Posted on 05/25/2005 8:42:08 AM PDT by qam1
The debate over whether to reform Social Security is full of idiosyncrasies.
Here's a big one: No matter what fix we're talking about - partial privatization, raising the retirement age, means testing so millionaires forfeit benefits, tying benefits to inflation rather than wages, etc. - the most ferocious opposition comes from the demographic that won't be affected either way by any proposal being discussed at either end of Pennsylvania Avenue: Americans already 55 and over.
If you can imagine that, you're already two steps ahead of the Bush administration. White House officials seem baffled that their biggest fight has turned out to be with a group with whom the administration went out of the way to avoid picking a fight. The polls on this issue back that up. Most show the same trend: The older the polling sample, the less support you find for tinkering with Social Security. The younger the sample, the greater the support.
The more the administration tries to reassure seniors that they'll squeak by before any rule change takes effect, and so this debate doesn't concern them, the more concerned seniors get. Here's what the White House missed: This isn't just about self-interest. It's also about sentimentality. No other generation is as passionate - and therefore as protective - about Social Security as the World War II generation, those Americans now in their 70s and 80s. For that demographic, this debate is about preserving a program that served their generation well and which they hope will be around several decades from now to serve their grandchildren.
That's interesting. If they really wanted to protect their grandchildren, they'd do everything they could to ensure some generational fair play. Unless something is done, the current system will - 10 or 20 years from now - soak taxpayers with tax rates that experts say could easily top 50 percent when you combine income taxes with the payroll taxes necessary to fund Social Security and Medicare.
But there's no reasoning with the elderly on this issue. I know. I tried.
Recently, I agreed to sit on a panel here in Coronado and discuss Social Security reform. Home to a lot of retired naval officers, the well-to-do community has a reputation for being conservative. But you wouldn't know it from the way the audience - made up almost exclusively of senior citizens - seized every opportunity to tear into President Bush and his proposal to allow young people to invest part of the money they contribute to the current system into private accounts.
The way these seniors see it, this isn't about demographics and the undeniable fact that, with every year that goes by, we have fewer workers supporting more retirees. This isn't about the fact that Americans are living longer, and so it only makes sense to push back the retirement age.
For this crowd, the whole issue of reforming Social Security comes down to trusting George Bush. For those who don't, it's tempting to buy the argument that the administration is manufacturing a crisis to gin up public support for a scheme that will make a fortune for ''Bush's friends on Wall Street.''
Judging from their questions and comments, that's what many in the Coronado audience believed. And they couldn't get past it. They insisted on making the issue political, when it's really generational.
That disappointed me. So did the fact that these seniors had convinced themselves that there was no ''crisis'' in Social Security because the best estimates are that benefits will continue to be paid out for the foreseeable future. They didn't seem to care a whit about the financial strain that future taxpayers will be put under to make that happen. This is the real crisis.
You know what else was disappointing? That many of the seniors were so openly contemptuous of the idea of letting poor and working people invest their own money in private retirement accounts. To listen to these seniors, the less well-off aren't smart enough to know what to invest where, and so need the government to provide them with a guaranteed benefit.
Putting aside the rank condescension, such comments were horribly naive. Given the demographic changes ahead - beginning with the retirement of 70 million baby boomers - don't expect the Social Security system to give out any guarantees or to honor them if it does.
That's something that older generations need to understand - and which younger generations figured out a long time ago.
Hey everyone will. This is how it works. In 1949 an accounting major in NYC got $2,500 per year. 50 years later, it's some $50,000 per year. That'a a 20X multiplier. When today's graduates retire 50 years from now, the starting salary using the same multiplier will be $1,000,000. They too will be paid more than they ever put in.
NIRA and NRA created monopolies, high taxes and wage controls that greatly prolonged the depression.
Indeed, FDR even lampooned Hoover for his interventionist tactics during the presidential campaign. Candidate Roosevelt 1932 was a very different man from President Roosevelt 1933.
"Now you want to wait until we are senile and take everything away from us and leave us to die."
What are we trying to take away from you? What promise do you have that you will receive any welfare checks from the SSA? Check my tagline.
The Greediest Generation
I have tried to explain that to Mama, because I support it and I, BTW, am 55, so it won't affect me. However, it will affect my children who are 36, 33, and 31. But Mama does not trust the stock market. She knew people who had lost everything in the stock market crash, even though that was before she was born, and she just thinks it would be a disaster.
inflation in not the primary driver. IT has to do with the early contributors only contributing a few years.
It is still true since reagan/oneill DOUBLEd the tax to 12.4% are '83
Should we double the tax to 25% to keep the ponzi scheme going ? THat is what Lindsey/Clinton would have us do.
She doesn't deserve a say in this argument. If she is reacting with emotions and not willing to educate herself regarding investments, then she needs to sit back and let me make my own decision. She can wring her hands all she wants, as long as I'm allowed to make choices with my own earnings.
She should try Jeremy Seigel's latest book. Buy dividend stocks.
Even the S&P is only down 14% from the drunk high of 2000 when dividends are factored in.
Let's double it every generation until we all give 100% of our earnings to the gov't. and thank our lucky stars for anything we get back!
and yes, if anyone wondered, i know how to spell "dithyramb"
lol.
I dont mean to be cynical. We need to move to a fully funded system like Galveston or Chile that uses Marketable gov debt (treasuries,TIPS ) or stocks.
Note that fixed income investments carry inflation risk as our CD buying friends are finding out.....
FWIW, I'm a boomer (leading edge) and have not trusted Social Security since the early 70's. My retirement plans don't rely on Social Security, or pension plans. Part of the reason I'm in that position is my lack of trust in the government to keep its promises drove me to make other arrangements.
And, yes, I strongly support Social Security reform, including private accounts, but advise any one with a long planning horizon to get to a point where you have excess income allowing you to self fund you own retirement.
Just my 2 cents.
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