Vote!
Our politicians find it impossible to keep their damned hands off of our money, pure and simple. The money is there, supposedly in a trust fund, but it is simple enough to “borrow” from that trust fund to the point where nothing is left. As to individuals investing in order to fund their retirements, what happens to them when the economy tanks? Ignoring Enron as an anomally, how many people lost the bulk of their investment value as recently as the beginning of GWB’s first term in office? (That doesn’t mean it was GWB’s fault.) Could it be that IF SS is privatized, the Federal Government would be off the hook as to repaying the “borrowed” funds?
But in 1983 they must’ve tried to justify this somehow, even if it was dishonestly and all they were doing was making an excuse to spend it away. When they sat down with all these new revenues from increased payroll tax and said “what’s the best thing to do with all this cash we’ve just raised to keep from going into debt later” the answer “let’s lend it to ourselves” seems not only stupid but bound to make worse the very problem that creating the Trust Fund was meant to mitigate, as we will have to “pay ourselves back” during the sametime that we’re encountering the predicted short falls.
So I guess my question is: does anyone that was not in dipers in '83 remember what the rhetoric surrounding all this money was. To make it relavant to the OP, why didn’t they invest it in the stockmarket then. Maybe the answer to that will tell us whether or not investing money is a good idea now.
It most certainly is true. An arrangement in which the entire system rests upon charging new entrants to get the money owed to incumbent members is the definition of “pyramid scheme”.
These assertions are mutually exclusive. Either the government can change the rules, or it is giving a guarantee.
Lifting the cap won’t do squat – it simply increases the system’s future obligations by a corresponding amount (you pay in more now, you get more later, if the system is run honestly).
No…There has never been a one-to-one correspondence between what you pay and what you get. There is no reason why we would need to alter the payout scheme.
It may be a necessary part of the definition but it is not sufficient. A pyramid scheme usually involves doing this in an unsustainable way and also claiming to people that they will make a lot of money on the scheme. Social security doesn’t claim to make people a lot of money…It is more like buying insurance, i.e., insurance of a certain minimum income in your retirement.
There’s your problem. You, like most of those discussing Social Security policy, want to preserve the viability of the system, as if SS were a thing to be saved for itself; instead of looking at the results of SS & seeing if there’s a better way, or if SS is still serving its purpose.
I don’t give a good god damn whether Social Security as a system survives. I want to know if the poor will be stuck in debt & squalor, & how to remediate that. What seemed like a solution to major problems in the 1930’s may not be the perfect solution in the long term.
There are still elderly & disabled people that can’t support themselves, but now they get a stipend from the government that might keep them going a little better than they did. Of course, a low-level proletarian who’s never saved any money, & was barely able to save any money (& yes, dammit, those people exist, I know them) is going to be relying on Social Security & other forms of public assistance entirely. Social Security alone can’t cut it, so there’s assisted housing & other welfare programs. What there isn’t, for that individual, is any sense of legal responsibility for him on the part of his former employer. SS is assumed to be the pension, even though it can’t possibly be enough.
On the other hand, a retiree who was relatively well-compensated as a worker will continue to be relatively well-compensated, & people who don’t strictly need Social Security draw checks from the government they could do without, because they’re old enough.
And those checks are supposedly paid for by a payroll tax that incentivizes low wages, by treating an employer’s Social Security obligation not as a function of the number of employees on his payroll, not as a function of the company’s gross income, but as a function of how much he pays his employees–a part of overhead that can be minimized by keeping wages low. :eek: Can you say “perverse incentive”?
All these people say vaguely that Social Security needs to be “fixed” in order to survive. I say directly that its funding system needs to be replaced in order to be just. And that is, in a policy sense, the end of Social Security as a program. It should be replaced with a pure needs-based social welfare program, funded in a way that doesn’t depress worker’s wages.
Oh, & the privatizers? They typically keep the idea that this is going to be paid for out of the worker’s trifling wage; they often don’t even realize it’s just another variation on denying the responsibility of business to share profits with its wage-earners. It’s the desperate dance to avoid egalitarian reform.
What do you mean by that, do you mean that employers won’t have to match the 6.2% paid by the employer into SS?
What can Young americans do to stop the AARP?
Simple: murder your parents.
If that’s to extreme just lock the doors to the country kitchen buffet. Worked in
Colorado.
I’ve got little to add to most of the social security agruments. I want to comment on some posters exhortation to vote.
I do believe voting is necessary, and that it is the first step to getting the government to change. However, what the AARP does is twofold: it consolidates votes, and it bankrolls politicians who are likely to support their proposition.
I, personally, am not a member of any voting block. So while I vote and occassionally write my DC and State representatives, I don’t have any weight behind me. When the AARP writes, the implied threat is “do what we say or we will tell our constituency to vote against you, or we’ll pull our campaign contributions from you and use them against you”. Therein lies the power of AARP. Despite the fact that its members are all across the political spectrum, it has a group which tends to vote regularly and has similar worries (aging).
continuity eror complained about his/her generation, but it really isn’t much different than my nor I doubt many other dopers’ generations. Some youth are politically motivated, but they are not unified across 50 states, and they can’t “guarantee” votes like the AARP can. Assuming continuity is a college student, I’ll say not to worry. 20 years from now, your generation will be voting in its Al Gore or George Bush, whether or not you agree with them or their position.
Regarding privatization: On the surface, it looks good, but it’s got an ugly undercoating. A lot depends on just how free people are to direct their mandatory contributions. Sure, the overall market might outperform the “return” one gets on SS, but how do you handle those who underperform, or even worse, lose all. I’d love to live in a nation where the adult population is smart enough to fiscally plan for the future through a diverse portfolio of investments whose breadth protects them from the vagaries of the market. We don’t live in that nation, nor will any amount of ‘education’ get us close enough. People will make foolish decisions; people will lose money; people will have money stolen; people, given the choice of a 54" TV today and retirement payments in 40 years will choose the TV. Social Security helps protect people from their own foolishness.
Lastly, I firmly believe that the more you force a redistribution of wealth, the less those with wealth want to be involved. Means-test social security? You penalize me for prudent fiscal decision-making while my colleague one chair over (earning the same) spends all day racking up gambling debts. I’ll be vehemently against it, and I’ll let my representatives know. However, personally, I’ll be less against a small redistribution that helps out a lifelong low-wage earner.
Like foolsguinea, I look at SS as a 1930s solution. Original problem- destitute elderly relying on family or charity. Solution: retirees get at least a meager independent assistance.
I differ somewhat on means testing. A lot of us have planned for retirement with a 3 legged stool of support: Company pension plus 401(k) or similar savings plus social security. Middle class workers have come to expect middle class retirement. If social security were changed to a welfare type system for the truly needy, then most of us can kiss dreams of a comfortable retirement goodbye. My means test would be that you take the median per worker income plus maybe a standard deviation, call that number x. If the retiree earns less than x from his pension or other sources, then he gets the full social security check. If he earns more than x, then his ss is reduced $1 for every $2 in benefits. Most folks still get their regular ss checks, but the truly wealthy would not get anything.
Another thing I would change is where people continue at their regular job past 70, they get the full ss check plus their regular paycheck. If ss is a retirement supplement, then it ought to go to those actually retired.
I for one am perfectly willing to let Bush go ahead and present privatization plans. I have no idea how the numbers will add up without smoke and mirrors, but let’s see the plan. My fear is that the current working generation will be left holding the bag- having paid for our parents’ retirements and having our children opt out of paying for ours.
Worse, you penalize me for actually getting an education to reward someone who is in a low-paying dead-end job because he majored in beer and bimbos.
That is certainly not what I was saying. Not everyone who ends up in a low-paying dead-end job is there for those reasons. I may have believed that 20 years ago, but I’m lucky enough to have had my eyes opened over time. Not everyone is Steve MB, and makes prudent educational decisions throughout their life. This does not mean they cannot be hard-working, conscientious members of soceity and I believed they’ve earned soceity’s help (not to be confused with total welfare and support).
Do you not understand that all of that is paid from the same funds? It’s really all payroll tax. Or do you have income that doesn’t come from your employer?
…:I reread what I wrote:…
Wait, I’m sorry, I was unclear. I mean to say, one’s payment into Social Security is proportionate to one’s wage, which is set by one’s employer. I think Social Security (or its replacement) should be funded by a tax on gross corporate revenues, not on payroll.
Market forces play more into wage than company fiat. I am totally against making SS deductions a cost-of-goods-sold (services-provided) item. This is a regressive tax hurting the poor far more than the middle class on up.
Okay, then, how about this?
Subtract non-labor, non-salary overhead from gross corporate revenues (which gets us somewhere between “gross” & “net”) & base it on that. The only reason I didn’t say to base it on net profits was to be sure that management compensation was counted as part of the total.
I have no answer but I think these links shed some light on the question of “what were they thinking”:
SUMMARY of P.L. 98-21, (H.R. 1900) Social Security Amendments of 1983-Signed on April 20, 1983
The thinking here simply seems to be - make the program solvent again, and adjust it to new demographic realities by increasing taxes and reducing benefits - and try to do it reasonably fairly, too. They were simply happy with the trust fund accounting scheme as it was. It was not an issue.
I also don’t think they meant to fix the program for all eternity. They just wanted to get it through the next few decades. With always the option to revisit the issue and make further adjustments as needed in due time.
Here they say plainly that Government obligations are a good investment. Just like investing in T-Bonds.
Also, it might have been a factor that the stock market at that time had only just recovered from a slump lasting more than a decade. (See e.g. next to last chart here, thick black line)
Yeah, using the money to let the gov’t invest in itself seems sketchy to me, but it may not be that bad. When I get a T-Bond, I certainly don’t have any doubts about the gov’t paying me back eventually. Having the government buy a T-Bond from itself with my money seems more sketchy, but I may be being paranoid that the gov’t won’t feel as obligated to pay itself back as it would to pay me back.
This is really what I’m worried about here. That the gov’t will use the late 90’s as a predictor of how the market will preform in the next 50 or so years. It will be cool if that works out, but if it doesn’t then the SS system will be more broke then it would’ve been otherwise. Also note that the same forces that change the amount of money SS pulls in (basically fewer people working) will also certainly change the dynamics of the stock market.
At the Washington Monthly blog (I know, blog cites==bad, but I think its a good point even if his numbers are unsubstantiated), the writer suggests that if the market preforms well enough to cover the SS deficit with privatized accounts, then the economy will be doing well enough so that unchanged payroll taxes will cover the deficit as well.
It’s kind of amusing to realize that the privatizers want to deal with the problem of T-bills becoming worthless in 20 years by going into debt now and issuing more. I’d also wonder how one’s investments would be doing if the US government is at the point of default.
So, who is really driving this initiative and why? Remember, for those of us with a lot of money in IRAs and 401Ks, the percentage of our assets invested in a privatized social security system will be tiny. (I believe that no one will be allowed to invest everything in a private account.) So, the major impact will be on those less well off, for whom this will be a big deal. So maybe the Republicans want this to improve the lot of those with lower incomes.
I’ll wait for you to stop laughing.
Or, perhaps it is for good Libertarian principles. I can buy this, but maybe they should concentrate on getting their fiscal act in order first, and not piling more money onto the debt? So supporters of privatization might be supporting it for good reasons, but Bush and his crowd aren’t.
My guess is that we should follow the money. If this goes through, it pumps a lot more money into the market. The market will then go up. Who benefits? Those with money already in the market. I know if this happens, I won’t participate, and I’ll try to guess when the bubble peaks, and get out and into municipal bonds. Because the bubble with burst, and those who trusted in the privatized accounts are going to take another bath. They may be out of luck, or there might be some effort to make up for it, which will give a great excuse for cutting services - and thus the starving the beast crowd might be behind it also.
So I think there is good money to be made from a privatized system - by everyone who is not in it.