I have thoughts and questions about Social Security reform

[HankReardon]

Social Security as it is today is not a fully funded savings and investment system. It is redistribution system, workers pay in, beneficiaries receive payments and the surplus is lent to the federal government and spent. My first question, What type of bond is held by the Social Security System for the money owed it by the federal government?

I think it was 1968 this started, almost 4 decades ago. Estimated SS contributions for the year 2005 are $575 billion, the estimated pay out is $515 billion, the $60 billion dollars will be lent to the federal goverment and spent. After 36 years of this borrowing how much is now owed the system? Including gained interest. I have heard estimates of over $1 trillion.

When Democrats say that the Social Security System is okay until 2043 are they using this money that was lent and spent by the federal government? We all know there is no actual money there, if it was to be paid back to the system it would have to be done with deficit spending.

When naysayers lament about how much it would cost to reform the SS system I would love to hear someone come back with, "The federal government owes the system over $1 trillion, how many billions do you thimk it will cost to reform the system?"

Anybody out there in the Public Employees Retirement System (risky scheme?)that would rather be in the Social Security System?

[Wuli]

You said:

"Even the Europeans, and Canadians have their pensions indexed to the cost of living, not wages."

Good for you, you've been doing some good reading.

And yet,

From what I have read, the demographics of the bulge in the retired baby boomers vs the numbers of workers paying into the system by 2030, suggest that we will still not get enough SS revenue from FICA alone, even with benefits based on price adjusted COLAs instead of wage adjusted COLAs.

[ran15]

Thanks I enjoy discussing many political subjects, and in doing so read good points people make.. and look things up on my own.

Europe is deceptive with regards to socialism. Overall they are worse, but in some ways they are more open then us. For example the 3 nations in Europe that will most likely be able to survive the coming pension crisis, are the Netherlands, UK and Sweden. UK and Sweden have private accounts, and I'm not sure about the Netherlands.

From talking to a Swede, not only do they have private accounts, but through Swedish mutual funds that invest abroad, Swedes can reap the rewards of rapidly growing economies like India. Meaning they aren't just dilluting their own equity market.


'we will still not get enough SS revenue from FICA alone, even with benefits based on price adjusted COLAs instead of wage adjusted COLAs.'

My numbers were just off the top of my head, and assuming a highly optimistic productivity growth. Beyond what America experienced in the last century. And not even factoring in things like rising interest rates so a greater debt burden on the government, government employee pensions, which are massive, medicare, pharmacare.. then all of the state and local employees pensions.. then on top of all of that, the major private companies pension and health plans.

[ran15]

Btw its cool you are writing a book on it, I was thinking of doing that too, but then procrastinated and never got around to it..

I can pm you eye catching statistics when I come across them, like a pdf I read froma german economist a while back, on just how profound Germany's coming pension crisis is.

There is a number of other steps besides price indexing to take too. The most obvious is reducing benefits gradually like 1% a year.

But there are other ways too. One way is increasing America's birthrate by stopping abortions. The nation loses 10 million a decade to abortion. And this is a problem that will have to be attacked from multiple angles, so every one of those babies counts lol.

The next is massive, unbridled immigration. Immigrants tend to be young, and they tend to have more children then American born citizens.

Bringing in millions a year, gives more options especially as its cumulative. So 2030 is 25 years from now.