Friday, January 9, 2009

Entitlements Part 1.5- Social Security

This brought up enough discussion that some things deserve to be addressed in a venue more public then the comments section. I will address as much as I can in no particular order. Here it goes.

First of all I did not mean anything seriously bad to the older folks who read the blog or your peer group. I poked some fun but it is just that, fun. I take a few friendly shots at just about everyone given the right setting. I am enough of am asshole that if I wanted to say something really mean I would.

As for the concept of raising the withholding I am for it but the max in terms of payout should also be adjusted in some way. Tweaking the max amount people contribute could be worth looking into. That being said it almost surely will not be a permanent solution. I don't think anything but a change of the status quo is realistically going to lead to a permanent solution.

As it has been said what I mentioned doing would almost surely not be a permanent solution to SS solvency issues. We pretty much did that stuff before and it bought some time but wasn't a permanent solution. We seem to complain about how the things we are willing to stomach can't fix things but we will not accept more radical solutions to the problem at hand.

The most interesting idea that came out of the comments was what happened in Chile with their SS plan in the 1970's. If you are as familiar with that as I was three hours ago then read this. I think that is sort of idea is probably the best chance of making our system viable but I still have the same big question/ concern I had about going to a privatized system before reading that article.

How did Chile deal with the ponzi structure of pay as you go plans? The money needs to keep coming in or those drawing benefits will be shit out of luck. For a system to be privatized my money needs to be going into my account. If my money is going into some sort of a privatized/ funded system either I would also be paying for a generation of retirees or they would be up a creek without a paddle. The government could pay the retired generation (ha ha ha ha ha this is such a funny joke) with money they save from somewhere else (an even funnier joke). Maybe to skip the trouble and expense of printing checks they could do it all direct deposit.

I don't think I will talk about this anymore. Maybe the answer is that we are all screwed.

10 comments:

Anonymous said...

I can bitch and complain all day, its not going to change a thing. They take my money, what can I do about it...nothing! All I have heard in the past is save for your retirement, IRAs, IRA-ROTHs, 401Ks, 403Bs, SEP-IRAs...well folks, those who did have seen their accounts lose 40-50% this year! As I wrote in a post a few days ago, thats it, I am taking my $15k this year and buying gold coins and silver rounds. The pain has only just begun with this market. You cant print 1.2 trillion, have bailout after bailout, and an unemployment rate at 7.3% (reported) or 15+% (unreported) and not see the pain coming. Hold on tight folk, take care of yourselves. The worst is yet to come! I am only a realist (survivalist)!

Anonymous said...

theotherryan,
Sorry, I also forgot to say, buy also the 3Bs (beans, bullets & bandaids). You can never have enough I guess. Thanks theotherryan for this great blog! You guys are the best!

Stephanie in AR said...

Part of the problem seems to be that SS was supposed to be insurance in case of poverty not the entire retirement package. Somewhere I read that today's retiree receives back all they contributed within the first 3-5 years *if* they have no medical problems & less than 2 yrs if they do. Perhaps some means testing so that those who truly need will have their *insurance* payment.

Sounds hardheated but if why should elderly immigrants collect when they have never paid into the system? We made a choice for me to be a sahm with the result that I do not have enough quaters in to collect - our choice- why should a foreigner?

That is for those children who collect SSI too. Most have some handicap, well yes lets pay for the medical (because national medicine is only a matter of time) buy why do they need an income after the medical portion is taken care of? Normal kids don't get a government check yet their parents manage to pay rent, clothes, and other childhood expenses. A neighbor's child finally got SSI for ADHD and lump-summed the beginning amount. The family had to spend it (rules) so bought a video games system & games to help work on his concentration. !?! There are entire families whose children all collect - why?

Then those who are younger who collect SSI due to disability. Yes some cannot work their old job - but could they work something else with training or education? Yes some cannot then fine let them collect-no problem-but how about education/training first?

I may seem hard hearted but not really. I do understand that the youngers can get hurt. Sil was a marine who led the invasion of Bagdad, now at 25 he has found he has the back of an old man and is estimated 30% disabled. He has had to change his college plans right now during his Sr year. No he is not getting SSI either. Many others with similiar stories but taking from Peter to pay Paul only works as long as Paul has money.

Has anyone ever did the math to see how much of SS is going to retirees, how much to SSI & how much to people (immigrants) who never paid in? Perhaps that would be a starting point. I just know that if we could have kept 1/2 of what has been taken from dh's checks over the years we would have had a lot more options. (ducking now)

Mayberry said...

Screw SS. Wish I could opt out, 'cuz I'll be dead before I qualify at age 69 (how appropriate....). Not that it'll even be around by then..... It's just $130 worth of preps that I could buy every month that I can't buy because the money is stolen from me before I ever see it.......

Stephanie in AR said...

Mayberry, Preachers get to opt out but once out can never opt back in.

Anonymous said...

I think your last sentance is about right. In 1983 the government got everybody to conceed to a tax raise in FICA. This would create a surplus that would be stored away to help us get through the period of the Baby Boomers where the numbers working could never support the numbers retired. This was called the Trust Fund.

Problem is that the government (Republican and Democrat alike) stole every single penny of that surplus and bought votes with it for nearly 25 years. Enron like accounting scandle where they loaned themselves the money and spent the money as part of their yearly budget knowing that taxes would need to be raised in the end to pay back waht they were spending.

Now the baby boomers are nearing retirement and their telling us SS is in trouble. People they spent $25 trillion of FICA surplus money over the past 25 years. $25 trillion that was designated to the Baby Boom retirees.

If they can convince the people to pay even more taxes to bail the system out once again then the people deserve to be stripped of every penny they have and left destitute for all of eternity.

The Hermit said...

Mayberry, keep working and take good care of yourself! I need your social security contributions to pay my check every month, I plan on living til at least 100! ;-)

T.O.R. see all the furor just the words "social security" raises. Now imagine you are Senator T.O.R. and you go on the tv and say what everybody knows, SS is broken and there's no fix. You'd be hung from a lamppost in no time flat!

Hey, I enjoyed this conversation. It's been a long time since I've seen people get fired up like that.

theotherryan said...

4:20, yeah.

4:25, that is true but what does it have to do with SS?

Stephanie in AR, People who do not need SS not being able to draw it could help but would almost surely not fix the problem.

Mayberry, Putting a couple three hundred bucks into another private retirement account would do me good.

6:48, Government not being able to steal SS contributions would help to fix the problem. I think we are past the critical mass where that would fix things.

Hermit, Great point. I seem to have a somewhat unique ability amongst survivalist bloggers to get people riled up. It does say a lot that I did as much as I possibly could to look at this issue in a reasonable and balanced manner and it got such a response. Everyone is pissed off about it. I sort of think a post that was two words long and said "Social Security" would have gotten a comparable response.

Sometimes I am in a heartless mood and tell things in a strait and ruthless manner. It does not surprise me when this leads to some heated discussion.

However when I carefully think around a topic and work at a solution that lets us all share the pain and folks are still ready to lynch anybody who mentions the topic it says a lot.

reinkefj said...

Trying to close the loop, here's a snip from a NYT story 12/1/2004

http://www.cato.org/pub_display.php?pub_id=2910

*** begin quote ***
There was no "economic" transition cost, because there is no harm to the gross domestic product from this reform (on the contrary, there is a huge benefit). A completely different issue is how to confront the "cash flow" transition cost to the government of recognizing, and ultimately eliminating, the unfinanced Social Security liability. The implicit debt of the Chilean system in 1980 was about 80 percent of the G.D.P.

We used five "sources" to generate that cash flow: a) one-time long-term government bonds at market rates of interest so the cost was shared with future generations; b) a temporary residual payroll tax; c) privatization of state-owned companies, which increased efficiency, prevented corruption and spread ownership; d) a budget surplus deliberately created before the reform (for many years afterward, we were able to use the need to "finance the transition" as a powerful argument to contain increases in government spending); e) increased tax revenues that resulted from the higher economic growth fueled by the personal retirement account system.
*** end quote ***

Bottom line is that if we don't try to solve the USS PONZI SCHEME, then we'll go down faster than the Titanic. I'd rate are chances as slim to none. BUT, Chile teaches us that it CAN be done.

I read somewhere that when the congresscritters talk about the "market risk" of a privatized "social security", then we should IMMEDIATELY talk about the "political risk" of gooferent "social security".

SS was supposed to be tax free! Right? It was supposed to be "social security insurance". Does it look like "insurance" to you? And, the COLAs are based on the gooferment's calculations of inflation. No thumb on the scale there?

I think we have to "fix" it. For the children. Heck, for me. I'm almost ready to collect!

Stephanie in AR said...

We decided the easiest way to fix the mess was to live as though SS would not be there when we retired. I feel for retirees & those close to retiring as changing the game in midstream isn't quite right. But as long as the politians do not have to live by the same rules as the rest of us there will never be an honest discussion in the halls of Congress. Ron Paul exepting of course.

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