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runaroundsue
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Location: supporting GREENer pastures
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 Posted: 10/28/04 - 09:55 Post subject:
| GaRebelRunner wrote: | I'm willing to consider changing the SS system provided the neocons can demonstrate how it will not harm those who have already paid into the system.
Thus far, the schemes are nothing more to break the backs of those who can least afford it. |
neocons??? GRR....no one can do that!! In order to fix it, it definitely "will" affect current payers adversely. So it won't be "fixed". It will be tweaked here and there and then it'll crash. I predict as when "tail-end" babyboomers felt it when they entered the job market.....they'll feel it again at retirement age. 25-30 years.
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runaroundsue
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Posted: 10/28/04 - 10:12 Post subject:
I agree that there are many people in this world that shouldn't have more than 2 kids and some should not have any. However, I'm also glad that it isn't up to the population in general to decide a couples right to have children. I see my neighbor with her 8 kids and I can honestly say that she does a better job than me with 2 kids. Those 8 have to work together to get by. Her children have many values than many of our 4 person families do not. They will go into this world thinking of others rather than themselves. And "yes" sometimes they depend on neighbors for rides, watching the little one for 5 minutes......... it brings our "little community" together. I'm very happy that my neighbor has decided to overpopulate our world 
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jrjo
Gone Fishin
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Posted: 10/28/04 - 10:54 Post subject:
| GaRebelRunner wrote: | I'm willing to consider changing the SS system provided the neocons can demonstrate how it will not harm those who have already paid into the system.
Thus far, the schemes are nothing more to break the backs of those who can least afford it. |
Not sure who you're referring to as neocons... care to name names? 
What do you think of the scheme to end the ceiling that SS taxes end at $87,900? Why not saddle the 6.4% on every dollar? Why politicians don't bring this up is beyond me. If there ever was an example of a 'flat' tax this is it and how the wealthiest have shut up Congress from even broaching the topic.
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megawill
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Posted: 11/09/04 - 12:51 Post subject:
Time to revisit this topic....Since while Bush 'barely' mentioned SS during his campaign, he now feels that he has the 'political capital' to push for privatizaiton.
Once again, I feel that this would be a horrendous mistake - with long term detrimental effects to our economy and society...
Excellent article here from the New Republic..
| Quote: | President Bush has usually talked about his Social Security privatization plan as a painless way to keep the cherished program going. As he typically explains it, allowing young workers to invest some of their Social Security money in the stock market would keep the program from going bankrupt while providing even larger retirement benefits. And when you put it that way, what's not to like?
But during his post-election press conference last week, Bush finally seemed to acknowledge what economists have known all along: With or without private accounts, preserving Social Security over the long term will involve raising taxes, cutting benefits, reducing spending on other government programs, or some combination thereof. The question is not whether to cause financial pain but how. Thus, Bush has a new, more nuanced defense of his Social Security plan: It won't hurt as much as the alternatives. "There are going to be costs," Bush said. "But the cost of doing nothing is ... much greater than the cost of reforming the system today."
That kind of talk certainly sounds refreshingly honest. But it's not. The Social Security scheme President Bush has in mind represents a particularly unappealing solution to the program's shortcomings, one that has less to do with saving the program than with undermining it for ideological reasons.
Let's start with the nature of the Social Security "crisis"--which, as it turns out, isn't really such a crisis after all. Money comes into Social Security as payroll taxes; it goes out as benefits. Right now, the taxes coming in are bigger than the benefits going out, so the government uses that money to cover other expenses while taking out a bunch of IOUs that make up the Social Security Trust Fund. Sometime in the not-too-distant future (2018 according to the latest projections) benefits going out will exceed taxes coming in, and Social Security will have to cash in those IOUs--which means the government will have to start shoveling actual cash from somewhere else back into Social Security. Those same estimates show that in 2042, the IOUs themselves will be gone. At that point, money coming into the program will cover only about three-fourths of the benefits going out. Either the government will have to come up with more money to make up the difference (by borrowing, raising taxes, or cutting spending elsewhere) or it will have to stop paying full benefits.
That's not a great situation. But it's not such an awful one, either. Social Security was in similar shape during the early 1980s. The government, acting upon the recommendations of a bipartisan commission led by Alan Greenspan, pushed back the date of insolvency by raising the payroll tax by 2 percent. Higher taxes are never fun, but the public accepted them and Social Security survived.
Note what the government didn't do in 1983: It didn't alter the fundamental structure and purpose of Social Security. When Franklin Roosevelt enacted the program as part of the New Deal, large portions of the nation's elderly were living in poverty because many had not saved enough during their working lives, and even those who had saved frequently lost money on bad stock market investments. The idea of Social Security was to insulate the elderly from the whims of the stock market and business cycle by guaranteeing a safe income. Social Security was also deliberately redistributive, paying out relatively higher benefits to those with lower incomes as another hedge against the fact that chance (whether in the form of bad business luck or poor inherited skills) left some people destitute as they entered old age.
So the first question to ask of any proposed reform is whether it would similarly remain true to the program's founding ideals. When it comes to private account schemes, the answer is "no." At a time when many Americans already fret over how recent Wall Street dips affected their 401(k) plans, privatization would tether their financial security even more closely to the economy and stock market. In general, privatization schemes envision people converting their accounts into annuities (which pay out a fixed sum of money every year) once they reach retirement age. But that means people who retire at the bottom of a bear market will be locked into benefits much lower than those who retire at the top of a bull market.
Privatization advocates insist that the accounts will yield so much interest that even those retiring during downturns will end up better off than they would under the present system, in which interest accumulates much more slowly since Social Security's money is invested in ultra-safe, relatively low-yielding government bonds. But that's a questionable argument, in part because people would likely reduce outside savings as their Social Security accounts grew, leaving them even more vulnerable to last-minute downturns in the market. It's also fair to wonder whether seniors would even tolerate fluctuations in benefits from year to year or whether they'd demand that the government make up the difference. As it is, some privatization schemes envision the government guaranteeing a minimum return on benefits--a guarantee that would push the program's costs even higher.
And that's only the beginning of the financial problems with privatization. Remember, most of the money coming into Social Security right now goes right back out as benefits. If some workers use that money instead for their private accounts, the system will run out of money even faster than it would now--forcing the government to make up the shortfall of several trillion dollars. Privatization advocates euphemistically call this a "transition cost," arguing that it simply means paying off now a debt that must be paid off later anyway. Others say it simply means making the debt that Social Security owes over the long term "explicit" rather than "implicit."
But what's so simple about that? If the government chooses to take on the entire long-term deficit of Social Security right now, it's got to find the money for it. Since it's safe to assume Bush would neither cut spending nor raise taxes to come up with this cash, the government would likely borrow it. That might have been fine just a few years ago, when the government was running budget surpluses and actually paying down its existing debt. But now, thanks in good part to the Bush tax cuts, we're back to running high deficits and accumulating debt--enough, many experts fear, to cause economic calamity (by, say, pushing up interest rates) if Bush suddenly throws a few trillion dollars more on the pile. "If interest rates go up four or five times in a few weeks or months, it's a real shock to the system," says Henry Aaron, a Brookings Institution economist, "and you could have yourself a merry recession or even a depression."
A better way to address Social Security's long-term financial problems is to pay off that debt in a way that spreads the financial pain over a large group of people and, preferably, over a longer period of time. And, as it happens, some very smart people have some very good ideas of how to do that. Among them are Peter Diamond, a well-respected economist from the Massachusetts Institute of Technology, and Peter Orszag, a former Clinton administration economist (and two-time TNR Online contributor) now at Brookings. Their plan involves a series of tweaks, including raising the retirement age as life expectancies increase and taxing higher incomes (right now individuals owe payroll taxes only on the first $87,000 of income).
Because Diamond and Orszag are intellectually honest, the solution they propose is not painless. It would be fair to say that it involves both raising taxes and cutting benefits, which, in addition to being unpopular, presumably would have repercussions on the economy. But compared to the alternatives, the plan is not so painful as to be unbearable to any one generation or any one group of people within a generation; plus it's particularly generous toward those who need help the most.
The Diamond-Orszag plan also has the virtue of being adjustable as time goes on. Long-term projections about Social Security's solvency fluctuate considerably because of the relative unpredictability of the economy and population growth. Under the plan, it's easy to add minor changes in benefits or taxes as the need arises. Most important, Diamond-Orszag avoids drastic changes in Social Security's design. Such drastic changes, of course, are precisely what Bush has in mind when he commits himself to "strengthen" and "protect" the program. |
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Cappy
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Posted: 11/09/04 - 12:58 Post subject:
Interesting article Mega
I thinking eliminating the cap, and raising the retirement age is a start. People are living longer these days
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elkid
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Posted: 11/09/04 - 13:02 Post subject:
| Cappy wrote: | | I thinking eliminating the cap, and raising the retirement age is a start. People are living longer these days |
Eliminating the cap, yes. Raising the retirement age? No. Last thing we need is 70YO bus drivers, machinists, and medical personnel.
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megawill
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Posted: 11/09/04 - 13:13 Post subject:
| elkid wrote: |
Eliminating the cap, yes. Raising the retirement age? No. Last thing we need is 70YO bus drivers, machinists, and medical personnel. |
agree, but most importantly; these are all open to debate, SS is very fixable without going to the drastic measure of privitization...
we as citizens rail about the inefficiencies of the 'civil servant' yet are willing to hand our retirements over lock stock and barrell to wall street that has trouble policing their own and has given us the likes of Enron, WorldCom, Merck not to mention Richard Grasso...
i just don't get it.... 
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Cappy
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Posted: 11/09/04 - 13:17 Post subject:
I think too, people need to plan for themselves too. I am not depending solely on SS when I retire.
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sonnylax
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Posted: 11/09/04 - 13:20 Post subject:
If I was to propose or attempt to implement a business system such as SS to private investors, I would be locked up for fraud. This is a pure pyramid scheme, nothing more - nothing less. Why/how the federal government is able to get away with it is beyond me.
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Gogirlgo
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Posted: 11/09/04 - 13:22 Post subject:
I'd like to hear more from people who think all life situations are plannable who themselves have no children. I'd like to know how they think it's possible to put money away for a catastrophically ill child when a family has no health insurance. Explain based on that one example alone how it's being irresponsible to not have skads of cash stashed away.
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jrjo
Gone Fishin
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Posted: 11/09/04 - 13:23 Post subject:
| megawill wrote: | we as citizens rail about the inefficiencies of the 'civil servant' yet are willing to hand our retirements over lock stock and barrell to wall street that has trouble policing their own and has given us the likes of Enron, WorldCom, Merck not to mention Richard Grasso...
i just don't get it.... |
Maybe it's the bits of financial know-how I've picked up, but if I had a private SS account, it would be put in the low-risk end of my portfolio. If others want to roll the dice on something else, it's their money, why not let them choose?
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megawill
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Posted: 11/09/04 - 13:23 Post subject:
| Cappy wrote: | | I think too, people need to plan for themselves too. I am not depending solely on SS when I retire. |
agreed...and the argument can be made that privatization will actually decrease what american's save for their retirement...
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Cappy
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Posted: 11/09/04 - 13:26 Post subject:
| megawill wrote: |
agreed...and the argument can be made that privatization will actually decrease what american's save for their retirement... |
I agree with the last part. At least a gov't mandated deduction gurantees (hopefully) some income when you reach retirement age
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megawill
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Posted: 11/09/04 - 13:28 Post subject:
| jrjo wrote: |
Maybe it's the bits of financial know-how I've picked up, but if I had a private SS account, it would be put in the low-risk end of my portfolio. If others want to roll the dice on something else, it's their money, why not let them choose? |
are you willing to front the transition costs or to you expect all citizens to front that expense...
several of us have financial 'know-how' several of us don't...the majority don't have a clue what the difference between a junk bond, gic, or a penny stock is...and frankly it's not 'their' money it's our money...part of that social contract thing...
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prohemp
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Posted: 11/09/04 - 13:29 Post subject:
| Cappy wrote: | | I think too, people need to plan for themselves too. I am not depending solely on SS when I retire. |
SS is not intended to be a persons sole income in retirement.
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