FighterHayabusa

Lesson number 2 in scaremongering: add up deficits under as long a time horizon as possible and present that ridiculous number as something we need to come up with today to keep a program going unchanged.

Don't use a sensible, diminutive (yet true) number like a shortfall of 1% of GDP, because the bigger the number you come up with, the less people believe that just tweaking the program such as by raising the age people start to receive Social Security by fractions of a year every decade or so in line with life expectancy reduces 2.5 trillion to 0 without a lot of muss or fuss.

Sadly, if you don't do this, Social Security could cease to be the Libertarian social program whipping boy and CommuSocioFascism will be just around the corner! And if you don't think that's scary, Oprah will be the supreme leader! You will only have two channels! Dr. Phil and Oprah! That wall they're going to build to keep Mexico out? It's to keep YOU in!

FighterHayabusa

I don't really find it that hard to see the Social Security Administration as being a separate entity that in and of itself is not the perpetrator of the wrongs you thrust on it. Your problem is actually with government spending the extra money collected by the SSA and failing to prepare for the day when they can't spend it anymore.

So again, why would you pick on Social Security instead of any of the other things we ran a deficit for since the surplus idea was concocted?

Every month I buy too much beer and put an IOU into the food budget, telling my body that I will give it the nourishment needs later and the extra beer calories will keep me alive in the short term. Your logic would be analogous to saying I should have never started the food budget, whereas really I shouldn't have bought the extra beer. There's nothing inherently wrong with having a food budget.

SteamJet

[quote=FighterHayabusa;685726]I don't really find it that hard to see the Social Security Administration as being a separate entity that in and of itself is not the perpetrator of the wrongs you thrust on it. Your problem is actually with government spending the extra money collected by the SSA and failing to prepare for the day when they can't spend it anymore.

So again, why would you pick on Social Security instead of any of the other things we ran a deficit for since the surplus idea was concocted?



I'm not sure what you're upset about or what exactly you're trying to defend. . .

Many of us aren't happy with the SS for a few reasons and the way government is run generally.

Gripes with SS:

It's little more than a legal ponzi scheme. The money (forcibly) taken from most employees is NOT "theirs" to be invested and then returned to them with interest at a later date. This is why the "trust fund" will be completly depleted in less than 20 years. That is, unless the ponzi pyramid is pumped up via more taxation from those currently working to pay for those who no longer are.

Many of us would like the FREEDOM to invest our OWN money in ways WE see fit. We neither need nor want the government to be our mommy.

Like anyone else who has worked for a government agency in any mid-level or higher capacity for any length of time, I'm acutely aware of the omnipresent waste and inefficiency in government. Fraud, waste and abuse are everywhere. It's the nature of the beast. Trying to get rid of it is like trying to keep every weed out of your lawn or trying to lose that last 5 lbs after age 40. Not impossible, but dam* near so.

SS is just ONE example of how the federal government does a LOUSY job managing the myriad social programs that directly impact the lives of its citizens.

As our history has shown time and again, all the government's good intentions and promises to learn from the mistakes of the past are nothing more than wishful thinking. To paraphrase Friedman, people just don't spend other people's money wisely and they never will.

In my opinion we would be much better off in the long-run if we would reverse the trend of relying more and more on government and rely more on ourselves. Yes, it would be painful for many, but it would be well worth it for all of us in the end. The government should get out of the social welfare business and stick to what it can (marginally) do right - roads, public safety, defense*, etc.

*not a slam in any way, shape or form on the men and women that serve in the rank and file of our armed forces. Been there, done that myself for over 20 years. If you were ever in the military you know what I'm talking about.

jungle

The 2.5 trillion is just the money already paid that has been spirited away to other "projects". In reality that 2.5 trillion will have to be collected again, thereby doubling the cost of this particular amount collected through SS.

For a more realistic accounting of unfunded liabilities and their real impact have a look here:










Social Security and Medicare Projections: 2009
Brief Analysis | Social Security


Thursday, June 11, 2009

by Pamela Villarreal

The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt.

The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, this debt rose by $5 trillion. If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both.

Social Security versus Medicare. Politi*cians and the media focus on Social Security's financial health, but Medicare's future liabilities are far more ominous, at more than $89 trillion. Medicare's total unfunded liability is more than five times larger than that of Social Security. In fact, the new Medicare prescription drug benefit enacted in 2006 (Part D) alone adds some $17 trillion to the projected Medicare shortfall - an amount greater than all of Social Security's unfunded obligations.

Future Payroll Tax Burdens. Currently, a 12.4 percent payroll tax on wages funds Social Se*curity and a 2.9 percent payroll tax funds Medicare Part A (Hospital Insurance). But if payroll tax rates rise to meet unfunded obligations:

When today's college students reach retirement (about 2054), Social Security alone will require a 16.6 percent payroll tax, one-third greater than today's rate.
When Medicare Part A is included, the payroll tax burden will rise to 25.7 percent - more than one of every four dollars workers will earn that year.
If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37 percent of payroll by 2054 - one in three dollars of taxable payroll, and twice the size of today's payroll tax burden!
Thus, more than one-third of the wages workers earn in 2054 will need to be committed to pay benefits promised under current law. That is before any bridges or highways are built and before any teachers' or police officers' salaries are paid.


Impact on the Federal Budget. The combined deficits of both programs now require about 14 percent of general income tax revenues [see Figure I]. As baby boomers begin to retire, however, that number will soar, and it will be increasingly difficult for the government to continue spending on other activities. In the absence of a tax increase, if the federal government keeps its promises to seniors and balances its budget:

By 2020, in addition to payroll taxes and premiums, Social Security and Medicare will require more than one in four federal income tax dollars.
By 2030, about the midpoint of the baby boomer retirement years, the programs will require nearly half of all income tax dollars.
By 2060, they will require nearly three out of four income tax dollars.

Full article with graphics: http://www.ncpa.org/pub/ba662

ppilot

What I think a lot of people don't understand is that the government at its core has one job, and one job only. To stabilize its society. That's really what Social Security is for. I'm pretty sure I would die with more money in the bank if I could invest what I pay into Social Security. But I'm just as sure that most people would not, and I'm also just as sure that many people would get to be 65-ish and have nothing.

You can say 'That's not my problem' and to a certain extent you're right. But society's problems really are your problems, like it or not. It's tremendously destabilizing to a country to have a large indigent population. If it came to that, do you think the government would just let millions (and it would be millions) of people starve? There would have to be other programs that would probably cost as much as SS.

IMHO, it's good for the country to have a small safety net for people when they get older/become disabled, etc. I don't think it's good for me personally financially. But I think it's good for the country.

jungle

Agreed, a carefully constructed safety net is a very good thing.

A monstrosity of spending forced on the public at large is not.

A climate of encouraging individual responsibility might go a long way to helping and encouraging people to plan for their retirement. Something along the lines of a mandatory 401k type savings account held in the name of the taxpayer might remove the temptation toward theft that has been consistently witnessed.

Some people can't handle their own affairs and government has proven untrustworthy in this regard, so where does that leave us?

FighterHayabusa

[quote=SteamJet;685779]There's a big difference between defending it and saying it's simply not an example of rampant government spending gone awry. Social Security is actually pretty well run is my point, and if you want to get mad at something, get mad at the myriad of things the yahoos spent the surplus on, not the thing that ran the surplus. People who think of it as an investment in their retirement are simply wrong, so arguing that it's a GOOD investment would be silly.

And it IS a surplus. Even if it's just the government owing itself money, it will still take a specific act of Congress to default on those bonds held by the SSA. This is what the nihilists want you to think when you think when they ominously say it's just a bunch of IOUs. Will it happen? Not likely.

Winged Wheeler

http://www.ssa.gov/policy/docs/ssb/v59n3/v59n3p45.pdf

11 page pdf found at the link. Summary follows here:

In 1924, Chile was the first country in the Western Hemisphere to establish a comprehensive social security program that provided coverage for old-age, survivors, and disability benefits (similar to the present OASDI system in the United States), and cash sickness and medical benefits. By the late 1970’s, it had become clear that massive government subsidies would be needed to continue to pay benefits. Then, in 198 1, Chile became the first country to change from a pay-as- you-go system to mandatory private savings for retirement. As many countries worldwide are currently facing problems with financing their social security systems, they are looking to the experience of other countries to find solutions. The Chilean model has become a popular one to observe. This article provides a description of the problems of the old public system, the transition provisions, the privatized system and its performance to date, and what the United States can learn from the Chilean experience.

ppilot

I agree with you that it's shameful what the government has done with the Social Security surplus.

But I disagree that a mandatory 401K type account can replace SS. For one thing managing such an account is beyond a lot of people. It just is. People would invest in single stocks and do things like move all of their money into the mutual fund that had the highest return the year before. The only way to avoid it would be to mandate what the investor could invest in, and that would first of all devalue the best funds and limit the returns on 'other' investing, and would second of all take away most of the gain that you or I could probably get from being able to invest that money.

For another thing, it doesn't take into account things like SS disability benefits and survivor benefits. If we eliminate retirement benefits from SS but keep the rest of the program in place, the taxes needed to fund that ALSO eat up most of the benefits we'd see if we could invest the retirement portion of the program.

My 2 cents.

FighterHayabusa

The other "projects" are the problem, not SS.