A model for Social Security reform

[Tikker]

No you should have said:

"I make enough money that I don't give a fuck whether or not it's a problem for anyone else, yet I'll make sweeping generalizations based on my own personal financial situation"

[Langston]

Have you even looked at the people who are the leadership in the CBO? Go click on their bio's... you'll see a common thread. You come back and tell me what you discover.

Yes, the CBO is a shit source for this information. It's sole purpose right now is to debunk the President's proposals - not only on Social Security, but on his entire economic plan.

I sincerely hope you don't believe that the CBO is non-partisan.... I sincerely hope...

[Rust]

Have you even looked at the people who are the leadership in the CBO? Go click on their bio's... you'll see a common thread. You come back and tell me what you discover.

Yes, the CBO is a shit source for this information. It's sole purpose right now is to debunk the President's proposals - not only on Social Security, but on his entire economic plan.

I sincerely hope you don't believe that the CBO is non-partisan.... I sincerely hope...

Fine. The SSA Trustees say 2042 and 73% of benefits, instead of 2052 and 80%. Not a vast difference, but a difference.

--R.

[Langston]

As of March 2004, the CBO estimated that Social Security would be able to pay out 100% of benefits until 2052, and then 80% of benefits thereafter.

Maybe you could clarify what you meant by 'insolvent', since normally one would think 'insolvent' would mean 'broke' or something.

--D.

I'm going to play your game this time, Rust. I'll use your source for the argument. Did you happen to read and actually UNDERSTAND the report?

The only way that the program will remain solvent past 2019 is if there are increases to the tax rate, the age of retirement, the cap on taxed income, or a reduction of benefits. You claim that it's good through 2052 - and the report tries to portray that... HOWEVER, the trust funds that they speak of that will fund the program shortfall from 2019 through 2052 are the funds that Congress has taken and pillaged for their own uses. These are IOUs. For Social Security to remain solvent beyond 2019, Congress is going to have to not only stop taking money from the Social Security pool - but start giving some BACK.

That isn't going to happen.

If THAT is what you're trying to say is going to save Social Security, and THAT is why you're saying that a new program shouldn't be designed, built, and implemented, then you are naive and you are wrong. Period.

[Rust]

No you should have said:

"I make enough money that I don't give a fuck whether or not it's a problem for anyone else, yet I'll make sweeping generalizations based on my own personal financial situation"

If you're as hard up as you claim, don't worry. People like me will make sure you'll have OAS to keep you from starving when you're old and poor.

--R.

[Rust]

If THAT is what you're trying to say is going to save Social Security, and THAT is why you're saying that a new program shouldn't be designed, built, and implemented, then you are naive and you are wrong. Period.

Goodness no, make SS solvent. It's the only sane thing to do.

Just don't claim Personal Accounts has anything to do with solvency. They don't. In fact they'll likely be another huge source of debt on top of making SS solvent, as currently proposed.

--R.

[Langston]

So you're admiting that, just like the CBO, that your whole basis for saying that SS will be "fine" till 2052 is that the Trust funds will be repaid by Congress?

[Rust]

So you're admiting that, just like the CBO, that your whole basis for saying that SS will be "fine" till 2052 is that the Trust funds will be repaid by Congress?

Well, the SSA holds US government securities. Unless the US government intends to default on them, they'll have to issue debt to replace them, or pay for it out of general revenues. But the Trust Fund won't be insolvent, and under the law, benefits will continue to be paid.

In return, are we agreed that Personal Accounts do nothing to solve the solvency issue?

--R.

[Langston]

In the short term they won't fix the solvency issue - but in the long term, they certainly do. There will have to be a "phase in" - which is known to everyone, including Bush.

What's your point?

[Rust]

In the short term they won't fix the solvency issue - but in the long term, they certainly do. There will have to be a "phase in" - which is known to everyone, including Bush.

What's your point?

Could you point me to the model that shows how Personal Accounts reduce costs to the plan over time please?

How much will the 'phase in' cost, and in what time frame?

--R.

[Diekan]

Yeah Ugzugz post your fucking sources!

--D. 'still e-cool'

[Langston]

What's your point?

[Rust]

What's your point?

The point is nobody is claiming that personal accounts will reduce costs. Not even the White House. So why are you?

From http://www.whitehouse.gov:

President Bush has pledged to work with Congress to find the most effective combination of reforms. He will listen to any good idea that does not include raising payroll taxes.

* Fixing Social Security permanently requires a candid review of the options.
* Over the years, many people from both parties have offered suggestions such as limiting benefits for wealthy retirees, indexing benefits to prices, instead of wages; increasing the retirement age; or changing the benefit formula to create disincentives for early retirement. All of these options are on the table.

As we fix Social Security, we must make it a better deal for our younger workers by allowing them to put part of their payroll taxes in personal retirement accounts.

* Personal accounts would be entirely voluntary.
* The money would go into a conservative mix of bond and stock funds that would have the opportunity to earn a higher rate of return than anything the current system could provide.
* A young person who earns an average of $35,000 a year over his or her career would have nearly a quarter million dollars saved in his or her own account upon retirement.
* That savings would provide a nest egg to supplement that worker’s traditional Social Security check, or to pass on to his or her children.
* Best of all, it would replace the empty promises of the current system with real assets of ownership.

The argument for personal accounts is 'you get to keep whatever you make over your base benefits', not that it somehow reduces costs, since every dollar put into personal accounts is one less dollar into the general fund. I was wondering where you got the idea it would reduce costs?

--R.

[Rust]

Yeah Ugzugz post your fucking sources!

--D. 'still e-cool'

We're actually having a reasonably polite discussion of the issues here. Why don't you take your own avatar's advice and "shut the fuck up", if you're not up to following along, okay?

--R.

[Diekan]

Yeah Ugzugz post your fucking sources!

--D. 'still e-cool'

We're actually having a reasonably polite discussion of the issues here. Why don't you take your own avatar's advice and "shut the fuck up", if you're not up to following along, okay?

--R.

Post your fucking source! k?

[Tikker]

No you should have said:

"I make enough money that I don't give a fuck whether or not it's a problem for anyone else, yet I'll make sweeping generalizations based on my own personal financial situation"

If you're as hard up as you claim, don't worry. People like me will make sure you'll have OAS to keep you from starving when you're old and poor.

--R.

I don't know if you're really this dumb, or you're just pretending

let me say it again


IT'S NOT ABOUT WHEN YOU AND I ARE AT RETIREMENT AGE THAT THERE'S GOING TO BE A PROBLEM. IT'S WHEN THE BABY BOOMERS ALL RETIRE, AND THE NUMBER OF PEOPLE DRAWING FROM OAP VASTLY OUTNUMBER THOSE CONTRIBUTING

[Diekan]

Raising the age would go a long way to helping the problem, especially since life expectancy is longer, but you can bet the geezers won't go for that.

That's actually not a bad idea, over all. The current retirement age is what, 65? When that age was set the average American wasn't living longer past 67 or so. Thus, the payout only lasted a couple of years, if the beneficary made it to 65 at all. As we've increased our life expectancy by over 20 years, but we haven't raised the age of retirement.

On the flip side, however, how do the younger people find work? When you have a combination of technology (everything from robotics to more self-sufficient software), out sourcing and a mass influx of illegals taking over the lower echelon jobs all working in concert to eliminate jobs across the board - what's going to happen if the age of retirement is raised?

So, now not only do the current jobs we have to select from pay shit for wages / salaries in comparison to the cost of living, but said jobs are becoming far and few in-between.

Obviously, the largest issue with this problem is in the number of people who are looking forward to collecting benefits. Well, if BOTH members of a household didn't have to work to survive the number or recipients wouldn't be quite as high and the amount of money having to be paid out wouldn't be as high.

40 years ago (give or take) if you had 2000 "households" only one member needed to work to support said household. Which ultimately meant that when that individual retired only one SS check would need to have been cut (2000 checks being cut). Now, it takes TWO members of a household to work, which ultimately means two SS checks are going to have to be cut (4000 checks). So, rather than the goverment paying out say... 1500 dollars per month to a single household, it's now paying out 3000 dollars to a household.

Not sure if I'm making my point clearly...

When wages are sufficient to cover the costs of living both members of a household aren't required to work - which does two things... A. It creates more jobs - becuase if *mom* or *dad* is making enough to support the family - the other parent/partner can "stay home with the kids" which means they're not sucking up a job in the overall workforce. B. It reduces the amount of money being paid out to an individual household at retirement time. Rather than both *mom* and *dad* collecting a SS check at 65 (double dipping), only ONE is collecting a check.

I think we could solve *some* of the problem if we'd lower our cost of living, raise our wages, and return to the days when one income was enough for a small family to survive. It would also have a huge impact job market. But, I don't think corporate greed will let that happen.

[Martrae]

If they raise the age now, that won't affect the people that plan to retire and not rely on SS benefits. Also, they have to make it so anyone 55 and older can still expect to retire at 65, but anyone younger than that will have to work more years.

That would still mostly cover the crop of baby boomers and make those jobs available.

[Lyion]

The argument for personal accounts is 'you get to keep whatever you make over your base benefits', not that it somehow reduces costs, since every dollar put into personal accounts is one less dollar into the general fund. I was wondering where you got the idea it would reduce costs?
.

Rust you are arguing about the institutiuon of Social Security. Ugz is talking about the beneficiaries. Big difference.

We're paying a lot of money into Social Security. Right now we recieve a receive a –0.82 percent rate of return.

The goal in personal accounts is to allow people to actually have a nest egg, and to get returns for their cash. The problem is the fear mongering being put forth.

This is a long term fix. Obviously it wouldn't fix costs in the interim, but once implemented it would fix Social Security. This is actually closer to what FDR envisioned when he worked his new deal magic.

We need to raise the retirement age, I agree. We also need personal accounts and to ensure that in the 15 to 20 years from now when Social Security is costing us 100 billion a year, that we'll have a better alternative for use setup. This is the best one I've seen.

What's funny is 10 years ago the Democrats were pushing this plan, and the Republicans were using fear tactics to oppose it. The wheel goes round and round.

[Rust]

The argument for personal accounts is 'you get to keep whatever you make over your base benefits', not that it somehow reduces costs, since every dollar put into personal accounts is one less dollar into the general fund. I was wondering where you got the idea it would reduce costs?
.

Rust you are arguing about the institutiuon of Social Security. Ugz is talking about the beneficiaries. Big difference.

We're paying a lot of money into Social Security. Right now we recieve a receive a –0.82 percent rate of return.

The goal in personal accounts is to allow people to actually have a nest egg, and to get returns for their cash. The problem is the fear mongering being put forth.

This is a long term fix. Obviously it wouldn't fix costs in the interim, but once implemented it would fix Social Security. This is actually closer to what FDR envisioned when he worked his new deal magic.

Lyion, I'm just not seeing data that personal accounts reduce overall costs of the plan. There may be versions of them that would reduce costs, but the basic outline put out the White House is that they're an 'add on' to make saving more attractive, not a mechanism to save money.

We need to raise the retirement age, I agree. We also need personal accounts and to ensure that in the 15 to 20 years from now when Social Security is costing us 100 billion a year, that we'll have a better alternative for use setup. This is the best one I've seen.

What's funny is 10 years ago the Democrats were pushing this plan, and the Republicans were using fear tactics to oppose it. The wheel goes round and round.

To me, there's two issues: one is to fix the insolvency issue, the second is to consider if personal accounts are something people want. I really see them as two different issues. The costs of transition funding or financing for personal accounts is not small, and that money could maybe be more wisely used to actually fix the insolvency issue instead.

We went through this in 1997 with the Canada Pension Plan - at the time rates were 5.5% or so and the actuaries of the plan pointed out that rates would climb to 10.1% or more by 2012 or so and then on up to 14.2% or more. So the government raised the rates from 1997 until 2003 to 9.9% and created an investment board. The 2004 Actuarial report for CPP says the auditors believe it's fully funded through the next 75 years now. The tinkered with some benefit reductions, added some caps to deductions, etc. (OAS is another matter.) The Government has also been reducing debt up here (we run a budget surplus) to set us up to handle the incoming cost crunch as our demographics change.

I hope you guys also manage to work out a decent solution - raise the retirement age a year or so, maybe raise the cap on SS-eligible income, I dunno. There's quite a few options to increase revenues. I would also think splitting SS out of the General Fund would be the best thing, but I don't see that being too damn likely politically.

But again, the way the White House is presenting 'personal accounts' is not as a cost saving measure but as an incentive to save.



--R.

[Mop]

I don't know why we even need to bother reforming social security, in the next 15 years skynets terminators will kill all of us, except for John Connor.

[Lyion]

The White House has also said the door is wide open, but that we should address Social Security right now before its too late.

Give me a better plan than Personal Accounts for morphing Social Security into something worthwhile? The current system is hugely flawed and will be in negative numbers with the upcoming boomer retirement.

I'd love to scrap the whole heap, but the old people who put a few grand into it and vote en masse would send the AARP lawyers after all us young folk who aren't keen on paying for rich people to get even more cash.

[Eziekial]

I don't like Social Security for the simple reason that it is a means for our government to take control over yet another aspect of our lives. Ralph, in his crude and entertaining way, is 100% right. People should be responsible and accountable for thier own retirement. What Ralph fails to mention and what Rust is so eager to point out, is that even if someone falls on bad times for whatever reason, there are plenty of people who would be willing and able to offer assistance. People giving charitably to help their fellow man is something wonderful and praiseworthy. People forcefully taking someone else's possessions to give in the name of charity is neither.

[Langston]

Rust - it's very simple:

Social Security, in it's current form, offers a miserable return on the investment - less than TBills or fixed income funds (I don't have the number readily handy - but it's low single digits - I'm sure you'll look it up anyway). Investment via the private accounts into publicly held interests has proven to return much higher rates - averaging much much higher yields which, when compounded over time (30 years say?), net massive differences in retirement income when the day arrives for someone to stop working and drawing off their account.

Where it costs less is that you invest YOUR money into YOUR account and when you retired you draw YOUR money and it's returns. You aren't funding one person's retirement off another person's current input into the system. The accounts are privately held and are off-limits for Congress to pillage.

There will be substantial transition costs... there's no way around it. There is a "promise" to those who are too far aged to begin the new system that must be kept. Likely the 30-somethings will wind up footing a lot of that bill till those without the new accounts can be "phased out".

The answer to fixing Social Security is not to leave the current system in place and only raise the age or the taxable caps... that's foolishness that only perpetuates the problems. Even FDR knew that these programs would need to be totally revamped at a later date - but Congress hasn't done so. Which leaves us where we are today: Insolvency fast approaching in a program that returns 1/4 (or whatever the real number is) of what the potential investment into a private account could have yielded thus giving retirees less money to live on and no benefits to pass on to heirs.

Our current system is trash. "Tweaking" it just makes it tweaked trash... it doesn't fix it.

[Martrae]

BTW...Social Security isn't secure. They can take it all away in a heartbeat and there's nothing we can do about it.

Social Security (and welfare) basically boils down to giving handouts to the unproductive. If we would quit doing that the US would be in much better shape. Unfortunately, it's handouts like this that fuel the voters, people vote for who will give them the most.