Social Security Reform

Council of Economic Advisers (.pdf) ^ | January 18, 2005 | Dr. N. Gregory Mankiw

[LowCountryJoe]

The "Ostrich Caucus", LOL...I like that.

[Brilliant]

Annual spending on Social Security will exceed the system’s tax revenue in 2018, with deficits increasing from there. The Social Security trust fund will be empty in 2042, at which point the system will be insolvent. Under current law, the benefits the system will be able to pay from that year on will be only as great as the revenues coming in. Retirees would receive only about 75 percent of scheduled benefits. In total, Social Security has made promises that exceed its resources by more than $10 trillion in present value.

No crisis here.... Move along, move along....

[Shermy]

Under these plans, future retirees receive benefits at least as high as those retired today, and they have the option of investing in a personal account and taking advantage of the higher return that accompanies equity investment.

Interesting comments about the indexing matter from the 1970's but he is guaranteeing "equity investment" will be a higher return? That's brave.

[LowCountryJoe]

In a prescient letter in the New York Times (published on May 29, 1977), Peter Diamond, James Hickman, William Hsiao, and Ernest Moorhead wrote,"...It would be sad if the legacy of a particularly forward-looking President [Carter] were a political nightmare."

Sounds like some forward-looking pundits!

[Blood of Tyrants]

I watched ABC the other night and according to them, if we do nothing, the system will be solvent for another 40 years and there is absolutely nothing wrong with it. Of course, they also think that all those IOU's that congress has been putting into our accounts have real value, conveniently forgetting where the government will go to redeem them.

[k2blader]

One thing is certain: His proposal will be a credible plan that puts the Social Security System on a firm foundation for generations to come.

"Firm foundation"? Socialism never has a firm foundation. President Bush's plan, if implemented, may help slow the problem, but it won't solve the problem.

What needs to be done to SS is grandfather it out.

[E.G.C.]

BTTT!!!!!!

[Drammach]

Bttt..

[Seadog Bytes]

...TRUST FUND...???

[farmfriend]

Yes, just like your taxes are voluntary contributions.

[Phantom Lord]

Interesting comments about the indexing matter from the 1970's but he is guaranteeing "equity investment" will be a higher return? That's brave.

Soon SS will be providing a compounded -1% return per year. Find me any 40 year period in American history where the market has not performed better than that.

[Seadog Bytes]

RE: "Yes, just like your taxes are voluntary contributions."

You just gotta get yourself one of these... It's the only way.

...??? Oh. It's a tacks shelter, of course.

[mountainfolk]

This article, like all of the others on the subject of Social Security, gives the impression that Social Security is only about retirement benefits. Social Security is a huge umbrella covering diverse programs that the general public seems not to be aware of. For any meaningful discussion of reforming the SS system, there needs to be a full disclosure of all of the programs that FICA taxes are spent on. SS and Retirement are not synonymous. The SS retirement program needs to be separated from the social programs that SS also supports. Anybody who is interested in knowing the variety of benefits available under SS that have nothing to do with retirement, has only to call their local SS office and ask for information on just what is covered by SS. It will be an eye opener. Also, for those who think their FICA taxes would decrease or go away if there were no retirement payouts, you will be disappointed to know that there are a multitude of non retirement related beneficiaries already dependent on those taxes.

[LowCountryJoe]

Yes, it's has morphed from it's original purpose as an Old-Age and Survivors Insurance.

Which one of these programs (Departments & agencies) are these FICA wages being used on, mountainfolk?

[Snoopers-868th]

This is what is so frustrating to me in the discussion. For some reason all the tack-ons are side-stepped and ignored. The blame is on those who drew from this fund when in reality it is our politicians fault and our politicians need to step up to the plate and the media needs to quit feeding us propaganda about decreasing birthrates lack of contributions and such. What did they think NAFTA CAFTA and all of them would do? Our government advocated and implemented everything that caused this fund to be on the downward trend.

My belief is that the next generation can't wait to get rid of it because they think it will make them rich. But I point out that this "social program" is no different than the social program that is taken advantage of on any line on the tax return. For example, why does anyone deserve a tax credit for marriage or rent. They are all social programs and apparently it depends on who it benefits if it is considered politically correct.

[Nick Danger]

why does anyone deserve a tax credit for marriage or rent. They are all social programs

You can expand the problem until it is so big that nothing gets done. The Comprehensive Reform Of Everything Act will never get passed. Let's chop the heads off the snakes one at a time, as we get the chance. The time is ripe to chop this particular snake, so let's do it.

[mountainfolk]

I feel so burdened. So many bureaucrats and bureaucracies depending on me and my tax contributions. As to your question, I would say the whole list benefits from FICA because that is where the government goes to replenish the larder. The Social Security listing is certainly non informative so we still don't know exactly what services they cover beyond retirement benefits. I am bookmarking your post as it is quite an adventure to read.

[Snoopers-868th]

Why not, in 1935 when the House voted 372-33 and the Senate voted 77-6 to pass the SSA at the same time, in the same bill, this bipartisan vote also enacted the other social programs as follows:

1) federal unemployment system,

2) the now abolished Aid to Familes with Dependent Children and,

3) an old-age assistance program along with,

4) it authorized grants to states to provide medical care.

Must have been bipartisan yet it is pretty much the crux of the social programs. I guess it depends on which troth you feed at whether it is a just cause or some greedy pig feeding. Anyone who believes SS will be fixed in any manner (personal funds or not) is in a dream world. Fodder is what we all are--for the vote by both parties.