a.SafaLab
The Neolibertarian NetworkWe’re So Scroooood
There’s a projection at the WSJ about what might happen to the fiscal situation of the worlds 25 most economically developed countries by 2050.
Most of you that know me understand that I don’t put much stock in long term projections. On the other hand, it seems that fiscal projections are at least as sound as projections on global warming and likely much better. So where do we go from here?
While Mark T. is calling for a payroll tax cut, Sen. Obama is calling for a payroll tax increase. The former wants “real” tax relief for working stiff while Obama wants to lift the cap on the payroll tax. Funny thing though, the Pope of the New Deal sold this to Americans as an “insurance” program in the form of annuity payments. Until such time as everyone agrees that the Social Security and Medicare Systems are really nothing but a wealth transfer program I’m going to question any changes. I support Mark’s proposition if, and only if, entitlement payments are reduced. I won’t support Obama’s deal under any circumstances.
Call me crazy (and some of you will) but I still think the private accounts are a better idea than lending the money to Uncle Sam to manage a pension trust. If corporate executives managed a defined benefit plan the way the government has handled out “retirement” dollars they would all be in the hooskow for flagrant neglect of their fiduciary responsibilities.
Of course there’s another way out of this. We can let huddled masses become citizens by the millions each year and tax the boots off of them along with our kids. Inasmuch as entitlement payments serve as a transfer system to take money for a cohort that lacks the wealth of the receiving cohort, we might as well continue the practice of taking from the poor and diving to the “not-so-poor.” It’s become “The American Way.”
But I’m not sure that there’s enough of them to go around. Look at the chart. Sheesh.
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Just one thing that often gets overlooked – Social Security runs a massive surplus every year, probably in teh rage onf $200B or more right now, and that surplus serves to bring down the deficit in the general fund. Far from costing the government money, SS is bringing it in.
“Trust Fund”? I go back and forth on that. Alan Greenspan said the TF is real, but what else could he say. I think they are managing it exactly as it is intended to be managed – the smoke part of smoke and mirrors that justifies this huge tax on wages. These people are not dumb.
Well, I didn’t mention it per say with the exception of “lending the money to Uncle Sam to manage a pension trust” so I’m surely aware of it. That, however, is not a permanent source of cashflow – and therein lies the rub.
But you can’t tell me that it wasn’t sold to the American public on its creation that it wasn’t a trust fund. That has never been redefined.
It seems that the real objection to privatization is that the government is going to be shorted some real money. So in a way, the Social Security System is one massive Ponzi scheme that will start having more outflow in 2017 than inflow.
But I am sure that we will all be just fine. After all, our political leadership has already rejected privatization. They must know what they are doing, right? Right? Buehler? Buehler?
Wait’ll the Boomers start pulling their retirement money out of equities. Heheh
Steve – here we go – round and round. 2017 is the date (2018 is the last I heard) that we start drawing town the supposed trust fund. All of these years SS has been feeding the budget, that is the year the flow of funds reverses. It’s not exactly the same thing as costing the taxpayer money. It’s not like working people haven’t ponied up their share. What you are saying is the equivalent to yelling “Theft!” when a corporation has to pay back a bond that has matured.
The actual drop dead date for SS is beyond 2050. With a little tinkering, we could fix that in a flash.
Dave – you’re right, it was sold to us as a trust fund. If it is such, it is only as good as the promises of the politicians who maintain it.
“Dave – you’re right, it was sold to us as a trust fund. If it is such, it is only as good as the promises of the politicians who maintain it.”
Now that’s fuckin’ scary.
Mark, the workers like you and me have been paying in to support the current retirees. We haven’t paid a dime into our own retirement. I am curious how you think that we can fix it in a “flash.”
The coming retirement of the Baby Boomers (I am one of them) is going to reduce the actual number of workers, so we will have to raise the tax rate on everyone. Since Social Security tax is essentially regressive, (it falls heaviest on those making less than $89k if I remember right) we will have to raise the cap. But that is only a temporary measure at best.
If we means test Social Security, does that mean if you were foolish enough not to provide for your retirement you are rewarded, but if you did save, you get less than the share you paid in?
There are a host of problems in this, and by ignoring it, we are only going to make it worse.
Oh, and let’s not forget the effect of Medicare, which is going bust even faster.
Steve – this is the essence of the debate, I think you know. Is there really a trust fund? As I said to Dave, only if we can trust our politicians. There is a way to judge how trustworthy they are: If they say drop-dead date is 2018, they are anticipating breaking the promise behind the Trust Fund. If they say it is 2053, then they are not.
You said DD date is 2018, so I presume you do not believe there is a trust fund. I’m pulled hard in that direction too.
To fix Social Security, which is very close to solvent, we need only remove the cap or extend the tax to income besides wages. Right now working people pay the whole load, investors get off free. We could easily fund it in perpetuity. But I don’t think the privatizers want that – I think they want it dead and gone.
I know it is pay as you go, I know I’m paying for my mother’s now and that my kids will pay for me. I’m OK with that – it’s a good program offering benefits the private sector cannot begin to match.
PS – to fix Medicare, fund it.
If there is a Trust Fund, or a promise for that matter, it should be enforceable. I just don’t think any of us can sue to enforce it.
I am afraid that it is only smoke and mirrors, and it is going to be made worse when a whole bunch of us take early retirement just so that they will be on board before it fails.
As to just funding it, SS and Medicare already consume half the federal budget (not the military which only takes 1/4).
Medical costs will continue to eat larger portions of our GDP as time goes on, no matter how we pay for it. That doe snot relive us of the obligation to take care of our seniors. We have to do it.
And believe me, the private sector does not want to do health care for seniors (not without a massive subsidy, anyway). That’s how Medicare came to be in the first place.
“Enforceable” – interesting word. These bonds are supposedly legal obligations of the United States Government. They seem real – not paying them is going to take some smooth PR. But I have faith they will not be honored.
I’d be $300,000 richer today if it weren’t for jackasses like FDR and Mark T.
Max – You must be one of those fortunate investors who doesn’t pay any expenses, only collects profits, and who never allows current trends to influence long term prospects. Indeed you would be richer.
Democrats and their fellow travelers are disingenuous about why they do not want to privatize Social Security.
Democrats and their fellow travelers do not want to privatize Social Security because: (1) if Social Security was privatized then they could not use the argument “vote for me because I will protect and/or increase your Social Security monthly check”; and, (2) if these Democrats could still be elected, they would be prevented from their first love: raising taxes on corporations, because this would be harmful to the investments of those who, if Social Security was private, had invested in corporate equities.
Actually, it’s simpler than that. In the disturbed mind of the socialist, the state does everything better. And, naturally, the thing the state does better than anything else is waste money.
Social Security is a solid and well-funded program that has lifted millions out of poverty and guaranteed retirement income to rich and poor alike. It offers 1) retirement income; 2) survivor benefits for spouses and children, and 3) disability income. In addition, the annuities are life-guaranteed – that is, they don’t run out in case you outlive the mortality tables.
There’s nothing like it available in the private sector. Nothing can touch it. Go out and price it for yourself and see – ask your estate planner (life insurance salesman) for a product that does everything that SS does, and see if you can afford it.
In addition. Social Security operates on a dime. Where a typical mutual fund will take 26% of ultimate beneifts in expenses over an investor’s life, Social Security takes about 3%.
And that is the rub – Wall Street investment houses see the billions that go through SSA and salivate – they are not getting their cut. That’s why the push for privitization.
One other factor – Social Security works, has worked, will continue to work. It’s a very high quality retirement model, better than anything the private sector offers. For that reason, government haters hate it.
Karl (Max Bucks) – you’re deluding yourself if you think that you really would be $300,000 ahead without SS. That’s one of the reasons that the Bush plan fell on its face. The numbers didn’t crunch.