Minorities in politics: only the "right kind" coun

[peter-griffin]

[quote="StruckingFuggle";p="508679"]Uhm, is there any point in putting any time or effort into a bill to "apologize for legalizing lynching", anyway? Why is it so horrible to not sign it? Did all republicans sign it, too, or are you just omitting them?

... but yeah. The republican Party is a bad thing. Blah blah blah, cancerous or viral metaphors, yadda yadda, should fall over and die, politically, for the good of the nation, entrenched failing systems, and all that bullshit.[/quote]

this seems normal

[Silux]

[quote="Deacon";p="509124"]First of all, can I get your take on exactly what Social Security is and what it's supposed to be?[/quote]

Are you serious? Fine. Social Security is a government run program funded by a payroll tax that provides mainly retirement benefits, but also disability and survivor benefits. It is a pay as you go system. So money taken out of your paycheck is used to help pay current retirees' benefits. It's a way for current workers to provide a basic level of care for non-workers, who have worked to help our country and economy in the past and who have paid to take care of those same people before them. Surely you aren't asking me to argue the benefit of this system.

[quote="Deacon";p="509124"][quote="Silux";p="509101"]I believe the wage cap for 2005 is $90,000. This means that your first $90,000 in income is taxed for social security, the rest isn't. So if you make say $500,000 your actually paying something like 1% into social security compared to the rest of us under the $90,000 mark, paying the 6 or 7%. Doesn't really seem fair.[/quote]
Do the people putting in more money get more money out? If so, then the wage cap is unfair. If not, I'd suggest that this isn't a charity and the recipients haven't "earned" Other People's Money.[/quote]

There are other factors, like the age at which you retire, but yes, in general, the more you've made throughout your life, the more you've paid in and the more you will get as monthly benefit. Now does this make sense? The better off you are, the more money you get from social security?

[quote="Deacon";p="509124"][quote="Silux";p="509101"]Couple that with wage disparity. This is the difference between the top earners in the country and the rest of us middle income earners. And guess what, it's growing. So while the rich are indeed getting richer, the median income in America is staying pretty flat.[/quote]
I assume your solution to the lack of advancement made by individuals in the middle class is to punish those who have? I'm sorry, but this to me doesn't indicate anything other than the complacency and comfort that exists with us here in the middle class.[/quote]

I don't exactly consider it a punishment to have the wealthy pay an equal share of their income as the rest of us. I consider that fair. And I'm sorry if it crushes your American dream, but the majority of us "here in the middle class" will never make as much as those in the top 1% or even the top 10%. Most of us will find it difficult reaching above the $90k level. And it has absolutely nothing to do with complacency.

[quote="Deacon";p="509124"][quote="Silux";p="509101"]This means an increasing burden on the average joe, while the average movie star or CEO is barely feeling anything.[/quote]
Wait...which burden is this? Surely you're not referring to the tax burden, nor are you suggesting that CEOs and movie stars should be stressed out trying to make ends meet.[/quote]

Yes, I'm referring to the social security tax. Because the benefits paid out are based on an average wage index, the median income is increasingly burdened. And I'm quite sure those CEOs, and movie stars, and pro-athletes that we place so much value on in our culture won't have a hard time making ends meet.

[quote="Deacon";p="509124"][quote="Silux";p="509101"]Meanwhile, benefit increases are based on an average wage index. The top earners in the country drive benefit increases higher. Not to say that there shouldn't be benefit increases, but it would make much more sense basing it on the rate of inflation, or on the median wage (what most of us make).[/quote]
Whoa whoa whoa...are you seriously suggesting that people are living to lavishly on Social Security? That Social Security is paying out too much?[/quote]

Did I say that? Of course not. But the fact is, benefits are increasing faster than they should be. In 40-50 years when benefits are currently estimated to be 70 - 80% of what they're scheduled to be, they will still be significantly more than today's benefits. And that includes inflation adjustments.

[quote="Deacon";p="509124"][quote="Silux";p="509101"]I'm certain that if these issues were addressed, we wouldn't have to worry about social security becoming insolvent in 20-40 years.[/quote]
OK, let's just assume that's correct. I'm not convinced, but for the sake of argument we'll say I am. How do you suggest that "these issues be addressed" then?[/quote]

Phase in basing benefits on price indexing or median wage indexing, versus average wage indexing, to slow the growth of future benefits. Raise the social security tax on upper earners by raising the cap gradually. Slowly raise eligibility ages due to longer life expectancies. Limit future spending by gradually reducing retirement benefits for those that are better off.

[quote="Deacon";p="509124"][quote="Silux";p="509101"]Basically the Republican leaders in Congress are telling Bush, "This private accounts plan ain't happening." I guarantee you we will not be hearing Bush parading around the country talking about privatizing social security anymore.[/quote]
Maybe I'm missing something, but...if they told him, "No, move on," then why would he be "parading around the country talking about privatizing social security" after that?[/quote]

This was just to clarify since you seemed unconvinced Bush & Co. are "sweeping this little private accounts thing under the rug." They'll put it on the backburner and make other issues their talking points. I find that funny since Bush was touring the nation saying what bad shape social security is in, and how it's going to be bankrupt down the line. Ultimately they didn't really want to fix social security in the first place...they wanted to dismantle it.

[quote="Deacon";p="509124"][quote="Silux";p="509101"]Not only will private accounts not solve the real problems, but they will burden our national debt even further.[/quote]
Hmmmm...I've heard that tossed out there once before, but I never have heard the reasoning for those allegations.[/quote]

In the switch to private accounts, all the people owed Social Security checks will still have to be paid while you're using some of your tax money to invest for yourself. What you're putting into your private account is not being paid out for current benefits. This gap would need to be filled. The estimates for the amount needed to cover this cost are around $1-2 trillion by conservative estimates.


[quote="Deacon";p="509124"][quote="Silux";p="509101"]I guess my point is why is it the Democrats fault for not getting private accounts up and running when the Republicans in Congress aren't even fully behind it. Why are we so quick to judge the Democrats for not coming up with a better plan, when the Karl Rove is over there saying anything less than private accounts will not do?[/quote]
OK, first of all, if the Democrats vote against getting private accounts up and running, then it IS their "fault" when if fails.[/quote]

Actually it isn't. Public opinion is what killed this plan. Nobody was buying Bush's rhetoric. If it came to a vote, you wouldn't need the Democrats' votes to pass it, if you had all the Republicans behind it.

[quote="Deacon";p="509124"]And I'm sorry, but you're totally losing me with this Karl Rove stuff. What does Karl Rove have to do with a total lack of substance on the left side of the aisle? Especially considering that Karl Rove isn't on either side of the aisle OR in the White House. He's a political advisor...[/quote]

Good Lord, what an incredibly naive stance to take. He's a tad more influential than your letting on.
http://en.wikipedia.org/wiki/Karl_Rove

[Martin Blank]

[quote="Silux";p="509395"]Social Security is a government run program funded by a payroll tax that provides mainly retirement benefits, but also disability and survivor benefits. It is a pay as you go system. So money taken out of your paycheck is used to help pay current retirees' benefits. It's a way for current workers to provide a basic level of care for non-workers, who have worked to help our country and economy in the past and who have paid to take care of those same people before them. Surely you aren't asking me to argue the benefit of this system.[/quote]
You've described a pyramid or Ponzi scheme in a fair detail (take money from people now to pay off former investors), which is illegal unless it's Social Security. There is a tremendous problem with this. Private accounts grow faster on average (7% or so annualized over any a specific length of time, which I seem to recall was 10 or 20 years), allow control of the assets, see those assets invested in current projects, and don't involve pyramid schemes due for eventual collapse.

I don't exactly consider it a punishment to have the wealthy pay an equal share of their income as the rest of us. I consider that fair.

Nor will you ever pay as much in taxes as they do. The top 2% (roughly those making $200K or more per year) paid 24% of the income taxes in 2001, the latest year for which the IRS has statistics. Those making $10M or more in 2001 made up 0.005% of the total taxpayers, but paid 3% -- $175 billion -- of the total income taxes collected. That's 600 times their percentage of the taxpayer base. It takes all of the people up through those making $14,000 per year -- 27% of the taxpayers -- to exceed that.

Yes, I'm referring to the social security tax. Because the benefits paid out are based on an average wage index, the median income is increasingly burdened. And I'm quite sure those CEOs, and movie stars, and pro-athletes that we place so much value on in our culture won't have a hard time making ends meet.

When out with a friend who is better off, do you demand that he pays a larger share of the group's total entertainment expenses? Just curious.

Phase in basing benefits on price indexing or median wage indexing, versus average wage indexing, to slow the growth of future benefits. Raise the social security tax on upper earners by raising the cap gradually. Slowly raise eligibility ages due to longer life expectancies. Limit future spending by gradually reducing retirement benefits for those that are better off.

That sounds a lot like emanding investment, and then shaping the market so you don't have to pay out.

Bush was touring the nation saying what bad shape social security is in, and how it's going to be bankrupt down the line. Ultimately they didn't really want to fix social security in the first place...they wanted to dismantle it.

Social Security is headed for insolvency, currently estimated around 2017, at which point money has to come out of income taxes to pay out benefits, meaning either taxes get raised, or else programs get cut. A lot of people are going to be very upset at past generations.

In the switch to private accounts, all the people owed Social Security checks will still have to be paid while you're using some of your tax money to invest for yourself. What you're putting into your private account is not being paid out for current benefits. This gap would need to be filled. The estimates for the amount needed to cover this cost are around $1-2 trillion by conservative estimates.

The gap will need to be filled anyway. This at least starts to get people weaned off of the current system, which they don't expect to be around, anyway.

Actually it isn't. Public opinion is what killed this plan. Nobody was buying Bush's rhetoric. If it came to a vote, you wouldn't need the Democrats' votes to pass it, if you had all the Republicans behind it.

Bad statements hurt the plan. The AARP is telling members that they'll lose all of their SS benefits, when this plan will only be available to people below a certain age, and even then will be optional for some of them. Those that aren't comfortable with the idea can continue to go with their 1.5% interest, while the rest of us can look at a combined 5% or so.

[Deacon]

PREQUAL EDIT: Holy crap this post took a long time to complete. Not just to write, but I started writing it, then went to play basketball for a while, then took care of some other things here at work, etc. Plus, it did take a long time to write out and research some of the numbers And now that I saw Martin replied and read through his response, I'll add that I agree with his explanations and stances pretty much all the way through.

[quote="Silux";p="509395"]Are you serious? Fine. Social Security is a government run program funded by a payroll tax that provides mainly retirement benefits, but also disability and survivor benefits.[/quote]
In reality it is treated as a replacement for retirement. People expect to live off of Social Security instead of saving, investing, and in general thinking about retirement. This was never intended to be the source of sail-around-the-world-for-20-years retirement. It was intended to be a safety net to make sure widows didn't starve, basically.

There are a number of problems to address, here, that don't involve numbers. First of all, it seems to be a popularly held idea that the commonly held concept of "retirement" is a somehow a right. That if you pass some arbitrary age, you have a right to sip cold drinks on the porch all day or go RVing around the country. This is neither a constitutional nor sensical position. You do not have a "right to retire" that I'm aware of. Additionally, building on this fallacy, people seem to be under the impression that their right to retire has a right to be funded by Other People's Money. It's not difficult to understand that people who manage to hang around for a while are going to pull out more money than they ever put in, especially when only one spouse was putting in, but both spouses are pulling out. People do not have a right to free stuff just because they managed to avoid killing themselves for a while. There is no prize for being old. Stuff costs money, and if you are unwilling to spend your own money, well it sucks to be you. Maybe you should think about these things while you're feeling young and healthy. I could see lending support to elderly citizens who have no other family and who have been defrauded out of their life savings through some criminal means. But people who made poor decisions, pissed off their family, and generally made a very poor bed do not have a "right" to lie in someone else's. If you decide to stop being a contributing member of society, that's your business, and if you can fund it, fine. But don't expect me to work at my job to fund your lack of enterprise. I sure as hell don't expect anyone else to do so for me.

Additionally, let's consider this magic finish line once crosses by remaining alive past a certain point. In 1935, when the SSA was formed, the average life expectancy--for newborns, mind you, not for those who were already old--for baby boys was 59 years, 63 for baby girls. You could start pulling minimal Social Security benefits at 62. The average man would be dead by then, leaving the average widow with an option to receive benefits for a year or two. And that's if you managed to even live that long. Certainly not EVERYONE lived that long, and a few centenarians throwing the curve aren't really a significant "burden" on the system. Basically, you had a whole lot of people paying taxes to lend a little support to a few people to make sure they at least had money to eat and to help their families as they took care of them in their last couple of waning years. And those who never had kids weren't worried about it, as they had plent of opportunity to provide for themselves long-term. In 1935, there were only about 7.8 million Americans over the age of 65. In 2000 there were 35 million. And that's only growing, and growing faster, as the Baby Boomer Bubble gets closer to cresting. And we're JUST talking about people getting older, at this point! We're not even talking about the enormous number of "disability" checks and survivors checks written! My grandfather hasn't worked since I've been alive, IIRC. He's at least never worked since I can actually remember. He's been pulling Social Security since he was in his 40s because he's an asshole. Well, technically it's supposed to be some chemical imbalance in his brain, but really he's just an asshole and has been all his life. He has selective and purposeful OCD, too. Not like a neurological or genetic psychological disorder, but because he decided to make it a habit. He apparently was so bad about it that he more or less shorted out the part of his brain that's supposed to keep that kind of thing in check. So the government's been paying their bills while my grandmother works full or part time as becomes available out in the small rural community where they live, and still works to this day (She's 68 or so now). Does my grandfather "deserve" to get free money? No. He needs to get off his ass and get a damn job. And guess what? While there are always a handful of cases that are somewhat legitimate, most are not what I would consider legitimate, that is debilitating physical impairments that prevent doing something useful. My grandparents have taken far more out of Social Security than they ever put in, and they will continue to do so until they're no longer with us.

Surely you aren't asking me to argue the benefit of this system.

The system as it exists today? Sure, let us know.

There are other factors, like the age at which you retire, but yes, in general, the more you've made throughout your life, the more you've paid in and the more you will get as monthly benefit. Now does this make sense? The better off you are, the more money you get from social security?

No shit, Sherlock. I mean do the benefit payments cap out at the same $90k level that the input cap's at? In other words, does a person who made $523,000/yr receive only the same amount as someone who made $90k/yr?

I don't exactly consider it a punishment to have the wealthy pay an equal share of their income as the rest of us. I consider that fair.

Hell no I wouldn't consider that unfair, either. I had no idea you were a Flat Tax man. That's cool to know

*EDIT* Looks like MB went ahead and further clarified what at the time to me felt like my eyes rolling so far back in my head that I went blind and passed out for a couple of minutes.

And I'm sorry if it crushes your American dream, but the majority of us "here in the middle class" will never make as much as those in the top 1% or even the top 10%. Most of us will find it difficult reaching above the $90k level. And it has absolutely nothing to do with complacency.

Not preparing for retirement has everything to do with complacency and priorities. I didn't suggest that you'd be a multi-million-dollar movie star. Nor did I necessarily suggest that everyone should be able to get jobs where they earn $90k+ a year. You don't need to do so to prepare and plan for retirement. Trading hours for dollars is only one way to generate income, a simplistic and significantly limited way at that. If you can wrangle yourself a position where you trade your hours for a lot of dollars, good for you. But you're also probably smart enough to be thinking about retirement, maybe college for the kids, etc, and not rollin' in a pimped-out BMW 7 series, either, with a million dollar house and a $10k TV. Unless you're trading those hours for LOTS of dollars. And yet people who aren't getting so many dollars for their hours are the worst ones about thinking about retirement. They want a boat or a new SUV or braces for a kid who was born with teeth that were just fine. They want so many credit cards that they can't even fold their wallet. In short, they're not fiscally responsible, they always figure they'll cross the retirement bridge when they get to it, and/or they're counting on their kids to pay out some fat Social Security checks when they decide to kick back and take some fishing trips. Most people admire someone working two full-time jobs. That's great and all, but working harder instead of smarter isn't really the way to go.

Yes, I'm referring to the social security tax. Because the benefits paid out are based on an average wage index, the median income is increasingly burdened. And I'm quite sure those CEOs, and movie stars, and pro-athletes that we place so much value on in our culture won't have a hard time making ends meet.

No, I'm sure they won't, unless they're Mike Tyson or MC Hammer or someone else who can go from riches to rags. It sounded like you were suggesting that we take people's money until they're only living on a "median" income regardless of how much they make or are worth. And I hate to sound like an idiot, here, but I'm still not sure I understand what you mean about this "because the benefits paid out are based on an average wage index, the median income is increasingly burdened" thing. I don't mean to be a dick, but please explain, as I'm honestly not getting it.

But the fact is, benefits are increasing faster than they should be. In 40-50 years when benefits are currently estimated to be 70 - 80% of what they're scheduled to be, they will still be significantly more than today's benefits. And that includes inflation adjustments.

So, according to your statements, in 40-50 years, benefits will only be 70% to 80% of what they should be. And even at only 70% to 80% of what they should be, they're still significantly more than today's benefits. Which means what, that today's benefits are only maybe 40% to 50% of what they should be? Either way, that seems to prove the exact opposite of your assertion that payments are way more than the should be if they're only half of what they should be. Seriously, that doesn't make any sense at all.

Phase in basing benefits on price indexing or median wage indexing, versus average wage indexing, to slow the growth of future benefits. Raise the social security tax on upper earners by raising the cap gradually. Slowly raise eligibility ages due to longer life expectancies. Limit future spending by gradually reducing retirement benefits for those that are better off.

So basically change the rules significantly in the middle of the game. And do so slowly. It's like slowly applying the brakes when you're barreling toward that cliff. Some of those things I could consider, but I think it's in much the same boat as education: small changes to the way we currently do business are not the answer, especially if people are going to be short-changed as a result. I would suggest that purpose and eligibility reform would be better places to start.

This was just to clarify since you seemed unconvinced Bush & Co. are "sweeping this little private accounts thing under the rug." They'll put it on the backburner and make other issues their talking points. I find that funny since Bush was touring the nation saying what bad shape social security is in, and how it's going to be bankrupt down the line. Ultimately they didn't really want to fix social security in the first place...they wanted to dismantle it.

That ridiculous last sentence aside, I think the issue here is your use of the "sweeping this little private accounts thing under the rug" metaphor, as though something shady were going on instead of admitting defeat to the alarmist chicken littles being made to dance by the Democratic puppet masters.

In the switch to private accounts, all the people owed Social Security checks will still have to be paid while you're using some of your tax money to invest for yourself. What you're putting into your private account is not being paid out for current benefits. This gap would need to be filled. The estimates for the amount needed to cover this cost are around $1-2 trillion by conservative estimates.

Ah. Part of the reason I'm not convinced of this is that nothing is that simple, and that's assuming that there's no reform to benefits eligibility. $493 billion worth of benefit checks were written in 2004. "Income was $658 billion, and assets held in special issue U.S. Treasury securities grew to $1.7 trillion." Where is the $1 to $2 trillion estimate coming from?

[quote="Deacon";p="509124"]if the Democrats vote against getting private accounts up and running, then it IS their "fault" when if fails.

Actually it isn't. Public opinion is what killed this plan. Nobody was buying Bush's rhetoric.[/quote]
Words like "nobody" and "rhetoric" are pretty strong words, but are you really telling me that you believe the Democrats weren't working to turn public opinion against the Bush plan? Especially working hand-in-hand with the AARP to use scare tactics on the elderly and the near-retirement? And I'd like to point out that not all Republicans toe the party line. Some make me wonder why they're wearing the R badge to begin with.

[quote="Deacon";p="509124"]What does Karl Rove have to do with a total lack of substance on the left side of the aisle?

Good Lord, what an incredibly naive stance to take. He's a tad more influential than your letting on.
http://en.wikipedia.org/wiki/Karl_Rove[/quote]
I read that article, making sure I wasn't confusing him with someone else. Yeah, he's an influencial man and often considered a political genius, begrudgingly by those who have to work against him. But he doesn't keep the left from coming up with ideas. I'm not clear on exactly how and why you believe he does.

[Martin Blank]

So far as I understand it, Deacon, payments out are based on payments in, not income during the period, so someone making $10M a year gets the same payout as someone making $90K a year.

To all those against the private accounts plan:

Listen up, people! Let me tell you what's south of us: no more museums, no more department stores, just homes! People! If we turn and run now, they're going to be defenseless! You don't like my plan? That's good. Give me a another plan, but don't tell me we're backing out!

-- Mike Roark (Tommy Lee Jones) in Volcano

Apply that to this. If you don't like the idea, that's cool. Come up with another one and let's discuss it. But people's lives, and the economy of the US and therefore the world, are going to be riding on what we do in the next few years about this.

[Silux]

Wow. I'm going to hit these one at a time, as time permits. Not enough time in the world to bridge the idealogical gaps between us.

[quote="Martin Blank";p="509458"][quote="Silux";p="509395"]Social Security is a government run program funded by a payroll tax that provides mainly retirement benefits, but also disability and survivor benefits. It is a pay as you go system. So money taken out of your paycheck is used to help pay current retirees' benefits. It's a way for current workers to provide a basic level of care for non-workers, who have worked to help our country and economy in the past and who have paid to take care of those same people before them. Surely you aren't asking me to argue the benefit of this system.[/quote]
You've described a pyramid or Ponzi scheme in a fair detail (take money from people now to pay off former investors), which is illegal unless it's Social Security. There is a tremendous problem with this. Private accounts grow faster on average (7% or so annualized over any a specific length of time, which I seem to recall was 10 or 20 years), allow control of the assets, see those assets invested in current projects, and don't involve pyramid schemes due for eventual collapse.[/quote]

MB, you must be a Libertarian, as that is one of their common criticisms. A ponzi scheme is: "An investment swindle in which high profits are promised from fictitious sources and early investors are paid off with funds raised from later ones." Social security is not an investment. What you put in is not what you get out. It is a social insurance program. Current workers are helping to take care of retired or disabled ones. What goes in is already going out. No profits are promised. And social security benefits are not fictitious. You're looking at the program in the wrong light. So comparing it to private accounts and a ROI isn't really correct. If the United States intends to fall back on its "New Deal" and welch on its promises, then yes it will eventually collapse. But as long as there are current workers there will always be funds for social security. So the idea that the system can go bankrupt is ridiculous.

Posted Sun Jun 19, 2005 11:07 pm:

[quote="Martin Blank";p="509458"][quote="Silux";p="509395"]I don't exactly consider it a punishment to have the wealthy pay an equal share of their income as the rest of us. I consider that fair.[/quote]
Nor will you ever pay as much in taxes as they do. The top 2% (roughly those making $200K or more per year) paid 24% of the income taxes in 2001, the latest year for which the IRS has statistics. Those making $10M or more in 2001 made up 0.005% of the total taxpayers, but paid 3% -- $175 billion -- of the total income taxes collected. That's 600 times their percentage of the taxpayer base. It takes all of the people up through those making $14,000 per year -- 27% of the taxpayers -- to exceed that.[/quote]

As it should be. Despite what Deacon thinks, I'm not a flat tax man. I'm fully aware that the US income tax is a graduated one. And rightly so. But my point is why should social security be any different? Why are those making the most paying into social security as a lower percentage of their income than those making the least?

Posted Sun Jun 19, 2005 11:22 pm:

[quote="Martin Blank";p="509458"][quote="Silux";p="509395"]Yes, I'm referring to the social security tax. Because the benefits paid out are based on an average wage index, the median income is increasingly burdened. And I'm quite sure those CEOs, and movie stars, and pro-athletes that we place so much value on in our culture won't have a hard time making ends meet.[/quote]
When out with a friend who is better off, do you demand that he pays a larger share of the group's total entertainment expenses? Just curious.[/quote]

When you see a homeless guy on the street begging for change do you tell him to go out and get a job? Just curious.

Posted Sun Jun 19, 2005 11:41 pm:

[quote="Martin Blank";p="509458"][quote="Silux";p="509395"]Phase in basing benefits on price indexing or median wage indexing, versus average wage indexing, to slow the growth of future benefits. Raise the social security tax on upper earners by raising the cap gradually. Slowly raise eligibility ages due to longer life expectancies. Limit future spending by gradually reducing retirement benefits for those that are better off.[/quote]
That sounds a lot like emanding investment, and then shaping the market so you don't have to pay out.[/quote]

You got me. I have no clue what "emanding investment" is. Please explain. As for shaping it so I don't have to pay out, get real. I pay out every two weeks. I'd continue to pay out with these changes. And if I do manage to work my way into a high income, I'll be more than willing to pony up, and take a cut on benefits. So should you.

[Martin Blank]

But as long as there are current workers there will always be funds for social security. So the idea that the system can go bankrupt is ridiculous.

Really?

According to the intermediate numbers for the Social Security Trustees Report in 2004, the income for the program was equal to 6.36% of the GDP, and output was 5.83%. By 2010, it will be 6.49% and 5.94%. Not much of a difference there, but it starts to go downhill fast. By 2020, the numbers become 6.52% and 7.29%, in 2030 it's 6.51% and 8.94%, and by 2050 it's 6.33% and 10.29% -- 62.6% more money going out than coming in. GDP is expected to be $88.8 trillion, so the program will be bringing in $5.62 trillion, and paying out $9.14 trillion.

So let's look at your "current workers" assertion. In 1950 there were 7.11 workers (people in the US from 20 to 64) per retiree (people 65 and older). By 1980 it was down to 5.04, and then down to 4.65 by 2000. By 2010 it will be 4.49, in 2020 it will be 3.45, and by 2050 it will be 2.65.

Now, let's combine them. In 2000, there were 166.5M workers, 35.1M retirees, a GDP of $9.7T, a payout percentage of 3.64%, and an average burden per worker in paid out SS benefits of about $2100. In 2050, those numbers will be 224M workers, 86.7M retirees, a GDP of $88.8T, a payout percentage of 10.29%, and an average payout of $40,800 per worker.

A few more extrapolations... The following ratios are expected comparing 2050 to 2000:

• Workers: 1.35
• Retirees: 2.47
• Percent GDP Payout: 2.83
• GDP: 9.15
• Burden per worker: 19.2

The burden per worker increases more than twice as fast as the GDP, meaning taxes are going to go through the roof. You're looking at nearly half of all current tax levels just to pay for Social Security -- completely ignoring all of the other programs the government runs. As I said, something's got to give: Social Security or other programs.

BTW, it's not an insurance program, either, because every insurance program in the country not run by the government is required to at least break even. They take in premiums and either save or invest them (depending on the company) so that they have enough for payouts when the time comes, whether that's sporadic and relatively uncommon like in medical or home insurance, or generally expected and common as in life insurance.

As far as my political stance (not that it particularly matters), I'm not a Libertarian, or a Republican, or a Democrat. There isn't a major party with whom I really agree on more than about half of the platform. I'm pragmatic, and when the numbers say that the system is in for destruction, I say that something needs to be done.

Why are those making the most paying into social security as a lower percentage of their income than those making the least?

Because they get less out of it?

In almost every other federal program, coverage is equal. A once-rich person whose financial empire collapses is eligible for exactly the same Medicare coverage as the next person. He is protected by the same military, drives on the same roads, and uses the same courts. But his Social Security benefit may well be higher because he paid in more.

When you see a homeless guy on the street begging for change do you tell him to go out and get a job? Just curious.

No, but neither do I give money. Now that I've answered your question, answer mine.

You got me. I have no clue what "emanding investment" is.

Please. You know damned well the word was meant to be 'demanding.' Don't try to divert things. I am not easily gotten off-track.

Please explain. As for shaping it so I don't have to pay out, get real. I pay out every two weeks. I'd continue to pay out with these changes. And if I do manage to work my way into a high income, I'll be more than willing to pony up, and take a cut on benefits. So should you.

First of all, what I should be willing to do is not up to you. That's like me saying that you should be willing to demand significant cuts to the government just because that's what I want. Second, your own words indicate that you're willing to cut benefits by changing payout algorithms and retirement points.

On a side note, if you're going to reply at length, please don't just tack on responses like that. It makes it difficult to respond to your entire post at length, because you're constantly adding new material. If you don't have time to get them all, pick some main points to respond to them all at one time, and come back to the rest later. Yes, that is what I do.

[Silux]

[quote="Martin Blank";p="509458"][quote="Silux";p="509395"]Bush was touring the nation saying what bad shape social security is in, and how it's going to be bankrupt down the line. Ultimately they didn't really want to fix social security in the first place...they wanted to dismantle it.[/quote]
Social Security is headed for insolvency, currently estimated around 2017, at which point money has to come out of income taxes to pay out benefits, meaning either taxes get raised, or else programs get cut. A lot of people are going to be very upset at past generations.[/quote]

Not correct. Around 2017-2019, there will be less money coming in from the social security tax than needed to cover scheduled benefits, but the difference would be made up by the social security trust fund. In the past there's been more coming in with taxes than was going out in benefits. This surplus is the the trust fund, and the fund has been generating interest from investments in government securities, T bonds if I'm not mistaken. The fund will sustain scheduled benefits well into the mid century, and is estimated to run dry sometime between 2042 and 2052. At this point, benefits going out will be paid solely by the tax income. So that's really the deadline we're looking at. Benefits will still be paid out, but not at the full payment they are supposed to be. However all these estimates are based on the assumption that social security is kept the way it is right now, with no changes. It's hard to imagine that Congress would let it get that bad, and not make some changes along the way to adjust for this. Whether it be higher taxes, lower benefits, changes in eligibilty, or other sources of funding. Private accounts do nothing to solve the overall problem. They are an unnecessary step, cleverly disgused and touted to fix social security, but really meant to fundamentally change how the system works and what it was meant to do.

[Martin Blank]

So you admit that we're paying into a system that could well be generating a negative result even with significant overhaul, which is no good for the economy, instead of even partially into a system that generates a significantly positive result?

Look at my numbers. In order to maintain taxes the way they are, you'd have to slash benefits to such a small fraction that it almost wouldn't be worth it. I'm willing to compromise, and continue paying some amount in as long as I can invest the rest of it largely as I see fit while giving up the right to claim the portion of Social Security those taxes would otherwise have paid for. I'd consider giving up all rights to traditional Social Security payments if I could do that.

Are you content with the government taking more than half of your paycheck even at your current pay rate? Even removing the cap on higher-income taxpayers isn't going to stop that from happening eventually. I lose about 33% of my paycheck to various taxes as it is, I'm not wealthy by any means, and I do not actively participate in any government projects, nor have I ever with the exception of some time on unemployment, which is paid by my employers in any case and is run like a much more normal insurance program. I'm comfortable, but if I were to lose another 17% or more of my income... Nope.

[Silux]

[quote="Martin Blank";p="509978"]
A few more extrapolations... The following ratios are expected comparing 2050 to 2000:

• Workers: 1.35
• Retirees: 2.47
• Percent GDP Payout: 2.83
• GDP: 9.15
• Burden per worker: 19.2

The burden per worker increases more than twice as fast as the GDP, meaning taxes are going to go through the roof. You're looking at nearly half of all current tax levels just to pay for Social Security -- completely ignoring all of the other programs the government runs. As I said, something's got to give: Social Security or other programs.[/quote]

Let's just save time by assuming your calculations are correct. I'm not going to get into that level detail. Everything you've said hinges on the idea that social security as we know it stays the same as far as funds/income/payments/eligibility. This is PRECISELY why changes need to take place. It is precisely why benefits should be calculated in a different way; why benefit growth needs to be scaled back; why longer life expectancies should be addressed; why eligibility standards should be set; why the cap should be raised, while benefits are cut for those who don't need it. Who's saying the system has to remain like it is? All I'm saying is private accounts aren't fixing the problems...they're fundamentally changing the system.

[quote="Martin Blank";p="509978"]BTW, it's not an insurance program, either, because every insurance program in the country not run by the government is required to at least break even. They take in premiums and either save or invest them (depending on the company) so that they have enough for payouts when the time comes, whether that's sporadic and relatively uncommon like in medical or home insurance, or generally expected and common as in life insurance.[/quote]

Social insurance doesn't mean business insurance as you're defining it.
http://dictionary.reference.com/search? ... 0insurance
In a more conventional use of the word, social security is insurance that our society is not burdened by a large number of people who are not capable of providing for themselves.

[quote="Martin Blank";p="509978"]

Why are those making the most paying into social security as a lower percentage of their income than those making the least?

Because they get less out of it?

In almost every other federal program, coverage is equal. A once-rich person whose financial empire collapses is eligible for exactly the same Medicare coverage as the next person. He is protected by the same military, drives on the same roads, and uses the same courts. But his Social Security benefit may well be higher because he paid in more.[/quote]

This is where the differences in idealogies occur. You think you do it to get something out of it, I think you do it to support those who can't support themselves.

[quote="Martin Blank";p="509978"]Now that I've answered your question, answer mine.[/quote]

Sure. I don't demand that my wealthy friends pay my way. But I also offer to treat when I'm out with those that aren't as well off as me.

[quote="Martin Blank";p="509978"]Second, your own words indicate that you're willing to cut benefits by changing payout algorithms and retirement points.[/quote]

Ding ding ding. When did I say the system is perfect and doesn't need to be tweaked?

[quote="Martin Blank";p="509978"]On a side note, if you're going to reply at length, please don't just tack on responses like that. It makes it difficult to respond to your entire post at length, because you're constantly adding new material. If you don't have time to get them all, pick some main points to respond to them all at one time, and come back to the rest later. Yes, that is what I do.[/quote]

You have your method, I have mine.

Posted Mon Jun 20, 2005 1:34 am:

[quote="Martin Blank";p="509990"]I'm willing to compromise, and continue paying some amount in as long as I can invest the rest of it largely as I see fit while giving up the right to claim the portion of Social Security those taxes would otherwise have paid for. I'd consider giving up all rights to traditional Social Security payments if I could do that.
[/quote]

I don't know. I'd prefer to keep my investment vehichles out of the hands of the government. There are plenty of ways to save for retirement, 401ks, IRAs, T bonds, CDs, the list goes on and on. But the minute the government has a say in what type of investments I'm making...then we have a problem. I guess that leads to another solution, if you could call it that: education. We should be making personal finance and retirement planning a required course in high schools.

[Martin Blank]

Refusing to look into detail means you miss the true magnitude of the situation. In order to maintain the status quo as to the burden on workers, you have to cut benefits to about half of what they are now, even factoring in retirement age increases, removing the cap, and limiting the well-off, at which point recipients become a burden again because they can't afford to live. Not changing the output means that the rest of us get hit with a massive tax bill, meaning they become a burden again.

You think you do it to get something out of it, I think you do it to support those who can't support themselves.

I do it because it's the law, and I have no choice. That's what I want is choice -- the ability to invest in something that will likely return two to three times what I would get in the form of Social Security payments, which when spent would result in additional taxes paid to and collected by the state and federal governments.

And to answer your point, yes, this is completely changing how it's done. That's the whole point. Throwing out some small numbers, someone making $20,000 a year at age 18 and then seeing a mere 1% annual raise until age 62, with a mandatory investment of 6.4% (half of SS taxes) and a conservative 5% annual return rate ends up with a nest egg of a quarter million dollars at early retirement, or $330,000 at age 67. That's pretty fair for a $20K income for 44 years, or $1385 per month, or $1834 per month at the end of 49 years for the next 15 years.

The ability to invest all 12.8% in that doubles that income -- which is a lot more than they're likely to get from Social Security, since it's even higher than their monthly wages at that point, not factoring in additional interest. It's a bit lower if you look at it for 20 years, but also remember that this is one person -- it gets a lot better when you add a second retirement egg into the mix, especially since a house could be bought outright at that point, and they could continue to live on far less money than they would need to if they had house payments or rent to make.

And this is just for the relatively poor people in life -- even the people making $12K per year don't do too poorly at this rate. Think how much better off it would be at $25K per year, or for that majority which does progress at some better rate through the wage structure, making 3% or more a year. Everyone ends up better off. Everyone.

[Deacon]

[quote="Silux";p="509997"]In a more conventional use of the word, social security is insurance that our society is not burdened by a large number of people who are not capable of providing for themselves.[/quote]
Who isn't capable of providing for themselves? Are you confusing this with Welfare or something? You're talking about taking people's money away from them with the promise that you'll give it back later in life.

[StruckingFuggle]

[quote="Silux";p="509997"]In a more conventional use of the word, social security is insurance that our society is not burdened by a large number of people who are not capable of providing for themselves.[/quote]

And furthermore, what, are you saying that social security itself isn't a burden on society?

[Silux]

It seems I'm arguing ways to put the program on a better financial footing, while you're arguing that the program is useless and not worth saving.

[quote="Martin Blank";p="510002"]Refusing to look into detail means you miss the true magnitude of the situation. In order to maintain the status quo as to the burden on workers, you have to cut benefits to about half of what they are now, even factoring in retirement age increases, removing the cap, and limiting the well-off, at which point recipients become a burden again because they can't afford to live. Not changing the output means that the rest of us get hit with a massive tax bill, meaning they become a burden again.[/quote]

Please explain how your figures are factoring in retirement age increases, removing the cap, and limiting the well-off. I'm not seeing that. The figures you're pulling from the Trustee's Report are based on the system as it stands now. These predictions do not account for changes that can be made in the meantime. And as for that last sentenence, how does scaling back benefit growth and limiting the well off not change the output?

The rest of your post...
It seems your saying that if you had your way, we wouldn't have to pay into social security at all. Instead we'd have to put this money in a government run investment plan for our individual retirement. Can I ask:

1. At what age does doing this become unfair for those who won't have as much time as a younger worker to benefit from this new plan? At what point does it become unfair for those who have been paying into social security all along, now have to give up that benefit? How do you compensate them?

2. Are those currently recieving benefits and those approaching retirement going to get cut off? If not, how are current benefits paid out if nobody is paying in anymore? What affect will this have on our national budget?

3. Who gets to determine what investments are made and what investment choices you get to make? Who is in charge of managing the millions of accounts? At what point is there a conflict of interest?

4. Hypothetically, my personal investment account comes to $300,000 when I'm ready to retire at say age 70. What now? Who gets to decide how that is paid out? Do I get my money up front? Is that windfall taxed? What if I blow through it in 2 years? Is it paid out as an annuity? How long an annuity? What if I live past the annuity term? Is it to be a perpetuity? At 5% the account could pay out $15,000/year indefinitely. What if I don't make 5% some years. What if $15,000/year isn't enough to live on 40-50 years from now? What affect does the rate of inflation have on my rate of return? What about management fees? What happens to this $300,000 if I die before it's paid out?

5. Is this personal account untouchable, or can it be withdrawn early or borrowed against like a 401k? What type of penalties will that incur? If it can be withdrawn early, don't you think we'd see a lot of the lower income earners continually emptying their accounts out it to help them make ends meet here and now instead of decades down the line? If it is untouchable, see question 6.

6. It is generally understood that social security benefits provide a small base for which to build upon for your retirement, with 401ks, IRAs, pensions and other savings. How does any change in the fundamental workings of social security affect those that have been planning based upon this assumption? What affect would using this new personal account system have on participation in other retirement plans? What affect would it have on the amount of retirement plans offered by employers? Would someone making $20,000 a year right now, be so concerned about building on their retirement plan if they see that solely using their personal account can get them that $300,000 down the line?

[Martin Blank]

[quote="Silux";p="511010"]It seems I'm arguing ways to put the program on a better financial footing, while you're arguing that the program is useless and not worth saving.[/quote]
You've not provided a single number showing how your suggestions would change the output. If you can show the numbers so that they can be factored in, then we have something to talk about.

Please explain how your figures are factoring in retirement age increases, removing the cap, and limiting the well-off. I'm not seeing that. The figures you're pulling from the Trustee's Report are based on the system as it stands now. These predictions do not account for changes that can be made in the meantime. And as for that last sentenence, how does scaling back benefit growth and limiting the well off not change the output?

My numbers don't. What they do is show just how badly planned the program is, and show that you will need to come up with some combination of reduced output and increased input that is very significant, and counts almost as overhauling the program anyway.

It seems your saying that if you had your way, we wouldn't have to pay into social security at all. Instead we'd have to put this money in a government run investment plan for our individual retirement.

No, it would be in government-approved investment plans for our individual retirements. Big difference.

1. At what age does doing this become unfair for those who won't have as much time as a younger worker to benefit from this new plan? At what point does it become unfair for those who have been paying into social security all along, now have to give up that benefit? How do you compensate them?

Those who have paid into the system on a full-time basis (i.e., the total 12.8%) will have such funds available to them from Social Security as would be appropriate based on amounts paid in. This would result in a gradually decreasing payout as fewer and fewer people pay in. No one gets stiffed by paying in and not getting anything back.

2. Are those currently recieving benefits and those approaching retirement going to get cut off? If not, how are current benefits paid out if nobody is paying in anymore? What affect will this have on our national budget?

Nope. Anyone already on the current system gets a one-time choice, with some people ineligible for choice, probably around age 50 or older, since the monies involved would not change dramatically, and in a very short term could be dangerous. Anyone below a certain age, probably around 30 or 35, is automatically put into the new system, with default investment plans that are set up to be conservative on risk.

3. Who gets to determine what investments are made and what investment choices you get to make? Who is in charge of managing the millions of accounts? At what point is there a conflict of interest?

You are. You are 100% in control of what happens. You're welcome to turn it over to an investment advisor if you wish. The accounts, since they're invested in the various markets, are managed by account managers, just like 401(k) programs and IRAs.

4. Hypothetically, my personal investment account comes to $300,000 when I'm ready to retire at say age 70. What now? Who gets to decide how that is paid out? Do I get my money up front? Is that windfall taxed? What if I blow through it in 2 years? Is it paid out as an annuity? How long an annuity? What if I live past the annuity term? Is it to be a perpetuity? At 5% the account could pay out $15,000/year indefinitely. What if I don't make 5% some years. What if $15,000/year isn't enough to live on 40-50 years from now? What affect does the rate of inflation have on my rate of return? What about management fees? What happens to this $300,000 if I die before it's paid out?

You're free to take it as you wish. No taxes collected. You can take it as an annuity if you like, or you can take it all in one lump sum to buy your dream house. You can pass it on to your kids if you want in your will, or donate it to your favorite charity. It works just like a normal retirement account, in that it is inheritable, you can tap it if you're disabled early, and possibly take limited loans against it for unexpected financial demands.

5. Is this personal account untouchable, or can it be withdrawn early or borrowed against like a 401k? What type of penalties will that incur? If it can be withdrawn early, don't you think we'd see a lot of the lower income earners continually emptying their accounts out it to help them make ends meet here and now instead of decades down the line? If it is untouchable, see question 6.

Generally speaking, yes, it's untouchable, unless you are permanently disabled prior to retirement age. You may have the opportunity to take out limited loans for unexpected financial demands such as medical care, and failure to repay may be penalized somehow.

6. It is generally understood that social security benefits provide a small base for which to build upon for your retirement, with 401ks, IRAs, pensions and other savings. How does any change in the fundamental workings of social security affect those that have been planning based upon this assumption? What affect would using this new personal account system have on participation in other retirement plans? What affect would it have on the amount of retirement plans offered by employers? Would someone making $20,000 a year right now, be so concerned about building on their retirement plan if they see that solely using their personal account can get them that $300,000 down the line?

Current plans would be left alone, but it would still be a good idea to use them to supplement the mandatory plan. Such plans have significantly more flexibility involved (and may well offer higher returns over time), as the mandatory plan would be limited to probably a dozen or so funds at the most to minimize confusion and ensure that government regulators would not have too many things to look at.