7 ms·

First, both parties have raided Social Security, not just Republicans. In fact, both parties have been complicit in the government's financial misfeasance for

First, both parties have raided Social Security, not just Republicans. In fact, both parties have been complicit in the government's financial misfeasance for a long time. Second, you mention the money "to pay back the workers who contributed." There was never any money to pay back. Social Security was always a pay-as-you-go system. Current revenue pays for current appropriations. There was never any "trust fund," another fact that smoothed the way for Congresscritters to raid Social Security and replace the surplus with Treasury IOUs. This system was feasible when there were ten workers being taxed for each retiree receiving benefits. With the graying of the Baby Boomers, that ratio will approach parity. Another commenter on this thread mentioned that the best thing to have done to Social Security would be to build an electric fence around it. A good idea. Too late. Congress has fleeced it.

trevelyan 15y ago
1. Social security reform was a core part of the Democratic platform in 2000. "I will keep Social Security in a lockbox, and that pays down the national debt and the interest savings I would put right back into Social Security." (Al Gore, Oct 4, 2000). Put simply, the Democratic policy aim was to divert the surplus into paying off the debt while preventing lower interest rates from spiking government borrowing/spending by also putting interest savings into the trustee account. You can compare this with the Republican plan at your leisure. 2. Your characterization of the "feasibility" of the social security program is wildly inaccurate. Seriously, instead of turning yourself inside out trying to claim that Republicans didn't setup a system that had workers pay MORE into the system than they were taking out for 30 years, why not just roll back the Bush tax cuts and call it a day?
- hadronzoo 15y ago
  I think it will take more than rolling back the Bush tax cuts. If no entitlements changes are made, it would take roughly twice the GDP of the entire world: "Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon. Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent." –Richard W. Fisher, Dallas Federal Reserve President, May 28, 2008 [1] 1. http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm http://www.dallasfed.org/news/speeches/fisher/2008/fs080528....
  - trevelyan 15y ago
    I agree that Americans pay far more for health care than they should. I agree that Bush's medicare giveaway to industrial pharma was grossly irresponsible and that it has contributed a massive amount to the crater that currently is US fiscal policy. And I do not honestly know how people who consider themselves conservatives could support either that or the tax cuts, especially when the United States was on course to actually pay off its national debt. Returning to the issue of social security, the statistic Fisher cites comes from Table IV.B6 of the trustees’ report, which is extremely conservative in its assumptions (assuming essentially zero productivity growth over the next 50 years) and thus - even at the worst - would require only a minor tax addition to permanently solve without reducing benefits. I do not much like your suggestion that since the Republicans instituted tax cuts the surplus is gone and there's nothing we can do about it, but will add only that if Gore's proposal had been adopted (Republicans at the time were championing the terrible idea of dumping social security funds into the stock market while cutting top-end taxes), even the "infinite horizon" figure would be nowhere near where it currently is and it would likely be possible to reduce the payroll tax or increase benefits. And given all this, I don't know how to reconcile your claim that this is not a Republican problem with the fact you claim to be a rational fiscal conservative.
    - hadronzoo 15y ago
      I quite agree with you (and Fisher) that the Social Security system's problems are solvable (you might have confused me with winestock). My point was that SS is a distraction–Medicare dwarfs the other entitlement liabilities–and it will take more than rolling back the Bush tax cuts to bring about budget surpluses.
      - trevelyan 15y ago
        Apologies for the mix-up. Point well made.
  - Duff 15y ago
    Social Security has very well defined costs that are manageable if you implement some reforms. Medicare is a another story altogether. Fact is, a 1960-style PPO for every old person just isn't sustainable when health costs rise like 13% per year.
mbreese 15y ago
You do realize that most Treasury IOU's are also called bonds, right? There are also two trust funds that comprise social security: the old-age fund and the disability fund. They each buy special issue securities from the government, but have also bought public bonds in the past. The securities have always been paid back with interest. If the Federal gov't ever didn't pay one of these securities, it would be a default by the gov't. It would be interesting if these funds could invest (limited amounts) in some other type of security, but for now, they are limited to Federal securities. Imagine the sway on the market a $2.7 trillion fund would have. http://www.ssa.gov/oact/progdata/fundFAQ.html#n7 http://www.ssa.gov/oact/progdata/fundFAQ.html#n7 http://www.ssa.gov/oact/progdata/specialissues.html http://www.ssa.gov/oact/progdata/specialissues.html
- muzz 15y ago
  The bonds will be paid, but future Congresses can decide at any time to cut benefits to recipients. That's the conflict. Perhaps analogous to lending your boss a large amount of money-- he now has the incentive to cut your wages so that he can more easily pay back the loan.
encoderer 15y ago
First, you're right, both parties have diverted Social Security surpluses. But only one party -- the GOP -- is trying to avoid paying it back, using the SS deficit as a tool to dismantle or alter the program. Second, that doesn't change the social contract we have with people who have spent their entire lives paying out up to $6000 a year in wages to the fund. Third, yes, while baby boomers retire, it will run a deficit. But if the surpluses over the last SEVENTY YEARS hadn't been diverted to the general fund, they'd have enough in the "lock box" (that Al Gore advocated for in the 2000 election) to pay for 'boomer retirements. Look at the predictions made by FDR's guys in 193(4?) about social security. They are surprisingly correct. They saw this coming. The only thing they didn't do is force a segregation of funds.
- cookiecaper 15y ago
  >Second, that doesn't change the social contract we have with people who have spent their entire lives paying out up to $6000 a year in wages to the fund. A good reason not to trust the government to keep a forced retirement account on your behalf. Someone is going to get the short end of the stick here eventually. I would prefer that people own up to this and we set up an orderly, phased dismantling of the program, but that doesn't seem very likely. Politicians and head-in-the-sand populace apparently insist on a single disastrous collapse that leaves millions insolvent rather than admitting and accepting that there will be some controlled loss involved in a phaseout.
  - jlangenauer 15y ago
    As opposed to forced retirement accounts you manage yourself? Make no mistake, no sane government would allow for completely voluntary contributions to any sort of pension or superannuation scheme - it'd be setting its country up for a massive economic and social timebomb as the majority of the population put present wants over future needs. As for investing pensions in the stock market, I'll merely add that in Australia, where we've had superannuation for 20 -odd years, all usually invested in stocks, there were are a large number of people who thought they were going to retire in 2008 (my parents amongst them) who are now still working.

trevelyan 15y ago

1. Social security reform was a core part of the Democratic platform in 2000. "I will keep Social Security in a lockbox, and that pays down the national debt and the interest savings I would put right back into Social Security." (Al Gore, Oct 4, 2000). Put simply, the Democratic policy aim was to divert the surplus into paying off the debt while preventing lower interest rates from spiking government borrowing/spending by also putting interest savings into the trustee account. You can compare this with the Republican plan at your leisure. 2. Your characterization of the "feasibility" of the social security program is wildly inaccurate. Seriously, instead of turning yourself inside out trying to claim that Republicans didn't setup a system that had workers pay MORE into the system than they were taking out for 30 years, why not just roll back the Bush tax cuts and call it a day?

hadronzoo 15y ago
I think it will take more than rolling back the Bush tax cuts. If no entitlements changes are made, it would take roughly twice the GDP of the entire world: "Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon. Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent." –Richard W. Fisher, Dallas Federal Reserve President, May 28, 2008 [1] 1. http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm http://www.dallasfed.org/news/speeches/fisher/2008/fs080528....
- trevelyan 15y ago
  I agree that Americans pay far more for health care than they should. I agree that Bush's medicare giveaway to industrial pharma was grossly irresponsible and that it has contributed a massive amount to the crater that currently is US fiscal policy. And I do not honestly know how people who consider themselves conservatives could support either that or the tax cuts, especially when the United States was on course to actually pay off its national debt. Returning to the issue of social security, the statistic Fisher cites comes from Table IV.B6 of the trustees’ report, which is extremely conservative in its assumptions (assuming essentially zero productivity growth over the next 50 years) and thus - even at the worst - would require only a minor tax addition to permanently solve without reducing benefits. I do not much like your suggestion that since the Republicans instituted tax cuts the surplus is gone and there's nothing we can do about it, but will add only that if Gore's proposal had been adopted (Republicans at the time were championing the terrible idea of dumping social security funds into the stock market while cutting top-end taxes), even the "infinite horizon" figure would be nowhere near where it currently is and it would likely be possible to reduce the payroll tax or increase benefits. And given all this, I don't know how to reconcile your claim that this is not a Republican problem with the fact you claim to be a rational fiscal conservative.
  - hadronzoo 15y ago
    I quite agree with you (and Fisher) that the Social Security system's problems are solvable (you might have confused me with winestock). My point was that SS is a distraction–Medicare dwarfs the other entitlement liabilities–and it will take more than rolling back the Bush tax cuts to bring about budget surpluses.
    - trevelyan 15y ago
      Apologies for the mix-up. Point well made.
- Duff 15y ago
  Social Security has very well defined costs that are manageable if you implement some reforms. Medicare is a another story altogether. Fact is, a 1960-style PPO for every old person just isn't sustainable when health costs rise like 13% per year.

mbreese 15y ago

You do realize that most Treasury IOU's are also called bonds, right? There are also two trust funds that comprise social security: the old-age fund and the disability fund. They each buy special issue securities from the government, but have also bought public bonds in the past. The securities have always been paid back with interest. If the Federal gov't ever didn't pay one of these securities, it would be a default by the gov't. It would be interesting if these funds could invest (limited amounts) in some other type of security, but for now, they are limited to Federal securities. Imagine the sway on the market a $2.7 trillion fund would have. http://www.ssa.gov/oact/progdata/fundFAQ.html#n7 http://www.ssa.gov/oact/progdata/fundFAQ.html#n7 http://www.ssa.gov/oact/progdata/specialissues.html http://www.ssa.gov/oact/progdata/specialissues.html

muzz 15y ago
The bonds will be paid, but future Congresses can decide at any time to cut benefits to recipients. That's the conflict. Perhaps analogous to lending your boss a large amount of money-- he now has the incentive to cut your wages so that he can more easily pay back the loan.

encoderer 15y ago

First, you're right, both parties have diverted Social Security surpluses. But only one party -- the GOP -- is trying to avoid paying it back, using the SS deficit as a tool to dismantle or alter the program. Second, that doesn't change the social contract we have with people who have spent their entire lives paying out up to $6000 a year in wages to the fund. Third, yes, while baby boomers retire, it will run a deficit. But if the surpluses over the last SEVENTY YEARS hadn't been diverted to the general fund, they'd have enough in the "lock box" (that Al Gore advocated for in the 2000 election) to pay for 'boomer retirements. Look at the predictions made by FDR's guys in 193(4?) about social security. They are surprisingly correct. They saw this coming. The only thing they didn't do is force a segregation of funds.

cookiecaper 15y ago
>Second, that doesn't change the social contract we have with people who have spent their entire lives paying out up to $6000 a year in wages to the fund. A good reason not to trust the government to keep a forced retirement account on your behalf. Someone is going to get the short end of the stick here eventually. I would prefer that people own up to this and we set up an orderly, phased dismantling of the program, but that doesn't seem very likely. Politicians and head-in-the-sand populace apparently insist on a single disastrous collapse that leaves millions insolvent rather than admitting and accepting that there will be some controlled loss involved in a phaseout.
- jlangenauer 15y ago
  As opposed to forced retirement accounts you manage yourself? Make no mistake, no sane government would allow for completely voluntary contributions to any sort of pension or superannuation scheme - it'd be setting its country up for a massive economic and social timebomb as the majority of the population put present wants over future needs. As for investing pensions in the stock market, I'll merely add that in Australia, where we've had superannuation for 20 -odd years, all usually invested in stocks, there were are a large number of people who thought they were going to retire in 2008 (my parents amongst them) who are now still working.