End of Social Security - or a Warning?

[WhoWee]

President Obama outlined a strategy this morning to help workers prepare for retirement.

From the speech, ""If you work hard and meet your responsibilities, this country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement. That is why we are announcing several commonsense changes that will help families put away money for the future," Obama said."

Isn't Social Security in place for this very reason? Is he telling people not to count on Social Security in years to come? Is he trying to defer payment of income tax refunds to the 100 million people he cited? Is he trying to increase cash reserves in the banks?

Why this and why now?

Wouldn't discussion of an expanded Health Savings Account system be more timely?


http://news.yahoo.com/s/ap/20090905/ap_on_go_pr_wh/us_obama_retirement_savings

Recession hits nest eggs; US promotes ways to save
AP

Obama: Gov't to expand workers' saving options Play Video AP – Obama: Gov't to expand workers' saving options

By CHARLES BABINGTON, Associated Press Writer Charles Babington, Associated Press Writer – 2 hrs 46 mins ago

WASHINGTON – The recession has eaten into people's nest eggs so the government is promoting ways to make it easier to save for retirement.

One initiative that President Barack Obama outlined in his weekly radio and Internet address Saturday will allow people to have their federal tax refunds sent as savings bonds. Others are meant to require workers to take action to stay out of an employer-run savings program rather than having to take action to join it.

"We know that automatic enrollment has made a big difference in participation rates by making it simpler for workers to save," Obama said. "That's why we're going to expand it to more people."

The new federal steps, which do not require congressional action, include:

_Making it easier for small companies to set up 401(k) retirement savings plans in which all workers are automatically enrolled unless they ask to be omitted. Employers can set default amounts of each worker's pay — perhaps 3 percent — to automatically be deposited into the accounts without being taxed. Workers can raise or lower the contribution levels, and they choose how to invest the money. They will pay taxes on the money only when they withdraw it as retirees, when their tax rates are likely to be lower than when they are working full-time. A similar process would apply to savings plans called SIMPLE-IRAs.

_Allowing such plans to automatically increase the amount that workers save over time unless the workers object.

_Allowing people to check a box on their federal tax returns asking that any refund be sent as a savings bond. More than 100 million U.S. households receive refund checks each year, and many are promptly cashed and spent.

_Allowing workers, when leaving a job, to direct unused vacation pay to a retirement savings account rather than taking it in cash.

"This recession has not only led to the loss of jobs, but also the loss of savings," Obama said, citing declines in home values as well as sources of retirement income.

"If you work hard and meet your responsibilities, this country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement. That is why we are announcing several commonsense changes that will help families put away money for the future," Obama said.

The administration earlier asked Congress to make it easier to set up retirement accounts for people whose workplaces do not offer them. No legislation has moved thus far.

"Tens of millions of families have been, for a variety of reasons, unable to put away enough money for a secure retirement," Obama said. "Half of America's work force doesn't have access to a retirement plan at work. And fewer than 10 percent of those without workplace retirement plans have one of their own."

Nearly half of the U.S. work force has little or nothing beyond Social Security benefits to get by on in old age, Treasury Secretary Timothy Geithner said.

"Just as the administration is dedicated to reviving the economy and getting people back to work, so too it is dedicated to helping put retirement security within the reach of all Americans," Geithner said in a statement.

While saving for retirement is universally seen as a good idea, any increase in savings rates could somewhat slow the nation's rebound from the economic recession.

Instead of telling us how to save, maybe he should fix Social Security, Medicare, and Medicaid and quit spending us into bankruptcy.

 

[drankin]

I have been and will be contributing large amounts of money to my Social Security. I don't even have a choice in this. It can't fail, or millions of Americans will be sueing the US gov't. I agree, they need to fix SS. I've always heard talk that I will never see my SS 30yrs from now. How the hell would they get away with making it go away? Like you said, that is what SS is for. Now, maybe they will increase the SS deduction? Is Obama ignoring SS?

 

[WhoWee]

I have been and will be contributing large amounts of money to my Social Security. I don't even have a choice in this. It can't fail, or millions of Americans will be sueing the US gov't. I agree, they need to fix SS. I've always heard talk that I will never see my SS 30yrs from now. How the hell would they get away with making it go away? Like you said, that is what SS is for. Now, maybe they will increase the SS deduction? Is Obama ignoring SS?

This comment by Geithner isn't exactly building confidence in SS either.

"Nearly half of the U.S. work force has little or nothing beyond Social Security benefits to get by on in old age, Treasury Secretary Timothy Geithner said.

"Just as the administration is dedicated to reviving the economy and getting people back to work, so too it is dedicated to helping put retirement security within the reach of all Americans," Geithner said in a statement."

 

[bleedblue1234]

S.S. is a disaster...

any funds that come into the system are immediately spent to negate budget shortfalls, and as such we aren't "saving" for our retirement, merely letting the government have more of our money and continue to grow.

A much better proposition would be that people either have a mandated "retirement" savings account or abolish the system altogether (but as with most government programs, it is extremely politically unpopular to end a program after it has began).

But budget shortfalls over the next 10-20 years and the rise of the baby boomer generation into the 63+ category will eventually spell the end of S.S. (in any meaningful way).

 

[turbo]

S.S. is a disaster...

SS is not a disaster. The problem is the way politicians raid SS resources - like a a drug-addicted parent who keeps stealing from their kids' piggy-banks. (Don't worry! I'll put it back!) SS can be made sound and stable with very little tinkering IF the government repays its debts to the system and stops raiding it.

 

[Al68]

SS is not a disaster. The problem is the way politicians raid SS resources - like a a drug-addicted parent who keeps stealing from their kids' piggy-banks. (Don't worry! I'll put it back!) SS can be made sound and stable with very little tinkering IF the government repays its debts to the system and stops raiding it.

This is simply not true. The projected shortfalls and bankruptcy of the SS system assumes that it will have all "IOUs" paid back.

I agree that's a problem, but it's not the big one. The big one is that the system is going broke, even assuming those funds, and interest, are paid back in full.

 

[CRGreathouse]

SS is not a disaster. The problem is the way politicians raid SS resources - like a a drug-addicted parent who keeps stealing from their kids' piggy-banks. (Don't worry! I'll put it back!) SS can be made sound and stable with very little tinkering IF the government repays its debts to the system and stops raiding it.

I think the propensity of the government to 'raid' SS is one of its largest problems. I don't think it's reasonable to expect future politicians to do otherwise without changes to the underlying law.

 

[turbo]

I think the propensity of the government to 'raid' SS is one of its largest problems. I don't think it's reasonable to expect future politicians to do otherwise without changes to the underlying law.

That's huge. At a minimum, I would expect the raiders to pay interest rates above prime, AND pay back in dollars adjusted for inflation/deflation as computed by the CBO to make sure SS doesn't get repaid in Monopoly money.

It would also be a good idea to remove the income cap on SS contributions. Since SS payments are calculated based on peak earnings, that would allow high-income earners to receive more in benefits when they retire. Of course, someone like Dick Cheney would regard such payments as little more than a nuisance, like a yearly birthday check of $5 from Aunt Tilly, so don't expect any wealthy people to support this. There are all kinds of ways to make SS self-sustaining, but if those options don't favor the top couple of percent of wealth-holders, they will never get Congressional hearings, much less votes.

 

[WhoWee]

I rarely post Wiki, but this time it's useful.

http://en.wikipedia.org/wiki/Social_Security_(United_States)

"Social Security in the United States currently refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program.

The original Social Security Act[1] (1935) and the current version of the Act, as amended[2] encompass several social welfare and social insurance programs. The larger and better known programs are:

* Federal Old-Age, Survivors, and Disability Insurance
* Unemployment benefits
* Temporary Assistance for Needy Families
* Health Insurance for Aged and Disabled (Medicare)
* Grants to States for Medical Assistance Programs (Medicaid)
* State Children's Health Insurance Program (SCHIP)
* Supplemental Security Income (SSI)

U.S. Social Security is a social insurance program funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA). Tax deposits are formally entrusted to[3] Federal Old-Age and Survivors Insurance Trust Fund, or Federal Disability Insurance Trust Fund, Federal Hospital Insurance Trust Fund or the Federal Supplementary Medical Insurance Trust Fund. The main part of the program is sometimes abbreviated OASDI (Old Age, Survivors, and Disability Insurance) or RSDI (Retirement, Survivors, and Disability Insurance). When initially signed into law by President Franklin D. Roosevelt in 1935 as part of his New Deal, the term Social Security covered unemployment insurance as well. The term, in everyday speech, is used to refer only to the benefits for retirement, disability, survivorship, and death, which are the four main benefits provided by traditional private-sector pension plans. In 2004 the U.S. Social Security system paid out almost $500 billion in benefits.[4] By dollars paid, the U.S. Social Security program is the largest government program in the world and the single greatest expenditure in the federal budget, with 20.8% for social security, compared to 20.5% for discretionary defense and 20.1% for Medicare/Medicaid.[5] Social Security is currently the largest social insurance program in the U.S., constituting 37% of government expenditure and 7% of the gross domestic product[6] and is currently estimated to keep roughly 40% of all Americans age 65 or older out of poverty.[7] The Social Security Administration is headquartered in Woodlawn, Maryland, just to the west of Baltimore."

There is more about background as well as some tidbits.

"The Supreme Court and the evolution of Social Security

The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right". In that case, Ephram Nestor, a Bulgarian immigrant to the United States who made contributions for covered wages for the statutorily required "quarters of coverage" was nonetheless denied benefits after being deported in 1956 for being a member of the Communist party.

The case specifically held:

2. A person covered by the Social Security Act has not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment. Pp. 608-611. (a) The noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments. Pp. 608-610. (b) To engraft upon the Social Security System a concept of "accrued property rights" would deprive it of the flexibility and [363 U.S. 603, 604] boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act. Pp. 610-611. 3. Section 202 (n) of the Act cannot be condemned as so lacking in rational justification as to offend due process. Pp. 611-612. 4. Termination of appellee's benefits under 202 (n) does not amount to punishing him without a trial, in violation of Art. III, 2, cl. 3, of the Constitution or the Sixth Amendment; nor is 202 (n) a bill of attainder or ex post facto law, since its purpose is not punitive. Pp. 612-621.[65]

The Supreme Court was also responsible for major changes in Social Security. Many of these cases were pivotal in changing the assumptions about differences in wage earning among men and women in the Social Security system.[55]

* Goldberg v. Kelly (1970): The Supreme Court ruled that the due process clause of the Fourteenth Amendment required there to be an evidentiary hearing before a recipient can be deprived of government benefits.[27]
* Weinburger v. Wiesenfeld (1975): A widower claimed that he was entitled to his deceased wife’s benefit, even though he had not been dependent on his wife. The court upheld his claims, stating that automatically granting widows the benefits and denying them to widowers violated equal protection in the Fourteenth Amendment.[56]"

There is much more...

 

[MV=PQ]

SS is not a disaster. The problem is the way politicians raid SS resources - like a a drug-addicted parent who keeps stealing from their kids' piggy-banks. (Don't worry! I'll put it back!) SS can be made sound and stable with very little tinkering IF the government repays its debts to the system and stops raiding it.

Efficiency of programs run by the government is conditional on many utopian "ifs". Yeah, if the government didn't spend surpluses baby boomers generated, maybe it wouldn't be a disaster. However, as our debt indicates, thriftiness is in short supply these days in Washington.

 

[WhoWee]

Efficiency of programs run by the government is conditional on many utopian "ifs". Yeah, if the government didn't spend surpluses baby boomers generated, maybe it wouldn't be a disaster. However, as our debt indicates, thriftiness is in short supply these days in Washington.

The terms "Trust Fund" and "Contract Law" don't appear to have the same meaning in Washington as they do elsewhere, ie Social Security and GM bonds/preferred shares.

 

[Al68]

The terms "Trust Fund" and "Contract Law" don't appear to have the same meaning in Washington as they do elsewhere, ie Social Security and GM bonds/preferred shares.

Along with many other words. We need a new thread just about how politicians use words to mean something different than their common meaning, knowing that people will not know that's what they're doing, for the purpose of misleading them.

How about "spending cut". That's a big one. Where else can you spend more than in any prior year, even adjusting for inflation, and more than both sides previously claimed to want, and then call it a "draconian cut" because it's slightly less than you now say you want?

Words aren't used that way by accident, it's done skillfully for the purpose of fraud.

 

[WhoWee]

Along with many other words. We need a new thread just about how politicians use words to mean something different than their common meaning, knowing that people will not know that's what they're doing, for the purpose of misleading them.

How about "spending cut". That's a big one. Where else can you spend more than in any prior year, even adjusting for inflation, and more than both sides previously claimed to want, and then call it a "draconian cut" because it's slightly less than you now say you want?

Words aren't used that way by accident, it's done skillfully for the purpose of fraud.

That's why the Bills are so voluminous.

Remember the stimulus package at $787,000,000,000 - and there was no time to read the Bill. Now HR3200 is about 1,000 pages and very difficult to decipher.

 

[Al68]

Now HR3200 is about 1,000 pages and very difficult to decipher.

Yes, but it would be a little easier if its advocates weren't denying what was in it, knowing that most people will simply choose who to believe rather than read it.

 

[WhoWee]

SS is not a disaster. The problem is the way politicians raid SS resources - like a a drug-addicted parent who keeps stealing from their kids' piggy-banks. (Don't worry! I'll put it back!) SS can be made sound and stable with very little tinkering IF the government repays its debts to the system and stops raiding it.

Once again, turbo has hit the nail squarely on the head.

HR3200 and any other huge Bill (remember the $634,000,000,000 "down payment" on health care?) can be used in the "shell game" they are playing with our future.

I watched a movie last night about a British "rogue trader" in Singapore in the early 1990's. His name was Nick Leeson.
http://www.stock-market-crash.net/barings.htm
"The Collapse of Barings Bank
In February of 1995, one man single-handedly bankrupted the bank that financed the Napoleonic Wars, Louisiana Purchase and the Erie Canal. Founded in 1762, Barings Bank was Britain’s oldest merchant bank and Queen Elizabeth’s personal bank. Once a behemoth in the banking industry, Barings was brought to its knees by a rogue trader in a Singapore office. The trader, Nick Leeson, was employed by Barings to profit from low risk arbitrage opportunities between derivatives contracts on the Singapore Mercantile Exchange and Japan’s Osaka Exchange. A scandal ensued when Leeson left a $1.4 billion hole in Barings’ balance sheet due to his unauthorized derivatives speculation, causing the 233-year-old bank’s demise. "


It reminds me of the game being played with Social Security and health care reform.

 

[Moonbear]

The problem is that people have come to expect SS as their way of living through their retirement years. It really shouldn't be your only means of living, it should just be a supplement...if even that. Basically, it was put in place after the Great Depression as a security blanket, a form of insurance, if you lost everything just as you were about to retire, so you wouldn't be completely destitute.

Wouldn't it make more sense for SS to only kick in if you manage to outlive your savings?

 

[turbo]

Wouldn't it make more sense for SS to only kick in if you manage to outlive your savings?

Means-testing is not unreasonable. Who screams most if this is suggested? The well-to-do who don't need the money to survive, but who view it as an entitlement. My friend Arthur was a very sharp guy who was a whiz at designing and setting up shoe-shop production-lines for optimal production. When he retired, he bought a very large farm and established a driving range, golf shop, etc (golf was his avocation), and he was in hog heaven. The only time I ever saw him fly off the handle was when a customer suggested means-testing for SS, and he literally ran the guy out with his tirade. I thought Arthur was going to bust an artery, and his wife was quietly trying to get him to calm down. Gee, a millionaire, with a nice comfortable little business in his life's work, and annual 6-figure income in his investments getting all unhinged over (at the time) maybe $1000 or less a month? I loved Arthur, but had a hard time understanding him at times. I grew up in tougher circumstances than he did, and I ended up more fiscally conservative, but less ideologically rigid. I still miss Arthur, but I really miss his wife's viewpoint and wish she was still around, too. She battled skin cancer for years, and she never failed to grab onto all of her friends and relatives. I loved her, not only for her class, but for her sense of fairness.

 

[WhoWee]

The problem is that people have come to expect SS as their way of living through their retirement years. It really shouldn't be your only means of living, it should just be a supplement...if even that. Basically, it was put in place after the Great Depression as a security blanket, a form of insurance, if you lost everything just as you were about to retire, so you wouldn't be completely destitute.

Wouldn't it make more sense for SS to only kick in if you manage to outlive your savings?

I've personally made Social Security contributions for 34 years now (hard to believe - WOW - >anyway) and, even though I've been skeptical for the past 20 years, I've done so expecting to have the amount of monthly retirement income they've been promising on the yearly updates. When they change the deal, I'm going to be angry.

At the same time, our 401K's have been devastated, real estate has devalued, inflation is about to run rampant and business is terrible. Also, let's not forget why savings rates are so low - CD's and savings account interest, insurance policies, etc. are all growing at the bare minimums.

Add to all of this, if you have a job ->>> tax rates, fuel, and utilities are going to have to increase given Obama's policies.

I'm not sure the average person is going to have a cushion in retirement years.

 

[turbo]

I've personally made Social Security contributions for 34 years now (hard to believe - WOW - >anyway) and, even though I've been skeptical for the past 20 years, I've done so expecting to have the amount of monthly retirement income they've been promising on the yearly updates. When they change the deal, I'm going to be angry.

At the same time, our 401K's have been devastated, real estate has devalued, inflation is about to run rampant and business is terrible. Also, let's not forget why savings rates are so low - CD's and savings account interest, insurance policies, etc. are all growing at the bare minimums.

Add to all of this, if you have a job ->>> tax rates, fuel, and utilities are going to have to increase given Obama's policies.

I'm not sure the average person is going to have a cushion in retirement years.

I have been paying into SS since I was 14. I was working full-time summers since 1966 (earlier actually if PT labor is counted) and can prove it. I have paid the maximum into SS for more years than I can count, and still have had trouble getting any help when I became medically disabled. I hope that you and yours (and me and mine) will have a reserve to draw from when we need it. Increasingly, politicians are excited about stealing money from the SS reserve, AND then proclaiming how the system can't be self-sustaining and cannot be made to be so. Are there any reasonable adults who are slightly resistant to hyperbole, so we can get a fair view of this ginned-up "situation"?

 

[Jasongreat]

That's huge. At a minimum, I would expect the raiders to pay interest rates above prime, AND pay back in dollars adjusted for inflation/deflation as computed by the CBO to make sure SS doesn't get repaid in Monopoly money.

.

Oh, sure the raiders will pay it back, WITH YOUR MONEY, as well as the rest of us poor tax-payers that have already paid into SS once and now get to pay it back again! Isnt big government great? And they now want to run health care, the car industry,the economy and what ever else they can get their greedy little fingers on. There is no possible way for SS to be successfull, for one the government can't live within their means so that means inflation. So for every 1,000 dollars you pay in by the time you go to collect they owe you 10,000. The next reason is birth rates would have to always be increasing, if they slow down there's not enough money coming into support what's going out(isnt that a ponzii scheme anyways, using one investors money to pay off another). We should be screaming about the largest hiest in history, instead were sticking our heads in the sand and allowing it to continue(because we want our money back, we don't want to accept the fact that money is long gone and the only way to get it back is to pay it again), I say call it a loss and take that power away from them to keep it from happening again.

 

[Jasongreat]

Means-testing is not unreasonable. Who screams most if this is suggested? The well-to-do who don't need the money to survive, but who view it as an entitlement. .

So if you have an extra tv I guess you wouldn't mind if I swing by and take it? You don't need it. Why wouldn't his money be entitled to be in his pockets?

 

[Al68]

Means-testing is not unreasonable. Who screams most if this is suggested?

Those of us who believe it's an insurance program, not a welfare program. Should Geico decide to means test accident claims after the premiums are paid? Gee, that would be fraud, wouldn't it.

And of course Democrats will claim that anyone not condoning such fraud must just be "for the rich", as always.

 

[WhoWee]

Did anyone notice during the Presidents speech last night he mentioned a Congressman by name John Dingell of Michigan.
http://www.house.gov/dingell/bio.shtml
"When his father passed away while still a Member of the US House of Representatives in 1955, the younger Dingell stepped up to fill the void, beginning his career on Capitol Hill at the age of 29.

At the beginning of every session of Congress, Congressman Dingell introduces the national health insurance bill his father sponsored when he was a Member."

This guy (or his father) has been in Washington for about 60 years. It's worth mentioning he fought for patients rights and do not call, but where has he been for the past 50 years on the subject of accountability of the Social Security Trust Funds?

We need term limits and accountability in Washington. Only Government managers can operate in the Red for 50 years and keep their jobs.

 

[Jasongreat]

We need term limits and accountability in Washington. Only Government managers can operate in the Red for 50 years and keep their jobs.

I agree for the most part. But I believe its been going on for far longer than 50 yrs. According to my reading of american history the Jackson administration was the only time the national debt was paid off. Thomas Jefferson was close until he bought the louisiana territory. And even with Calvin Coolidge during the hayday of the roaring twenties, the congress wasnt satisfied and wanted more. So I agree we need term limits, if its good enough for the executive why not the legislative? Let's get some new blood in there, with new ideas.

 

[Office_Shredder]

To be fair, having a government operate in the red isn't necessarily a bad thing. The problem is when your debt grows faster than inflation

 

[WhoWee]

To be fair, having a government operate in the red isn't necessarily a bad thing. The problem is when your debt grows faster than inflation

I don't disagree about a little Red ink - but there are limits and we are WAY over the line.