what jshore said - by your definition, any insurance program is a pyramid scheme. The problem with Social Security is that the demographics underlying the system have changed. In 1950, the ratio of workers to retirees was 16:1. Today it is around 3:1. Over the next 30-50 years, given current population growth rates it will fall to 2:1. The change in the demographics affecting the system is one of the reasons for the increase in payroll taxes and slight reductions in payouts in 1983 (to deal with the surge of retirees from the baby-boom generation).
I don’t see how my statements can be construed as mutually exclusive. By your logic, any change that the government makes regarding other programs (example, FDIC) renders the guarantee moot.
The government changes the rules (or conditions) with which it will guarantee it’s obligations. But a change in the conditions doesn’t necessarily mean that the government opts out of it’s obligation entirely. However, if the government decides to privatize Social Security, it is in effect reneging on it’s obligations (unless, of course, the government provides some sort of security on the money placed into indiviual retirement accounts; in which case, then why the hubbub over privatization? The system ALREADY is guaranteed by the government).
Two things will happen:
(1) Companies will play with the numbers to reduce their tax liability.
(2) Prices of every good and service will rise
Now employers could conceivably say to every employee that they are getting a salary cut because SS is going away and the portion the employee paid is now being paid by the employer, but that will sink faster than a Democrat’s hopes on November 3rd. At the same time, the government will tell consumers that the increase in price is not inflationary, but rather due to a change in the FICA laws. So I keep my salary, and receive a “raise” due to no FICA which is offset by an increase in the price of every good and service I consume. I’m in a position where if I was asked to take the cut to offset my employers new expense, I could find a new home for my services to a new employer at my old or even a greater salary. However, the very nice lady who comes in after hours and cleans up the office is getting hit with a pay cut coupled with an inflationary increase in prices. [Sure, in an imaginary world, my firm could only work with contractors who didn’t cut salaries, but we don’t live in that world].
You’ve just screwed the people least able to handle the screwing.
There are so many ways of looking at it. You might also say that government is just propping up current demand and price of treasury debt slightly.
My concern would be whether debt statistics accurately reflect total debt outstanding, including the special issues. Although even that is not the main issue. The real issue is one of demographics and actuarial calculations.
Current legislation does contain an unfunded mandate. But legislation or policy can always be adapted. One solution is simply making sure that you maintain a certain Workforce Participation Rate in the population. Now that doesn’t sound too hard to achieve, right?
I used to be outraged by these pay-as-you-go unfunded government systems until just recently. But somehow I have some round now. The solidarity and inflation-indexing aspects of social-security schemes are unique and unmatched by other schemes. There are so many parameters that can be adjusted to keep the systems solvent. People can and should be (and are being!) encouraged to enroll in supplemental private pension schemes, leaving SS as just one leg of people’s 3-legged SS stool.
My main beef right now is that people should be better informed. People say and think that they are “contributing” toward their own SS entitlement by paying their SS premiums. Not true. And that’s what people should realize. Is all.
I’ll have to admit that I haven’t read all of the last 10 or so comments so if someone has posted this I’m sorry.
I just received my AARP bulletin and here is part of what they have to say.
There is a lot of misinformation about Social security. We want to make it clear where AARP stands on this issue. ** We stand with you**
… Social Security is the most successful program in our nations history.It is a promise our country makes to working Americans and retirees.And a promise should not have an expiration date.
At AARP we have a number of good ideas on how to make the adjustments needed and would be glad to share them with you.Visit our site at www.aarp.org/socialsecurity.
…One idea being put foreward is in the wrong direction for fixing Social Security and will actually make the problem worse , not better…
** AARP is opposed to private accounts that take money out of Social security.**
…Some critics of these personal accounts think that Wall Street ,not retirees ,would be the real beneficiarities.
Anyway yall should go to the website and see what the ideas are.
One Idea being put forward…will make the problem worse,not better, Taking some of the money that workers pay into the system and diverting it into newly created private accounts would weaken Social Security and put benefits for future geberations at risk.
Note to self proofread proofread proofread
This assumes that employment rates, and salaries, will rise with the market. I’d be a bit skeptical of this. What is more likely that tax revenues would rise with the market, thus putting the government on sounder footing and making the repayment of the SS obligations easier.
Not that the other reforms already mentioned are unreasonable. Increasing the maximum limit for which SS taxes are taken out is one. A later retirement age is another. First, the quality of life of someone at 65 is a lot better than it was 70 years ago. Second, the very baby bust giving problems to the systems will tend to make employers encourage those of age 65 to keep working.
Hurm. I haven’t completely worked this idea out yet (& it is my idea), so maybe I did just seem to advocate a Value Added Tax. :smack: But what I’m trying to say is that the tax needs to be on corporate/employer wealth, not on wages. It’s disingenuous to claim that the ways businesses will screw people under a new system are worse than the ways they do now on top of the institutionalized disincentive to pay people well.
Look, a huge amount of GNP goes through taxes, both for government programs & redistribution. And even someone who gets a net payout from the government is constantly reminded of the taxes he is supposedly paying. Actually, it’s the dealer who pays sales tax, & the employers who pays payroll tax–or did you just mail off your sales taxes to the state for your groceries this week? But you get to see how much is withheld from your paycheck, & how much is collected in tax, & you’re told you pay it. The businesses want you to know about it, so you feel like it’s landing on you.*
That the taxes largely get redistributed to the same people who pay them doesn’t get rid of the perception that the government is on everybody’s backs. In fact, it makes aspects of redistribution look silly. So our society, in poorer sectors, has an almost paranoid sense of money being tight. This works to the advantage of “fast cash” moneylenders (who ultimately make things worse) & people who offer cheap goods & services (like the Wal-Mart approach).
By moving away from sales taxes & payroll taxes toward taxes on corporate revenues & profits, we do things:
[ul]
[li]We fund the entitlements to retired wage-earners from the actual wealth they produce, not the “acceptable overhead” determined by employers.[/li][li]We have a counter to companies that dodge their obligations by using non-U.S. labor.[/li][li]We give labor a purer argument, & a stronger bargaining position. Any raise in wages is just that, a raise in wages, not in wages & taxes.[/li][li]And we move the burden from smaller or less successful employers to larger & more successful employers. Many self-employed persons would go from having to pay both parts of the payroll tax to being exempt due to low income.[/li][/ul]
Now, why, again, should your employer have to pay a percentage of the cleaning lady’s pay to the government? And how is that not giving them an excuse to keep her wages low?
[sub]
*Hey, fair enough! The businessmen have an interest in making everyone feel their pain, & understandably so. But the current system acts like the customer & the laborer owe taxes at a defined rate, whereas a fair system of taxation should look at the active concentration of wealth.[/sub]
I won’t disagree with you - there are many other ways of looking at the results of Social Security and seeing if there is a better way or if Social Security is still serving it’s purpose. However, what I have a problem with is the notion that privatization of Social Security is the only or even best way of the addressing the issue.
Yes, I avoided calling it a Value-Added Tax the way presented. I didn’t know how you would take it. Also, are you talking about payroll taxes, which are a company expense, or FICA withholdings, which are a shared expense?
There is a corporate disincentive to pay people well. That’s because corporations exist to increase shareholder wealth. Reducing payroll tax burden is certainly one way to increase shareholder wealth, but it’s generally not a prime consideration in wage scales. Corporations are more than happy to pay good salaries to people like me (actually, I work for a partnership, but you get the idea) because it feels that I increase shareholder value to a greater extent, and my firm wishes to retain my ability to do so. Corporations also seem more than happy to pay outrageous sums to those at the very top of the corporate hierarchy; boards of directors seem mostly fine with this :mad: , and I hope that some of the recent scandals and Mr. Buffet’s work can maybe bring top executive salaries in line. However, in addition to being a cynic, I’m a pessimist and don’t have a lot of faith of seeing significant reform. The point is, firms exist to increase the value to its owners, not to provide jobs. That they provide jobs in the process of increasing value is a bonus.
Your last paragraph sounds like you are asking for corporate income tax reform, which I support. The schemes and vehicles for reducing a corporation’s tax on its income are, in my opinion, obscene. Quite frankly, it is much harder for a corporation to dodge it’s payroll tax obligation than it is to dodge its income tax obligation. Thank your federal representatives, elected with money donated by the corporations, for that.
What concerns me more is the “they have a different view from us, we must stop them” mentality. Last time I checked they have the right to express their viewpoint just the same as you have a right to express yours. But what I don’t undrstand is why you think you have a right to keep them from expressing theirs?
I was referring to one of the candidates wives who managed to hide 55% of her wealth in tax free dividend income (which comes out to a tax burden of about 12%.)
Feel free to warm yourself at any of the charity housing I’ve contributed money to over the years. Maybe I should take the tax deduction for it this year. Whadda think? Screw Uncle Sam out of a few more dollars?
Investing in tax free bonds is in no waym hiding one’s wealth. They actually transfer money from the federal government (in lower tax revenues) to states and municipalities, in the form of lower interest rates made possible by the tax break. Ms. Heinz-Kerry could certainly have gotten a higher rate of return for her investments, and probably could have found shadier tax shelters if she was that sort of person. I assume the bonds are in Pennsylvania, which would be in keeping with the very significant work her foundation has done in improving Pittsburgh (Source - the major New Yorker article on her before the election.)
I am quite familiar with these, since my father (who does not have as much money as Ms. Heinz-Kerrt ) chooses to invest only in them. I assure you, the market sets the rates so they are not a higher yielding investment than others, though they are safe. He lost nothing in the bubble.
So I’d thank you to stop insinuating that someone choosing a perfectly legitimate investment that supports local governments is doing something underhanded or unethical.
All I did was suggest a strategy that would create a financial end run around an AARP tax enthusiest. Not sure why you think I was berating Teresa Heinz-Kerry. Nowhere did I say anything bad about her.
I’ve always been for lower tax rates (as is the party I voted for). It gives individuals more money to spend on charitable works, which tend to be more efficient than government handouts. Which was going to be my point to Zoe if he questioned me further.
My understanding is that SS income (money taken from the people under threat of imprisonment) is put into general funds.
I will accept that it is, as I dont have any info counter to it (I assumed), so in that case the Lord wouldn’t be pissed off on this one.
No it’s not the same. W/ T bills the gov’t has to pay it back, even if it has to print the money it owes, no the same w/ SS.
again as even you have to admit there is zero in there.
Yes please do if for no other reason that it is a privatized system, and that is what we are compairing the current SS system too. I will live and die by it.
lets look into the Galveston system:
The numbers you stated basically show that overall people do better w/ this system, but they’re a few exceptions and those exceptions are just slightly behind the SS system as a whole.
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I’m not talking necessarily about total market failure - the folks who had most of their investments in Enron didn’t lose all their money because the market collapsed. They lost all their money becaue their company tanked. Besides, the system is set up so that even in the event of total market failure, those that lost Social Security benefits would be paid first whenever the market recovered (or rather, that’s how the system SHOULD work; never mind that those with the financial and political clout would, more than likely, get their money first).
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Some would say if some person invested his life savings in one stock he gets what he deserves, others might say that if a system is to replace the SS system some safegards should be mandated, such as forced diversification.
1 - I don’t know, managing your personal money, would you rather have the gov’t do it (under threat of imprisonment) or one that you can select? Say you had an extra $10,000 burning a hole in your pocket, and the SS system offered investment options, are you more likely to give it to Uncle Sam or your own retirement fund?
This is the only point I can accept. Under certain situations. If we (the US) go through an enormous period of growth, such that the retired can’t keep up w/ living expenses then a program might be of use to take from those who are creating such growth to give to those who lead up to this period (and most likely built the basis for this growth)
I don’t know where you got this from. It means you cricetus control it. If you wish to give that money to someone else, well that’s up to you.
Well true but misleading, you can buy T-bills, (and IIRC E-Bonds which are other gov’t securities) which means uncle Sam gets his cut. Anyway you slice it someone gets a cut, that’s not really a bad thing as it is the basis of our ecconomy, but wouldn’t you like to decide who gets that cut?
I do have a big problem with basically saying f’ you. But also a problem with continuing a system that has to fail eventually and we will have to say f’ you to much more people.
Again I state I don’t know.
I wouldn’t be shocked, but even if this was not true, the best they can come up with is that SS hurts most people big time, and those who it helps just barely benifit.
I wouldn’t call W. Bush a neocon, as it appears he is a long time conservative. neocon’s would be the newly conservative.
I do agree with the points that there should be no income limit for SS payments. Ideally I would like to see a system that the 1st $10,000 of SS goes into your private retirement account, anything after that goes mainly to a redistrubution SS system.
Why did I pick $10,000? I asked my nice what was her favorite number, she said 10,000.
Look around post #58 and afterwards for Frankenstein’s Monster’s posts on the subject. He’s convinced me that to say there’s nothing in the SS Trust Fund is an exageration, there’s a lot of gov’t bonds anyways, so the money isn’t put directly into the general fund, it’s used to buy bonds, the revenue’s from which are used to finance shortfalls in the general fund.
The AARP link from above supports this.
Again, look at Frankenstein’s links.
I haven’t read the Galveston case yet, so I’ll refrain from commenting on the rest of you post except for a short, painless, nitpick:
I don’t think the US gov’t takes a cut of T-bills. They pay you interest, and as far as I know don’t take anything out of that to pay for overhead. What I think other posters are saying here is that if we give SS money to private stock brokers and the like they’ll take a cut of the earnings, while so far as I know the US government doesn’t take any service fee out of money we pay into the SS Trust Fund.
No, there is not zero there. It’s just that, for accounting purposes, it’s all money from the same pot.
The two systems aren’t very comparable - the people in the Galveston system are public employees, whereas Social Security includes everyone. And in particular, the people that would be adversely afffected with the Gavleston system would be precisely that segment of the population that benefits the most from Social Security - the less well-to-do.
Maybe a person deserves what he gets for investing his life savings in one stock, maybe not. In the Enron case, many people were forced into putting their investment dollars into Enron stock; others were willing based on fraudulent claims by the company (the stock is doing well! keep investing in Enron stock! all the while selling your own stock because you know the books have been cooked, so to speak).
And if one is all gung-ho on privitization, why force people to diversify? After all, it’s there money, right? “Let’s make 'em put most of their money in very secure investments just to be safe - like T-bills.” WHICH IS EXACTLY WHAT THE GOVERNMENT DOES ALREADY WITH SOCIAL SECURITY!!!
If I had 10,000 extra dollars, I would put it in some safe, secure investment vehicle. But once again, SOCIAL SECURITY IS NOT AN INVESTMENT VEHICLE. It’s a supplement to one’s own investment plan for retirement; or rather, it’s an insurance plan.
No, the governemtn does not get a cut. If I buy a Savings bond, I give the government money and in return (at a later date) I get more money in return. All I have is the assurance that the government will pay me what they say they will pay me for me giving them my money.
What makes you think that the system will fail eventually? And what makes you think that privatization will save it? If the system is in such dire straights, that implies that the overall economy is in dire straights. Which means that privatization won’t help matters anyway.
If it’s such a crappy system, then why is the system so popular? (and yes, I am aware that just because a system is popular doesn’t necessarily mean that it’s an effective system). In any event, I’d like to see hard data on the deleterious effects of Social Security - to what effect and how much.
The only hard evidence I have come across regading the deleterious effects of Social Security is that the payroll taxes are regressive on those at the bottom end of the income scale (they pay more in taxes for the system). But they are precisely that part of the population that benefits the most from the system.
Sorry, but I interpret hiding someone’s wealth as being slightly shady. During the campaign she was criticized for paying a low tax rate, as if she were doing something wrong for a Democrat.
BTW, I understand your point about charity. Could you point me to statistics showing that the recent massive tax cut has led to an equally massive increase in charitable giving. I have seen a cite that elimination of the estate tax would also lead to a big decrease in estates being donated to charity.
) chooses to invest only in them. I assure you, the market sets the rates so they are not a higher yielding investment than others, though they are safe. He lost nothing in the bubble.