was assumed that you'd work 'til you drop. We've since seemed to create something like a "right to retire." Should there be such a thing?

	15-01-2005 11:04									#74
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quote: Social Security started as scheme #1.

Actually, I disagree with this. While it has been over a decade since SS was my favorite hot-button topic, I drew the conclusion from my readings that SS was nothing more than a means to raise taxes during the Depression by way of duping the populace that there will be a benefit to each of them individually.

	15-01-2005 11:18									#75
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One thing is certain; if young people divert funds to personal accounts the old people still have to be paid. Since less money will be coming in but more money will be going out the general fund will have to start paying for most of social security almost immediately after privatization occurs. You think we have deficit problems now and that the dollar is sinking to fast? Just wait until the financial markets see the size of Bush's new post SS deficits.

	15-01-2005 12:10									#76
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Social Security was meant to, and still does, mean assuring an income to people once paychekcs no longer come in, an assurance citizens did NOT have prior to its inception. For 60 years it has worked, and the complaints against it are primarilly ideological.

It is a social entitlement- it is society saying, even when old, we will give you enough not to starve or drop dead. Its not about making people rich at the end of life- you won't be rich of Social Security, but you will have something.

People are free, always have been, to save the income they do get however they wanted- each and every American making above 30,000 coupld probably afford to sneak away $100 a month in a money market account- no one has stopped the American people. The fact people DONT, the fact so many live of social security should be more than opbvious that most people will not get involved in stock speculation.

This board has a few great falings, few women, few elderly, so a bunch of young or middle aged white men (cause non-whites here too are a minority) go off shooting their mouths, and for all the intellect present (cause this group is very smart), it can still be filled with so much nonsense.

	15-01-2005 12:19									#77
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quote: Originally posted by GePap Social Security was meant to, and still does, mean assuring an income to people once paychekcs no longer come in, an assurance citizens did NOT have prior to its inception.

If that's the case why was the retirement age set at 65 when the average life expectancy was 59.7 years?

	15-01-2005 12:39									#78
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The fact remains that we've turned social security into a right without ever having a conversation about that. And it leads to some pretty questionable scenarios.

Consider: if all goes as plans, I'll be retiring in 23 years. I'll be getting a government pension (appox. 1/3 of the highest of my last 3 annual salaries) and should have $750,000-$1,000,000 (in current $) salted away in my government and TIAA retirement accounts. In short, I'll be fine.

So why on earth should I collect social security? Why on earth should hard-working taxpayers contribute to my greens fees? They shouldn't -- yet they will, because neither pensions nor investment income are taken into account when considering reduction of a SS recipient's "income."

So one problem is that people like me will end up collecting social security. A second, related problem is that there are too few people like me -- that is, people saving for retirement -- precisely because everybody's counting on social security. (We're the richest country in the world, and we have one of the lowest savings rates. That's the crisis.)

We'd all be best off is social security was returned to being what it was sopposed to be: a last-ditch source of support for the very old who have no other means. But I suppose that genie's long fled his bottle.

	15-01-2005 13:45									#79
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quote: One thing is certain; if young people divert funds to personal accounts the old people still have to be paid. Since less money will be coming in but more money will be going out the general fund will have to start paying for most of social security almost immediately after privatization occurs. You think we have deficit problems now and that the dollar is sinking to fast? Just wait until the financial markets see the size of Bush's new post SS deficits.

As has been pointed out by the WaPo editors, among others, it shouldn't matter a whit to the markets whether the liability is recognized on the general fund's books or Social Security's books. They are identical obligations from a financial perspective (inasmuch as Social Security benefits are going to be paid as promised).

	15-01-2005 13:56									#80
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But you and I both know that with in a short time deficits will have to be cut and so SS is likely to be cut as it will be the single largest expenditure. Why break a system that is currently functioning?

Like Rufus said there are ways to strengthen the system without destroying the promise made to needy elderly people. Meanings testing is a great way to save money by not sending checks to millionares and passing laws requiring Congress to stop stealing from the Social Security Trust Fund would also help.

	15-01-2005 13:59									#81
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quote: Originally posted by Oerdin SS is actually in pretty good shape and only modest barrowing will be needed to keep it solvent through 2060. If we allow enough immigrants in then no borrowing would be needed at all. Bush is willing to spend trillions on deficits for pet programs but he won't cut qanything to save social security? Why is it he wants to spend two to three times the cost of protecting social security to privitize it?

	15-01-2005 18:21									#82
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quote: passing laws requiring Congress to stop stealing from the Social Security Trust Fund would also help.

FYI: There is no Social Security trust fund.

	15-01-2005 21:33									#83
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The New York Times Magazine had an excellent article today, which will be online tommorrow and I will post a link to tommorrow that deals with a LOT of these issues, and also gives a history of the politics.

SS was supposed to be a RIGHT- it was a social pensions scheme, after all, and has done great wonders in ending senior poverty.

Interestingly enough, SS actuaries have always had to look 75 years ahead to look at the solvency of the system- you guys know what? In 1934, at a time that the % of Americans over 65 was around 5% (these are figures from the article which wI will link to tommorrow), Social Security actuaries forcast that in 2000 12.65% of the population would be over 65 years. They were abit above, since the actual figure was
12.49%. The men who put this program together KNEW what was coming, it was no surprise to them. That they made a system that lasted that long and whethered all storms and the same endless and constant bull from its ideological enemies (and every arguement made today was made 65 years ago, the tune has never changed) is incredible.

	15-01-2005 21:36									#84
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quote: Originally posted by JohnT quote: passing laws requiring Congress to stop stealing from the Social Security Trust Fund would also help. FYI: There is no Social Security trust fund.

Wrong, yes there is, to the tune of 1.5 Trillion dollars. UNless of course you think the US Treasury will default on 1.5 Trillion dollars of US Treasuries. Yeah, that would do wonders to the overall Treasuries market-show how trustworthy the US government is.

Or are you saying that future congresses will allow the US to default on lasrge portions of our own obliugations? Wow, I didn't know conservatives are so untrustworthy. I know never to lend money to you JohnT- i'll never get it back.

	15-01-2005 21:41									#85
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quote: Originally posted by Rufus T. Firefly So one problem is that people like me will end up collecting social security. A second, related problem is that there are too few people like me -- that is, people saving for retirement -- precisely because everybody's counting on social security. (We're the richest country in the world, and we have one of the lowest savings rates. That's the crisis.) We'd all be best off is social security was returned to being what it was sopposed to be: a last-ditch source of support for the very old who have no other means. But I suppose that genie's long fled his bottle.

SS was never a "last resort" as you mention.

States in Europe and Japan do have public pensions, AND higher rates of savings than the US. Our miniscule savings rate has nothing to do with SS- without social security, many elderly, (heck, a good portion) would be on welfare programs-that Americans don't save is a cultural issue- we encourage spending and consuming, not saving. Fast, cheap, easy credit has far more to do with our palrty savings rate than Social Security.

	15-01-2005 21:43									#86
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quote: Wrong, yes there is, to the tune of 1.5 Trillion dollars. UNless of course you think the US Treasury will default on 1.5 Trillion dollars of US Treasuries. Yeah, that would do wonders to the overall Treasuries market-show how trustworthy the US government is. Or are you saying that future congresses will allow the US to default on lasrge portions of our own obliugations? Wow, I didn't know conservatives are so untrustworthy. I know never to lend money to you JohnT- i'll never get it back.

Please, no need to get personal.

However, there is quite a bit of difference between a "trust fund" and 1.5 trillion in government debt. If you don't think so, well, that's your mistake... not mine.

	15-01-2005 21:56									#87
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The debt is the government's debt, NOT Social Security. Would you claim that the Japanese and Chinese have nothing in the bank because all they are holding are US Treasuries (aka, Debt?), and not cash itself?

It makes 0 economic sense to say that 1.5 Trillion in US Treasuries is meaningless unless you expect the US to default, whcih would cause FAR greater problems than just with SS. Do you forsee the US defaulting? Do you know of some dark, economic problem the rest of us don;t know about?

	15-01-2005 22:00									#88
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Millions of Americans own US Treasuries- are you claiming they have nothing, since all they own is government debt?

I am still at a loss of why anyone ever claims that US Treasuries don't matter, that they are ephemeral- is the Bond market just a fantasy???? When did the US start issuing junk bonds?

	15-01-2005 22:12									#89
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quote: Originally posted by DanS Wall Street isn't too hot on it. They were wanting a system like the Brits have, where the Wall Streeters would get substantial fees.

Which is why, eventually, this is the system we will have. Once the door is opened to privitisation, Wall Street will lobby the hell out of Congress to get their hands on it, and sooner or later (probably sooner), you Republicans will give it to them.

quote: quote: We can just as well take them out of the general fund. Paying benefits through the general fund would fundamentally alter the nature of the system.

So what?

	15-01-2005 22:24									#90
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quote: Originally posted by PLATO With the stock market showing an average yearly return of nearly 12% for the last 70 years and with the security of investing in Government backed bonds, The privitization is beginning to sound pretty good.

That's not true. At best, as el freako has showed, the actual return on investment from the stock market has been below 5%. You're better off investing in your home as a retirement plan than putting it in the market. Consider, though, that there will eventually be a housing market crash, since you're going to have more supply than demand as all these aging boomers want to sell off their homes and move to Boca Raton. Those of us in the Sun Belt will be fine, though.