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Mathematics of the Social Security "Crisis"
ScottyB writes "Here's a good start for reading into the economics and history of the much-discussed 'crisis' in Social Security. It's from the NY Times magazine, so you know the drill...'A Question of Numbers.'"
no-reg link: http://www.nytimes.com/2005/01/16/magazine/16SOCIA L.html
http://www.google.com/search?q=http%3A%2F%2Fwww.ny times.com%2F2005%2F01%2F16%2Fmagazine%2F16SOCIAL.h tml&sourceid=mozilla-search&start=0&start=0&ie=utf -8&oe=utf-8&client=firefox-a&rls=org.mozilla:en-US :official
they allow google to refer to them registration free.
Runnin' On Empty
A little thing called the great depression showed the error of that little scenario.
___
Cogito cogito, ergo cogito sum.
Click here. Used NYT Link Generator.
Ant(Dude) @ Quality Foraged Links (AQFL.net) & The Ant Farm (antfarm.ma.cx / antfarm.home.dhs.org).
The short answer is politics. The long answer is that people about to retire believe that their life's worth of social security is in a bank someone, and its THEIR RIGHT to have it. Since they are the most consistent voting block (backed by the most power special interest group- AARP), they get anything they want. The reason that younger people today cannot just do away with social security is because it is their momney that pays the benefits to old people. Since they run the political show (both parties have to lick the senior citizen boot), they can force us to pay them our taxes for their benfits.
Don't like it?
Open Source Sushi
Oh I forgot, they never put any of this money away for people's retirement like was originally planned.
It was never designed to be a savings plan. It was originally designed to be Old-Age Insurance.
Your second paragraph bit off your first. I guess you realized what I was going to say in advance: Fox News Network puts paid liars on TV. It lies about its motives and its methods. When it's convenient, its talking heads are "commentators" and are supposed to be excused for their more blatant prevarications. They know full well their audience doesn't understand the distinction any more than they know who was behind 9-11. They just think they are "watching the news."
Making this point in itself is deceptive, since egregious bias in Fox News Network's ostensible "hard journalism" is well-documented.
If you think Conservatism is special and its army of propagandists, advocates, and other helpers would do it for free, you are dreaming.
We have always put journalists on a pedestal in this country, because we understand their importance to our way of life. Bias in journalism is like drunk driving among teenagers. Some conservatives say, let's take away the rules, since "you'll never stop those kids anyway," but I think the adults in the country know better - let alone remember better, from pretty recent times.
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It is in secure, government bonds.
The problem is when the government cannot balance its budget. Then they have three options:
#1. Raise taxes to pay the bonds.
#2. Default on the bonds.
#3. Borrow more to pay the bonds.
NONE of this would be a problem IF the government could balance the budget.
Option #4. Declare that Social Security is in crisis and needs to be scrapped.
NO NO NO NO NO NO NO NO!
Please read this article, it's probably the most well researched and insightful look at the current health of our social security program. The end conclusion: It's Fine. Seriously. No Really. Totally OK.
If you took the worst case scenario given out by the Social Security Trustees as the future exactly as it will happen, Everyone will continue to recieve 100% of benefits until 2048, and then, after that, we'd recieve only 75% of benefits, and the system would continue to hum. That's if the worst case scenario mixture of immigration and ecomonmic slowdown happen, and absolutley NOTHING done to the system. Their realistic scenario call for complete 100% solvency of the system for the next 75 years, again, with NOTHING done to the system.
Social Security is the best running government program ever devised in this country. Everyone here will be able to recieve their retirement benefits that they've been paying into their whole lives.
The Social Security "crisis" stems from that 25% reduction in benefits in 2048. If we were to give everyone 100%, then we'd run about a $3 trillion deficit in SS over the next 75 years, in the mean time, Medicare is projected to start deficit spending in only 10 years, and will run an $11 trillion hole. And both of these self financed systems have a better outlook than out general acocunt budget, the pot of money that pays for the rest of the government. Best guess estimates are that our government will go $15 TRILLION MORE into debt over that same $75 years.
So what is more in crisis, $3 trillion that we don't need to even go into deficit for, or $15 that we absolutely must? Our current $440 billion deficit is the real crisis.
The president and all of the conservative commentors here want to reneg on the deal President Reagan made in 1983 when he reformed social security. He raised payroll taxes beyond the amount needed so we would run a surplus, and that would go into a trust fund that would pay for the burden of the Baby Boomer retirement. That trust fund was mandated by law to buy treasury bills, which have consequently been used to finance the upper class tax cuts. Basically, the president has done a transfer of wealth from the working class who payed more into the system than they had to so the super rich could mooch off the government even more.
I Repeat: SOCIAL SECURITY IS FINE! RTFA!
Th
This is exactly what Presidents Reagan and Clinton did to save Social Security. They raised the upper bracket tax rate from 33 to 35%, and increased the payroll tax to 12.5% to make our nations social contract solvent.
Th
TAX CUTS DO NOT MEAN LOST TAX REVENUE. Rather than looking at forcasts, if you look at the decrease in revenues, you'll find that that after the Bush tax cuts they INCREASED! This is because of economic growth.
On the other hand, tax increases stifle economic growth and usually DECREASE revenues.
Also, there is a great deal of misinformation coming from the Left as well. Stop reading NYT Mag or Krugman Op-Eds and you might find it.
Just because there is no crisis scheduled for next year doesn't mean the system can't been changed for the good.
Robo-Blogs of the world: UNITE!
"At the time it was passed, very few people lived much past the age of about 60, let alone 65."
Actually, much of the deaths would have been very early. If you lived to 50, you had a pretty good chance of living quite a while longer. If you made it to 60, you had a very good chance of getting well past 65.
Another thing to consider, there were more people involved in dangerous occupations, like mining and farming. And worker protections were more lax, and technology was primitive. That would create more people with disabling injuries which would put them on Social Security for the rest of their potentially long lives.
So I'm not sure the point is a good one.
September 2011: Looking for Cocoa/iOS work in Boston area Cocoa Programmer Quincy, MA
The "food problem" is a political problem, not a resource problem.
What?
from Wiki:
State pension systems lack a number of basic features that define Ponzi schemes, and so are fundamentally different:
* There is no belief that there are large profits coming from something; rather, it is clear that these are pay-as-you go systems, where workers (at any given time) are providing money to those who have retired.
* There is no growth of incoming funds driven by the enticement of high returns over a short period of time, with new investors continually entering in order to support payouts to early investors.
* State pension systems are in some way insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in.
* Because receipts (taxes) and payouts (entitlements) can be calculated quite accurately in the short term (five to ten years), and predicted (with a range of assumptions) for periods beyond that timeframe, there will never be a sudden collapse.
* General tax revenues can be used to supplement worker payments into the systems, although many taxpayers will be unhappy with such supplementation. Similarly, benefits can be reduced through the political process, either across-the-board or by reducing benefits to the well-off, although there will clearly be opposition by those who will get less.
Rather than looking at forcasts, if you look at the decrease in revenues, you'll find that that after the Bush tax cuts they INCREASED!
/ is _2004_April/ai_n6094611/pg_3
Wrong. Federal tax receipts have dropped from $2.05 trillion in the last Clinton year to $1.85 trillion in 2003.
http://www.findarticles.com/p/articles/mi_m1ECO
trying to get Fox censored for not sharing FAIR's political views
It's like you live in a crazy alternate reality where it is impossible to have honest news, so why try. Can you admit that it is even theoretically possible to have an organization that identifies bias and other bad practices in journalism? If you have any specific cases where you think FAIR was off base I'd love to discuss, but my guess is you're not that kind of guy.
Move to China if you love propaganda so much.
Yes, they would do it for free.
Interesting. Why pay them, then?
Call it luck or whatever, but Fox News was the first to report who was behind 9-11.
Here, Read this.
It's a FAIR report titled "Fox News Spins 9/11 Commission Report".
You can reply to this and make some specific, legitimate complaints about what it says. I will be thrilled to discuss it.
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Because old people should be taken care of by: Themselves, State Government, Local Government, or Private Charities. When the federal government was asked to do it, we ended up with a ponzi scheme that did nothing more than allow federal politicians to spend more money. The MOST incompetent retirement planner is the federal government. You can't even call the federal government a retirement planner, merely a money spender. Some future legislative session will actually to the planning. And it never happens.
The article briefly mentions that Sweden reformed their pension system a few years ago. Annika Sunden, a researcher at Boston College, has written a rundown of the Swedish Experience (I like the sound of that).
In 2000, the new center-right Swedish government passed a law that mandated private pension accounts. Under the law,Swedes pay an 18% pension tax, 16% goes to the pay-as-you-go system (same as in the US) and 2% goes to private individual accounts.
There are over 650 investment funds you can choose to invest in. You can own up to 5 funds. If you don't activly select a fund, your placed in a "default" fund, that's composed of about 75% stocks, and the rest bonds.
When the program was launched, 70% of people in year one made an active choice and picked their own funds. In subsequent years, only 10% activley select a fund. This can be explained by all the media attention the new law caused, and a government marketing campaign in 2000 urging people to pick a fund.
Most accounts have lost money since they began, and people are starting to question private accounts. Shitty timing to start this at the top of the bubble.
A big lesson here is that if you are going to create private accounts, the composition of the default fund is hugely important. It needs to be very low risk and well diversified. (And, I'd be happy to run it for a mere 0.00001% management fee)
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That's why there's a surplus now. The above is *part of the plan*. Payroll taxes were raised in the '80s so that the trust would have enough of a surplus to cover the baby boomers. The surplus gets drawn down, as you mention, but once the boomers are gone, it shouldn't be a problem.
See here for more information
I'm sorry, but you must be a moron. Clinton is saying that after such and such a date, Social security will need to cut benefits to 75 cents on the dollar, which is exactly what everyone who says there is no crisis is saying!!!
The issue should NOT be whether Social Security is solvent or not.
The issue SHOULD be, "you have X years to balance the budget and pay off the Social Security loans so Social Security stays solvent".
The Government BORROWED the Social Security money and now the Government doesn't want to pay it back.
Balance the budget, Bush. The Social Security money is there.
State pension plans invest deductions from payroll or state contributions in marketable securities. These securities receive interest income or capital appreciation and grow over time. Retirees then draw from this fund in the form of pension payments.
Social security invests NOTHING. Current contributions are immediately paid out to beneficiaries. The only deviation from this is when collections are greater than payouts, in which case the money is forwarded to the "general fund" and spent for government programs. The social security system receives an IOU from the government in the amount of the surplus that is filed somewhere, and is sometimes referred to as a "treasury security". Unlike a treasury security, however, it cannot be traded. It is not marketable in any way. No funds are set aside to meet these pseudo-obligations. As a security, these instruments have zero value and are only a political instrument used to cover the fact that payroll taxes are in excess of what is currently needed, and is used for non-social security purposes.
The social security system really is a lot like a ponzi scheme, but one supposedly supported by the ability of the U.S. Government to raise money (through taxation). As long as the government is willing to support social security when payroll taxes don't cover benefit payouts, we're fine. It's been the other way around for years now. But I sorta doubt that the feds will be able to do that when I retire.
For starters, there is so much documentation about falsehoods and out and out lies being spouted by Fox, it is pointless to even begin enumerate them. However, everyone arguing over whether or not CBS and rather screwed up are simply managing to get mislead (again) by republican talking points. That was one aspect of the story: it was refuted, although even that refutation was, in fact, questionable. Furthermore, the independent commission now being cited as saying that Bush "served honorably" during Vietnam did nothing of the sort; they merely claimed that CBS used poor journalism in the way in which they took the story to press. They never claimed that the long list of other supporting evidence that Bush was delinquent even in his diminished duties was invalid. http://mediamatters.org/items/200501120004
Or have you only comfort...that stealthy thing that enters the house and guest then becomes host, then master - KG
I don't know about "good" (I think it is), but you could try the BBC.
A bit liberal by US standards, but more news about goings on around the world.
Rhymes that keep their secrets will unfold behind the clouds.There upon the rainbow is the answer to a neverending story
David Boylan, the WTVT general manager, was quoted as telling the reporters "We paid $3 billion for these television stations. We will decide what the news is. The news is what we tell you it is."
To be fair, this sort of thing, in itself, isn't the problem. I mean, an editor (or owner or someone else with editorial power) is within his rights to tell a reporter to rewrite stories. Sometimes the reporter disagrees, and might even believe that the editor's perspective on a story is "wrong". That an editor would pull the old, "I'm in charge here! Shut up and say what I tell you to say!" isn't necessarily unethical.
So, I guess all I'm pointing out is, the problem was not that FOX told a reporter what to say. The problem lies only in the fact that what FOX was telling him to say was demonstrably false.
Well, this makes sense only if you use the life expectancy at age 18 (or 21, or whatever your cutoff is for when someone enters the workforce). Life expectancy at birth is a stupid measure to use for this, because having a bunch of children die before the age of 1 affects social security not a bit. (They don't pay in, and they don't withdraw)
So how has life expectancy changed over the last century? Well, in one sense, it's risen dramatically - the life expectancy at birth is now something like 15 years longer than it was in 1940. However, most of that increase is due to advancements in keeping children from dying. At the other end of the spectrum, someone who made it to 65 in 1940 could expect to live, on average, another 12.7 years. Nowadays, they could expect to live another 15.3. That's a whopping 2.6 year increase. (I admit, the increase has been greater for women now that we've gotten better at diagnosing breast cancer - a woman who reaches age 65 now can look forward to 4.9 years more than one could who reached age 65 in 1940)
Remember this: life expectancy for adults today is not radically different than it was 60 years ago. The difference is that today we don't have as many children being wiped out by childhood diseases, so the average looks much higher if you watch the wrong statistic.
Reference: http://www.ssa.gov/history/lifeexpect.html
I guess you passed over the part that went like this:
What's more, there is a strong case to be made that the agency is erring on the side of being overly pessimistic. If its more optimistic projection turns out to be correct, then there will be no need for any benefit cuts or payroll-tax increases over the full 75 years.
The 2018 is pretty much a worst case scenario. If the conditions occured that would make the system run a deficit in 15-20 years, the stck market would also flounder. Meaning private investments and 401K's would not be a great option to social security.
Social Security isn't truly designed to be 100% of retiree income. In fact, if you continued reading:
Social Security does not provide, and was not meant to provide, a satisfactory retirement on its own. The average stipend for a 65-year-old retiring today is $1,184 a month, or about $14,000 a year. About half of Americans also have private pension plans, but for two-thirds of the elderly, Social Security supplies the majority of day-to-day income. For the poorest 20 percent, about seven million, Social Security is all they have. Even those figures understate the program's importance. According to an agency publication, ''Income of the Population 55 or Older: 2000,'' 8 percent of elderly beneficiaries were poor, but a startling 48 percent would have been below the poverty line had they not been receiving Social Security.
So many seniors and retirees did save up, and try as they might, without Social Security, they'd be in poverty.
Th
The coming boom in retirees was forseen twenty two years ago, and they enacted a plan to take care of them: they raised taxes to create the Social Security Surplus.
There is no SS crisis. And the privatization plan being floated cuts benefits more than the "do nothing" approach under the most pessimistic economic assumptions.
There were no WMDs, either. Judge the folks by their track record.
1998: $68400
1999: $72600 +6.1%
2000: $76200 +4.9%
2001: $80400 +5.5%
2002: $84900 +5.5%
2003: $87000 +2.4%
2004: $87900 +1.0%
2005: $90000 +2.3%
"You're Wrong."
Source: Social Security Administration - Annual maximum taxable earnings and contribution rates, 1937-2003.
Only recently has the cap risen less than the rate of inflation.
There has been no credible evidence to suggest that CBS was in any way connected with any fabrication of the documents, any more, than, say, the Daily Telegraph was responsible for forging the infamous Hitler Diaries. That CBS were prepared to take at face value items that may or may not have been forged (the case has not been proven either way) is another matter.
The Economist is also quite good, but not cheap. It seems like they have fewer articles but each leaves you with a decent amount of knowledge about a subject. I also like that on the subjects I know more than the average journalist about, tech and finanacial news, they generally hit the important notes which makes me feel much better when reading an article on Eastern European politics or other topics I know considerably less about.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
There is no SS crisis.
Al gore said it was only solvent until 2050 - And the Democrats savaged bush 4 years ago on it...
I know - Bush is in office so the rules have changed - Like they did when Clinton was happy to point out a Bomber Pilot fighting for our freedom in the skies of Iraq during a SOTU address..
_ _ _ Go for the eyes Boo! GO FOR THE EYES!
As for the rest of the stuff, well, let's look at Amendment X to the US Constitution:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Based solely on that, there are many federal programs that are unconstitutional. There is no provision for the federal government to provide poverty relief, flood insurance, medial insurance, etc. Most roads are built by states and municipalities, anyway. It only says in clause 1 that it can "for the common Defence and general Welfare of the United States." Taking from Peter to pay Paul does not provide for the general welfare of the US. It provides for the specific welfare of Paul and hurts the welfare of Peter. OK, you all think I'm starting to sound like a mean SOB with a big burr up his backside. In reality, if anyone wants these things as government programs, the place to have them enacted is at the state level. Equitable? It entirely depends on the state in which you live. I have far less of a problem paying the higher tax bill to the state than I do the federal government, becuase at least when it's to the state, the money stays closer to home and has more of a direct effect on me.
Do the words "provide" and "promote" mean the same thing? According to the dictionary, no. According to the Supreme Court decisions over the last several decades, yes.
"A government that robs Peter to pay Paul can always count on the support of Paul."
OCO is Loco
That would be one possible course of action. Whether it is "proper" or even desirable is another matter. Without the the Trust Fund buffer, SS financing beomes tightly coupled to current economic performance. Maintaining SS's commitments during periods of very modest economic performance would then be impossible, orat least very painful. It's not at all clear that this would be proper or even wise public policy.
In the fact that it has never happened any other way in the history of the world.
Where is the basis for it in the Constitution.
Section. 8. Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
I am of the mind that private charities and businesses can handle this burden without a caretaker government.
So what? Where is your PROOF?!
Computers are useless. They can only give you answers.
-- Pablo Picasso
The story wasn't fake. One piece of evidence was not corroborated (never proven false by the way) and the right wing spin machine went into overdrive to "discredit" the story.
Fact is, Dubya was AWOL, and no one had the guts to say it loud enough.
Give me a break! I believe that Dubya was AWOL, but that doesn't make a clumsy and obvious fraud look any more believable to me. Even older versions of Word and Times New Roman do not reproduce the perfect match to the character spacing and relative line lengths that you get if you type the memo text into the current version of Word, using defaults for everything (I've tried it). And we are supposed to believe that some mythical proportional spacing typewriter from the '70's that nobody has actually managed to identify just happens to match the way that Word spaces characters today?
If you believe that, I have a URL that you should visit to verify all of your bank accounts and credit card numbers....
The life expectancy calculations you mentioned are a myth. Debunked by the NYT article. Further, the original Social Security estimates of life expectancy were almost spot-on perfect. They actually anticipated a longer life expectancy by a year or two, not a much shorter one.
Similarly, everything you said reads like a talking point list from the Republicans. And without going back and doing a point-by-point analysis of your claims vs the NYT, I think the article refutes every claim you made. If you want to argue this, start the point-by-point, quoting the NYT article or historical documents and I'll willingly commit the effort. But I won't waste my time on something I suspect is partisan astroturfing by an anti-SS advocate.
My take: the republicans have hated Social Security since day 1. They've tried to kill it at least 4 times. Now, they're saying it's doomed to bankruptcy and must be dramatically changed to be saved. Ironically, the remedy is very similar to the previous attempts to destroy it. Hmmm...
Republicans hate SS. They also hate that it's been unassailable (the proverbial 3rd rail). If they are the only ones that say it's doomed, Occam's Razor says they're lying.
"Over the objections of many of its own employees, the Social Security Administration is gearing up for a major effort to publicize the financial problems of Social Security and to convince the public that [privatized] accounts are needed as part of any solution." (The New York Times, 1/16/2005)
Ok, so one could concievably argue that the employees are worried about losing their jobs, and the SSA is worried about the American people. Publicizing problems - that's a good thing: people should know about the financial difficulties of their retirement fund. Convince...whoa, whoa, wait a minute, there, buster! First of all, precisely what is to be done about Social Security privatization is the business of the legislature, not the SSA. The organization itself should merely provide facts and objective analysis to the discussion, not opinions. If the SSA starts telling us what we should do, then there's a serious conflict of interest: shouldn't its suggestions be ones that would tend to insure the SSA's continued existance? Yes.
Wait! They're not. Now, THAT sounds fishy. Of course, you could argue that the self-devaluing nature of the SSA's recomendations supports their credibility. One could also argue that it shows that they are being manipulated by higher powers, eg the Executive Branch. We'll never know which it is. The only way to have an honest discussion of SS reform is if the SSA stays out of it.
Here is the phone # of the SSA. Tell them what you think of their role in the discussion.
1-800-772-1213
After the greeting, dial 1 for English or 2 for Spanish.
Then press 3.
Then press 0 to speak to a representative.