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Fixing Social Security The FDR Way
Washington Post ^ | November 26, 2007 | Amity Shlaes

Posted on 11/26/2007 3:00:11 PM PST by Delacon

Older Americans tend to think of Social Security as something we ought to be able to afford. Indeed, many seniors tell themselves that when Washington pours extra cash into the New Deal pension program, the action is something like investing in a new Volvo. The purchase may look extravagant but is, in reality, deliciously necessary. This attitude is also held by some of our most respected pension officials. The longtime Social Security Administration commissioner Robert M. Ball wrote on this page recently that "it's the essence of responsibility, in my view, to insist on no benefit cuts" ["A Social Security Fix for 2008," Oct. 29].

Ball is partially right. American retirees can have a Volvo. There is a way to keep Social Security with no benefit cuts. It is the upgrade that's the problem. There is no way the country can afford a newer model for each new cohort of retirees. Not when the economy grows at a rate of 1 percent or 2 percent or 3.9 percent -- the rate it expanded in the third quarter this year. The reasons for this trace not as much to the New Deal as to postwar authorities, including Ball himself.

Franklin Roosevelt explicitly limited Social Security's commitment, saying in August 1935 that the goal of the new program was not a total pension but "some measure of protection to the average citizen and to his family." I.S.C. 9, the legendary pamphlet that laid out the program, likewise delineated a ceiling on Social Security payments through the decades. "You and your employer will each pay three cents on each dollar you earn, up to $3,000 a year. That is the most you will ever have to pay," it said.


(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; Government
KEYWORDS: fdr; greatsociety; lbj; socialsecurity; ssisaponzischeme
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To: Rudder
“Why should they want, need, or deserve SS?”

“Because, damn it, we paid for it!”

True enough, but you didn’t pay for your OWN SS—you paid for your parents’. The government has no contractual nor legal obligation to pay any SS to anyone. It is, in the final analysis, an income transfer program from the young to the old.

41 posted on 11/26/2007 5:09:32 PM PST by Forgiven_Sinner (The most incomprehensible thing about the universe is that it is at all comprehensible.)
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To: mamelukesabre
Because she herself never earned a dime and therefore never paid a penny into SS. The fact that her husband WAS her income and paid the MAXIMUM did not matter. He got nothing back because he died too soon. And she got the minumum and was told to feel blessed for the charity.

One more excellent reason to privatize the system.

If your grandfather had been paying into a privatized system, he would've owned the fund. And, like everything else in his estate, it would have accrued to your grandmother upon his death.

But it wouldn't have given the Democrats a single vote. So, they'd never agree to privatization.

42 posted on 11/26/2007 5:24:44 PM PST by okie01
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To: Forgiven_Sinner

Spoken like a true bureaucrat.


43 posted on 11/26/2007 5:25:33 PM PST by Rudder
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To: Forgiven_Sinner

“The government has no contractual nor legal obligation to pay any SS to anyone. It is, in the final analysis, an income transfer program from the young to the old.”

No. Its an income transfer from the young to a massive debt of the older generations with no plan for parity for the young from future generations. If the old farts(cons and libs) can live with that(and I am sure they can) so be it. My aim is to thwart them on this.


44 posted on 11/26/2007 5:28:27 PM PST by Delacon (“The attempt to make heaven on earth invariably produces hell ” Karl Popper)
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To: Delacon

Fix it the Republican, conservative way. Cut Social Security taxes. Cutting taxes raises revenue, right? I don’t understand why no GOP Presidential candidate is proposing this. It’s the only way to fix Social Security.


45 posted on 11/26/2007 5:30:24 PM PST by brightonbill
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To: Brilliant
“Americans have an exaggerated sense of respect for the New Dealers who created the original Social Security model. Questioning them or the Great Society heroes seems impolite.” Only if you are a rabid liberal.

Heck, they don't even have to be rabid in my neck of the woods.

46 posted on 11/26/2007 5:39:29 PM PST by pilipo
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To: brightonbill

It is just a tax. Like all the other taxes we pay. It is not a fund that anyone pays into. In the minds of the FDR addled generations that grew up on it when the tax paid more into the federal coffers than it took out. It didn’t matter that it wasn’t a retirement pool. That it was just another way to sap billions of dollars from the people and pay for All government spending. Sure, they didn’t care because they knew it wouldnt matter for them when the bill came due. Now the bill is coming due and the boomers are using their considerable political might to make sure the bill gets handed off to the next generation. Their retirement will cost more than all the revenues coming in can pay for when you take in all other required spending like defense and entitlements.


47 posted on 11/26/2007 5:47:39 PM PST by Delacon (“The attempt to make heaven on earth invariably produces hell ” Karl Popper)
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To: Delacon
That said, the first thing a con should be thinking is how we can break ourselves from the SS system entirely, NOT how we can get out what we paid in. Our best objective as cons is to aspire to leave a legacy of good government. Thats what cons do.

Cons are, pubbies aren't. We are in a significant minority. That doesn't mean we should quit though.

48 posted on 11/26/2007 5:50:54 PM PST by pilipo
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To: Delacon
“The government has no contractual nor legal obligation to pay any SS to anyone. It is, in the final analysis, an income transfer program from the young to the old.” No. Its an income transfer from the young to a massive debt of the older generations with no plan for parity for the young from future generations. If . . . . .(cons and libs) can live with that(and I am sure they can) so be it. My aim is to thwart them on this.

You really need to consider another perspective when isolating descriptive monikers. The political construct is not just cons and libs. As a practical matter it is a matrix of cons,libs,pubs, and dems. There are no moderates. Additionally, there are the reactionary and radical components. Also, you need to add the judicial elements and fifth columnist (or 4th estate, your call) media to the matrix.

Now, when you've composed your matrix, run an analysis using as many demographics as possible, you'll see that the solution does not lie in the political realm.

49 posted on 11/26/2007 6:10:50 PM PST by pilipo
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To: Rudder
“True enough, but you didn’t pay for your OWN SS—you paid for your parents’. The government has no contractual nor legal obligation to pay any SS to anyone. It is, in the final analysis, an income transfer program from the young to the old.”

“Spoken like a true bureaucrat.”

I’m just trying to set people’s expectation correctly—the government has no obligation to pay anything. This has been tried in court and there is no legal agreement nor ownership of the money you’ve paid into SS.

Now, my solution is to 1) don’t spend the surplus money that SS is now collecting; 2) means test SS benefits—don’t pay out if the person has income in excess of -——— (pick a number). I’d say less that a million, more than $200,000. 3) Allow people to devote up to 2% of their SS tax to a personal IRA account. They may select any stock or mutual fund. It defaults to an index of the top 3000 stocks. The money this generates goes into their account. 4) Freeze SS benefits. No more inflation adjustments. 5) Any deficit that occurs (between payouts and income) will come from the general fund, funded by spending cuts. 6) Once the people with the retirement accounts retire, the government no longer has to pay SS nor tax for it, since the benefits from the accounts will exceed the SS benefits. People will still “have” to save 2%, but not the 6% plus the 6% of the company they work for. 7) The incredible increase in savings in the US will greatly benefit the economy. I’m not sure how Pres. Bush failed to sell this before.

That’s my story and I’m sticking to it.

50 posted on 11/26/2007 6:23:25 PM PST by Forgiven_Sinner (The most incomprehensible thing about the universe is that it is at all comprehensible.)
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To: Delacon
I scrolled quickly through all the comments and didn't see Fred Thompson's name mentioned once.

Ms. Shlaes was referring to Thompson's proposal to peg S.S. increases to the CPI instead of to the wage index without naming him.

I fear that no one's paying attention to the issues.

Not a good omen for Mr. Thompson -- abortion and speculation on his belly-fire is so much more popular, I guess.

51 posted on 11/26/2007 6:38:03 PM PST by BfloGuy (It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect . . .)
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To: Brilliant

Most Xers are more socially liberal but economically conservative from my experience. Most of my friends feel they want to keep your nose out of the bedroom and your hand of my wallet (including for money to look in the bedroom). My wife is all around liberal—but I’m still working on her. She’s becoming more conservative each year. She was a straight up socialist in the middle of college a few years ago.


52 posted on 11/26/2007 7:16:17 PM PST by rb22982
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To: Delacon

wanna fix it? Take all the immigrants that are on it and tell them NO, you haven’t paid anything into the program to deserve anything out. Many of these guys take their work record from their home country and come here getting FREE benes with no input, and out govt cries there is NO money.


53 posted on 11/26/2007 7:17:43 PM PST by television is just wrong (deport all illegal aliens NOW. Put all AMERICANS TO WORK FIRST. END Welfare)
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To: Forgiven_Sinner

“I’m just trying to set people’s expectation correctly—the government has no obligation to pay anything. This has been tried in court and there is no legal agreement nor ownership of the money you’ve paid into SS.”

This is a fact. The government could say SS has ended tomorrow and there is not one thing anyone could do about it. That was one of the arguments for privitization. You legally own that portion of your retirement savings. Its property. You can will it to your children. Not so with all the money you fork over to the government as a SS tax. Its just another tax. It goes in with all the other money you pay out and like piss is a swimming pool you cant seperate it out.


54 posted on 11/26/2007 7:23:07 PM PST by Delacon (“The attempt to make heaven on earth invariably produces hell ” Karl Popper)
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To: woofer

Believe me, by the time I turn 65, it will be 70. And by the time I turn 70, it will be 75.


55 posted on 11/26/2007 7:33:34 PM PST by Brilliant
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To: babygene

“If the amount you paid in (plus the employer’s portion) over the last 30 odd years had been invested and not pi$$ed away by the crooked politicians, your account would be worth millions now.”

If wishes were horse, beggars would ride. What might have been and all that. Previous generations took a dollar in/dollar out system and messed it up from the beginning. Now we are expected to pay for it. The guy says “Its mine because, if I had invested that money I’d have some much more now if I hadn’t willingly handed it over to the SS admin”. Thats like saying if I had put my money in Microsoft back in 88 instead of Enron I’d have so much money now, so I am entitled to something. Enron equals the government. And nobody is entitled to squat if I have my say.


56 posted on 11/26/2007 7:33:46 PM PST by Delacon (“The attempt to make heaven on earth invariably produces hell ” Karl Popper)
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To: dalereed

Raise the retirement age to 80 and SS is fixed!

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

That’ll do’er allright! But everybody will have to be self-employed because nobody wants to hire us old farts over 45 now!


57 posted on 11/26/2007 7:37:32 PM PST by RipSawyer (Does anyone still believe this is a free country?)
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To: RetiredArmy
everyone was under the impression that the SS money actually was going into some type of account for SS

Hey Army, you're correct here, FDR deliberately engaged in the dissemination of misinformation. The government called a tax "contributions" and referred to an "account" like it was a contract with the government.

However, you paid taxes and got an entitlement which can be rescinded at the whim of Congress, unlike a contract which cannot

58 posted on 11/26/2007 7:52:13 PM PST by Navy Patriot (The hyphen American with the loudest whine gets the grease.)
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To: RipSawyer

I’m self employed but my wife still has a job and she’s 70.

Work at it and you can be empolyed after 45!


59 posted on 11/26/2007 7:52:43 PM PST by dalereed
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To: Delacon

You can’t “fix” Social Security. It’s a worthless ponzi scheme that was destined to failure from day one simply because it can’t work and politicians control it with their meddling.

Any talk of “fixing” or “changing” is ridiculous. It should be eliminated. Period.


60 posted on 11/26/2007 9:25:18 PM PST by Fledermaus (The Dark Knight is coming !)
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