What are the potential impacts of public confidence on the economy's recovery?

[mheslep]

Just the prejudice that they should be. I am a free man and I want to have my own choice. Why don't they just give me one?

I'm with you there. The stock answer I believe is that the majority won't let us out. That state of affairs suggests another alternative that I haven't seen discussed: a buy out of sorts. I'm just rolling this around, but the idea is that everyone under ~40-50 that wants to opt out of the system pays some kind of 'buy out' of our legal obligation to SS, something I think the highly indebted government would find extremely tempting. Now of course as citizens we shouldn't really have to buy out of anything that you don't intend to receive in the first place, but the political reality is what it is, and a buy out might overcome the political hurdles, especially now. The advantage is that the individual becomes free and clear of SS taxes forever, and likely the country at large eventually follows suit. The alternative is that all US citizens continue to pay into SS and watch it inevitably 1) go bust and not pay off, and 2) take the federal government budget down with it.

 

[turbo]

The alternative is that all US citizens continue to pay into SS and watch it inevitably 1) go bust and not pay off, and 2) take the federal government budget down with it.

SS is self-funded, and cannot borrow. It cannot add to the deficit, despite Alan Simpson's transparent attack on it. He knows better, but there are agendas to pursue. Raising the income cap on the higher wage-earners would keep SS solvent forever, though Simpson would have us believe that pensioners should have to work longer and accept lower benefits to "fix" SS.

 

[CRGreathouse]

SS is self-funded [...] Raising the income cap on the higher wage-earners would keep SS solvent forever

Yes, making other people pay for my retirement could stop SS from running out of money. But that's not the idea -- it's not supposed to be other people paying for my retirement but *me* paying for my retirement. The income cap exists because of the benefits cap.

You also ignore the economic loss required by such a transfer, but I trust this was only for brevity.

 

[turbo]

Yes, making other people pay for my retirement could stop SS from running out of money. But that's not the idea -- it's not supposed to be other people paying for my retirement but *me* paying for my retirement. The income cap exists because of the benefits cap.

You also ignore the economic loss required by such a transfer, but I trust this was only for brevity.

SS was structured such that present earners pay benefits to present retirees. It can work well in perpetuity as long as the system is updated with current actuarial data. People like W, Simpson, and others want to sabotage the system. To begin with, they demonize beneficiaries as welfare recipients getting paid under an entitlement program. The story is paper-thin.

If you suggest raising the income-cap, the standard neo-con reply is "you can't raise taxes in a recession". Let's see...what was the economic climate in the mid-1930s when SS was established? The people pushing the right-wing propaganda are hoping that nobody knows any history, nor cares to learn it.

 

[mheslep]

SS is self-funded,

...

Raising the income cap on the higher wage-earners would keep SS solvent forever,.

Which is it?

 

[Mathnomalous]

Economic recovery? I doubt the economy will "recover" before 2020. What we should just do is lower the tax rate for those making over >= $300,000 to (-10%) and raise the tax rate for those making < $300,000 to 60%; then, get rid of SS, Medicaid, and Medicare.

That should cut down on a lot of useless debates between "right vs left."

 

[turbo]

...


Which is it?

It is BOTH, as you know. The system needs to be kept current with actuarial data that reflects incomes, costs, and life-expectancy. No rocket-science there.

 

[mheslep]

Some more spice for the SS history lesson might include:
1. What did happen to the 1935 economy after the enactment of SS? What were the income tax rates along side it?
2. What was the cost back then, before Johnson exploded SS benefits in the 60s?

 

[mheslep]

It is BOTH, as you know. The system needs to be kept current with actuarial data that reflects incomes, costs, and life-expectancy. No rocket-science there.

Then 'self funded' must have some fairly exotic definition.

 

[mheslep]

Still no resolution to the pending tax increases for everyone. The Treasury will have to send out the new with-holding tables with increased rates in about a week. What a disaster given yesterday's http://www.suntimes.com/business/2943864,CST-NWS-Jobs04.article" and 15.1 million.
http://www.reuters.com/article/idUSTRE6B31NN20101205

 

[brainstorm]

Yes, making other people pay for my retirement could stop SS from running out of money. But that's not the idea -- it's not supposed to be other people paying for my retirement but *me* paying for my retirement. The income cap exists because of the benefits cap.

This kind of logic makes me wonder if people have any sense that the economy changes despite money staying the same. Money is nothing more than the ability to acquire available goods and services. If the goods and services available don't add up to those produced for the money you got/saved, how can you redeem your SS for them? Money is ultimately just a medium for bartering.

Economic recovery? I doubt the economy will "recover" before 2020.

It depends on what you mean by "recover." Probably people will figure out how to live well with less personal spending before 2020, but will that be counted as recovery?

 

[CRGreathouse]

This kind of logic makes me wonder if people have any sense that the economy changes despite money staying the same. Money is nothing more than the ability to acquire available goods and services. If the goods and services available don't add up to those produced for the money you got/saved, how can you redeem your SS for them? Money is ultimately just a medium for bartering.

Wow, that had nothing to do with my post.

 

[brainstorm]

Wow, that had nothing to do with my post.

Of course it does. If you worked on the railroad, how did you contribute to your own SS unless the railroad you worked on provides support for the economy that takes care of you in retirement? My point is that SS is a mechanism for trading present labor for future labor, but who is to say whether present labor will actually have any economic benefit to future labor? More likely the trade is "we built the mass-production economy, now you serve us in restaurants."

 

[CRGreathouse]

Of course it does.

I notice that you still didn't tie any of that into my post. I'll respond anyway, though.

If you worked on the railroad, how did you contribute to your own SS unless the railroad you worked on provides support for the economy that takes care of you in retirement?

It doesn't have to. You could work for a railroad, contribute to SS, and have the railroad go bankrupt without the railroad ever supporting the economy, and yet still collect SS. Of course the economy still has to exist (supported by some companies) at the point that you want to collect, and the laws still have to allow you to collect. But this has nothing to do with the fate of your employer.

My point is that SS is a mechanism for trading present labor for future labor

I'm quite sure that every person who has posted on this thread is aware of that fact.

who is to say whether present labor will actually have any economic benefit to future labor?

Future voters and politicians, mostly.

 

[OmCheeto]

Still no resolution to the pending tax increases for everyone. The Treasury will have to send out the new with-holding tables with increased rates in about a week. What a disaster given yesterday's http://www.suntimes.com/business/2943864,CST-NWS-Jobs04.article" and 15.1 million.
http://www.reuters.com/article/idUSTRE6B31NN20101205

Well, for once, I'm in agreement with the Republican leadership.

Chicken Crap!

 

[brainstorm]

I notice that you still didn't tie any of that into my post. I'll respond anyway, though.

I was simply questioning your assumption that you contributing money toward your own retirement (SS) is equivalent to your economic contribution contributing to the economy that supports you in old age.

It doesn't have to. You could work for a railroad, contribute to SS, and have the railroad go bankrupt without the railroad ever supporting the economy, and yet still collect SS. Of course the economy still has to exist (supported by some companies) at the point that you want to collect, and the laws still have to allow you to collect. But this has nothing to do with the fate of your employer.

You're still not getting my point to differentiate monetary contribution from functional economic contribution. You might have made loads of money working for World Online or building houses prior to the mortgage meltdown, but that doesn't mean that what you produced actually contributes to your retirement. Building houses might in the sense that someone could live in a house you built in exchange for providing you with restaurant service. On the other hand, the same person could build their own house and dismiss having to serve food to retired people to make a mortgage payment. My point is that economics is ultimately the exchange of goods and services regardless of how they are represented in balance sheets and SS payments.

I'm quite sure that every person who has posted on this thread is aware of that fact.

The point is that if the economy collapses due to lack of connectivity between past and present/future economic exchanges, your entitlement due to previous contributions is meaningless. It all comes down to milking the goods and services you want out of the present economy. If social security allows you to do that, congrats. What you did to qualify for your SS is just legitimation. It's nice to think of the system as being valid, but does it really matter in terms of economic realities?

 

[CRGreathouse]

I was simply questioning your assumption that you contributing money toward your own retirement (SS) is equivalent to your economic contribution contributing to the economy that supports you in old age.

That was never my assumption.

What you did to qualify for your SS is just legitimation. It's nice to think of the system as being valid, but does it really matter in terms of economic realities?

That's well and fine, but I'm talking about the legal tie between how much a person pays into SS and how much they can collect, not what philosophical claim they may and may not have to SS. I acknowledge that this could be an interesting topic, but it has nothing to do with my post.

 

[Mathnomalous]

It depends on what you mean by "recover." Probably people will figure out how to live well with less personal spending before 2020, but will that be counted as recovery?

What I meant by "recovery" in a consumer-based monetary system is primarily the return of jobs that will provide people with money to cover their basic needs. If one has no job and no other means of income, one will likely starve.

So, unless those jobs return in the near future (highly unlikely) or a new industry or technology rises (uncertain), I expect unemployment and general discontent to remain high for the next decade.

Want to short circuit that? Start a war, preferably with China.

 

[Mathnomalous]

Well, for once, I'm in agreement with the Republican leadership.

Chicken Crap!

Why were you angered? Is how the sick game of modern politics is played. The donkeys forced the elephants to take a position on tax cuts and now the donkeys will base their plays on the elephants' position. It only matters to those who still buy into the system.

In the end, it is all a farce.

 

[brainstorm]

That's well and fine, but I'm talking about the legal tie between how much a person pays into SS and how much they can collect, not what philosophical claim they may and may not have to SS. I acknowledge that this could be an interesting topic, but it has nothing to do with my post.

What other basis is there for establishing that legal tie besides a value exchange between labor contributed and labor consumed in old age? Money is a measure of labor-value; at least it is when it is paid/collected for labor rendered. When you save it, either through SS or otherwise, you are investing it in other people's labor with the hope of getting a value return for it at a later moment. If the labor it gets invested in doesn't produce anything of value to you, how can you expect to enjoy the fruits of that value in retirement? What is it, exactly, that you want to consume with your SS income?

There's a good chance that there will be enough food and shelter for you not to have to be homeless and hungry. Anything else might become scarce considering the babyboomers are a large generation with high expectations for consumption. If so, consumption may become competitive driving the price up of many goods and services many people would expect to consume in retirement. As such, you might find yourself in the class of people excluded from those scarcified goods and services. You might also find you're one of the privileged but that you will have to spend a great deal of your retirement wealth on a limited number of privileges. It may only be very very rich people who get it all, i.e. retirement condo in a warm climate, extensive travel privileges, expensive life-prolonging proprietary pharmaceuticals, etc. It shouldn't be this way, probably, but that's capitalism for you.

What I meant by "recovery" in a consumer-based monetary system is primarily the return of jobs that will provide people with money to cover their basic needs. If one has no job and no other means of income, one will likely starve.

Starvation isn't the main problem with unemployment. It's homelessness. Usually, unemployed people are able to get food one way or another, I think. The question is whether people and/or government will figure out some way to give people access to the large surplus of inhabitable property even if job-creation doesn't grow. The ironic thing is that as long as the property surplus continues or grows, GDP will continue to shrink. However, you can't really create jobs that people don't want to pay for so the best option would be to split up existing jobs to create more part-time jobs, but what would stop people from taking multiple part-time jobs leaving others once again fully unemployed.

So, unless those jobs return in the near future (highly unlikely) or a new industry or technology rises (uncertain), I expect unemployment and general discontent to remain high for the next decade.

There's a third possibility, though it's somewhat like a new industry or technology. What happens is that people give up on paid employment and the people who do so most comfortably are those with other sources of income. These people then create cultural lifestyles that appeal to others, causing people to desire to work less. This is basically the culture of valuing life more than work and money. The more people choose this culture, the higher the demand will become for part-time work, which will open up more part-time jobs and remedy unemployment. I keep wondering when some kind of part-time labor lobby will develop to pursue laws and policies that would be beneficial to part-timers.

 

[Mech_Engineer]

Obama announced today that the Bush-Era tax cuts would be extended for 2 years, in exchange for an extension of unemployment benefits. It appears that Obama has conceded that raising taxes during such a recession will not help the economy.

http://www.boston.com/news/nation/w...s/?rss_id=Boston.com+--+Top+political+stories

They also mention that a "payroll tax" will be reduced from 6.2% to 4.2%. I think this refers to the Social Security contribution from workers, which will help give workers higher take-home pay but will definitely accelerate the bankruptcy of Social Security as well. I'm still waiting for the day (perhaps in vein) that I can opt-out of Social Security and instead put that money in a Roth IRA or 401k of my choosing.

 

[dreiter]

...It appears that Obama has conceded that raising taxes during such a recession will not help the economy...

I look at it that he conceded he wouldn't get anything he wanted if he didn't give the rich what they wanted, so he gave in. Fixing the taxes for millionaires isn't going to affect the economy much, but it would help the deficit and fix some of the imbalances in the current tax system. Republicans, as usual, were douche bags, and didn't allow this to happen.

 

[Mech_Engineer]

Fixing the taxes for millionaires isn't going to affect the economy much, but it would help the deficit and fix some of the imbalances in the current tax system.

You know what would fix the "imbalances in the current tax system"? A http://en.wikipedia.org/wiki/Flat_tax" model. Flat tax would certainly simplify the US tax code quite a bit...

Republicans, as usual, were douche bags, and didn't allow this to happen.

Republicans are D-bags for defending citizen's right to keep money they earned?

 

[mheslep]

you know what would fix the "imbalances in the current tax system"? A http://en.wikipedia.org/wiki/flat_tax" model. Flat tax would certainly simplify the us tax code quite a bit...

+1

republicans are d-bags for defending citizen's right to keep money they earned?

+2

 

[WhoWee]

Obama announced today that the Bush-Era tax cuts would be extended for 2 years, in exchange for an extension of unemployment benefits. It appears that Obama has conceded that raising taxes during such a recession will not help the economy.

http://www.boston.com/news/nation/w...s/?rss_id=Boston.com+--+Top+political+stories

They also mention that a "payroll tax" will be reduced from 6.2% to 4.2%. I think this refers to the Social Security contribution from workers, which will help give workers higher take-home pay but will definitely accelerate the bankruptcy of Social Security as well. I'm still waiting for the day (perhaps in vein) that I can opt-out of Social Security and instead put that money in a Roth IRA or 401k of my choosing.

I absolutely LOVE the idea of putting the Democrats tax increase plan on the ballot (more or less) for 2012.

As for the "payroll tax" reduction - why would anyone propose to cut funding for a (long term) under-funded program? The other aspect of such an idea (one of my personal pet peeves) will the Earned Income Tax Credit also be reduced (if not/why not)- it's designed to give back Social Security withholdings?

 

[brainstorm]

I look at it that he conceded he wouldn't get anything he wanted if he didn't give the rich what they wanted, so he gave in. Fixing the taxes for millionaires isn't going to affect the economy much, but it would help the deficit and fix some of the imbalances in the current tax system. Republicans, as usual, were douche bags, and didn't allow this to happen.

It's easy to shift the tax burden to the rich when you don't count yourself among them. It's like having a broken leg and saying that people with good legs should run more. This mentality of spend money and send the bill to someone with more money promotes an extremely irresponsible approach to economy. I would like to see people who advocate more spending do so from the perspective of how much labor they themselves are willing to contribute to the public good. If taxes would be taken in labor instead money, I wonder how many people would be voting to raise the amount of labor the government would demand from them.

 

[OmCheeto]

http://www.myfoxny.com/dpp/news/national/average-familys-wealth-soars-ncx-20101210"
What are Americans going to do with their $10,400 of added wealth? That's how much the average US family's wealth increased between July and September, according to the Federal Reserve -- cited by the New York Post -- which reported Thursday that the nation's 115 million households gained $1.2 trillion in worth.

A forward from one of my facebook financial buddies.

Don't really know what it means, but several of his buddies asked where their $10k was.

:rofl:

 

[CRGreathouse]

What other basis is there for establishing that legal tie besides a value exchange between labor contributed and labor consumed in old age?

Fiat, of course.

 

[Mech_Engineer]

A forward from one of my facebook financial buddies.

Don't really know what it means, but several of his buddies asked where their $10k was.

:rofl:

I'd bet it's because the average savings rate in the US went up due to the crappy economy. If your "buddies" want to know where their $10k is, ask them why they didn't save it!

 

[WhoWee]

A forward from one of my facebook financial buddies.

Don't really know what it means, but several of his buddies asked where their $10k was.

:rofl:

I'm guessing mine was re-distributed?

 

[CRGreathouse]

I'd bet it's because the average savings rate in the US went up due to the crappy economy. If your "buddies" want to know where their $10k is, ask them why they didn't save it!

I imagine it's paper wealth from real estate revaluation.

 

[OmCheeto]

I'd bet it's because the average savings rate in the US went up due to the crappy economy. If your "buddies" want to know where their $10k is, ask them why they didn't save it!

Actually, my financial buddy said he saw his. I think the others were just joking.

The article also said:

Since the depths of recession in December 2008, the average household net worth has climbed by $51,309 to a current level of $477,315

That's about 12% in two years. Not too shabby.

The DJIA is up 62% from it's low.

My top 6 stocks are up 45%
My bottom 4 stocks pull that down to only 12.5%.

BTW, does anyone know if it helps the economy when I invest in growing companies?

 

[CRGreathouse]

BTW, does anyone know if it helps the economy when I invest in growing companies?

Yes, typically. Of course the effect is small unless you're particularly wealthy.

 

[Mech_Engineer]

That's about 12% in two years. Not too shabby.

The DJIA is up 62% from it's low.

My top 6 stocks are up 45%
My bottom 4 stocks pull that down to only 12.5%.

I was happy to see my 401K is up 12% for the year, a lot better than a few years ago!

Seriously though, times of economic turmoil tend to trigger higher savings rates, but it's hard to know if the full $10k was due to savings alone, and not reevaluation of monetary factors...

 

[Naty1]

generally a high level discussion here..bravo...

The original NY Times article has some good ideas...but also panders to NY Times liberals so they'd print it...cigarette (boat) gas guzzlers? give me a break...OBAMA a popular President? at 39% approval?...his PERSONAL approval is higher but the authors appropriately discount such things in discussing economic activity.

If you want to understand why the economy is doing so poorly, why so few jobs are being created, why 2011 will be no better than 2009 and 2010, why this is weakest economic "recovery" since the great depression...try reading about Bill Ayers (Obama's buddy and inspiration), Cloward and Piven...and see why Obama and Company are picking winners (supporters like Goldman Sachs, Bank of America, unions, GE, now 522 union and company exemptions granted from OBAMACARE, etc) and losers ( Merrill Lynch, Lehman Brothers, the wealthy). US Business, properly, does not TRUST Obama and fears he will collapse the US financial system as planned by his extreme left wing supporters. When the government gives $600M to BOA can buy out Merrill Lynch, nobody knows who Obama will try to crush next.

The solution is obvious: eliminate most federal taxes (to strip the federal government of its power) so they can't distribute (earmarks,etc) it via politics and darkroom deals, let States do the work and exercise their legitimate powers,
and constrain the federal government via enumerated powers specified in the Consiitution of the United Sates.

http://en.wikipedia.org/wiki/Cloward–Piven_strategy



Post #522:

Since the depths of recession in December 2008, the average household net worth has climbed by $51,309 to a current level of $477,315

Household net work HAS never been anywhere near that high...I don't thion it has EVER exceed even $100K...Could not find a current figure but the government tracks that...here is one chart that seems in the ballpark:

http://en.wikipedia.org/wiki/File:Graphic.png
\Note the peak at about $65K.

Check this on CURRENT Dem and Rep nonsense:

http://www.politico.com/news/stories/1210/46383.html