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Pensions Lost: Finally, a return to Americanism ?

 
 
Reply Mon 9 Jan, 2006 05:51 pm
We have all read recently of larger corporations scaling back or eliminating such scheduled benefits as retirement pensions. Many feel this is a bad thing. Is this the end of an Era? If so, I say: Good ridd'ns to bad rubbish. Now, if we can just get the Social Security (SS) monkey off our backs, we might be able to return to one of America's finest and oldest principles: individualism.

But what to do with those that depend on SS for their old age retirement income? Well, how about restoring such future recipients' dignity by allowing them the opportunity to take charge of their own affairs and letting them invest in their future on an individual basis. A few minutes of addition and multiplication reveals the enormous sum of our own personal earned income that we have let the federal government "redistribute" or "reallocate" to others deemed "less fortunate" than ourselves. Implicit in this mode of thought is that we must feel guilty if our personal industry and intelligent investment strategy result in superior rewards. Greed may not be good, but the pursuit of increased personal wealth and financial resources is not necessarily bad. It is the manner in which this pursuit is conducted that is important.

The second implication that encourages this governmental legal plunder is that all individual citizens require some compensation for merely, well, existing. This is not an advocation of Social Darwinism but a plea for social sanity. As we have all seen these past few months with the actions of lobbyists and special interest groups, every one seems to have their hand out. This is certainly not new, but there is no reason our central government has to feel obligated to place free resources into those hands and thereby encourage these ignoble passions. After all, these resources are not really free, someone must always pay. We sometimes forget this.

So, am I for the, now moribund, Bush like SS changes? Absolutely not. Bush's changes involved only specifics on a small amount (less than 20%) of your money in where it went after the government took possession of it. Simply put, even with Bush's plan, the government still possessed it (the money). Conceptually the Bush plan allowed you to put some of their money into some investments (i.e. stock, bonds, mutual funds, etc.) but this allowance translates into a loan. They loaned you your money (actually it is now their money) and allowed you to make money on it for your future retirement. Sounds good, but wait just a minute, the devil is in the details. The smell becomes more apparent with an analogy: Suppose you borrowed the money not from the government but your local bank (which placed a lean against your house for obvious reasons) and invested it in the stock market? Same deal right? Yes the same thing. You then make a ton of money on your stock investments pay the bank back and everybody goes home happy.

Has the stench in Denmark started to become apparent? Yes, just like the bank analogy, the government must be paid back the money it loaned you whether or not you made any money...even if you lost money you would have to pay back the government loan. Why? --because they need the money to pay all those on the SS rolls.

American individualism has the answer: let the people invest their own money. Too simplistic? Not really. Both the concept and its enactment are uncomplicated and have precedent. IRA's (both regular and Roth) and 401k's show us the way. By eliminating personal entitlements and expectations that Americans have become addicted to, we free up personal resources that once were lost in the obfuscated funding system. After all, we know that SS funds are not always used to pay SS retirees. The Congress has been using SS funds as its own personal piggy bank for way too long. Individuals, with a little help and education, always do better with their own money than those that have a governmental license to stick their hands into that citizen's personal pockets. Eliminate the middleman and let Americans control their own destiny...again.

So, what do you think?

JM
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joefromchicago
 
  1  
Reply Mon 9 Jan, 2006 07:59 pm
Re: Pensions Lost: Finally, a return to Americanism ?
JamesMorrison wrote:
We have all read recently of larger corporations scaling back or eliminating such scheduled benefits as retirement pensions. Many feel this is a bad thing. Is this the end of an Era? If so, I say: Good ridd'ns to bad rubbish. Now, if we can just get the Social Security (SS) monkey off our backs, we might be able to return to one of America's finest and oldest principles: individualism.

And you damn kids stay offa' my lawn!

JamesMorrison wrote:
But what to do with those that depend on SS for their old age retirement income? Well, how about restoring such future recipients' dignity by allowing them the opportunity to take charge of their own affairs and letting them invest in their future on an individual basis. A few minutes of addition and multiplication reveals the enormous sum of our own personal earned income that we have let the federal government "redistribute" or "reallocate" to others deemed "less fortunate" than ourselves. Implicit in this mode of thought is that we must feel guilty if our personal industry and intelligent investment strategy result in superior rewards. Greed may not be good, but the pursuit of increased personal wealth and financial resources is not necessarily bad. It is the manner in which this pursuit is conducted that is important.

And what do you propose to do with those whose investments end up losing money, or who never had much to invest in the first place?

JamesMorrison wrote:
So, am I for the, now moribund, Bush like SS changes? Absolutely not. Bush's changes involved only specifics on a small amount (less than 20%) of your money in where it went after the government took possession of it. Simply put, even with Bush's plan, the government still possessed it (the money).

How can anybody be for the Bush social security plan? Bush never had a plan. It never existed, not even conceptually. Indeed, I defy anyone to identify the specifics of the Bush "plan."

JamesMorrison wrote:
American individualism has the answer: let the people invest their own money. Too simplistic? Not really. Both the concept and its enactment are uncomplicated and have precedent. IRA's (both regular and Roth) and 401k's show us the way. By eliminating personal entitlements and expectations that Americans have become addicted to, we free up personal resources that once were lost in the obfuscated funding system. After all, we know that SS funds are not always used to pay SS retirees. The Congress has been using SS funds as its own personal piggy bank for way too long. Individuals, with a little help and education, always do better with their own money than those that have a governmental license to stick their hands into that citizen's personal pockets. Eliminate the middleman and let Americans control their own destiny...again.

So, what do you think?

Dickens said it best.
    "At this festive season of the year, Mr. Scrooge," said the gentleman, taking up a pen, "it is more than usually desirable that we should make some slight provision for the Poor and Destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir." "Are there no prisons?" asked Scrooge. "Plenty of prisons," said the gentleman, laying down the pen again. "And the Union workhouses?" demanded Scrooge. "Are they still in operation?" "They are. Still," returned the gentleman, "I wish I could say they were not." "The Treadmill and the Poor Law are in full vigour, then?" said Scrooge. "Both very busy, sir." "Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course," said Scrooge. "I'm very glad to hear it."
Each man for himself and the devil take the hindmost. That too is the spirit of individualism.
0 Replies
 
edgarblythe
 
  1  
Reply Mon 9 Jan, 2006 08:11 pm
Morrison, I volunteer you to Robinson Crusoe's island, where you can be all that you can be without f'ing up my life.
0 Replies
 
fishin
 
  1  
Reply Mon 9 Jan, 2006 08:48 pm
Re: Pensions Lost: Finally, a return to Americanism ?
joefromchicago wrote:

How can anybody be for the Bush social security plan? Bush never had a plan. It never existed, not even conceptually. Indeed, I defy anyone to identify the specifics of the Bush "plan."


Interesting... I seem to recall quite a few people posting about how his "plan" was going to ruin the WHOLE WORLD - old ladies and little helpless children were going to be starving in the streets if his "plan" was passed! lol
0 Replies
 
parados
 
  1  
Reply Mon 9 Jan, 2006 08:51 pm
Re: Pensions Lost: Finally, a return to Americanism ?
fishin' wrote:
joefromchicago wrote:

How can anybody be for the Bush social security plan? Bush never had a plan. It never existed, not even conceptually. Indeed, I defy anyone to identify the specifics of the Bush "plan."


Interesting... I seem to recall quite a few people posting about how his "plan" was going to ruin the WHOLE WORLD - old ladies and little helpless children were going to be starving in the streets if his "plan" was passed! lol


What else do you expect from a plan with no specifics? It certainly wasn't going to give everyone a great retirement.
0 Replies
 
fishin
 
  1  
Reply Mon 9 Jan, 2006 08:54 pm
Re: Pensions Lost: Finally, a return to Americanism ?
parados wrote:
fishin' wrote:
joefromchicago wrote:

How can anybody be for the Bush social security plan? Bush never had a plan. It never existed, not even conceptually. Indeed, I defy anyone to identify the specifics of the Bush "plan."


Interesting... I seem to recall quite a few people posting about how his "plan" was going to ruin the WHOLE WORLD - old ladies and little helpless children were going to be starving in the streets if his "plan" was passed! lol


What else do you expect from a plan with no specifics? It certainly wasn't going to give everyone a great retirement.


Would expecting people to shut their yaps and wait and see what the plan is before bitching about how it's going to be the financial ruin of everyone be to much???
0 Replies
 
edgarblythe
 
  1  
Reply Mon 9 Jan, 2006 08:59 pm
We all know that whenever the government alters SS, it is to take out more money.
0 Replies
 
joefromchicago
 
  1  
Reply Tue 10 Jan, 2006 12:00 am
Re: Pensions Lost: Finally, a return to Americanism ?
fishin' wrote:
joefromchicago wrote:

How can anybody be for the Bush social security plan? Bush never had a plan. It never existed, not even conceptually. Indeed, I defy anyone to identify the specifics of the Bush "plan."


Interesting... I seem to recall quite a few people posting about how his "plan" was going to ruin the WHOLE WORLD - old ladies and little helpless children were going to be starving in the streets if his "plan" was passed! lol

You certainly are not refering to me, are you? If you were, I would expect you at least to back up your claim by providing a link to a previous inconsistent statement of mine (although you might want to check out this post from last June first). If you're not accusing me of hypocrisy, then I fail to see your point: people who attack a non-existent plan (like JamesMorrison) are just as misguided as those who support it.
0 Replies
 
DontTreadOnMe
 
  1  
Reply Tue 10 Jan, 2006 04:05 am
the only problem with the "morrison plan" is that when alla those ol' codgers drop dead, after an exhausting day of dumpster diving for a li'l brunch, the damn liberals are gonna wanna raise taxes to sweep 'em up. probably want us to kick in even more to plant the ol' bastards.

now that's what i call family values. Rolling Eyes
0 Replies
 
fishin
 
  1  
Reply Tue 10 Jan, 2006 07:14 pm
Re: Pensions Lost: Finally, a return to Americanism ?
joefromchicago wrote:
...I fail to see your point: people who attack a non-existent plan (like JamesMorrison) are just as misguided as those who support it.


You didn't fail to see my point. Based on your own words here you are in complete agreement with it. It is stupid (or misguided if we're going to be polite...) to advocate either for or against a non-existent plan.
0 Replies
 
JamesMorrison
 
  1  
Reply Mon 23 Jan, 2006 07:36 pm
It seems that joefromchicago, edgarblythe, and DontTreadOnMe have either not read my original post carefully enough or chose simply to ignore it when it referred to:

Quote:
"...what to do with those that depend on SS (Social Security) for their old age retirement income? Well, how about restoring such future recipients' dignity by allowing them the opportunity to take charge of their own affairs and letting them invest in their future on an individual basis."


I must assume the former and reject the latter possibility in that their response was not just a knee jerk reaction originating from the prospect of any change to SS at all. So the assumption that I wish to suspend all SS and Medicare subsidies to present and near future retirees is, well…misguided. Do I look forward to, ultimately, the end of the SS welfare program? Yes, but more on that in a while. (Perhaps my crime is that of the crow that wishes to tell Dumbo that the Magic Feather he holds in his trunk is not what allows him to fly; it is his own ability that so affords.)

But not to worry, I don't have those powers needed to eliminate SS. But wait… Congress does! Indeed, since its inception Congress has both decreased and increased SS benefits any number of times. Robert J. Samuelson has pointed out this very fact in his Washington Post column the week of Feb, 18 of 2005:

Quote:
"It may shock most Americans to know that Congress could legally cut or eliminate their Social Security benefits tomorrow."


Sure enough, in my research for this response I came across this very fact in Analytical Perspectives (of 2003) a document published as a supplement to the Budget of the United States and seeks to explain it:

Quote:
"Other Federal programs exist that are similar to Social Security in the promises they make--Medicare, Medicaid, Veterans pensions, and Food stamps--for example. Few have suggested counting the future benefits expected under these programs as Federal liabilities, yet it would be difficult to justify a different accounting treatment for them if Social Security were to be classified as a liability. There is no bright line dividing Social security from other programs that promise benefits to people, and all the government programs that do should be accounted for similarly"
Quote:


Those who wish to kill the messengers (who include myself) may want to do some outsourcing since we are many and varied, but this will not change the fact that absolutely no one is owed SS or Medicare benefits (or food stamps, farm subsidies, etc). The claim exists, at this point, as a moral obligation and is neither a legal nor accounting obligation in any sense.

But where did this genuine sense of entitlement come from? From the very beginning the intent was there. In Arthur M Schlesinger's "The Coming of the New Deal" we find this quote from the father of SS, President Franklin D. Roosevelt, of the political value of connecting SS benefits to payroll taxes:

Quote:
"They [taxes] are politics all the way through. We put these payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes there no damn politician can ever scrap my social security program"


This explains Roosevelt's intent and wish, as good as it was for that time, but still gives no legal force or guarantee to future retirees towards their receiving a specific, or any amount, of government subsidy during their lifetime. Neither contributors nor recipients have the benefit of ownership in SS.

Am I beating a dead horse regarding the ultimate downsizing of SS? Well some here would like to believe so but this is tantamount to the proverbial ostrich head in the sand exercise. The week of Feb 18, of 2005 the Wall Street Journal finds economics Nobel laureate Gary Becker stating:

Quote:


Indeed, around 2012 the Social Security Trust Fund will have been depleted and because of mass retirement of the baby boomers it will require 2.9 workers to subsidize one SS and Medicare recipient. Samuelson, speaking of SS resolution, again, provides clarity:

Quote:
"Fourth, any sensible solution must include benefit cuts. There are many possibilities: higher eligibility ages; higher Medicare premiums; stingier benefits for wealthier retirees. Present benefit levels imply staggering future tax burdens. That would be unfair to workers and might harm the economy. Even if benefits are cut, taxes will rise because there will be, relatively speaking, more retirees and fewer workers."


Obviously the magic feather will become frayed to the point of its own destruction.

So, if SS is unsustainable in its present form what can we do to save this liberal social gem? President Bush, in his obvious attempt to visit another "fix" (like his new Drug Benefit Program) upon America's seniors rides to the rescue with (Drum roll please…) Personal Retirement Accounts (PRAs)!! But, where should we invest these funds? Stocks and bonds! Why? Because these investments have provided, over the long term, decent returns on one's investments. Sounds good!! (Why not REITs - Real Estate Investment Trusts --too?) Well, just Hoooold on there Bobbalouie!!!

At this point let me address this quote because the response is germane:

joefromchicago wrote:

Quote:
"...I fail to see your point: people who attack a non-existent plan (like JamesMorrison) are just as misguided as those who support it."


This denigration is unwarranted. I first became aware of the President's PRA proposal to help "fix" SS in a summer 2005 column by Paul Krugman but in my research found a somewhat less shrill source located at:

http://www.irrationalexuberance.com/shillersocsec.doc

Just to be sure that no one mistakes this proposal for PRAs as the "Morrison Plan" I have pasted it onto the very end of this post. In case any one has trouble with the URL and would like the complete text, let me know and I will P.M. it to you in its entirety.

The relevant section comes from Robert J. Schiller of the Cowles Foundation for Research in Economics and International Center for Finance at Yale University (e-mail= Robert.shiller@yale.edu). The Title of the paper is: The Life-cycle Personal Accounts Proposal for Social Security: An Evaluation. The section quoted below is located on page 1 of the main body of text (not the summary) Under: I. How the accounts would Work and starts on line 14 of that section.

This paper is germane, not so much because the proposal I outlined in the original post is indeed the President's (not mine) and did and does exist with some details, but more so in its object of examining the viability of using a mixture of stocks and bonds as investment vehicles for that 4.0% of our SS payroll tax "contributions". The hopeful claim that the President has no plan at all is baseless. The debate should then proceed to the plan's details or lack thereof.

President Bush's plan does have details enough (including the general details of types of portfolio's that might appear in the PRAs) so that Mr. Shiller was able to construct mathematical models shedding light on various investment strategies involving these accounts from low risk conservative portfolios to those more aggressive and therefore more risky. These use historical returns from 1871-2004 and involve separate calculations with only U.S. returns and then International (more real world) stock returns and bond yields. This is a 32 page (double spaced mostly) non technical paper that should be required reading for legislators (or layman) promoting or investigating "substituting" PRAs for SS benefits. Those such as joefromchicago or edgarblythe will find succor.
Indeed, here is the last part of the no nonsense summary of Shiller's paper regarding SS and a Life-Style Account to replace SS benefits (that type that would approximate most PRA portfolios after a worker's age of 47):

Quote:
"In addition, life-cycle portfolios are considerably riskier than what some would think. By suggesting that the life-cycle portfolio is the recommended portfolio for everyone, the [President's] plan neglects the variability across workers of economic situations, and of psychological barriers to good financial planning: given the risks, the plan could be disastrous for some workers."


Indeed the median value at the end of the game is only $15, 172 (mean= $17,634), that is a rate of return of only 3.4% (this figure takes into account fund expenses and the 'offset' value {that owed the government}). This is well below the 6.5% assumed by the Social Security Actuaries. Using more real world international data the returns are worse yet. But using the more hopeful figure of $15,172 we calculate its lifetime annuity value to about $1000 a year…Hmmm. Even the lowest SS benefit (using price indexing) is $14, 025 per year. The worker comes up short…way short.

I know right about now some might ask: So how do people make money with stocks and bonds? Well the paper being discussed reveals a clue, actually two, towards that end. If one consults Shiller's charts There are only two) he finds that it is the balance between equities and fixed income (stocks and bonds respectively) and the timing of the necessary re-balancing of those instruments that works towards higher returns. Individualism begins to rear its ugly head.

But why do the PRAs show such an abysmal final return on investment? Well the Bush plan sets in motion the Life-Style Accounts at workers age of 47, almost 20 years before the target retirement age. There is a way for the worker to raise his rate of return by rebalancing his portfolio but he must sign a waiver to do so but this would require joefromchicago's devil "individualism" hindmost and all.

However, there is something else. For those that read the excerpt found at the end of this post, please recall Shiller's:

Quote:
"But, according to the President's plan, the personal account does not come for free...So, in an attempt to preserve balance over an infinite horizon, the plan specifies that when the individual finally retires, an "offset" value, the terminal value of the personal account contributions cumulated at a 3% real interest rate, will be annuitized (converted into a series of payments for life, analogous to the payments that people make on mortgages) and subtracted from the traditional Social Security benefit."


Remember when I said that that part of your SS tax contribution earmarked for investment in PRAs was a loan from the government? Well this is where you get to nobly pay your debt to the government. Your "contributions" the government considers its own and now it is time to fulfill your Faustian deal with the Federal government and severely decrease your returns on investment. Afterall, it turns out you bought your investments on margin--you took out a loan, from the government, to invest in your retirement.

So, why in heaven would I go to such lengths to cite hard evidence that seems to favor joefromchicago, et al's case to leave SS alone? Two reasons:

1. SS, for those beginning their work lives now, is going to go the way of the Dodo bird.

2.With reason #1 a given, workers should be able to keep that portion of what would be considered their "contribution" to SS sooner rather than later and allowed to invest it in tax deferred accounts (IRAs) for their retirement. They should be allowed, nay, required to invest the tax relief portion afforded them sans SS taxes into tax deferred accounts. Borrowing money from the government (or anyone) for a long term retirement account is a bad financial move.

We will probably never rid ourselves of government welfare (corporate or otherwise) programs entirely. But the more individuals keep of their own money the less the government gets to mismanage. Someone once said that, essentially, citizens are exposed to less fiscal abuse when Congress is in recess, I agree.

JM

P.S. all emphasis, except in the quote from joefromchicago, are mine:JM

Robert J Shiller explains the meat of the Presidents plan to fix SS:

Quote:
"The proposed new personal account system would be optional: people can stay in the old system (subject to future changes in that system that Congress might make) or elect to have 4.0% of their 6.2% contribution (up to a maximum amount that would be phased out by 2041), diverted into personal accounts. They can then allocate these accounts, according to their tastes, into a portfolio of their choosing, subject to the restriction that it be comprised of a few broadly diversified investment funds of stocks and bonds along the lines of the options currently offered to Federal employees through the Thrift Savings Plan (TSP), and including as well a life-cycle fund option, which the TSP has announced plans for, but which it does not currently offer.
But, according to the President's plan, the personal account does not come for free. Indeed, there is a much-discussed budget problem that the President's plan must allow for. A plan that simply allows workers to divert part of their Social Security contribution into a personal portfolio will mean that the government will no longer be able to use this part of current contributions to support the current beneficiaries of Social Security. The government will have to borrow money to make up for the money workers have diverted to the personal accounts. So, in an attempt to preserve balance over an infinite horizon, the plan specifies that when the individual finally retires, an "offset" value, the terminal value of the personal account contributions cumulated at a 3% real interest rate, will be annuitized (converted into a series of payments for life, analogous to the payments that people make on mortgages) and subtracted from the traditional Social Security benefit. In addition to this reduced traditional benefit due to the offset, the worker will also get the lump sum value of the personal account, although he or she would be required to annuitize at least enough of that so that the combined traditional benefit and personal account would be above the poverty line, whenever there is enough in the personal account to make that possible. In effect, the worker has not really "diverted" his or her Social Security contributions into a personal account, but has merely borrowed from the government to invest in a personal account, and must eventually pay the loan back. The offset will eventually help the government deal with the debt it incurred to maintain benefits to retirees.
While the plan is described as a way of "fixing" Social Security, in effect, the new personal accounts are nothing more than a plan to encourage people to buy stocks and bonds on margin that is to borrow money to buy stocks, with the Federal government as the lender offering a 3% real interest rate on the loan. The computation that is made when a worker retires is the same as one that a brokerage firm would do for customers with margin accounts who elected to put the equity in their margin account into a retirement annuity on the day they retired. In the brokerage business, the "offset" would be called the "debit balance" in the margin account."
0 Replies
 
edgarblythe
 
  1  
Reply Mon 23 Jan, 2006 07:45 pm
When one is retired on SS, it is too late for all that individuality rugged he man pull yourself up by your own boot straps crap.
0 Replies
 
JamesMorrison
 
  1  
Reply Mon 23 Jan, 2006 10:09 pm
edgarblythe wrote:
Quote:
When one is retired on SS, it is too late for all that individuality rugged he man pull yourself up by your own boot straps crap.


Perhaps so, but how does this speak to the future financial security of those now young enough in the SS pipeline that must eventually face the eventual real world scenarios sans the SS "cushion" that both you and I presently and soon will enjoy? Doesn't the government have a responsibility to inform and educate them so that they do not suffer the fate of so many U.S. citizens during pre-Rooseveltian times? Roosevelt was a hero in my book, for many reasons, but times change and so must retirement planning for the masses.

JM
0 Replies
 
joefromchicago
 
  1  
Reply Tue 24 Jan, 2006 12:54 pm
JamesMorrison wrote:

joefromchicago wrote:

Quote:
"...I fail to see your point: people who attack a non-existent plan (like JamesMorrison) are just as misguided as those who support it."


This denigration is unwarranted. I first became aware of the President's PRA proposal to help "fix" SS in a summer 2005 column by Paul Krugman but in my research found a somewhat less shrill source located at:

http://www.irrationalexuberance.com/shillersocsec.doc

....

This paper is germane, not so much because the proposal I outlined in the original post is indeed the President's (not mine) and did and does exist with some details, but more so in its object of examining the viability of using a mixture of stocks and bonds as investment vehicles for that 4.0% of our SS payroll tax "contributions". The hopeful claim that the President has no plan at all is baseless. The debate should then proceed to the plan's details or lack thereof.

From the Shiller paper:
    President George W. Bush has outlined a specific plan for personal accounts within Social Security, allowing workers to invest a portion of their payroll taxes in exchange for a reduction in their traditional Social Security benefit. The plan is similar in spirit, but different in important details, to a plan proposed by President Bill Clinton in 1999, which relied on a government budget surplus at the time. [b]Bush has not yet unveiled an entire plan to restore solvency[/b].
(emphasis added). I repeat: there was no Bush "plan" for social security reform.
0 Replies
 
DontTreadOnMe
 
  1  
Reply Tue 24 Jan, 2006 01:21 pm
and solvency is the real issue of import, isn't it ?

i feel like the bush plan is more about boosting investment for the corporations than doing anything meaningful for citizens.

somehow, i just keep thinking about how my dad, at retirement, invested a big chunk of his hard earned profit sharing in the stock market (ala the bush theory ), only to have it vaporized when bush senior presided over the market dump of the late '80s.

social security is, and never was, meant to insure that john Q. public would be able to pay his green fees when he retired.

only that he would not have to eat the aforementiond greens to avoid starving.

instead of proposing a "get rich" scheme, why not start by not pillaging the social security coffers at every opportunity. and then, come up with a reform that actually fixes the system ?
0 Replies
 
fishin
 
  1  
Reply Tue 24 Jan, 2006 05:21 pm
DontTreadOnMe wrote:
social security is, and never was, meant to insure that john Q. public would be able to pay his green fees when he retired.


It also wasn't intended to provide survivors benefits, benefits for family members, disability, early retirement (age 62) or cost-of-living increases. That doens't even get into increased life expectancy and such.

As an overall system is flawed in it's basic structure. You can't continue paying out more to people than they pay in and have more people collecting than paying.
0 Replies
 
Cycloptichorn
 
  1  
Reply Tue 24 Jan, 2006 05:27 pm
Then you increase the number of people paying, Fishin, by removing the 90k cap on SS. This also increases the AMOUNT being paid in tremendously, while simultaneously removing the common incenctive for Corporations to concentrate their payrolls above 90k to save money on taxes.

Cycloptichorn
0 Replies
 
fishin
 
  1  
Reply Tue 24 Jan, 2006 05:41 pm
Cycloptichorn wrote:
Then you increase the number of people paying, Fishin, by removing the 90k cap on SS.


Errr.... That doens't increase the number paying. Think about it for a second. If you have 100 people paying and 10 of them reach the cap and continue paying how many are paying at that point? It's still 100 isn't it? Wink

Quote:
This also increases the AMOUNT being paid in tremendously, while simultaneously removing the common incenctive for Corporations to concentrate their payrolls above 90k to save money on taxes.


Not really. It would increase the revenues slightly but hardly by enough to keep the system afloat long term. SS Tax is a payroll tax so people like Bill Gates would pay more than they do now but they still wouldn't pay it on the overwhelming majoirty of their income which come in the form of capital gains - not payroll.

And if you eliminate the cap then you'd also end up having to eliminate the cap on payments so the SS chacks those people get when they reach retirement age would just be larger. In the end, based on how SS is setup, the net effect of eliminating the cap would be negative.

On average once you've been collecting SS for 5 years you've alreday gotten more out of it than you ever paid in. Eliminating the caps would increase the size of those monthly checks to the people that need it the least and they are also the most likely to live the longest.

You could put a means test on the ability to collect SS at retirement to limit that some but that just delays the eventual train wreck a bit farther.
0 Replies
 
Cycloptichorn
 
  1  
Reply Tue 24 Jan, 2006 05:45 pm
Umm.. grr.. <biting knuckles> How far in the future are we talking about, this train wreck?

Do you believe that tweaking isn't going to get the job done? Calculate based upon an eventual stabilization of our societal population through articifical means (I predict it will happen within 30 years or so, at the most). If you wish, that is, thanks.

Cycloptichorn
0 Replies
 
edgarblythe
 
  1  
Reply Tue 24 Jan, 2006 05:53 pm
When they can throw away billions or trillions on a wasted war, give the rich big tax cuts, do everything for the rich and continually make sure the poor get less and less, they can't even talk to me about needing to quit paying SS. They need to hang the bastards from a tree and live up to the promises made in the past. The Bush plan is a make more rich people richer plan, not a thing to benefit anybody.
0 Replies
 
 

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Appointment necessary ??? - Question by annbo
Social Security abroad as a non resident - Question by orandaberg
 
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