51 thoughts on “Social Security: Point/Counterpoint”

1. Excuse me but IT IS my money we are talking about. I have already paid into SS for 32 years. Ashley is talking about the money she expects to pay in but has actually only paid very little so far. And Ashley, you misinpterpreted, the 73% is not 73% of the benefits paid out in 2005 but 73% of benefits that would be due in 2043 if the system were allowed to continue as is. Under the Bush plan the private account that you will be allowed to set up is intended to mitigate if not make up the loss in benefits you would incur due to the change in the program. Read that sentence very carefully Ashley. Your private account coupled with your SS may pay out as much as you might have received if the system is allowed to continue as is.

2. Definitions :
   Welfare : Financial or other aid provided, especially by the government, to people in need.
   Social Security : A government program that provides economic assistance to persons faced with unemployment, disability, or agedness, financed by assessment of employers and employees.

   If your goal in life was to retire and go on welfare/SS go for it. The way things are now (and I hope it will remain); it will be enough to eat a hearty helping of 9 lives with rain water.
   For the rest of us FINANCIALLY RESPONSIBLE persons ; we will continue to contribute to our retirement plans , be frugal with our moneys , live within our means , find more ways to make more money , contribute to the government enough to keep the US safe and a SUPER POWER in the world , and vote capitalist and NOT socialist. So that when we the FINANCIALLY RESPONSIBLE are at the age of retirement we can say that we did it our way, on our own terms.
   ….. and eat filet mignon with a glass of red wine.

   “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety. ”
   Benjamin Franklin
   

3. Ah,

   Anonymous is about to be outted – that is my man. See why I married him Mom? Not only is he smart he is funny (welfare recipients should eat cat food – *guffaw* *snort* – it’s funny because it’s true.)

   And he quoted Benji for me. I quoted John Adams for John a few posts back but he didn’t notice 🙁

4. And just where are younger people supposed to get all of this money to put in non-SS 401k’s and other such private retirement accounts? In 2018 the outflows overwhelm the inflows for SS. Then the Feds use the “SS Trust Fund”. What a laugh! “SS Titanic” is more like it! The gov’t MUST: cut spending and run a perpetual surplus(impossible AND is using MY income tax money to give to older generations who used that revenue to lower their past income tax rates/spend more), raise FICA taxes on my (and future) generations AGAIN(started out at 4% for the LOTTERY WINNERS but don’t seem to be quite that low any more), raise MY income taxes to make up the shortfall, or borrow more money and add it to the national debt(and by doing that use up more of my income tax money to pay debt service so fewer services for me and also make interest rates rise and increase the costs of public and PRIVATE borrowing.)

   Seems to me that any way the pie gets sliced all I end up with is the bill.

   And that only “works” ’til 2041 when the fictitious “trust fund” runs out.

   So we in the future are facing: massive cuts in OUR availble gov’t services, higher interest rates, MUCH higher income AND FICA taxes, and working MUCH longer since we will have far less take home pay and no way to have thousands let alone pennies to throw into a 401k.

   Raise the retirement age to the average age of death NOW and index it to life expectancy. Everyone who is already collecting SS made out like a bandit and spread the rest of the pain FAIRLY to the rest of us. People have been shouting about the coming SS implosion for DECADES!

   Retire at 60 and collect SS at 67? Get real! We’ll be lucky to ever be able to retire at all!

   Honey, we future generations owe you NOTHING! Voting yourselves largesse out of the Treasury and giving future generations the bill is not a “generational social contract” it is THEFT! And if you and people like you continue on with the charade that Social Security is fine and dandy and needs no reform NOTHING is exactly what you are going to get! When every working man and woman in this country is paying 80 to 90% tax rates so you can get far more out of SS that you ever paid in you better believe that we are going to cut you off! You have absolutely zero sympathy for our future plight and we will have zero sympathy for yours when you are living in the street because you tried to do it to us first.

5. Sorry, but in my opinion Ashley lost the instant she descended into the usual conservative bit of name-calling. Oooooh, the evil Commie pinko socialist FDR. Her next post proved that she hadn’t done any homework and hasn’t a clue as to the actual mathematics or economics of the situation. Then “her man” proceeds to wish for the return of what life really used to be like for far too many of the elderly to possibly be amusing to anyone with any appreciation of the truth unless they have the empathy of Jeffrey Dahmer. In addition he proceeds to trivialize the true meaning of trading liberty for security. She in turn approves mightily of his wishing the worst for anyone who doesn’t or simply can’t save up for a comfortable retirement. Let me descend into my own generalization here and opine that much ignorance has been displayed as well as vitriol towards those evil old farts who created social security only from the most venal of reasons, not possibly because they saw a need that no one was addressing because in fact they couldn’t. First, let me wish for Ashley and Anonymous that what they wish for the less fortunate be visited upon them tenfold in some sense of justice. And if we are going to play the quote game…

   Those who cannot remember the past are condemned to repeat it.
   George Santayana, The Life of Reason, Volume 1, 1905

6. John! You’ve got a battle royal goin on here man! Now this is what blogging is all about. I tip my hat to you sir.

   Before I go, my two cents:

   We pay to fix it now, or we pay tripple to fix it later. Are private accounts critical to the fix? No.. We could raise the age limit, cut benefits or tax the crap out of our kids.. All unacceptable IMOP.. The only way to go are the accounts. Take any 30 year snapshot of market performance – from any starting point — You’ll see that the market beat the pants off of the current SS growth rate.

7. Hans, that is an excellent point. You can go all the way back to the 30’s and index market returns and it has always averaged in double digits. So they private accounts are a no brainer IMO. The real issue is how to make the transition. I could live with raising the taxable amounts from the current $90,000 for people at or above 45 years old, to keep the old system going. Everyone else would convert to the investment accounts. Don’t know if those numbers work, but that is the nut that has to be cracked. No one in their 20s is going to want to invest in SS with no hope of any return on that money.

   As always, I appreciate you coming by! You are my favorite fascist! 😀

8. Jim, Ashley is quite capable of defending herself, so I will just note that she can be as hard on conservatives as she is on liberals. She is very issue specific and does not hold to party dogma. If anything, she is a closet libertarian. I think that is what makes the SS reform debate so interesting politically. We have MoveOn aligned with older Americans, and young Americans gravatating to a conservative position. I don’t know that this will cause any permanent shift in alligences, but it will be fun to watch it all shake out.

   Thanks for coming by and sharing your views.

9. RJ, obviously I agree with you that SS is broken and in need of a radical fix. Still, you can’t blame us boomers for a system that was created in the 1930s. We (well, not me but most of my generation) have been paying into this crappy system for 30 years, based on a promise made by Uncle Sam. Whatever money we get back will be less than our investment unless we live to be well into our 80s. Had that money been put into a mutual fund with a 12% return we wouldn’t be facing this issue. So, let’s find a way to get you people out of the system while keeping the promise made to the oldsters. It is not our fault that we are in this situation, and Carol is not asking for anything more than she was promised, and has even acknowledged she will have to settle for less, but not 60% less.

   This is a tough issue and we all need to work together to fix it. Thanks for sharing your views here. Hope to see you again.

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11. Carol needs to read the relevant statutes. The money she paid into Social Security is not legally hers (she bears no title to a numbered account, and she is not party to a contract that entitles her to the benefits, for example), and it no longer exists (the joys of a pay-as-you-go system).

    John McCrarey, we live in a representative republic. Saying it wasn’t your fault doesn’t cut it. It most certainly is your generation’s responsibility that you collectively shunned the issue when you were younger, and are leaving the hard decisions to your children and grandchildren, who took to the trouble to educate themselves and advocate for reforms that won’t leave their children with a Weimar Republic-style tab. Living with 60% less unacceptable? Cry me a fucking river. If 100% less, which the vast majority of generations beyond the Boomers are expecting and planning their financial futures upon, is good enough for your children, speaking of hardship on 60% less is ludicrous.

    If the backers of Social Security reform were clever, they would threaten to fold the thrift plan into Social Security, retroactively. What? Is that the sound of millions of startled federal government employees? Hey, if Social Security is good enough for the proles, and it is as rock solid as the Democrats claim, it is surely good enough for you guys! If Social Security really is less risky and better than a thrift plan style reform as the Democrats claim, then who needs the thrift plan? We would be doing the federal employees a favor by putting them back on Social Security! The reality is the federal employees would fight tooth and nail to retain the thrift plan and stay out of 100% vesting into Social Security, as they should. This would expose the Democrat’s deception, and cleave off a major voting bloc (unionized federal employees) at the same time.

    We’re all Americans and I hate to see generation warfare just as I hate to see class warfare. But the continued wilfull denial of the senior generations to acknowledge that starting with Gen X’s retirement, or very shortly afterwards, the programs will simply implode as long as world wide and national fertility rates continue downward decades-long trends, with immigration weakening the funding structure even further…it makes me wonder if the older generations even grasp the meaning of the price of freedom.

    You pay the full price of freedom not when you vanquish an enemy army, but when you come home afterwards and still take responsibility for yourself no matter how hard the consequences.

12. Anthony, I admit that social security should have been fixed a long time ago. Any you are right, if the gov’t tried to put me into that sinkhole I would scream bloody murder. The past can’t be undone, but I sense a oonsensus is building to tackle this issue in the here and now. The President hit a home run tonight, and I am totally on board with his proposals.

    Peace?

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14. “Bottom line-it’s theft” veiled by a feel-good idea that the government will tend to your needs for life. This is the work of Governmental Slave Plantation Policy.

    If the current system remains as is, the system will utlimately force young workers to pay both payroll tax AND income tax to sustain the Social Security system…I’d call this double theft.

    Actually, it will be triple theft as those who paid dearly into the system all their lives will not be allowed to pass on their earnings to those they wish, but to the Government Slave Plantation.

    There is no security in our current social security system since any ecomonic platform built upon socialist policies will ultimately come to a grinding halt.

15. John, I am not blaming Boomers for the SS mess. I am sure that there are some Boomers out there who will confront the coming disaster with honesty and fairness. Unfortunately it seems to be a rare breed of Boomer indeed! Look at how many won’t even admit SS has any problems at all!

    The prevailing mindset of many seems to be that we are in a game of musical chairs where they know that not only are there not enough chairs available but they know exactly when the music is going to stop. As long as the music stops AFTER they get their chair they don’t care. Screw everyone else (who is younger).

    I remember Sen. Simpson talking about the SS mess when I was in grade school 25 years ago. My generation was “promised” SS just like the Boomers so I would appreciate if that old canard were left unsaid because it is ridiculous. We have faced the highest SS tax rates (since TEFRA was passed) for our entire working lives.

    The only question for me is whether the Boomers think that they can just shove this problem off to my and future generations while they block any attempts to have them have to shoulder some of the burden as well.

    Knowing the Boomers as I do, since your reputation for selfishness knows no bounds, I am not hopeful.

16. Maybe rjasko apparently is more informed on the subject of social security than I am. Instead of telling Ashley to do her homework I guess I should have said we both should do our homework. I wasn’t aware that I or my generation of boomers had voted ourselves a largesse. I don’t know what this perception is based upon. Most of us aren’t even drawing social security yet and have been aware all of our lives tht we would not receive the same generous benefits of our parents. I cannot speak for everyone in my generation but rest assured rjasko that I have not been depending solely on my social security to see me through my old age. I set aside 25% of my income for retirement. Couple that with my payroll taxes and it becomes clear why I do not bring home but a third of what I gross. I would strongly suggest that you not depend solely on your private social security accounts to see you thorugh old age either. It is suppose to be a supplement. You are already responsible for taking care of your retirment needs. If your investments fail to accumulate (and by the way where are these rosy snapshots coming from? 12% gain over 30 years? The expected rate of return is between 4.6% to 3.3%) then the supplement was suppose to be your security net. Don’t for one moment think that social security is the beall and end all of your retirement. Start saving and stop whinning. I am also aware that that the money that I paid into social security was an investment I made into my country but I still have ownership. The deal was I paid in and in return I would get a pay out in my old age. If the government can renege on its promise to me then what makes you 2- somethings think they won’t renege on promises made to you? If you don’t want to be a true sandwich (supporting kids and parents) era then you best look at protecting your parents interest as well as your own. I do nto fault you for yoru vehemence on thsi subject. I recall well that I felt exactly the same way at your age. The difference was that when I was your age the government wanted to raise payroll taxes to keep social security solvent, which they ultimately they did. The rhetoric of youth was coutererbalanced by the government’s call to make a sacrifice for America and out older generation. This time the government is on the side of youth so no one is talking about sacrifice and older generations. I support personal accoutns and I beleive that social secrity is in need of a tweak. However, don’t rob me of the investment I made in SS so you can start a private investment. (Which you should have been doing all along!)

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18. Social Security sucks!

    I would like to point out to all those retired folks who natter about how they paid into SS for so many years and they so deserve these $1200 a month payouts.

    Maximum SS taxes in 1965 were about $350 a year. You can Google it up. Now they are $90K x 15.2% = $13680 (yes, the worker “pays” the employer’s share throuigh lower salary than he/she would otherwise receive).

    You know, I’m not so impressed now with your gigantic contributions to SS any more, Mr. Retired-to-Florida-and-where’s-my-Viagra?.

    And the “Trust Fund” is a pile of debt issued by the government TO the government. Completely meaningless. Try funding your retirement by writing an IOU with your right hand and putting it in your left pocket.

    Say it with me again: SOCIAL SECURITY SUCKS!

19. Hey Chester I am not retired. I have ten years to go at least. I am one of the folks paying the maximum and will be for another ten years at least. My parents will not be an issue in another 10 years or so they are well in to their seventies. They get a whopping $772 a month. If they decide to retire to Florida I can assure you it will not be financed on a social security income but on their savings that they carefully accumulated over the years. My folks were a penny pinching generation. As for my generation I am not sure how good we were as a whole at saving. The younger generations 20s, 30s, and 40s are more about consumption and living for the moment than saving for the future. The younger you get the worse it gets. Social Security is not suppose to be your only source of retirement income. It shouldn’t even be the biggest part but you younger people act as if it should be and act as if privatizing it will enable you to save the money you should already be investing in your future. Social Security needs tweaking just as it has every decade since its inception. However, the bigger problem is Medicare/Medicaid, and the most expensive and inefficient health care system in the world. No one, certainly not baby boomers, is saying we should not tighten our belts and fix these problems. However, before you go bashing us boomers, who aren’t on the dole yet, take a look at all the handouts and where they are going. Don’t just target us boomers go after everyone. I tell you what Chester dismantle social security. Let me keep my money. Pay out beneifts to our current retirees until there is no money left. I will take care of myself and you take care of yourself and we can both take care of our parents respectively. My parents won’t be around as long. I come from a big family and my parents were, like I previously mentioned, good at saving. It will not be that big a hardhip for me. My family will get by. When your family finds the burden of caring for multiple generations burdensome don’t come looking for a handouts in the form of housing or fuel assistance, cheap FHA loans, student loans, pell grants, WIC, free clinics for immunizing children, higher property taxes for schools, child tax credits, or the myriad of other handouts given on behalf of children, students, parents or the elderly. Cut everybody off the gravy train. Everyone can do for his or her self, the placment of individualism above community. Altrusim, who needs it, right?

20. Fact of the matter is. someone is going to get stuck with the bill at the end of the day. This discussion is all about who should get stuck with paying.

    Should Mom pay so that daughter does not have to?

    or

    Should Daughter pay so that Mom does not have to?

    At a restruant I picture that they would both be grabbing for the ticket and the one that loses offers to pay the tip. What we see here is just the opposite.

    Mom saying that she has been paying the bill for the last 30+ years and now it is Daughters turn to pick up the tab and the tip.

    Daughter calling bull$%(^ just because Grandma and Great-Grandma created a Ponzi scheme why should I be forced to join in?

    Mom’s response:”Because I don’t want to be left holding the bag”

    Daughter:”Well me neither.”

    Further debate rages with no end in sight. Basically it will come down to 2 eventual truths.

    Those with the largest voting bloc will win the battle. (MOM)

    As the crushing weight of taxes destroys our economy and crushes the spirit of the people. Grand Daughter will in traditional style rise up and sweep the slate clean. Leaving mom on a hill somewhere to die at the ripe old age of 104 so that Great-Grandaughter can have a place at the table and start a new life unburdend by our wasteful culture.

21. Carol: I am not as young as you perhaps think. I am 46, and I saw this godawful situation coming 20 years ago.

    I quit working as soon as my wife and I could live on her salary. She likes her job, I didn’t. I’m now a stay-at-home dad.

    I realize that SS is not supposed to be one’s whole retirement. That’s why we save over 30% of our income, since 20 years ago I figured out that SS was a goner. Even with 30% it ain’t going to be easy.

    Comparing the contributions of somebody like your parents who used to pay FICA a max of $350 a year to the current INCREDIBLE CRUSHING ABSURD GIGANTIC burden of $13000+ a year is laughable.

    The SS system cannot go on much longer as is; it’s too big a load for young people to carry, and it’s getting worse yearly. WAY TOO BIG. I am surprised there is any debate on this at all.

    I wish some reporter would ask these Dem leaders if they have EXTREMELY RISKY IRAs or Keoghs with money in the market. THE HORROR. Or whether, since SS is such a great deal, they are willing to cancel their own better retirement plan and get in the soup with all the rest of us.

    Anybody in the media have the stones? What do you think, carol?

    SOCIAL SECURITY SUCKS!

22. I found a chart that will put all this in perspective:

    http://www.treasury.state.tn.us/oasi/taxtables.htm

    In 1949 the maximum annually paid to FICA by employee/employer was $60. That was on $3000 income max.

    Now it’s $13,680 on $90,000 max (FICA/Medicare).

    What will it be in 30 years? How can anybody POSSIBLY defend this nonsense?

23. Carol,

    Social Security is a “pay as you go” system (or, less generously, but no less accurately, a Ponzi Scheme). The essence of such systems is that current outlays are paid out of current receipts. That’s why we have an impending crisis in the system. The baby boomer generation is approaching the age bracket at which they will be able to receive Social Security payments. There are lots of Baby Boomers, as I’m sure you are aware. You are probably also aware that succeeding generations are demographically much smaller. The number of people paying into the system will rapidly approach unsustainable levels as the Baby Boomer wave swamps Social Security.

    You paid into Social Security for most of your life. You did so based on a promise that you would receive payments in your own retirement. That, however, does not make your payments an “investment,” nor is that money you paid kept on account for you somewhere, nor does it mean that you are entitled to payments at all. As soon as you paid that money, it was sent out to others as benefit payments. Sure, the gov’t made a promise to pay you in the future, but it was not a promise they are capable of keeping. They made me the same promise too, and the odds of me ever seeing a dime of Social Security are virtually nil (I’m currently 36 years old). That promise was a lie when it was made to you, and it was a lie when it was made to me. People who run “private” Ponzi schemes make the same sort of promises of payout (guarantees of profit percentage). They can keep those promises for a little while, but inevitably the promise must be broken. Then we call them criminals and lock them up for fraud.

    For years now, Social Security receipts have exceded outlays. This was especially true when the Baby Boom generation was at the peak of its earning power. This “surplus” has been a subject of much political haymaking over the last twenty years. In fact, the existence of this surplus represented two things: 1) a back door for allowing the government to raise taxes without appearing to raise taxes, and 2) a way to make people feel warm and fuzzy about Social Security even when it was becoming obvious that the system is unsustainable in the long term. The notion of a Social Security “Trust Fund” was dreamed up as a way to present the surplus to the public. Basically, the government would continue to collect way more in SS taxes than it needed at the time, then loan the surplus proceeds to itself to be spent on whatever the politicians were wasting money on that year. The government is not legally allowed to invest that money in anything other than US government debt securities. So, the “trust fund” money has all been spent, the SS “trust fund” left holding mountains of government bonds, the gov’t dramatically increasing the national debt thereby, and there being no reasonable way to pay back the money owed on those bonds from the general funds.

    Everybody is now scrambling for position so as not to be the ones holding the hot potato when the system fails. The Baby Boomers don’t want it to be them, and are trying to push the failure off on to the next generation. They have the political clout in numbers to postpone reform for a while, but probably not long enough. It’s time to get used to the idea that the promise made to you by the government about Social Security was a bald-faced lie, and that SS owes you nothing. As soon as you can accept that, it might actually be possible to keep the system from being entirely destroyed and get it back to being the safety net it was supposed to be in the first place.

24. John said:

    Peace?

    John, it was not my objective to send vitriol your way, so definitely, peace. If you support the President’s proposal, we are both on the same team on this issue.

25. I just wanted to drop in to thank all of the commenters for bringing such informative and substantative contributions to this discussion. I am learning a lot, and I really appreciate that the discourse has been relatively free from rancor.

26. Born in 1956. Wife born in 1960. Bush plan would keep benefits for those born on or before 1950. It would start the private accounts with those born on or after 1965. We are tweeners in this situation.

    I told my 19 year old son long ago that he had best get involved in this debate because he would be part of the generation that would be hit with 80 to 90% cumulative tax rates to pay for the folly of our parents generation. Rush Limbaugh has been talking about this since 1990.

    I am a boomer. If done today, I would gladly give up my claim to benefits for keeping half of the 13.4% currently withheld through FICA. I have paid in over $50K since 1976. Had I been able to invest that, I would now have in excess of $400K when my own 401K and retirement savings were included. Even with the $25K I lost in 2000. That would be pretty damn good with 20 years left in the workforce.

    This issue has laid dormant for too long. The reason? Politicians are gutless and spineless. The Republicans are already whining about losing their seats if they do something that requires them to make tough compromises. I’ve got news for them. They can look for adversaries in their own party if they don’t do something.

    My grandfather started receiving SS payments in 1964 at the age of 65. He lived to be 94. He more than gained from what my father, brother, and sister have put into the system. Now my Dad has been receiving SS payments since 1988. He is now 81 and has received way more than what he ever put in.

    I am satisfied to know that I contributed to their retirement. It is time to do something!!! Given that I have time to make the adjustments necessary, I want it to happen now!!!!!!!!

    Folks, take this to the bank. If we allow this stupid system to continue into the future, the federal government, to make itself solvent, will look at the money it has allowed us to keep(tax free) in IRA’s and 401K’s. They will confiscate it to satisfy the debt and we will all go down with the ship. We suck it up and take the hard steps now or the consequences in the future could be extreme. Don’t believe the Donks. Their beloved FDR is their patron saint. They will allow us all to sink, just to keep the Republicans from claiming to have solved the problem that they created.

    I will gladly clasp hands with Gen Xers or anybody else who will bring fiscal sanity back to government. I can and will take care of myself and my own.

27. 
    
    
    
    
    Carol and Ashley; I hate to bring this up, but I fear that
    The solution to SS will not be pretty; it will have
    its roots in the Roe V. Wade decision. I fear
    that the generation that had so many of its peers
    aborted will turn to Euthanasia to deal with the
    social security and medicare problem; The parents
    aborted the children; the children will kill their parents
    so they can afford to live. By 2048 there will be
    a maximum age for social security benifits and
    sliding scale of how much medicare will spend
    on the elderly before they will be offered only
    euthanasia.

28. 
    
    

    
    Carol said:

    I wasn’t aware that I or my generation of boomers had voted ourselves a largesse.

    Social Security’s deficiencies were known when Boomers were in their 20’s, 30’s, and 40’s. Boomers are arguably the best educated American generation to date (and will continue to be so long as the NEA has their despicable special interest claws deep in the sides of our children’s education), so why did your children and grandchildren’s generation figure out the scam before the Boomers? As I said to John McCrarey, our gracious host here, because we are citizens of a representative republic, inaction to remedy ills of the state does not excuse the citizens from shouldering responsibility for addressing those ills. You cannot cherry pick what you like about liberty, and leave the messy parts for someone else to face.

    I am also aware that that the money that I paid into social security was an investment I made into my country but I still have ownership. The deal was I paid in and in return I would get a pay out in my old age.

    You could not be more wrong, Carol. American citizens have been so amiss in their civic duties that it is not surprising large numbers of people believe this. As I said before, you do not possess legal title to what you paid in. There was and is no “deal” that you alluded to in your post.

29. 
    
    

    
    Carol said:

    If the government can renege on its promise to me then what makes you 2- somethings think they won’t renege on promises made to you?
    

    If conservative trends on American college campuses are any indication, most 20-somethings have already figured out that government as constituted today is not their friend, and has already welshed on whatever empty promises have been made.

    If you don’t want to be a true sandwich (supporting kids and parents) era then you best look at protecting your parents interest as well as your own.

    That’s simply thinly veiled extortion, and one with no credible force to back it up. Even the most partisan leftist assessment of ages 18-34 confidence in Social Security pegs it at 40%. That article comments upon the Third Millenium survey. The survey corresponds more closely to my personal experience. Either way, a plurality already believe that irrespective of whether or not they are looking after their parents’ interests, the government has already reneged.

    You can’t threaten someone with the loss of something they consider already lost.

    In the current policy climate we are not talking about abolishing Social Security. When you say, “I support personal accoutns and I beleive that social secrity is in need of a tweak [sic]”, I can’t tell if you are in support of the President’s proposal.

    Whatever your position on his proposal, your concern over someone “robbing” you of your Social Security “investment” (even though there is no such thing as an “investment” in Social Security) is completely unfounded. Nothing in the proposal would lead to such an outcome. I’m guessing that you might understand this already, but because you have demonstrated that you do not understand your contractual rights under the current Social Security legislation (that is, none whatsoever), I want to pursue an explanation in case you don’t understand the proposal, and for the benefit of others following this discussion.

    The president’s proposal is really just a test. It tests the resolve of American citizens to live as free and responsible participants in a nation that honors the premise and promise of liberty over the illusory quick salves of debt. It is a voluntary program. No one will be compelled to participate.

    Conservatives, Gen X and younger generations are in effect saying, okay, we acknowledge there will be nothing to pay out when today’s young reach retirement age. Not only are we accepting that, we’ll pay to fund this test. We’ll pay in the form of higher interest rates in the future, because the older generations will out vote us if we asked them to try to help us fix this problem. Read that again. Under the proposal, we’re already assuming Boomers and older won’t help us fix this at all. We’re saddling our children through these interest rates, once again, with the tab. But we’re willing to take the risk that this test might just be enough to start a debate on migrating off of the Social Security plan in time to lift at least much of the burden off of our grandchildren, long, long after the last Boomer passes away.

    That’s it. The Boomers are not being asked to help. The impact of the interest rates will only hit them in the last waning years of their life, and perhaps not even then if more business-friendly reforms are accepted. The younger generation is just asking for the chance to pay for and test a scaled down version of an escape valve before the entire system melts down, and takes the entire economy with it.

    We are not even talking about a one-for-one replacement of private accounts to Social Security. It is just a fraction of an individual’s Social Security contributions. That’s why it is a test, and not true reform.

    So everyone who is against the President’s proposal is saying that they don’t care that their benefits won’t be touched, and they don’t care we are voting for even more debt to ensure their benefits won’t be touched. They want such an iron grip guarantee that there isn’t even the remotest iota of a chance of benefits adjustments, that seeing their children’s nation sink ever deeper into the muck and mire of ruination is preferable to letting their children try a test version of a reform that a non-superpower has already adopted full on without pushing elders into eating cat food in the streets.

    By the way Carol, while I realize you were being sarcastic with your altruism remark, that was like tossing a prime rib out into a pack of ravenous dogs if you are hanging around a conservative/libertarian crowd. I have often said that I would be willing to forfeit any claim on Social Security, completely write off all contributions into it, if I could be let out of the program. Cutting everyone off the gravy train sounds rational to libertarians, or Liberty Caucus Republicans.

    The younger generations 20s, 30s, and 40s are more about consumption and living for the moment than saving for the future.

    Sure, there are plenty like this in every generation. But I would like to see some stats to back up your assertion, because my personal experience doesn’t coincide with yours. In my experience, my generation (30’s) and younger are far more sophisticated and worried about financial planning than our parents or grandparents; perhaps that is simply unique to my circle of friends. While Boomers are worrying about saving $400K and up. My circle of friends and I have already saved $300K minimum per family, and we all agree that $1M is the bare minimum because of anticipated inflation and taxes in the future given current domestic policy trends; we plan for our children’s young adult financial future before they are even born; we learned about equities, bonds, options, forex, and commodities years and sometimes decades before our parents did in their lives; most of us have run the numbers in college or earlier and figured out that the only realistic hope of getting out relatively unscathed from anticipated future taxation rates is to run our own business, and the plurality of us who own businesses are actively investigating basing our businesses offshore (retaining attorneys and accountants to assess the impact serious, not just reading about it). This exact profile might not describe the younger generations as a whole, but even when I lived in a hippie’ish student co-op in college the need for aggressive, obsessive and early financial planning was known by every resident, yes, even the most rabidly liberal ones.

    Any senior generation intransigence about “nobody is stealing my Social Security investment!” may well out-vote the younger voices. But there is one individual out there who outguns us all. When he speaks, he will make us an offer we can’t refuse. His name is Mr. Market. The day confidence in our currency collapses, is the day that all the voting you care to throw at the problem won’t keep a catastrophic implosion of all government services from happening. What happened after the Soviet Union fell will seem a picnic by comparison. If you think this is hyperbole, then you haven’t been following the GAO reports, CBO reports, forex markets, central bank reports, and foreign investment flows. It will be a couple decades yet before we reach the point where this is a possibility that even the man on the street can perceive, but major players are already placing their bets and jockeying for position.

30. Eugene, I think you really nailed the issue and offer a reasonable solution. Carol is also a tweener and I think she recognizes that some sacrafices will have to be made. At some point, we all need to come together and face this issue once and for all.

    I was a little surprised by the animosity the younger folks have towards boomers. Well, we are part of the problem (though we didn’t create the problem), so we have to step up and be part of the solution. It is NOT an us against them situation, and I appreciate you pointing that out.

31. Democratics – About to be Irrelevant?
    If the Democratics and progressives of this country want to be meaningful players in the upcoming debate on social security reform, business as usual isn’t going to work. New approaches will be needed and this effort must be viewed as a battle; they are going to have to get organized and develop a counter-attack comparable to the Republicans.

    President Bush, using a very effective playbook, which is understood by everyone involved in shaping conservative-oriented public opinion, is spearheading the introduction of a new language and new words, all created and designed to evoke positive emotion, such as “personal ownership” or “freedom”.

    Merely criticizing the notion of personal savings accounts and their
    detrimental effect to the existing social security program will not be enough. He and the Republican Party have effectively, through coordinated marketing techniques, begun to divide the young from the old on the social security issue by pandering to both groups. Who can argue the ideas being directed at this younger segment of our society are not resonating, particularly when young people have come to believe that the existing Social Security program will not be there when it’s time for them to access it?
    One truism or statistic that everyone seems to agree on is that in
    approximately 50 years, the program will only be able to cover 70% of benefits.
    How then will the 30% deficit be made up, from the federal government’s annual budget?
    The point is that while the program won’t be bankrupt by 2050 as asserted by Bush, the country is going to have a huge future budget problem. For Democrats to continue to focus their attention on how the savings plan proposal will cripple this important social program isn’t going to work in an environment where the country has been craftily separated by age and era. The Democratic Party has to show some leadership by first acknowledging the need for adjustments and then marketing those ideas as a counter to the Bush-driven changes. Most importantly, they must develop a single voice; a common message in how they propose to avoid this future shortfall with Social Security.
    Failing to do view this as an all out effort to win the minds and hearts of Americans of all ages, the Democratic Party faces the prospects of becoming irrelevant in shaping future social or economic policies in this country. President Bush will be given much more than a legacy for his presidency; he will have positioned the Republican Party for long-term dominance.

32. I posted this last night, but I put it under the original post. I have decided to move it here since it seems this is where the conversation will continue.

    1. Let me start with a complete aside: (1) Happy Birthday Ayn! and (2) to pull a Paris Hilton, “The Cato Institute is Hot!”

    OK, now down to business. Social Security does go for the other things I mentioned because the government has been borrowing from it. And, yes, I have an IRA, but I can’t afford to add to it. That is a lie. If I am going to be responsible I have to admit that I could put money in my IRA but I don’t have a lot of disposable income and I spend what I have left over after paying taxes and paying bills. I am just as interested in living now as I am in living when I am in my eighties. And, I don’t believe that I misinterpreted your “73%” comment. What I took from that was this: in 2043 I could get (if I were eligible-which I wouldn’t be) 73% of the benefits currently being paid adjusted for inflation. If it were not adjusted for inflation, I guess you think I would be getting more than a 100% return. The problem is that, if it is not adjusted for inflation, it would be even less useless than it is now. Which brings me to my next point, you said that I needed to think of SS as a supplement. I do, which was why I referred to it as “bingo and golf money” in my last post. Even the Socialist Times (that would be Time Magazine to the liberals) admitted that no one could live off of social security. That money does not really help any retired person. However, if I could keep that money now I could invest it. And, despite what you think, the return would be higher and the admin costs lower. The government is bloated and inefficient. If we switched to private accounts, brokerage firms would get a windfall, but they would also have to operate in the free market so they would realize that the lower their fees, the more investments they would get. The gov’t has no such checks and balances. Furthermore, if my boss didn’t have to match my contribution he could pay me more and he would have to – again, because a competitor would do it in a free market.

    However, my basic problem with SS is that I want my money. I don’t want to pay into this system. I want to make my own decisions. I don’t CARE if my personal account would exceed or equal with what SS would give me – I want to control my own life. I see by your last two posts that you also have a healthy sense of getting back what you earned. That encourages me. You are worried about your own retirement and pissed that you faithfully contributed into a system and now you are afraid that you are going to be double-crossed by Uncle Sam. See, we feel exactly the same way. The only difference is that you will be facing it soon and I see a lifetime of contributions ahead of me that I KNOW will never be returned to me. I sincerely hope that people of your generation don’t walk away from the bargaining table because of fear. All of this rhetoric is fun, but really, if Bush’s plan makes any headway it will be after massive compromises. The Baby Boomer’s will get all of their money and half of mine. I am not OK with that, but, as a member of a much smaller and much more laid-back generation I have to take what I can get.

    Completely off the top of my head – how about something like this:

    1. Immediately cut FICA on both employers and employees in half for employees under 50. The remainder will continue to go into SS to fund SS for current retirees for the next 20 or so years. This amount will decrease incrementally over an, as now, unspecified amount of time.

    2. Cutting government grants to NPOs will fund the remainder.

    3. The current liability that is the SS fund will also immediately be funded by cuts in government grants. Any NPO without an independent unqualified audit opinion will be denied Federal funds. Those with unqualified reports will then be audited by the Federal agency administering their funds to verify that they are fiscally responsible. Any found lacking will lose their funding.

    4. A law passed that all bills with unrelated riders are automatically rejected from consideration, which would free up a considerable amount of money.

    5. A government commission, with oversight from Greenspan, evaluates current private brokerage firms and gives Americans a choice of firms and funds (with an appropriate risk mix determined by age) to choose from to invest the other half of what was the FICA tax. This also has a cut-off date, after which Americans will have to make their decisions for themselves. Because many Americans are unfamiliar with investing at this point, the cut-off date will be a couple of decades in the future. In the intervening time, all high school seniors will have to take a class on personal economics, responsibility, and investing.

    6. Further tax cuts (in the form of making invested income non-taxable until withdrawn) for Americans who choose to invest more than the 4% freed up by the cut in FICA. These tax cuts won’t hurt us because we have freed up a lot of money with 2., 3., and 4. above.

    7. Right now, any many instances, states get back less Federal funds if they do not comply with things the Federal government thinks they should (seat belt laws, drinking age, grade-level testing for kids are 3 things that have been affected by the heavy hand of the Federal government in my lifetime.) Here, in the interest of comprise, I endorse the Federal government applying pressure. States would have to set aside a certain amount of expected revenue in their budgets to meet the needs of any Americans negatively impacted by SS reform to get back money from the Feds.

    8. If there is still a short fall, we could begin a necessary trimming of gov’t excess by (1) making government’s hiring/firing policies match those of the private market and (2) eliminating bloated and unnecessary gov’t departments starting with the DOE. Any taxes paid toward DOE employees’ salaries the gov’t would keep first to pay back SS and second to fund general operating funds and the remainder of the tax would go back to Americans in the form of vouchers to private schools.

    Like I said, it is off the top of my head so I expect many holes can be punched in it. Resist the temptation unless you have something constructive to add.

33. Jim S,

    I was not “name calling” when I called FDR a socialist. He was a socialist.

    The following is an excerpt is from http://www.whitehouse.gov/history/presidents/fr32.html
    By 1935 the Nation had achieved some measure of recovery, but businessmen and bankers were turning more and more against Roosevelt’s New Deal program. They feared his experiments, were appalled because he had taken the Nation off the gold standard and allowed deficits in the budget, and disliked the concessions to labor. Roosevelt responded with a new program of reform: Social Security, heavier taxes on the wealthy, new controls over banks and public utilities, and an enormous work relief program for the unemployed.
    In 1936 he was re-elected by a top-heavy margin. Feeling he was armed with a popular mandate, he sought legislation to enlarge the Supreme Court, which had been invalidating key New Deal measures. Roosevelt lost the Supreme Court battle, but a revolution in constitutional law took place. Thereafter the Government could legally regulate the economy.

    The New Deal in all of it various components, such as the Tennessee Valley Authority (which created gov’t owned utiltity companies among other things) and Social Security, took economic control out of people’s hands and put it in the government’s hands. That IS socialism. The only thing I will grant you is that it was socialism-lite.

    Next, because I started my next post by saying I would indeed do some homework I don’t see how your comment is in the least bit relevant. I would love to know exactly how I don’t understand the “actual mathematics or economics of the situation.” And I think that if you were so confident of that fact you would have backed it up by showing how I was wrong, but you didn’t and I suspect you can’t.

    Next, Michael’s post was pretty damn clear. He, and I, will not feel sorry for those who refuse to take care of themselves and expect someone else to do it. You don’t have to like it. In fact, your defensiveness makes me think that my taxes just may be paying for your internet connection. And for the record, we prefer Ed Gein to Jeffrey Dahmer. Michael did not trivialize liberty. America, as a sovereign nation, may never have come to be if it were not for unfair taxation. (So I guess at this point I could throw your quote back in your face-you seem to be the one forgetting history.)

    And, finally, you can wish whatever you want on us. There are a lot of things that scare me in life, but hippies aren’t one of them. The reason they don’t scare me is because they don’t have the drive or the determination to do anything about anything-they just “wish.” And you do not understand the concept of “justice” if you think justice would be us being punished for being angry that we are being stolen from.

34. Anthony wrote: If the backers of Social Security reform were clever, they would threaten to fold the thrift plan into Social Security, retroactively.

    So much for the President’s claim that, “the money in the account is yours, and the government can never take it away.” Anthony finds it perfectly okay for the government to seize the contents of private accounts. If Anthony’s view should become the majority view the contents of private accounts will not be safe–and conservative viewpoints seem to be gaining ground every day.

35. I hesitate to defend Anthony’s position because he will doubtless make a better argument than I could.

    I do believe that the thrift plan he is talking about is the one my Mom referred to in one of her early posts. My Mother has a seperate retirement account as a government employee that the rest of us don’t have. And even though she has an opportunity that we don’t have she is arguing against reform that could help us. The thrift account is good for her, but it is too good for the rest of us.

    I do not believe that Anthony thinks the government has the right to seize private accounts. He is making the point that we should all have private accounts.

    You don’t appear to really be following the discussion. The “conservative” opinion is that people should control their own money, not the government. The liberal side is the one who thinks it is preferable for the government to take people’s money and re-distribute it.

36. I have no expectation of ever collecting benefits. Maybe someday when I have saved enough (if that is even possible) I will move to another country where I can earn a living wage without the burden that is growing with each passing year.

    If anyone wants some education on why Social Security is bad and needs to be ended immediately. Please read the following post.

    http://www.kimdutoit.com/ee/index.php/themrs/single/social_insecurity/

    I am sad to say that as we near the inevitable solutions will be more drastic and extreme than if we just take responsability now and accept the failings that we know are obvious and take drastic measures to fix the problem now. To wait is to be remiss in our civic responsabilities.:neutral:

37. Lets see. Carol is someone who says she is only taxed on her first $90000, implying she makes more than that. Plus she is married to a civil servant. Yet she still cannot save enough for retirement. Now picture how a single person in their 40’s who earns at most $40000/ yr feels being told “save fast or starve” because we are changing the SS system.
    PS is Carol calculating the equity in her house towards retirement? If you are retired you do not have to live anywhere with expensive real estate.

38. A lot of folks have made some very good points but there has also been a lot of massaging of facts and figures going on. It doesn’t take a genius to understand that if fewer people are paying in to the pool for an increasing number to draw out of the pool then the system cannot continue to pay out the same level of benefits. So the system needs tweaking. Not dismantling but tweaking. Those of you who argue for dismantling the system ignore the fact that the system serves a purpose and that ultimately it is in everyone’s best interest, including the government’s. Bush has modified his original proposal. He is going to limit the investment possibilities and automatic rebalancing will be a feature, two things I originally expressed as beign necessary for my buy in to his proposal. The private accounts still won’t be your money except for the percentage that exceeds what you will drawn in benefits and that money must be reinvested in an annuity. This is good too and addresses my concerns that younger folks woudl squander the money and still have nothing for retirement thus increasing the burden on society. You will not have the right to use the money before retirement. The draft I read did not explain who would be administering the accounts. that is still a concern of mine. Apparently, libertarians were not invited to the table when this plan was drafted. Oh and it appears that I will be included in the plan. In fact the plan will be offered to boomers (1950 to 55) and those born between 56-64 first. So Ashley I suggest you bite the bullet, curb your spending tendencies and put money into your IRA becasue hsi proposal is not going to give you anymore money than SS would have. It jsut seems designed to keep the system solvent.

39. Hey Bob ,the more you make the more you spend. No, I am just being flip. Carol has argued in favor of raising her own taxes so that 40 year old will not “starve” when it comes time to collect SS. Ashley argues the 40 year old will be wealthier if he keeps his own hard earned pay and invests it so that it returns 10+% annually. The miracle of compounding and all that. So the debate is about whether the whole concept of SS is flawed and outdated. When you have two worker bees trying to fund SS for the boomer generation retirees, the system breaks down. Regardless of personal income.

40. Yes, I know that when SS was started, it was extremely rare for anyone to live to 65, & there was something like 30 to 1 ratio of workers to retirees. Europe is suffering an even more extreme version of our problem.
    Am I the only one who thinks we need a 100% moratorium on all forein aid (including disaster relief & UN funding) until our own financial house is in order?
    I am actually less worried about the burden of SS to those younger than myself than the burden of the national debt.
    On another note. the cost of medicare is greater than the cost of SS. anybody have suggestions as to how to lower this cost?

41. I read another another explanation of the Bush SS proposal complete with examples. Young people would have to be nuts to buy into this proposal. In the example a person invests 1000 a year for 40 years with a 4.6 rate of return (that is adjusted for inflation and it is generous). At the end of the 40 years, the now old person can keep and use, however they wish, the amount that exceeds what they would have earned in benfits under SS. Assume the account grows to 220K or so 151K would be a dollar for dollar offset so the old person gets to keep the 60k left over. The 151k must be invested in an annuity. If you die before collecting the money back too bad so sad. The payout in benefits under this plan is 15k a year or the level of poverty. The government hopes you will invest the remaining 60k in an annuity to bring your beneifts up to 20k a year. The plan does not address the insolvency problem as I thought earlier. Worse yet the government must borrow 1 trillion dollars over the next 10 years and another 3.4 trilion in the 10 years follwoing that. Now this is where I get confused. Greenspan warned just the other day that if we did not curb the national debt that it was going to start impacting our market. In the report it talked about the fact that the US is currently borrowing money from other countries to keep our economy going but because Japan and Germany (where we borrow the most) is ageing faster, the personal savings that we have been borrowing to finance our growth will no longer be available as these poeple start using up those personal savings to finance their retirements. So where are we going to borrow the money from and if the debt impacts our markets then how is investing into personal accounts suppose to help mitigate the loss in social security benefits? Those accounts will break even at best and face an increased hazard of actually losing money because of the slowed market created by the borrowing needed to create the accounts in the first place! The government will not be able to borrow against the SS trust fund because by then (thanks to the loss of income to personal accounts) the government will actually be drawing down the trust fund to pay benefits. Who or what is benefiting from this proposal? Is anyone out there connecting the dots?

42. I am done with this conversation. I am bored of going back and forth. I leave you with this link:

    http://www.capmag.com/article.asp?ID=1771

43. Thanks Ashley for lucidly explaining my apparently too subtle rhetoric for Kenneth Almquist.

    Carol, you are evaluating a compromise, made necessary and desperate by the stranglehold the older generations have on this issue. What you leave out is what would happen without the compromise, and we went about business as usual, or even with any “tweaks” you so heartily approve of but fail to share with the rest of us benighted souls. You are applying a solvency test for the proposal when solvency simply does not exist for the system as constituted today.

    The SSA Trustees’ own words damn your condemnation of the proposal. Unfunded liabilities identified in their reports exceed the total net worth of the nation. By almost two times over.

    More relevant to your personal situation is the termination liability of Social Security and Medicare. Assume that Social Security and Medicare will be closed to all new entrants, starting January 1, 2004 (last year). Determine what today’s workers and retirees are due to receive in future benefits over and above what those same workers and retirees are due to pay in future contributions. That comes to about the net worth of the nation.

    You are due to retire within 15-20 years, 10 years by your own words in an optimistic time frame. I guarantee you that this nation will not find the productivity to capitalize an expense equal to its own net worth out of pocket in either of those time frames, and the majority would have to be funded through debt issuance. While you are “connecting the dots” over a $3.4 trillion symbolic gesture (because that is the most your generation and older will even even take under consideration), a $30 trillion freight train is bearing down on us all.

    Greenspan is not indicting Bush’s proposal. He is indicting the entire edifice.

    From the Concord Coalition’s explanation of termination liability:

    This number represents the subsidy that today’s adults expect from future generations, which is another way of saying that it measures the extent to which future generations will fail to get a fair return on their contributions. It also tells us the cost of transitioning from today’s pay-as-you-go entitlement system to a new funded system. It is the sunk debt that future generations would have to liquidate before they can invest their own contributions free and clear.

    In good years, if you treat America as an investment vehicle, the nation throws off about 3% of annual growth that could conceivably be reinvested. Taking only the termination liabilities (perpetuity calculations of liabilities more appropriate to public financing and accounting discussions balloon to almost twice as much), Social Security and Medicare on their own have effectively consumed the next 33-1/3 years of national growth, assuming the national economy hits on all cylinders for the next three decades (a foolhardy assumption). In investment climate terms, imagine facing what is effectively 1970’s stagflation over the long haul, pretty much your entire working life if you are just graduating college today.

    Evaluated with the same eye as any practiced investor or trader, or more appropriately with the same eye as a pension fund administrator, Social Security and Medicare already are past the point of insolvency. If you care that is, as most Gen X and younger generations do, to not bequeath a debt-soaked legacy to your children and grandchildren, and not simply run the numbers for only the period you happen to expect to live.

    The liberals are right. There really isn’t a solvency problem with Social Security or Medicare. If you plan on dying within the next 30-50 years. Beyond that, our Treasury instruments will start glowing radioactive, and investors will touch it only at their peril.

    The proposal was never meant to tackle the solvency problem in any substantive way. It was meant to open the eyes of the citizens to the murky map of the future, especially that section beyond the impassable mountain range of our deaths leading to the golden plains of our childrens’ lives, there is a little legend the map maker wrote down, reading: “Here there be dragons.”

44. Brilliant, Anthony. There is far too much of a just wishing this would go away mindset across the political spectrum. Your comment really brings home the fact that we all need to accept the reality of insolvency as the starting point of the discussion of what needs to be done.

45. Carol, I do recognize you allow for reform, but we differ on the degree of reform you and I individually believe is necessary, and initially I could not tell whether or not you support Bush’s proposal (you have since come out against it with currently known, available facts). While you advocate “tweaks” in your own words (and have yet to share with us what exactly you believe is sufficient, and why), others like myself are trying to point out to you and others on your side of the discussion that the system itself is so beyond prudent fiscal redemption that any responsible reform veers wildly from from “tweak”-land into “not as we currently recognize it”-land.

    By the way, you quoted the Concord Coalition in your second citation of the group’s two main concerns for any reform, but a Google search fails to bring up what you quoted. Can you please point us to your source material if it is on the Web, other readers reading this discussion can be on the same page as you?

    My personal position is if we drastically curtail eligibility to those who are facing Third World level shanty-town destitution, then the programs can thrive without endangering our economic superpower standing. Anything short of that will incrementally bleed off the productivity of America until at some point we can no longer catch up with more vigorous economic blocs, and we will then be fortunate to count ourselves a perceived has-been superpower like the U.K. (even though they still wield enormous power) or worse, a Second World nation.

    I have pointed you to the actual numbers that the SSA Trustees themselves computed for long-term (75 years and up) sustainability, and these numbers and methodologies were not challenged by pension specialists, so they are generally accepted to be accurate. Unless you reject these projections, and can defend why the projections are incorrect, we can start discussing what reform makes sense in light of those numbers. These numbers spell the fiscal doom of even the most financially powerful nation in not just the world, but the world’s entire history whether measured in absolute or comparative terms. Not doomed today, not in ten years when you retire, perhaps not even in 40 years when you are likely to have passed from this mortal coil.

    But in 60-75 years hence, the numbers tell us that we face a stark choice. Either we effectively give up all national economic progress for the next 2-4 generations (and every year of economic progress not spent on social programs mortgages future generations further into debt), or give up on a set of social programs as currently constituted that however well meaning, simply cannot be afforded. That doesn’t mean we can’t have any such programs whatsoever; that’s a discussion for another day. But any amount of demanding that “taxes are taxes” or raging at tax burdens is not going to repeal numeric reality. That reality says we must consider drastic actions to even hope to retain a sustainable program that is even a shadow of its former self. This is assuming we have the luxury of not having our currency’s users force a decision upon us any sooner, an assumption that the sad history of many long-dead currencies cannot support.

    Your generation and older generations today can demand and successfully defend your benefits. You can even magnanimously allow the passage of “tweaks” and convince yourselves that you saved the system. You will be long gone and turned to dust when the reckoning comes to the fore in full force.

    If the Federal Reserve chooses to respond to the future reality with inflation, we risk forever losing America as a democratic representative republic. There are no recorded instances of any First World level republic surviving hyper-inflation of its currency. John Law’s Mississippi Bubble-era France and Weimar Republic-era Germany are two major examples; neither nation’s governing systems survived the hyper-inflationary responses to the fiscal crises of their day intact. They remain republics today largely through exacting a terrible price in blood from internal (in France’s case) and external (in Germany’s case) strife.

    The Federal Reserve cannot force the nation to respond to the reality by paying up and simultaneously enacting emergency cuts in expenditures; only Congress and through them, the citizens, can make that choice. History’s lessons are very bleak indeed here as well; no First World level nation has ever chosen a path out of ruinous level national debt that instantly guaranteed devastating depression, which most central bankers are convinced is an economic death spiral.

    The chains the older generations are heaping upon the younger generations if they are successful (as I sardonically expect) in retaining or largely retaining their benefits are chains that will force a future soul-rending national decision turning upon whether we shall enter a struggle to survive the fires of hyper-inflation or the icy depths of depression. We as a nation are fiscally fouling our own nest in a tragic drama that the ancient Greeks would have forked over copious amounts of electrum to watch, all the more so because unlike the Greeks with their maddeningly cryptic Delphinic oracles, our oracles have shown us with breathtaking clarity the future that lies in store for us if we continue on our spendthrift ways.

    As an optimist in human endurance I know that the nation will survive. But it would be foolhardy to believe that we would be the exception to the historical empiricism that once a superpower loses its perch it never regains it again without a wrenching change in national and cultural identity.

    Dying to defend freedom is relatively easy because often someone else like an enemy soldier makes that decision for you. Living with tangible and/or intangible privation to retain liberty is much more difficult because you have to volunteer for an unheroic, unremarked upon, and even harsh life, except possibly in the eyes of your family and friends. Saying you pay your own way and take care of your own is so much more mundane and far less dramatic (but far more ennobling for lovers of liberty) in our celebrity-soaked era than saying you fight for investing in the people while leaving the actual decisions in other people’s hands.

    It is far more soul satisfying to seize the moral high ground and demand “social justice”. Nobody likes to delve the arcana of finance, investment theory, money theory, etc. and come back with dry answers for the price of that lofty real estate.

    This is my last participation on the discussion; you have the last word Carol if you desire. I have some clients with major projects to serve in the next several months and by the time I’m done this thread will be long dormant. In any case, I literally can afford to not care about any adverse outcomes, and any veiled threats of “social justice or else you won’t like the revolution” simply don’t impress me. Coming from a family that escaped one of the most murderous regimes in history that used rhetoric as blithely unaware of economic laws and human nature as we hear today from supporters of bankrupt social programs, we’ve been planning and preparing for a long, long time for similar follies to befall our beloved adopted nation, ever since we sadly (but not surprisingly, now) noticed the same familiar echoes. We’ll speak out for as long as we can, but when the mortal madness grips the crowds, we’ll be long gone and not to be found by those crowds.

46. Anthony, notwithstanding the outcome of your discussion with Carol, let me say that your insightful and heartful comments on this subject have been both enlightening and thought-provoking. I really appreacite the obvious thought and work you put into each of your comments. Hope you can come back and share insights on other topics in the future.

    Good luck to you!

47. Social Security:
    I do have a dog in this fight. I was born in 1950 which means I am considered a “young” worker. I am going to be 55 on 7/21/50. I miss staying in the original Social Security plan by 6 months. I know some who missed it by 10 days and 25 days. Is this fair?
    Now I read that in 2009 those born from 1950-1965 can open a private account. Does anyone realize how old those of us born in 1950 will be in 2009? 59 YEARS OLD!!!!!!!!

48. IT DOESN’T MATTER IF YOU ARE REPUBLICAN OR DEMOCRAT
    > >
    > >> > 2008 Election Issue!!
    >
    > > GET A BILL STARTED TO PLACE ALL POLITICIANS ON SOCIAL SECURITY.
    >
    >This must be an issue in “2008”
    > SOCIAL SECURITY:
    >
    > This is worth reading. It is short & to the
    point.)
    Perhaps we are asking the wrong questions
    during election years.
    Our Senators and Congresswomen do not pay
    into Social Security &, of course,
    they do not collect from it.
    You see, Social Security benefits were
    not suitable for persons of their rare elevation in society .They Felt they should have a
    >pecial plan for themselves. So, many years ago they voted in their own benefit plan.>
    >In more recent years, no congressperson has felt the> need to change it. After all, it is a great plan. For all practical purposes their plan works like this:
    >
    >When they retire, they continue to draw the same pay until they die.> Except it may increase from time to time for cost of> living adjustments..
    >For example, Senator Byrd and Congressman White & their wives may expect to draw $7,800,000.00 (that’s SEVEN Million,> EIGHT-Hundred Thousand Dollars), with their wives drawing> $275,000.00 during the last years of their lives.
    >This is calculated on an average life span for each of those two Dignitaries.
    Younger Dignitaries who retire at an early age, will receive much more during the rest of their lives. Their cost for this excellent plan is $0.00.
    > NADA….ZILCH….
    >
    >This little perk they voted for themselves is free to them. You and I pick up the tab for this plan. The funds for this fine retirement plan come directly from the General Funds;
    > “OUR TAX DOLLARS AT WORK”!
    >
    >from our own Social Security Plan, which> you and I >pay (or have paid) into, -every payday until we retire (which amount is >matched by our employer)-we can expect to get an average of
    > $1,000 per month after retirement.
    >
    > Or, in other words, we would have to collect our >average of $1,000 monthly benefits for 68 years and one (1) month to equal>Senator! Bill Bradley’s benefits!
    Social Security could be very good if> only one small change were made. That change would be to: Jerk the Golden Fleece Retirement Plan from under the Senators and Congressmen. Put them into the Social Security plan with the rest of us
    then sit back & watch how fast they would fix it.
    >
    >

49. Three cheers for Pamela Clark!

50. Pamela,
    “Our Senators and Congresswomen do not pay
    into Social Security &, of course,
    they do not collect from it”
    WRONG: They, in fact, pay 6.2% just like you and me PLUS they pay 1.3% to FERS.

    “When they retire, they continue to draw the same pay until they die”
    WRONG: The maximum, by law, is 80%.
    
    Virtually every fact you cite is WRONG.
    So much Fox News – so little information.