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One of my parents is a pensioner and their attitude towards money is that "I earned it, and so it's my money," regardless of whether that money is in their acco

One of my parents is a pensioner and their attitude towards money is that "I earned it, and so it's my money," regardless of whether that money is in their accounts or in their monthly check. They really do view all of that money which comes to them as being an entitlement which is already funded, and not part of an ecumenical system of money. > I have very clear memories of the political battles of the 1980s and 90s when my parents’ generation were in their prime working age. They demanded two contradictory things from government. First, they wanted their taxes reduced dramatically. Second, they wanted all the perks and services they were already receiving. I can't put it any better. The government, to my parents and collateral relatives (uncles and aunts), is simultaneously evil for taking Social Security taxes from paychecks, and also good for paying out Social Security to them, but they don't register the cognitive dissonance. > So instead the gap was filled with debt, unrealistic future promises, attrition, and a can that was kicked down the road. Society went way out on the risk curve in search of “growth” that didn’t actually exist anywhere but on paper. Yep. The idea that Social Security is paying it forward (or paying it backward) is just too tough. > The meme will be simple and palatable. These were benefits that were earned from years of hard work. These are the deserving recipients of what is due them. That’s completely different from just handing out fake cash to random slackers and wastrels who squander the money on Netflix and Amazon Prime without contributing to society. I can hear the sarcasm in the author's inflection. And I can also hear its stark effectiveness in my parent's complaints.

chrisco255 6y ago
Social security taxes were never reduced. Income taxes have been through various taxation schemes but the total Federal tax revenue as percentage of GDP typically always hovers just under 20% regardless of tax legislation: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S
- RhodesianHunter 6y ago
  Because the effective tax rate never really changes that much.
narag 6y ago
There is no law of nature that says that SS systems must work the way most do: paying current pensions with current work. You can actually save current incoming money in a fund that will grow making everybody richer, instead of depending on future generations that can shrink, actually what's happening now. The only reason it was implemented as debt is that it works from the start up. But it's possible to transition slowly from one model to the other one. There are political reasons why they're not doing that, but honestly, I think your parents are right to ask for what they were promised to receive. Maybe it's impossible to materialize the money now, but that doesn't make them wrong.
- zeveb 6y ago
  George W. Bush wanted to do that, but it died a nasty death due to politics and his complete and total lack of political capital. It's a real pity, IMHO, because transitioning from the tax-by-another-name Social Security system to something closer to a mandatory 401(k) plus a disability scheme is vital to spreading the wealth of the country. It would be awesome if even the poorest labourer owned — and could vote — shares in the wealthiest corporations.
  - StillBored 6y ago
    That might be a bit charitable. The GWB SS fix, was basically as you mention turning SS into a mandatory 401k. Without any kind of backstop, limit on fees, etc. Which means the burden and risk were shifted entirely to the individual with a guaranteed cut for the financial services industry. That is a terrible idea, given that the market goes up and down, and not everyone necessarily makes enough money to fully fund a 401k style retirement account. The only winners in that situation are the retirement fund managers, and people at the top of the income distribution who suddenly don't have to pay for the less fortunate. Much the same argument can be made WRT pensions, which are guaranteed benefit systems. Its the company/govemerments responsibility to assure that the pension is funded sufficiently to grow. Market failure risks, and the like are the responsibility of the pension, which can do a better job of averaging returns over decades than the individual can. Say someone wants to retire in 2008, instead of their 401K dropping by 40% and eating heavily into their principal they are just part of a larger fund which can absorb that hit with the understanding its over funded from the previous 20 years of returns and the fact that it could be additionally funded a small amount over the next couple decades to make up for the loss if to much of the principal is reduced. Its basically the same argument for any kind of insurance. You spread the risk over a larger pool and everyone benefits.

chrisco255 6y ago

Social security taxes were never reduced. Income taxes have been through various taxation schemes but the total Federal tax revenue as percentage of GDP typically always hovers just under 20% regardless of tax legislation: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S

RhodesianHunter 6y ago
Because the effective tax rate never really changes that much.

narag 6y ago

There is no law of nature that says that SS systems must work the way most do: paying current pensions with current work. You can actually save current incoming money in a fund that will grow making everybody richer, instead of depending on future generations that can shrink, actually what's happening now. The only reason it was implemented as debt is that it works from the start up. But it's possible to transition slowly from one model to the other one. There are political reasons why they're not doing that, but honestly, I think your parents are right to ask for what they were promised to receive. Maybe it's impossible to materialize the money now, but that doesn't make them wrong.

zeveb 6y ago
George W. Bush wanted to do that, but it died a nasty death due to politics and his complete and total lack of political capital. It's a real pity, IMHO, because transitioning from the tax-by-another-name Social Security system to something closer to a mandatory 401(k) plus a disability scheme is vital to spreading the wealth of the country. It would be awesome if even the poorest labourer owned — and could vote — shares in the wealthiest corporations.
- StillBored 6y ago
  That might be a bit charitable. The GWB SS fix, was basically as you mention turning SS into a mandatory 401k. Without any kind of backstop, limit on fees, etc. Which means the burden and risk were shifted entirely to the individual with a guaranteed cut for the financial services industry. That is a terrible idea, given that the market goes up and down, and not everyone necessarily makes enough money to fully fund a 401k style retirement account. The only winners in that situation are the retirement fund managers, and people at the top of the income distribution who suddenly don't have to pay for the less fortunate. Much the same argument can be made WRT pensions, which are guaranteed benefit systems. Its the company/govemerments responsibility to assure that the pension is funded sufficiently to grow. Market failure risks, and the like are the responsibility of the pension, which can do a better job of averaging returns over decades than the individual can. Say someone wants to retire in 2008, instead of their 401K dropping by 40% and eating heavily into their principal they are just part of a larger fund which can absorb that hit with the understanding its over funded from the previous 20 years of returns and the fact that it could be additionally funded a small amount over the next couple decades to make up for the loss if to much of the principal is reduced. Its basically the same argument for any kind of insurance. You spread the risk over a larger pool and everyone benefits.