Social Security?

@Cycloptichorn,

Just how I feel about it. It doesn't matter to me if you have a different opinion.

Cycloptichorn

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@Cycloptichorn,

Cycloptichorn wrote:

No, it does not have a problem inherent to its' structure.

Well if you aren't even willing to acknowledge the problem then it's pointless to discuss whether privatization is a valid part of the solution to the problem.

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You cannot brow-beat people into agreeing with you without providing evidence to back up your position.

I don't care if you agree or not but was not going to move the goal posts with you.

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IF SS had been, or even if we started RIGHT NOW, to allow the program to work in the way it was intended - that is, allowing the excess funds to add up and gain interest instead of stealing them and using them to add to the general fund - it would cover it's outlays for the known future.

Nonsense, a post or two ago you said there was no way to know this and now you claim it would be problemless at least for the "known future".

This is nonsense, if the cash flow is negative long enough no amount of savings would prevent it from exhausting the funds. The cash flow is going to be negative for the known future.

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You seem to be arguing that the program cannot continue into infinity, so therefore it is inherently flawed.

No, I'm arguing that banking it all on positive cash flow that is going away very soon is inherently flawed.

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But no program is designed to work into infinity!

I'd settle for one that's not running negative cash flow in the foreseeable future Cyclo. Now you want to move the goal posts again to "infinity"? Laughing

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All have to be changed over time in one fashion or another. This doesn't mean that the programs are inherently flawed.

That all programs have to be changed doesn't say anything about whether Social Security is flawed. We aren't talking about "all programs" and "infinity" we are talking about Social Security in the foreseeable future.

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Our governmental budgeting system has far more problems then Social Security does.

That doesn't mean Social Security doesn't have a problem that is inherent to Social Security.

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When we decided to put the SS trust fund into gov't bonds, the expectation that those bonds HAVE to be paid back should have been there. Apparently for many, that expectation did not exist. This is not a problem with the tool, it's a problem with the way we have decided to use the tool.

That has nothing to do with the inherent problem of negative cash flow. That has to do with how soon that inherent problem will completely exhaust the trust fund.

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The 2017 date as a 'serious problem' for SS is a joke. It is not the date when SS has a problem. It's a date when the bills come due for the Federal Government. You are blaming the wrong people for the upcoming event.

No, I'm just trying to establish with a stupefyingly stubborn individual that there is an inherent problem with Social Security. The other bills that influence the date at which picking up the tab for Social Security is catastrophic doesn't change that the negative cash flow puts Social Security on a collision course with the catastrophic meltdown.

Now if your stock and store is to just blindly claim this is not problematic, or to try to make straw men about the solutions (to the problem you won't fully acknowledge in the first place) to knock down then I'll just have to live with you pretending that it's not an inherent problem then, and make sure to try to avoid serious discussion with you about how to solve it.

1 Reply

@Robert Gentel,

But, I've already discussed steps that we could take to solve it - raising caps, raising monies collected, raising retirement ages. If your goal really is to discuss various ways that SS could be mended, and you refuse to do so unless I bow to the superiority of your position, then I think you should examine your own stubborn tendencies rather then focusing on mine. It seems to me that you are more interested in hearing 'you are right, Robert' then you are moving forward with any discussion about the future.

While the conversation has drifted here and there in this thread, my original proposition has not been successfully challenged, and I still stick by it: if we had gone with the Bush plan, the one championed by Republicans and other pro-privatization forces, people would have lost money in our current financial crisis, and this would have negatively affected their retirement savings.

Let me throw a little bone your way - I don't believe SS is any more inherently flawed than ANY other government program currently in operation. All require fixing on the fly in order to meet the demands of our changing world. That which worked last year is NEVER guaranteed to work next year. So, if you are willing to admit that pretty much every process we use to run our society is inherently flawed, then I agree with you; SS is to the same degree as all other processes.

Cycloptichorn

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

If your goal really is to discuss various ways that SS could be mended, and you refuse to do so unless I bow to the superiority of your position, then I think you should examine your own stubborn tendencies rather then focusing on mine. It seems to me that you are more interested in hearing 'you are right, Robert' then you are moving forward with any discussion about the future.

Nonsense, I don't ultimately care what your position is, and it's only important to whether or not I want to discuss Social Security with you.

If you don't see the discrepancy between revenue and payments as a fundamental problem we just don't see eye to eye enough on this to have a useful conversation about the problem that you don't think exists. To me it begins and ends with fixing the negative cash flow because as long as that is positive there is no Social Security problem. I don't care if you are unwilling to "bow to the superiority of [my] position". I don't really see it that way at all and if you see yourself in some kind of ego struggle I'm fine with you going on "unbowed". Rolling Eyes

Like I and many others have said, this discussion doesn't require "guts" Cyclo. It requires a lot of patience.

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Let me throw a little bone your way - I don't believe SS is any more inherently flawed than ANY other government program currently in operation.

Thanks but no thanks, I'd rather just discuss it with others. An "agree to disagree" if you will.

1 Reply

@Robert Gentel,

Fine with me. I'd point out, however, that our government has been running a negative cash flow for the entirety of my lifetime - with a small, brief part of sanity in the middle during the late 90's. The idea that a negative cash flow, for a governmental agency or entity, is some sort of emergency, is not born out by the real-world situation which surrounds us.

Cycloptichorn

1 Reply

@Cycloptichorn,

I never claimed that negative cash flow is itself an emergency Cyclo. I claimed that it is a fundamental problem that will lead to an emergency without changes in the fundamental structure.

Borrowing to make up the difference, like the government does, is one way to solve cash flow in the short term. It's still a fundamental problem because you are sticking the future with the bill, and creating the potential for financial catastrophe.

The US government can't continue to run a deficit permanently either and that the government has done so in our lifetimes says nothing about whether Social Security's deficit is a problem or not. It just means there are even fewer easy ways to address that fundamental problem.

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@Robert Gentel,

The biggest problem I see for the future is the ratio of interest payments due on all the increasing debt as it takes a larger and larger percentage of the annual budget which takes away from everything else.

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@Robert Gentel,

Robert Gentel wrote:

I never claimed that negative cash flow is itself an emergency Cyclo. I claimed that it is a fundamental problem that will lead to an emergency without changes in the fundamental structure.

Borrowing to make up the difference, like the government does, is one way to solve cash flow in the short term. It's still a fundamental problem because you are sticking the future with the bill, and creating the potential for financial catastrophe.

The US government can't continue to run a deficit permanently either and that the government has done so in our lifetimes says nothing about whether Social Security's deficit is a problem or not. It just means there are even fewer easy ways to address that fundamental problem.

Okay, I think we are coming nearer to agreement here. I agree that Social Security has problems that must be addressed in the long run. I just don't see them as problems which are any more imminent then the ones our government faces today. When SS reform was initially proposed by Bush, it was sold as an imminent problem and one which must be addressed post haste, or we would see a collapse in the system; I just disagree with that assessment, preferring to focus on what I consider to be more pressing problems.

Let us say that the retirement age was raised, even by as little as a year or two; what affect would that have on the financial health of the program? Is there any data that you are aware of addressing questions such as this?

Cycloptichorn

1 Reply

@Cycloptichorn,

Here again, Bush made a claim about the immanent bankruptcy of the social security funds when he tried to promote his private investment plan for retirement. Even the "same" government said that social security was safe until 2042.

His scare tactics didn't work "this" time.

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@Robert Gentel,

Let see what the other scenarios are since you think I cherry picked..

http://www.heritage.org/Research/SocialSecurity/images/cda98-01tab01.gif

It seems I didn't cherry pick numbers at all. I used a number that was lower than most of the different scenarios. Many of them show a return double the number I used.

Of average and low income families every group of 30,40 and 50 year olds but single males and 30 year old dual earners have a return higher than the 1.23% I used. Of high income wage earners, single earner families have a return higher than the one I used.
According to the census. 25% of households have people over 65 and 36% have children under 18. High income wage earners per Heritage were families that earned over $150,000 so that is only 6% of of the households according to the census. So the low to average income covers roughly 90% of the households below 65.

As I suspected it was Heritage that cherry picked in finding the lowest return for average wage earners to headline their piece.

You can apologize for accusing me of cherry picking now. My figures were LOW and I still showed that the market has underperformed SS in 10 year periods.

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@cicerone imposter,

Lets face it folks, the only reason the government is not more bankrupt than it is - is because Social Security taxes currently exceed payouts, but as this will surely disappear, the general fund will no longer be able to rob this extra money and replace it with worthless ious, and then we will be in very very serious trouble indeed.

We will need to raise retirement age more, and we will need to raise the limit on income from which ss taxes are applied to, in order to keep the program afloat, but that only continues to place more burden on the current and future economy, simply because we have already spent alot of what has been made up to this point. The current and future economy has to pay for what past economies have borrowed in order to attain the level of living that we have enjoyed. At least that is how an okie views it in simple terms.

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@okie,

okie, That's right; when the baby-boomers begin to retire in a few years, there will be more recipients than payers. The government failed to react to this reality by not a) increasing the age of benefit, and b) not putting that money to work as they collected the taxes. Rather, they put the social security trust fund into the general fund to spend in their annual budgets.

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@okie,

Sorry
We will need to raise retirement age 0 How long? I am ready to settle in USA and work till the last minute before my death. Only if USA makes a law that once you hire a person you should not fire him( if he works hard and behave not like the criminal CEO's).
How about following other country's social security?
Take for instance in India there were no social security but the family take care.
My younger brother who is the most intellectual in my family ( because of his two different degrees) had not worked a single day in his life and he is far far far better than my sister who is a doctor( radiologist) .
Don#t you think that USA is failing miserably with faulty fantacies?
Stick to the family value and free and fair economy.
Family is responsible for the offsprings.
Free economy- if fails should go out of the competion.
Most of my blood relatives in USA are fed up with corporate communism and characterless family values.

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@parados,

parados wrote:

Let see what the other scenarios are since you think I cherry picked..

Why? Unless you get the total return rate, and not just forecasts for demographics you are still picking out subsets within the data and not comparing apples to apples. You are taking the markets with all their risk, and comparing it to Social Security without any of its risk. I think this has already been pointed out to you.

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You can apologize for accusing me of cherry picking now. My figures were LOW and I still showed that the market has underperformed SS in 10 year periods.

I could but that would be stupid, because you did cherry pick a single forecast of a subset of the population and extrapolate that to the whole. Any of those forecasts you can pick from don't take into account the risks of paying into Social Security and not getting any return. If your point was that more effort would have found you a higher forecast to use I'll readily acknowledge that. After all if you use Bush's own numbers in his arguments that the private market outperforms Social Security he himself cites a higher return rate than you did when he claimed that "Right now, the real return people get from what they put into social security is a dismal 2% a year. Over the long term, sound investments yield about a 6% return."[1]

But this ignores that none of this forecasting doesn't reflect the total data. About one in six Americans will die between the working age and retirement age [2] and in these cases they get no return on their investment.

All of those forecasts you use ignore the biggest risk to your social security investment. They don't represent the total return on Social Security investment except for the scenario being forecasted.

If you are going to include the market data with all its risks, then you might as well try to come up with a real Social Security return rate that includes its risks to avoid comparing apples to oranges.

[1] Speech in Rancho Cucamonga, in “Renewing America’s Purpose” May 15, 2000: http://query.nytimes.com/gst/fullpage.html?res=9F01E0DD1238F931A25752C1A9669C8B63
[2] CDC mortality rates 2003: http://www.cdc.gov/nchs/data/nvsr/nvsr54/nvsr54_14.pdf

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Cycloptichorn wrote:

Through what, the magic of 'privatization?'

While it is true that some, restricted privatization would almost certainly provide a boost in benefits; it is also true that a better managed system could provide much of the same benefit without privatization. You seem stuck in a false dilemma (that it's one or the other), as opposed to both and/or a myriad of other possibilities. It is, after all, earned money that is being withheld to provide retirement benefits for individuals. Regardless of who controls it; the Ponzi style pay as you go system we have now is a piss poor way to manage money.

Now, if you want SS to simply provide a safety net against poverty then I would agree that paying as the need presents itself makes some sense. However; this isn't the way SS has evolved. SS benefits are dependent on how much a person pays in... which makes it mimic an investment of sorts... but who in their right mind would intentionally invest in a system with such an abysmal track record for returns?

A true safety net need not be any more than a flat benefit rate if that's its true purpose. SS, as its run today, is more than a safety net; it's retirement planning. The problem is that the portion of SS that exceeds "safety net" needs; is a forced investment into a crappy investment vehicle that will always require forced investment at the point of a gun to survive.

Ideally (IMO), the portion that is "safety net" should be raised within the Federal Tax (progressive rates, and certainly no caps.) Now if an individual's retirement needs beyond a "safety net" are to be mandated by Uncle Sam; said individual's retirement funds shouldn't be forced into such a crappy investment vehicle. (Believe it or not; Professional Fund Managers really are better at what they do than even the best intentioned government bureaucrats and their minions.)

Cycloptichorn wrote:

I just don't buy that. The stock market is not a magic engine for making money.

While it's certainly true that past performance is not necessarily indicative of future results, historically, the stock market has indeed been a magic engine for making money. Really. Show me any Index that didn't exceed SS for 20 years... let alone the 40+ years most everyone spends paying in to SS. (You might want to start by learning what an Index Fund actually is, before underlining your ignorance like you did last time you commented on it.)

You have proven here, thoroughly, that you lacked a fundamental understanding of both the Market and of Social Security’s inherent flaws, as demonstrated by a Bi-Partisan group of objectors. Your gotcha moment has been thoroughly demonstrated laughable repeatedly. You should, at least, take advantage of the opportunity to learn the errors of your assumptions.

Robbing Peter to pay Paul is sometimes a necessary evil, but it doesn’t make for a convincing prospectus… which is why any investment operated like SS would be laughed off the table, even if the methodology wasn’t illegal in all 50 states, were it not enforced at the point of a gun.

Robert has demonstrated a great deal more patience than he thought he had: Take advantage and learn.

1 Reply

@Robert Gentel,

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All of those forecasts you use ignore the biggest risk to your social security investment. They don't represent the total return on Social Security investment except for the scenario being forecasted.
...But this ignores that none of this forecasting doesn't reflect the total data. About one in six Americans will die between the working age and retirement age [2] and in these cases they get no return on their investment

And you accuse me of cherry picking data?

What the hell do you think "life expectancy is taken into account" means in the methodology? Of course some people get zero and some people get more than the average. It's you that is ignoring the data by claiming something was not included when you haven't even looked at the methodology which clearly takes into account what you say it doesn't.

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26 National Center for Health Statistics, Vital Statistics of the United States, 1992 Life Tables, Vol. II, Section 6, 1997.

I don't think you even know what the term "cherry picking" means.

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Cherry picking is the act of pointing at individual cases or data that seem to confirm a particular position, while ignoring a significant portion of related cases or data that may contradict that position.

So.. could you please point out the significant portion of the data that contradicts my position. So far you have only come up with small subsets while my number is lower than the majority of subsets which confirm my position. If you want to accuse someone of cherry picking you should have data to support your accusation. You have provided no data. You have only made specious claims which are obviously false and done your own cherry picking of really small subsets.

1 Reply

@Robert Gentel,

Robert Gentel wrote:

parados wrote:
Let see what the other scenarios are since you think I cherry picked..

Why?

Because "cherry picking" has a meaning would be why. If I cherry picked then the majority of the other data would contradict my claim. But the majority of the other data does NOT contradict my claim. I didn't pick data to make sure my claim was correct. I picked data that was presented by a source that I knew had the opposite opinion and would probably cherry pick their data. I was proven right in that the total data set shows that 1.23% is one of the lowest returns for the majority of those eligible for future benefits. (This includes those that die before they get benefits.)

Here is an older scenario by the Cato Institute that doesn't take life expectancy into account.
http://www.cato.org/pubs/journal/cj14n1-4.html
You will notice that the returns are much higher than the one from Heritage that I used.

From Economic Research Data

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The "average" U.S. worker faces a rate of return on contributions that is quite low--less than 2% after adjusting for inflation.

http://www.frbsf.org/econrsrch/wklyltr/wklyltr99/el99-34.html

I did not cherry pick based on any objective evidence. I will give you the benefit of the doubt in that you are not aware of the meaning of the term you misused. But you should be careful about your own cherry picking.

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@OCCOM BILL,

Bill, the point of SS is not to make the most money; it is an investment vehicle which will not fail, period. It is a tool of redundancy, not one of efficiency. And the 'magic money engine' is not a tool of redundancy. Some will lose out.

It's not a ponzi scheme, you've already been shown that it isn't a ponzi scheme, and your insistence on using the term still sort of makes me lose interest in continuing the conversation with you. It's quite obvious that you are one of those who is just dead-set convinced that you aren't getting the return that you could if you could just manage the money yourself... which to me says that you don't understand the point of SS at all.

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Now, if you want SS to simply provide a safety net against poverty then I would agree that paying as the need presents itself makes some sense. However; this isn't the way SS has evolved. SS benefits are dependent on how much a person pays in... which makes it mimic an investment of sorts... but who in their right mind would intentionally invest in a system with such an abysmal track record for returns?

Okay; it's a safety net against poverty. Anyone in their right mind would pay into a system which, while it doesn't provide giant returns, provides guaranteed returns. Not over a 20-year period, not subject to fluctuation. Guaranteed by the government.

I talked of my grandparents earlier. They receive an SS check, for the money my grandfather and mother put in to SS during their working life. None of it is subject to the whims of the market. If SS were currently set up the way that the Bushies (and you, which really should be a sign to you that you're on the wrong side of this issue) wanted, a big portion of their money would be in an account which is linked to stocks. The fluctuation of those stocks would lead to a fluctuation in the amount of money that they received right now. While over the ten-year period starting in 2005 and ending in 2015 they might still show a profit, that doesn't change the fact that they wouldn't be doing as well at any given moment and that would be directly reflected in the amount of money they get to live their life.

Old folks aren't looking for a gamble, they are looking for security. Better a low, steady check then one which is all over the place and could be much less at some points.

I don't think your contention - that people who weren't forced into SS wouldn't buy into it - is supported by any data whatsoever. Polling has shown that people like Social Security. When given the option to change to a system that you propose, they soundly rejected it. How do you explain that? You used the phrase 'enforcement at the point of a gun' twice. Dramatic but stupid. When given the opportunity to turn that gun elsewhere, people keep deciding to keep it pointed at them...

And as I said to Robert earlier: we both know it ain't gonna change, so what's the point of going on about it? The American public has rejected the privatization of SS for the time being. And, as I also said before, it's largely an issue of trust.

I also think there are a lot of additional costs and inefficiencies associated with having a private fund for every person in America, but funny, no advocates really want to talk about that fact, and how much those transaction and management costs would remove from the system...

Cycloptichorn

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@parados,

parados wrote:

And you accuse me of cherry picking data?

Yes, because you are.

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What the hell do you think "life expectancy is taken into account" means in the methodology?

Exactly what it says. It takes the life expectancy, and projects those scenarios based on the life expectancy. That gives a forecast for people who live to that projected expectancy but the forecasted return rate doesn't include the significant (1 in 6) number of people who don't get any return.

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Of course some people get zero and some people get more than the average. It's you that is ignoring the data by claiming something was not included when you haven't even looked at the methodology which clearly takes into account what you say it doesn't.

Nonsense. Answer this simple question: have you cited one single statistic that gives an accurate return rate for the entirety of the program or are you picking between forecasts for specific scenarios?

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I don't think you even know what the term "cherry picking" means.

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Cherry picking is the act of pointing at individual cases or data that seem to confirm a particular position, while ignoring a significant portion of related cases or data that may contradict that position.

So.. could you please point out the significant portion of the data that contradicts my position.

I have already done so. About 1 in 6 Americans would get no return rate.

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So far you have only come up with small subsets while my number is lower than the majority of subsets which confirm my position.

So? Your number still doesn't indicate the return rate of Social Security, just the return rate for the specific scenario being forecasted.

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If you want to accuse someone of cherry picking you should have data to support your accusation.

I did.

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You have provided no data.

That is a lie.

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You have only made specious claims which are obviously false and done your own cherry picking of really small subsets.

Go call a waaaambulance. You haven't established that I posted any false data and any subset that you are ignoring is indicative of your data not being reflective of the totality of Social Security. All it takes to demonstrate that you have not established what the return rate for Social Security is is to show that you are using forecasts that exclude any of the dataset.

So showing you any data your forecast excludes shows you that you have not established the return rate for social security.

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