News Should Social Security be privatized?

[Ivan Seeking]

McCain supported this. I'm not clear on his current position, but it certainly speaks to his judgement.

Of course the fundamentals of the economy are strong.

In 2000 McCain Wanted to Divert Social Security Money to Private Accounts. The Wall Street Journal reported that “[a] centerpiece of a McCain presidential bid in 2000 was a plan to divert a portion of Social Security payroll taxes to fund private accounts, much as President Bush proposed unsuccessfully.” The plan would put workers’ retirement money into the risky market and reduce the amount of Social Security payments they would receive from the government. The plan would undermine the Social Security system. [Wall Street Journal, 3/3/08]

http://www.aflcio.org/issues/politics/mccain_retirement.cfm

[May 19, 2008] Sen. Barack Obama on Sunday continued his efforts to tie presumptive Republican presidential nominee John McCain to President Bush, contending that the Arizona senator’s Social Security proposal was simply a continuation of Bush’s failed attempt to privatize the government-sponsored retirement plan.

“Privatizing Social Security was a bad idea when George Bush proposed it,” Obama told a forum at an assisted-living facility here. “It’s a bad idea today.” ...

http://articles.latimes.com/2008/may/19/nation/na-obama19

 

[Benzoate]

McCain supported this. I'm not clear on his current position, but it certainly speaks to his judgement.

Of course the fundamentals of the economy are strong. http://www.aflcio.org/issues/politics/mccain_retirement.cfm http://articles.latimes.com/2008/may/19/nation/na-obama19

Isn't Social Security going to go bankrupt anyway whether we privatized it or not ?http://money.cnn.com/2006/05/01/retirement/SStrustees_2006report/index.htm?cnn=yes My generation won't have a Social Security to used , so it really doesn't matter if it becomes privatized or not. Why should continue we be forced to give money to old people anyway when they have to be the wealthiest demographic in this country. they don't need any money.

 

[Ivan Seeking]

The "old people" already paid into the system. Why do you want to steal their money?

There are many old people who have nothing but SS as an income. Do you know how much they receive?

 

[Cyrus]

I heard on the radio (cspan radio) someone talking about how SS, had it been privatized, would have taken a huge hit with the economy going down and many people would have lost a big % of their SS checks, since the private company would have lost a huge share: but because its still gov run, the retired lost only in their 401K, and not in both. I think the number was somewhere around 20%.

 

[Benzoate]

The "old people" already paid into the system. Why do you want to steal their money?

There are many old people who have nothing but SS as an income. Do you know how much they receive?

Do you know my generation will not reak any benefits from SS? And There are a lot more people my age who have no income than compared to the number of old people who have no money. Should there be a federal gov't program geared towards aiding students in paying off their college loans? I this point , since we are helping bail out a couple of a investors who made bad investment decisions, then we should make college free for students. After all , we needed the most since we are one of the poorest demographic in the country. Spending need to saved more and stopped buying things that they can't by right away . Too many americans don't practiced saving and investing their money and too many americans spend way beyond their means. Its there fault that they have nothing after retirement.

 

[Astronuc]

The Social Security system already has more future obligations than revenue coming in. The government takes the money, invests puts it in the Treasury, and then spends it. I've heard that there is a surplus in the SS account. That may be so, but that money was spent in other accounts - so in reality there is not surplus.

Starting in 2014, with current revenues and outlays, the outlays (which are increasing as baby boomers retire) will exceed the revenue (which are decreasing - younger folk don't earn as much as older folk - and there are more baby boomers leaving the workforce than younger folk entering).

As of 2014, there will apparently be slowly increasing deficit in the cash flow.


Would privitization work? Well - given what we've seen during the past few weeks the answer would seem to be - NO!

Then what is the alternative. The government will not be able to sustain SS, and neither would private investment corporations or financial services companies if they are managed the way the failed companies have been managed to date.

What will need to happen is a substantial restructuring of the US and global economies.

 

[vanesch]

I think that all things which touch upon "security" cannot be privately held. After all, private initiative comes with contracts and risk taking, be it the risk that the contractor is going to (be able to) respect the contract. Even though that risk may be small, it is incompatible with something which is called "security". That doesn't mean that "complementary insurances" of whatever social nature cannot be private. But insurance is not security.

 

[Astronuc]

If investment = gambling, then it is not security.

I think we see the effects of inflated investments, whether it is real estate or equities. The earnings/returns simply have not justified the value of equities.

Too many people and institutions over-extended themselves for the economy to handle, and that is a systemic problem that must be corrected.

 

[turbo]

SS should not be privatized. The fund can be shored up with small adjustments. The people who scream about future obligations of SS and say we need to privatize SS NOW are the same ones who deregulated our financial markets and engineered this give-away of taxpayer money masquerading as a bail-out. To subject SS to the whims of the markets would put the lives of many people at risk. My IRA has lost over 20% since January, despite being very diversified. How would you like to know that your grandmother's SS check is 20% smaller now than in January, with heating season staring her down and food costs rising?

 

[Gokul43201]

I think SS, as it exists now, should be completely phased out and terminated over the next 2 decades. It should be replaced by a much smaller (financial) disaster relief fund. As long as the markets are being reasonably well behaved, the overwhelming majority of the population should learn to take care of themselves.

 

[Jimmy Snyder]

In spite of all the garbage talk, SS is not going to fail. It is invested in the safest security there is. You can say all you want about how unsafe it is, but you can't find safer. Neither will it go away. Everyone knows that if not for SS, their parents would move in with them. End of discussion.

 

[LowlyPion]

I think SS, as it exists now, should be completely phased out and terminated over the next 2 decades. It should be replaced by a much smaller (financial) disaster relief fund. As long as the markets are being reasonably well behaved, the overwhelming majority of the population should learn to take care of themselves.

I trust you are not planning a career in elective office in Florida.

 

[Benzoate]

If investment = gambling, then it is not security.

I think we see the effects of inflated investments, whether it is real estate or equities. The earnings/returns simply have not justified the value of equities.

Too many people and institutions over-extended themselves for the economy to handle, and that is a systemic problem that must be corrected.

bad investments are not the solution obviously. Forcing americans to pay 12 percent of their income into a system that will eventually go bankrupt and there will be no future beneficiaries o the system is flat out wrong! People should be taught or they should teach themselves to invest their money wisely or saved their money . I think that is spending money on things we do not have is a BIG problem in this country and the problem is being overlooked by many politicians. The solution isn't to spend spend spend , whether our decision is rooted in personal choice or in the government forcing us to spend our money on government programs and services. We must saved! It a shame that they don't teach you how to invest your money wisely in college.

I alsi think that the financial situation of many americans would be in better shape than it currently is if we change are monetary system , returning to gold standard rather than sustaining this fiat currency we have now. If you buy gasoline with silver coins, the price of gas will relatively be the same as the price of gas you bought in 1964.

 

[Gokul43201]

The "old people" already paid into the system. Why do you want to steal their money?

How does one steal "their money" without actually taking anything?

 

[Benzoate]

How does one steal "their money" without actually taking anything?

The US government is the only entity participating in the act of stealing.

 

[Jimmy Snyder]

I alsi think that the financial situation of many americans would be in better shape than it currently is if we change are monetary system , returning to gold standard rather than sustaining this fiat currency we have now. If you buy gasoline with silver coins, the price of gas will relatively be the same as the price of gas you bought in 1964.

Annual production of silver is roughly 850 million ounces, of which roughly 650 million ounces are used in industry, photography, and jewelry. http://www.silverinstitute.org/supply/index.php"
Annual production of gold is roughly 80 million ounces. http://www.goldsheetlinks.com/production.htm". I'm not sure of the uses to which it is put. I believe about 30 million ounces are used in jewelry and the rest is cast into coins and ingots. There is relatively little industrial use for gold probably because of its high price. These are guesses.
There are several issues here. One is the relative size issue. If the amount of silver you pay for gas is to be visible to the naked eye, then it would take a traincar of silver to pay for a skyscraper. If the amount of silver for gas is to be in dime size coins, then many traincars for the skyscraper. Moreover, you have the problem that with 300 million Americans, there is only enough production to provide a fraction of an ounce per person per year in silver or gold. The rest of the world gets nothing. What fraction of your annual fraction of an ounce of silver will that tank of gas cost?

If, instead you have paper money with metal backing, then the problem of the train car goes away as you just print bills with large denominations while the actual silver lies motionless in a vault somewhere. As to why we would all be better off if there was a vault full of motionless silver somewhere, I can't say. But you still have the miniscule production problem. A solution would be to have a multiplier. That is, behind each dollar is a tiny fraction of an ounce of silver. That way, if there were too few dollars in circulation for an efficient economy, you could decrease the silver backing. I assume that Congress would gleefully reduce to the point that you could count the number of atoms of silver behind one dollar. How is that different from what we have now?

 

[turbo]

I guess we could base our currency's value on stockpiles of tulip bulbs...

Nah! It didn't work so well the first time.

 

[Ivan Seeking]

How does one steal "their money" without actually taking anything?

The suggestion was that we should cut-off the checks going to people who are entitled by a lifetime of payments. That is theft.

 

[Ivan Seeking]

Do you know my generation will not reak any benefits from SS?

That is not a fact. That is a prediction that hasn't changed since I was your age.

And There are a lot more people my age who have no income than compared to the number of old people who have no money.

You have the ability to get a job and earn income.

Should there be a federal gov't program geared towards aiding students in paying off their college loans?

How is money paid to the SS system the same as money not paid into the system? You haven't pain into SS or a college fund, so why should you get a handout? Perhaps you should save and invest and not overspend.

Too many americans don't practiced saving and investing their money and too many americans spend way beyond their means. Its there fault that they have nothing after retirement.

There are lot of people who invested in SS based on a contract with the US government, but you want to steal their money.

 

[Benzoate]

Annual production of silver is roughly 850 million ounces, of which roughly 650 million ounces are used in industry, photography, and jewelry. http://www.silverinstitute.org/supply/index.php"
Annual production of gold is roughly 80 million ounces. http://www.goldsheetlinks.com/production.htm". I'm not sure of the uses to which it is put. I believe about 30 million ounces are used in jewelry and the rest is cast into coins and ingots. There is relatively little industrial use for gold probably because of its high price. These are guesses.
There are several issues here. One is the relative size issue. If the amount of silver you pay for gas is to be visible to the naked eye, then it would take a traincar of silver to pay for a skyscraper. If the amount of silver for gas is to be in dime size coins, then many traincars for the skyscraper. Moreover, you have the problem that with 300 million Americans, there is only enough production to provide a fraction of an ounce per person per year in silver or gold. The rest of the world gets nothing. What fraction of your annual fraction of an ounce of silver will that tank of gas cost?

TE=jimmysnyder;1909396]Annual production of silver is roughly 850 million ounces, of which roughly 650 million ounces are used in industry, photography, and jewelry. http://www.silverinstitute.org/supply/index.php"
Annual production of gold is roughly 80 million ounces. http://www.goldsheetlinks.com/production.htm". I'm not sure of the uses to which it is put. I believe about 30 million ounces are used in jewelry and the rest is cast into coins and ingots. There is relatively little industrial use for gold probably because of its high price. These are guesses.
There are several issues here. One is the relative size issue. If the amount of silver you pay for gas is to be visible to the naked eye, then it would take a traincar of silver to pay for a skyscraper. If the amount of silver for gas is to be in dime size coins, then many traincars for the skyscraper. Moreover, you have the problem that with 300 million Americans, there is only enough production to provide a fraction of an ounce per person per year in silver or gold. The rest of the world gets nothing. What fraction of your annual fraction of an ounce of silver will that tank of gas cost?

If, instead you have paper money with metal backing, then the problem of the train car goes away as you just print bills with large denominations while the actual silver lies motionless in a vault somewhere. As to why we would all be better off if there was a vault full of motionless silver somewhere, I can't say. But you still have the miniscule production problem. A solution would be to have a multiplier. That is, behind each dollar is a tiny fraction of an ounce of silver. That way, if there were too few dollars in circulation for an efficient economy, you could decrease the silver backing. I assume that Congress would gleefully reduce to the point that you could count the number of atoms of silver behind one dollar. How is that different from what we have now?

But there periods in US history when are currency was backed strictly backed by Gold metal. We can all agree that inflation was never a problem , the exceptions being that the price of gold would steadily rise during wartime. We are producing a lot more paper money that is not backed by any valuable metal like gold or silver, therefore it is worthless.

How is our fiat system is better than the gold standard when gold isn't driving the prices of goods and services up and therefore lowering the living standards of the middle classes whereas the price of gold has remain basically flat over the years compared to the dollar due to overspending and borrowing money from other countries.

I don't understand how it would take a traincar of silver coins to pay for a skyscraper; There would be a lot less silver coins compared to the number of dollar bills used to pay for a skyscraper. In one period in US history, an ounce of gold was worth $35.00 now an ounce of gold is worth as much as $1030 per ounce. You could pay your apartment rent with one ounce of gold .

Even our founding fathers didn't want our currency to be backed by anything other than gold or silver and forsaw the problems with a fiat currency .
Section 10, Clause 1 (Contracts Clause): No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.(http://en.wikipedia.org/wiki/US_constitution#Original_pages_of_the_Constitution)

 

[Benzoate]

That is not a fact. That is a prediction that hasn't changed since I was your age.

I seriously doubt people of my generation will reak any benefits from SS since it is going to take generations and generations of people to bail out these private investors , not to mentioned that there is a LARGE baby boom population that is about to retire.

You have the ability to get a job and earn income.

And those old people have the ability to established a savings account as well to put money aside after they retired or if they want to retire early .

How is money paid to the SS system the same as money not paid into the system? You haven't pain into SS or a college fund, so why should you get a handout? Perhaps you should save and invest and not overspend.

There are lot of people who invested in SS based on a contract with the US government, but you want to steal their money.

I don't want to steal anybody's money; I don't want the US government taking money from me that I've earned. Nobody should be forced to pay for my college education and therefore I should be obligated to pay into people retirement fund when they should be saving money for their own retirement fund.

 

[Jimmy Snyder]

But there periods in US history when are currency was backed strictly backed by Gold metal.

There was a promise to pay in gold, but there were always more dollars in circulation than there was gold to back it up. This is the multiplier solution. Even today there is a warehouse full of gold in Ft. Knox. Divide the number of dollars in circulation by the number of ounces of gold and you have your multiplier. We have already implemented your solution.

I don't understand how it would take a traincar of silver coins to pay for a skyscraper;

The volume of a dime is 340 cubic mm http://answers.yahoo.com/question/index?qid=20070812211332AAaGhbi". So it would take 3 railcars full of dimes to pay for a skyscraper. The energy costs for the transportation of money to pay for a $10 trillion dollar economy would sink us. We would have to have paper representations of the silver. That brings us back to the multiplier problem. We would need to warehouse improbable amounts of silver to keep the paper honest. Or use a large multiplier. It seems sufficient to have a dime encased in some ceremonial housing with a placard on it that says: This silver backs all the dollars.

 

[turbo]

I have paid into SS since I was 14 years old, and for decades, I paid the maximum amount. I have a medical disability that prevents me from having normal contact with members of the public, and have been unable to find a job. Recently (after years of applications, denials, and appeals) I received word from an administrative law judge that he found me to be disabled, and eligible for disability benefits. I am over a decade away from normal SS retirement benefits, and with no possibility of finding a new job, I have been fully dependent on my wife's wages and the health insurance that comes with her job. When you start playing neo-con shell games with SS and health insurance (like McCain's proposal to tax employer-provided health insurance or privatize SS), you can influence people who either are so wealthy that they have no need of either, or those who are so young that they have nothing invested in those programs. Neither group is acting out of public interest - just self-interest. Ivan is right - right-wingers have been predicting the failure of the SS system forever. It's a sham.

 

[Evo]

I seriously doubt people of my generation will reak any benefits from SS since it is going to take generations and generations of people to bail out these private investors , not to mentioned that there is a LARGE baby boom population that is about to retire.



And those old people have the ability to established a savings account as well to put money aside after they retired or if they want to retire early .

How is money paid to the SS system the same as money not paid into the system? You haven't pain into SS or a college fund, so why should you get a handout? Perhaps you should save and invest and not overspend.

I don't want to steal anybody's money; I don't want the US government taking money from me that I've earned. Nobody should be forced to pay for my college education and therefore I should be obligated to pay into people retirement fund when they should be saving money for their own retirement fund.

Benzoate, just curious, I am assuming that English is not your first language. Sometimes I find it difficult to figure out what you mean, you might want to take a bit more time to check your spelling and grammar.

 

[Benzoate]

I have paid into SS since I was 14 years old, and for decades, I paid the maximum amount. I have a medical disability that prevents me from having normal contact with members of the public, and have been unable to find a job. Recently (after years of applications, denials, and appeals) I received word from an administrative law judge that he found me to be disabled, and eligible for disability benefits. I am over a decade away from normal SS retirement benefits, and with no possibility of finding a new job, I have been fully dependent on my wife's wages and the health insurance that comes with her job. When you start playing neo-con shell games with SS and health insurance (like McCain's proposal to tax employer-provided health insurance or privatize SS), you can influence people who either are so wealthy that they have no need of either, or those who are so young that they have nothing invested in those programs. Neither group is acting out of public interest - just self-interest. Ivan is right - right-wingers have been predicting the failure of the SS system forever. It's a sham.

Both of the neocons and liberals have no intention of eradicating the social security system anytime soon. one of the faction parties wants the SS to be privatize. SS has only be around since the 1930's. How do you expect SS to be around when we have dozens of other government services to pay for , including these recent bailouts that have piled up on our table? We spend the most on Medicare and Social security. Currently the number of beneficiaries are around 40 million people. Now that the baby boomers have retired , it is estimated that the number of beneficiaries will almost doubled to 80 million since the first number of baby boomers have retired this year. There was an article from USA today that said that spending for SS is expected to go up from 4 % to 6 % and spending for Medicare is expected to arise from 3 % to 11 %.

How do you expect future generations to benefit from social security when they will probably have to work into retirement just to pay back the expensive bailouts? Generations ago , America used to be a country that valued saving . Now , we are a generations that values spending beyond are means. I think personal spending and government induced spending is the problem not the solution. Our Deficit have been steadily rising for 50 years , regardless if the president has been a democrat or a republican. I think in order to have a secure financial future, Americans in general have to adhere to 'not spending beyond your means ' mentality, a mentality that was very common among americans decades ago.

 

[CaptainQuasar]

The "old people" already paid into the system. Why do you want to steal their money?

I haven't dug deeply enough into Social Security financing to be able to confidently distinguish alarmism from reality. But it doesn't seem entirely unfeasible; population pyramids have caused cataclysmic problems for countries all over the world and throughout history, as far as I know. It also seems a little suspicious to be saying "Yeah, the regular government budget has gone ten trillion dollars in debt, but the Social Security part of everything, now that's been managed perfectly and with complete foresight."

In any case, "we already paid into the system" seems like a pretty inadequate defense of the moral high ground. If Social Security financing is screwed up, it got screwed up on the "old people's" watch. Since it looks as though oil reserves are going to get used now rather than left for the future, the colossal project of finding and transitioning to some kind of alternative energy is going to be left to the future, the ice caps are going to be literally melted away in short order, and so on, and so forth, "just sit tight, everything will be fine when you're our age" seems like a pretty big con.

(But privatization of SS would be dumb as a fix to any problems, forget that.)

⚛​

 

[turbo]

We don't need to kill SS to fix it, contrary to what the neo-cons, and the "conservative" Republicans before them would have us believe.

http://www.washingtonpost.com/wp-dyn/content/article/2007/10/28/AR2007102801150.html

http://zfacts.com/p/487.html

http://marketplace.publicradio.org/display/web/2008/09/05/social_security/

http://weblogs.sun-sentinel.com/news/politics/dcblog/2008/04/wexler_proposes_social_securit.html

"Conservatism" is often a cover for societal roll-backs that are not conservative, but are wasteful and potentially dangerous. Watch out for politicians and their handlers that espouse radical plans - when there is this much money involved (SS trust) there are fortunes to be made in the margins.

 

[russ_watters]

The "old people" already paid into the system. Why do you want to steal their money?

[separate post] The suggestion was that we should cut-off the checks going to people who are entitled by a lifetime of payments. That is theft.

Steal their money? C'mon, Ivan. It is one thing to say that you want to keep the current system, but that's a rediculous thing to say, for three reasons that you already know:

-Social security is not an investment account. Your money never was reserved to be given back to you any more than any of your other taxes are. If that's all SS was, mandatory private retirement accounts would be equivalent, if not superior.
-People receiving Social Security are set to receive more than they put in. (So would you support a cutback to make their benefits equal their contributions?)
-The bulk of the money that current seniors will receive comes from young people. I probably wouldn't use the word "stealing", but the government is taking money from the young and giving it to the old, knowing that the young will likely not get the money back. So if you really want to use that word to describe the situation, you're using it backwards.

And I know you know enough about SS to know these things.

How is money paid to the SS system the same as money not paid into the system? You haven't pain into SS or a college fund, so why should you get a handout? Perhaps you should save and invest and not overspend.

Good idea! But clearly, from the above, you only believe that when it applies to others. When it applies to you, you want someone else to provide the money for you.

 

[WheelsRCool]

We don't need to kill SS to fix it, contrary to what the neo-cons, and the "conservative" Republicans before them would have us believe.

This is pure nonsense. Conservatives do not want to kill SS and understand very much that it can be fixed without killing it.

And BTW, if it had not been for the Democrats in the first place, SS would still be solvent. It was Lyndon Johnson and the Democratically-controlled House and Senate that took SS out of the Trust Fund and put it into the general fund so Congress could spend it.

It was the Democrats who eliminated the income tax deduction for SS withholding.

It was the Democrats who started taxing SS annuities.

It was the Democrats who started paying SS annuities to immigrants at age 65, who'd never paid a dime into the system.

Then we get this nonsense that Republicans want to just take SS away.

And if you think SS, Medicare, and Medicaid are expensive now, wait until universal healthcare arrives.

 

[russ_watters]

Would privitization work? Well - given what we've seen during the past few weeks the answer would seem to be - NO!

Could you be more specific about how the events of the past few weeks lead you to that conclusion?

 

[russ_watters]

I think SS, as it exists now, should be completely phased out and terminated over the next 2 decades. It should be replaced by a much smaller (financial) disaster relief fund. As long as the markets are being reasonably well behaved, the overwhelming majority of the population should learn to take care of themselves.

I basically agree. I think, however, that the phase-out should include laws to require savings, which, if done correctly, would work out better in the long run for everyone.

 

[Benzoate]

We don't need to kill SS to fix it, contrary to what the neo-cons, and the "conservative" Republicans before them would have us believe.

http://www.washingtonpost.com/wp-dyn/content/article/2007/10/28/AR2007102801150.html

http://zfacts.com/p/487.html

http://marketplace.publicradio.org/display/web/2008/09/05/social_security/

http://weblogs.sun-sentinel.com/news/politics/dcblog/2008/04/wexler_proposes_social_securit.html

"Conservatism" is often a cover for societal roll-backs that are not conservative, but are wasteful and potentially dangerous. Watch out for politicians and their handlers that espouse radical plans - when there is this much money involved (SS trust) there are fortunes to be made in the margins.

I can equally post sites that say SS will go bankrupt:

http://wiki.answers.com/Q/When_will_the_social_security_system_go_bankrupt

http://www.bloggingstocks.com/2007/10/15/will-baby-boomers-bankrupt-social-security/

http://www.whitehouse.gov/news/releases/2005/02/20050204-12.html

http://www.isil.org/resources/lit/time-to-end-ss.html

We haven't had real conservatism since forever. For those who claimed that they are conservatives, they are really liberals masquerading in conservative clothing. No admistration has truly balanced the budget and deficits have continue to rise steadily in the past 50 years. No politician serves the interests of the people , and it is naive to think that they do and in reality they don't take the interests of the American people seriously .

 

[russ_watters]

Ivan is right - right-wingers have been predicting the failure of the SS system forever. It's a sham.

Do you and Ivan have any comment on the statistics about the health of SS, which are the basis for the predictions of failure, or do you just have predictions based on nothing more than 'they've said it before'? How will it be possible for SS to not fail? Is the average life expectancy going to suddenly drop back to 50? Is the birth rate going to suddenly double? Or will it be kept alive by restructuring it to drop the benefits, tax the benefits, or push the retirement age up to 75?

This is an issue that everyone has a good common knowledge understanding of, yet people make wild, baseless assertions about it when saying it won't fail and it shouldn't be changed. I want to hear some arguments with a real basis in fact and logic.

 

[WheelsRCool]

There is a book by an economist called "Econospinning" which talks about how both the Left and Right publications twist statistics here and there to favor their views.

He goes into some detail about how incredibly expensive SS is likely to become.

Thing is, he is no strict Republican (he voted for Kerry in 2004). He seems to be independent from what I can tell (as he crticizes both Republicans and Democrats in the book).

So it isn't strictly Republicans who argue that SS is going to go insolvent in the future.

I think SS, as it exists now, should be completely phased out and terminated over the next 2 decades. It should be replaced by a much smaller (financial) disaster relief fund. As long as the markets are being reasonably well behaved, the overwhelming majority of the population should learn to take care of themselves.

I agree, if this could be made workable; I think the problem is that occasional chance where the markets behave erradically, like now, due to bad legislation and so forth, plus the occasional stock market crash; Chile I believe has a SS system that essentially privatizes the profit but socializes the risk (I think - could be wrong, but it's something involving privatization of the SS system in a workable way), however, making such a system work in the United States is more complex. But it's something to look at.

I think people should learn to take care of themselves, but that might require a cultural change that at this point I don't know if we could achieve. Once you start giving the middle-class a major entitlement, it becomes ingrained into them that they should get it.

 

[mheslep]

We don't need to kill SS to fix it, contrary to what the neo-cons, and the "conservative" Republicans before them would have us believe.

http://www.washingtonpost.com/wp-dyn/content/article/2007/10/28/AR2007102801150.html

http://zfacts.com/p/487.html

http://marketplace.publicradio.org/display/web/2008/09/05/social_security/

http://weblogs.sun-sentinel.com/news/politics/dcblog/2008/04/wexler_proposes_social_securit.html

Note that at least the first two of those sources propose partial (~%20) privatization of the the trust fund through investment in equities, the difference from the President's plan being that per the WP and Zfacts authors, the government would do the investing, not you or me. We can't be trusted.

 

[mheslep]

Nobel Laureate Gary Becker on the subject; he addresses many of the above posts
http://www.becker-posner-blog.com/archives/2005/02/why_i_support_a.html
Why I Support a Privatized Individual Account Social Security System-BECKER, 2005


What caused the problem?

... as birth rates fell drastically, and the life expectancy at age 60 expanded enormously, fewer workers are now being forced to support more and more retirees. The result is a huge rise in social security taxes in every nation with a pay as you go system. The combined tax on employees and employers in the United States, excluding contributions to medicare, is now 12.4 per cent and rising, and that percentage is much higher in Japan and most Western European nations.
...
Pay as you go systems are in trouble throughout the world in good part because of changes in the number of workers per retiree, but also because of politically determined decisions that changed the system from saving for old age to an inefficient and complicated welfare system for some of the elderly. For example, despite the growing mental and physical health of older persons, political pressures in all nations with pay as you go systems forced a restructuring of social security payouts to encourage retirements at earlier ages than even the originally established age 65. In the United States many retirements occur age 62 or earlier, while Italians retire frequently while in their mid fifties, and very early retirement is not uncommon also in Germany, Belgium, and many other European countries.

What are other countries doing?

The expectation of continuing growth in this tax rate explains why countries as different as Sweden and Great Britain have partially moved toward a privatized individual account system.It also helps understand why Hong Kong, Poland, and other countries with low birth rates that recently introduced social security have important components of individual accounts in their systems.

So SS is in trouble, going broke. Just raise taxes? No, government can't help itself and blows it. Not just the US, all governments:

...Just as important are the political implications of Federal fiscal behavior. Tax revenue from social security taxes at present exceed payments to retirees. This excess is counted as part of the growing Social Security Trust Fund, but in fact also enters into the consolidated Federal budget account, and helps reduce the reported spending deficit. Reported deficits during the past decade would have been much larger if social security was not running a surplus during this whole time period.
Social security tax revenues are expected to fall below spending on retirees in about 20 years. If we simply raised social security taxes now-say by two percentage points- consolidated federal deficits would appear much smaller, and the federal government would be under less constraint to reduce spending. Both theory and evidence indicates that a good fraction of the additional revenue would indeed be spent. Putting aside assets for the future is very difficult for all governments, subject as they are to immense demands for spending now from various interest groups.

Becker's main reason for private SS: Higher benefits? No, it is that savings are removed from the political process:

I do not believe that the main advantage of a private account system is that individuals can get a higher return on their old age savings by investing in stocks. There are no free lunches from such investments since the higher return on stocks is related to their greater risk and other trade offs between stocks and different assets.
...
If there is no obvious gain from allowing most individuals to invest in stocks to help cover their retirement, and if there is no fundamental transition problem, what, if any, are the advantages of a funded privatized system? I believe the advantages are mainly political, not economic, that privatization helps to separate saving for retirement from interest group politics, taxation, and government spending.
...
So the really strong arguments for privatization are that they reduce the role of government in determining retirement ages and incomes, and improve government accounting of revenues and spending obligations. All the other issues are really diversions because neither advocates or opponents of privatization are asking the most meaningful question about privatizing social security: Is there as strong a political economy case for eliminating government management of the retirement industry as there is for eliminating their management of most other industries? My answer is yes

 

[Gokul43201]

I'm too tired to go digging now, but someone should post links to what the last Comptroller of the GAO, David Cantrecallhisname has said about the state of the SS fund.

 

[Ivan Seeking]

Steal their money? C'mon, Ivan. It is one thing to say that you want to keep the current system, but that's a rediculous thing to say, for three reasons that you already know:

-Social security is not an investment account. Your money never was reserved to be given back to you any more than any of your other taxes are. If that's all SS was, mandatory private retirement accounts would be equivalent, if not superior.

False. The SS program demands payment based on the good faith of the US. Your representation would make it a tax only and not a social safety net.

-People receiving Social Security are set to receive more than they put in. (So would you support a cutback to make their benefits equal their contributions?)

The money was paid based on the good faith of the US. Your position is that the US should commit fraud.

-The bulk of the money that current seniors will receive comes from young people. I probably wouldn't use the word "stealing", but the government is taking money from the young and giving it to the old, knowing that the young will likely not get the money back. So if you really want to use that word to describe the situation, you're using it backwards.

The money was paid based on the good faith of the US. You desire that the US commit fraud. Call it whatever you like.

But clearly, from the above, you only believe that when it applies to others. When it applies to you, you want someone else to provide the money for you.

Who said anything about me? I don't even expect to live that long. And if by chance I do, Tsu and I have invested well. [no we weren't naive enough to put our money in stocks]

 

[Ivan Seeking]

How are we to save SS? I thought everyone knew this by now: Immigrants.

 

[Astronuc]

Could you be more specific about how the events of the past few weeks lead you to that conclusion?

The stock markets were down 15-20% in one week, and about 40% down from their highs. More importantly, several financial institutions essentially went bust, their obligations far exceeding their capitalization. Given recent behavior of many financial institutions, I'd expect privatized SS to lose money. It is also a great way for some (managers of financial companies) to line their pockets or bank accounts with other peoples money - like some insurance companies have done with Medicare and Medicaid.

Private companies, which exist to make profit and enrich management, would add to the overhead (cost) of SS.

 

[WhoWee]

Astronuc...I HAVE TO AGREE!

How is it even possible to discuss privatizing social security in the same week our banks are being nationalized and stock market collapsing? It seems like the giant Ferris wheel is spinning so fast and out of control...it's now come off its frame and is rolling down the midway...and instead of trying to stop it... or get out of the way...is everyone instead trying to hop on for a thrill ride?

 

[Ivan Seeking]

Astronuc...I HAVE TO AGREE!

How is it even possible to discuss privatizing social security in the same week our banks are being nationalized and stock market collapsing? It seems like the giant Ferris wheel is spinning so fast and out of control...it's now come off its frame and is rolling down the midway...and instead of trying to stop it... or get out of the way...is everyone instead trying to hop on for a thrill ride?

uh huh. Perhaps the lunacy of the Republican/McCain plan can now be kept in perspective.

We need to get illegal immigration under control so that large numbers of young immigrants can move here legally and help to save the economy.

 

[Gokul43201]

I'm too tired to go digging now, but someone should post links to what the last Comptroller of the GAO, David Cantrecallhisname has said about the state of the SS fund.

I'm in luck. David Walker was on Bill Maher last night.

0NM5Q5VDpnA[/youtube]

 

[mheslep]

I think SS, as it exists now, should be completely phased out and terminated over the next 2 decades. It should be replaced by a much smaller (financial) disaster relief fund. As long as the markets are being reasonably well behaved, the overwhelming majority of the population should learn to take care of themselves.

It occurs to me that if Obama wins, politically he could take such a step and McCain could not. The left would trust Obama sufficiently - not that I see Obama taking such a step. Just as the right trusted Reagan to negotiate an end to the cold war with the Soviets at Reykjavik (barely), where they never would have allowed McGovern to do so.

 

[Gokul43201]

It occurs to me that if Obama wins, politically he could take such a step and McCain could not. The left would trust Obama sufficiently - not that I see Obama taking such a step. Just as the right trusted Reagan to negotiate an end to the cold war with the Soviets at Reykjavik (barely), where they never would have allowed McGovern to do so.

...in just the same way that McCain, rather than Obama, would have the political capital to cut wasteful defense spending.

 

[mheslep]

...in just the same way that McCain, rather than Obama, would have the political capital to cut wasteful defense spending.

Exactly. If McCain wins I hope he lops 25% or so off the top of DoD, the US could still maintain a strong defense where it counts.

 

[BobG]

Steal their money? C'mon, Ivan. It is one thing to say that you want to keep the current system, but that's a rediculous thing to say, for three reasons that you already know:

-Social security is not an investment account. Your money never was reserved to be given back to you any more than any of your other taxes are. If that's all SS was, mandatory private retirement accounts would be equivalent, if not superior.
-People receiving Social Security are set to receive more than they put in. (So would you support a cutback to make their benefits equal their contributions?)
-The bulk of the money that current seniors will receive comes from young people. I probably wouldn't use the word "stealing", but the government is taking money from the young and giving it to the old, knowing that the young will likely not get the money back. So if you really want to use that word to describe the situation, you're using it backwards.

And I know you know enough about SS to know these things. Good idea! But clearly, from the above, you only believe that when it applies to others. When it applies to you, you want someone else to provide the money for you.

As is, the plan is to steal money from someone. Either steal from those that paid in their whole life believing SS would be there for them when they retired ... or steal from a new generation of suckers.

I prefer doing the latter.

Realistically, the minimum age for receiving benefits should have increased at the same rate as the population's health. The plan was never intended to bankroll a life of leisure. It was intended to provide a minimum income for those who could no longer work.

 

[turbo]

Bernie Sanders' proposal is lifting the cap on SS payments. Currently, the cap is set at $90,000 of earnings, meaning that people making much more than that, still only pay SS contributions on the first $90,000. As he points out, Congress is not facing an economic problem with SS, but a political problem.

http://www.vote-usa.org/PoliticianIssue.aspx?Id=VTSandersBernard&Issue=BUSSocialSecurity

 

[dlgoff]

People receiving Social Security are set to receive more than they put in. (So would you support a cutback to make their benefits equal their contributions?)

After 40+ years of putting in money to SS, do you think $900 a month for a few years will use up all that was put in?
Shoot I'm going to retire a early as I can before you get enough people to agree that you can take/steal my part.

 

[CaptainQuasar]

How about retiring with a ten trillion dollar federal debt on the books? Isn't that stealing, just as much?

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