Social Security IOUs coming Due.

[MKSheppard]

Also, there is a very pressing reason to get this done as fast as possible.

As you all know, the baby boomers are about to hit retirement age -- which will quadruple and sextuple the AARP's political influence and power; as well as clogging up the entire social security/medicare system.

So it's important to start talking about fixing it now, or at least implementing some structural changes, which will see us through the huge bloated hump of the boomers as they pass through the old age social system; without breaking it....that badly.

Otherwise, then the system will be locked in for good -- can you imagine the screams of a billion baby boomers as they find out the government wants to cut their benefits? That plan dies even faster than it would die now.

[Simon_Jester]

...There are 10 divisions roughly in the US Army -- two are permanently overseas at any one time in South Korea and Germany -- and the rest as you know, rotate in and out of VIETRAQSTAN. That's a lot of money...It's basically what Eisenhower did in the 1950s -- he cut conventional military forces to the bone and instead funded nuclear forces to economize on costs, and it did work pretty well.

Oh, I'm not saying you're wrong.

It's just so hilarious that you proposed to solve the Social Security crisis with nukes. I wish Shroomy were here.

Exactly. If the US had a small conventional military in 2003, backed up with tens of thousands of nukes, Vietraq wouldn' have been invaded.

Of course, if the US had a small conventional military in 2003 not backed up by tens of thousands of nukes, and instead just kept the nukes it already has, Vietraq probably wouldn't have been invaded then, either. The nukes are not strictly necessary for this except as a way of assuring Pentagon officials that their weapon hasn't shrunk.

[J]

Quit worrying Sheppy, when the money runs out and the revolution comes, we'll turn the baby boomers into Soylent Green.

Being serious now, Social Security is something which needs to be dealt with by the end of Obama's term. We have a recession/depression which is going to drag on for quite some time, a CBO report which projects $1 trillion+ deficits for many years to com, tax receipts which show no signs of recovery, and oh yeah, millions of retiring boomers who will soon be drawing benefits. The SS slush fund isn't getting replenished any time soon so we need to take action now to mitigate the damage.

If we don't then as Shep mentioned the US government will need to sell additional bonds (or print up a stack of bills) to cover the shortfall on top of all the extra bonds they're alread selling to cover the economic bailouts and the FDIC, which is also flat broke. This adds to the national debt which increases the interest payments which then sucks more money out of the economy.

[Bilbo]

Privatized social security: all the benefits of social security ... with the added benefit of massive volatility! Maybe they should get Goldman-Sachs to administer it, eh?

Hell yeah!

Being serious, what exactly would be the benefit of privatized social security, given that there are already private retirement investment funds and all that? What would differentiate it from an IRA or 401(k) program, apart from not being attached to a job?

None, really. The people who pushes privatized social security were arguing that people could benefit from "higher returns" in "the market". You know, they could have bought some of those fantastic high-yield CDOs we kept hearing about, and which got such good ratings from Moody's and the other fraud pushing, er- I mean debt rating institutions.

It's sad how the right-wing economists who pushed those ideas 10 years ago would have created an even bigger catastrophe if their plans went through, and we really dodged a bullet by not following their advice, yet they are still confidently giving advice, and people are still listening to them.

Well beyond the hugely obvious benefit. Private retirement accounts would not be raidable by the government the way Social Security has been. If all that money had been in the privat sector then it would have gone up and down with the market. Instead its sat in a little box somewhere and has been constantly raided by a government too fucking lazy/stupid to spend within it means.

Sure there is the danger of market crash, but go run the numbers. Assume a person retires today at 67. Lets assume they entered the workforce at age 20, that puts them 47 years in the workforce. Imagine that since 1963 that person has been paying the equivalent to social security into a mutual fund of some sort. Even with the market adjustments of late there is no fucking way that person has less money in that retirement mutual fund then they would have in social security. In addition that money would have been out there helping the economy instead of being raped by the government, creating debt, and fucking the economy as government has to start considering reduced benefits and increased taxes.

But yeah, beyond that there is no benefit to private over public.

[Bilbo]

Quit worrying Sheppy, when the money runs out and the revolution comes, we'll turn the baby boomers into Soylent Green.

Being serious now, Social Security is something which needs to be dealt with by the end of Obama's term.

It wont happen. This is a bomb, a bomb that will destroy in the short term whichever party is in power. So the current party in power will try to pusht he bomb off in hopes that it will explode when the other party is holding office. Expect various aspects of the media to push this thing huge if Obama becomes a one term president and a Republican takes over in 2012. Of course by the same token you should see FoxNews, etc, pushing this more and more now to saddle the bad news on Obama and in hopes that enough pressure is created to force action by the Democrats which will destroy then at the ballot. Its dirty pool and both sides play to win.

[MKSheppard]

So the current party in power will try to pusht he bomb off in hopes that it will explode when the other party is holding office.

You saw this in 2005, when Bush tried to reform social security -- the Democrats basically called it a right wing ploy to gut SS benefits et al -- I believe I quoted a fairly long converstation with Harry Reid back then in the original post.

[Admiral Valdemar]

I don't expect to have a private or state pension by the time I reach retirement age (not that I expect retirement to be a thing when I get to the classic age of 65). I still pay National Insurance, obviously, but since the company gave me a 6% pay-cut last February, they also cut their input into each employee's pension too. So I stopped paying in as well, since I kind've need all the cash I can get just for now. And I don't splash out on holidays, a new car or high-end consumer goods unlike most people (mainly down to not having a credit card, thankfully).

I honestly don't see how this issue can be resolved in an era where debt is growing faster than anyone can pay it off (with the US, all unfunded liabilities wouldn't even have their interest paid off annually even with every US citizen paying 100% tax), energy, and by extension, everything else will start costing more and people are living longer to boot. Fewer well paid workers paying for a larger population of retirees isn't going to bring anything but resentment in the end. And when those cashing in their life savings find that they can't get much for them anymore, there'll be even more hell to pay the government will have to address.

[J]

Well beyond the hugely obvious benefit. Private retirement accounts would not be raidable by the government the way Social Security has been. If all that money had been in the privat sector then it would have gone up and down with the market. Instead its sat in a little box somewhere and has been constantly raided by a government too fucking lazy/stupid to spend within it means.

Perhaps you'd like to ask a few Argentinians about what happened to their retirement accounts...

[Big Phil]

So the current party in power will try to pusht he bomb off in hopes that it will explode when the other party is holding office.

You saw this in 2005, when Bush tried to reform social security -- the Democrats basically called it a right wing ploy to gut SS benefits et al -- I believe I quoted a fairly long converstation with Harry Reid back then in the original post.

Bush didn't try to reform so much as he tried to turn SS into a great experiment in privatization. That's putting a band-aid on a sucking chest wound.

[Admiral Valdemar]

Perhaps you'd like to ask a few Argentinians about what happened to their retirement accounts...

Screw Argentina. Ask my parents where the money they sunk into Equitable Life went when they collapsed. It's just as well there is some form of compensation from the government and they had other accounts, because if anything, I'm more wary of private pensions than state ones. The state may pay back at a lower rate of return, but if the country isn't run by idiots (a big assumption, admittedly) then it should still have something left in the jar. If a private company screws the pooch and loses it all, then too bad.

[SirNitram]

Here's a brilliant idea.

Remove that 250k cap on the payroll tax, making it a progressive tax.

Sure, there will still be hard times for a bit, but we're in the middle of a recession(Minimal tax income, high unemployment) of considerable magnitude.

[Darth Wong]

Well beyond the hugely obvious benefit. Private retirement accounts would not be raidable by the government the way Social Security has been.

Government internal debt is "raided" only in the sense that they borrow against it. Yeah, they shouldn't be doing that, but they're borrowing against everyone in the country already, so what difference does it make? It's academic to argue about precisely what they're borrowing against. And what do you think happens if the entire US government defaults on its debts? You will have the mother of all market crashes anyway, so guess what happens to your precious market and privatized retirement funds.

On the subject of private retirement accounts, they are subject to far more dangers. The entire retirement fund can go bankrupt through the mismanagement or corruption of others. You could try to manage it yourself, using the same methods you use to manage your other retirement savings, thus guaranteeing that if something kills your main retirement savings, it will also kill your Social Security. Perhaps we could call this the "all eggs in one basket" retirement plan.

If all that money had been in the privat sector then it would have gone up and down with the market. Instead its sat in a little box somewhere and has been constantly raided by a government too fucking lazy/stupid to spend within it means.

Do you honestly not understand the reason for Social Security?

Sure there is the danger of market crash, but go run the numbers. Assume a person retires today at 67. Lets assume they entered the workforce at age 20, that puts them 47 years in the workforce. Imagine that since 1963 that person has been paying the equivalent to social security into a mutual fund of some sort. Even with the market adjustments of late there is no fucking way that person has less money in that retirement mutual fund then they would have in social security.

Mutual funds are a joke. The gains they make are mostly theoretical; by the time they're done taking their management fees out, long-term mutual fund gains are consistently below the market as a whole, and you still run the risk of a major collapse right at the time you try to take the money out. Alternatively, you could try to invest in stocks and bonds yourself, but that means that everyone's financial security is up to their own financial acumen.

In addition that money would have been out there helping the economy instead of being raped by the government, creating debt, and fucking the economy as government has to start considering reduced benefits and increased taxes.

Money in government hands helps the economy too. You're just spouting libertarian bullshit now. Explain how you know that money given to Wall Street helps the economy more than money spent by government. For that matter, prove your premise that all money in government hands produces zero economic benefit.

But yeah, beyond that there is no benefit to private over public.

Ooooh, you're so clever with your right-wing sarcasm. Did your mother help you with that?

[Surlethe]

Here's another way of phrasing the problem with Bilbo's argument. He is weighting the gains exactly the same as the losses, so if one generation retires when the market is peaking (say, 1999) and reaps benefits based on, say, 30% overvaluation, that evens out the next generation retiring when the market is troughing (say, 2008) and reaping losses based on, say, 30% undervaluation. But that doesn't pass the common-sense test: the harm caused by short-term market fluctuations is quite clearly disproportional to any potential average benefit spread out over the long term.

Put another way with numbers. Suppose a person has a goal of living on $30,000 a year in retirement. Toward that end, he invests $10,000 at the age of 20, which grows at an average rate of 8% annually. After 50 years, at age 70, that's about $500,000. Ah-hah, you say - now he has a $500,000 nest egg to last him the last 15 years of his life, or an average annual income of $33,000. Clearly the government socialists are trying to destroy his livelihood! What if the market has a bad year the year before he'll retire? If it tanks, say, 20% that year (and a quick examination of the DJIA shows that it does so regularly - maybe once or twice a decade), he's left with a nest egg of $400,000. That forces him to live out his retirement at $27,000 annually or postpone retirement several years. If it tanks 30%, as it did in 2008, he's more than 10% more screwed - he's now living $10,000 worse than he expected to be, and his standard of living in retirement has dropped 30%.

To leave retirement incomes in the hands of the market is to leave the welfare of retirees up to chance: the very opposite of a safety net. Better to keep a robust social security (with higher retirement age) and let people invest their money if they want to chance the market.

[The Duchess of Zeon]

Dropping the 250k limit would be an easy fix, mostly due to the concentration of wealth in the hands of so few people in this country making it especially necessary.

[Patrick Degan]

Well beyond the hugely obvious benefit. Private retirement accounts would not be raidable by the government the way Social Security has been. If all that money had been in the privat sector then it would have gone up and down with the market. Instead its sat in a little box somewhere and has been constantly raided by a government too fucking lazy/stupid to spend within it means.

Uh huh. AIG and Lehman Bros. You have no argument.

[Simon_Jester]

Here's a brilliant idea.

Remove that 250k cap on the payroll tax, making it a progressive tax.

Dropping the cap is a fairly common suggestion, and it's at least remotely plausible that it might get implemented because it is explicitly only a tax increase for the rich.

Nitpick: it would make the payroll tax flat. At the moment, the payroll tax is actively regressive, because people below the cap pay proportionately more of their income than people above.

[SirNitram]

Here's a brilliant idea.

Remove that 250k cap on the payroll tax, making it a progressive tax.

Dropping the cap is a fairly common suggestion, and it's at least remotely plausible that it might get implemented because it is explicitly only a tax increase for the rich.

Nitpick: it would make the payroll tax flat. At the moment, the payroll tax is actively regressive, because people below the cap pay proportionately more of their income than people above.

Ah, I was wrong. Alright. I'm OK with a flat tax on this.. For now. But for fucks sake, trying to reform it beyond simply making the mega-wealthy starting to actually pony up the same percentage in the middle of now is ridiculous. Of course it would run low or zero: Payroll taxes depend on 1) Employment(Which sucks thanks to Wall Street and ridiculous mortgages nuking the economy), 2) People properly classified as employed. As opposed to that common use, the contractor.

[J]

Screw Argentina. Ask my parents where the money they sunk into Equitable Life went when they collapsed. It's just as well there is some form of compensation from the government and they had other accounts, because if anything, I'm more wary of private pensions than state ones. The state may pay back at a lower rate of return, but if the country isn't run by idiots (a big assumption, admittedly) then it should still have something left in the jar. If a private company screws the pooch and loses it all, then too bad.

Indeed. Argentina was the first example that came to mind, there are of course many others. Another good example is what happened to airline pension funds following the mass Chapter 11 bankruptcies in the wake of 9/11. The employees were hosed and had their pensions crammed down by over 50% in some cases, this applied to both active employees and those who were already drawing their pensions.

And of course if AIG didn't receive $200 billion or whatever the final number ends up being in government backstops then every last one of their insurance, investment, and pension plans would've been liquidated for pennies on the dollar, anyone holding one of their policies would be SOL.

[Shroom Man 777]

Goddamn, and by diminishing the Army divisions and carrier groups in exchange for Eisenhowerian Pentomic phallic policies, America would also get the needed money savings for universal healthcare and all sorts of public works projects - and maybe some extra money to fund NASA, even! Man! What can't nukes do? It can probably cure AIDS AND put Neil Shroomstrong back to the Moon! This would also mean that all those poor brown-yellow people in Vetraqistan wouldn't have died at all! Sheppy-Pooh! *squee*

(Sheppy Pooh wuvs the little children, all the children in the world! Red and yellow black and brown, they're all precious in his sight! ^____^)

*hugs Sheppy Pooh*

God, I can't believe Shep is actually being progressive AND humanitarian! Man. Is the power of the atom actually warming the cockles of his heart? The sub-cockles? Maybe even his colon?