Posted on 01/05/2014 6:35:47 AM PST by Kaslin
America desperately needs genuine entitlement reform to avoid a Greek-style fiscal future.
The biggest problems are the health entitlements such as Medicare, Medicaid, and Obamacare, but Social Security also has a huge long-run fiscal shortfall.
That’s why I’m a big fan of the very successful reforms in places such as Chile and Australia, where personal accounts are producing big benefits for workers. 
These systems also boost national economies since they generate higher savings rather than added unfunded liabilities.
And I’m very happy that we now have more than 30 nations with personal accounts, even tiny little jurisdictions such as the Faroe Islands.
But many statists object to reform, presumably because they don’t want workers to become capitalists. They apparently prefer to make people dependent on government.
Not all leftists take that narrow and cramped approach, however. Some academics at Boston College, for instance, produced some research showing some big benefits from Australia’s private Social Security system.
And new we have some remarkable admissions about how minorities are net losers from Social Security in a study from the left-leaning Urban Institute.
We use historical and projected data from 1970 to 2040 to measure the ratio of old age, survivors, and disability insurance (OASDI) benefits received to taxes paid by members of each race or ethnicity each year. This measure captures the transfers that occur in a given year from current workers to current beneficiaries of each group. We then examine benefit-tax ratios for each race or ethnicity into the future to determine how these redistributions will play out in the coming years. Our conclusion: When considered across many decades—historically, currently, and in the near future—Social Security redistributes from Hispanics, blacks, and other people of color to whites.
Why does the program have this perverse form of redistribution?
On average, blacks are more likely to be low income and short lived and are less likely to marry than whites. …Given this, one would expect forced annuitization and auxiliary benefits related to marriage and divorce to redistribute from blacks to whites.
And that’s exactly what the research found.
…whites have clearly received a disproportionate share of benefits relative to the taxes that they pay in at a point in time. Their benefit-to-tax ratio has been higher than that of blacks, Hispanics, and other ethnic groups for as long as the system has existed, while projections continue that trend at least for decades to come.
Here’s a chart from the study showing how different races have fared in terms of taxes paid and benefits received.
In other words, if folks on the left really cared about minorities, they would be among the biggest advocates of genuine reform.
By the way, it’s also worth noting that Social Security is a bad deal for everyone. The Urban Institute study simply investigates who loses the most.
And the system is getting worse for every new generation.
Recent studies have also documented how different generations are treated within Social Security, with succeeding generations achieving successively lower “returns” on their contributions.
This helps explain why the evidence shows personal retirement accounts are superior – even for folks who would have retired at the peak of the recent financial crisis.
Here’s my video on why we should replace the bankrupt tax-and-transfer Social Security system with personal retirement accounts.
P.S. You can enjoy some Social Security cartoons here, here, and here. And we also have a Social Security joke, though it’s not overly funny when you realize it’s a depiction of reality.
P.P.S. Thanks to Social Security, I made a $16 trillion mistake in a TV debate. Fortunately, it didn’t really change the outcome since I was understating the fiscal shortfall of the current system.
This is another quick source to the IOUs but not the total. Newt Gingrich said a couple times on radio that he hated it each year when CONgress spent the “surplus”.
When I say abolished it’s not a right now type of thing except welfare. You need to wean folks off.
SS could have worked if implemented and run by competent people vice the government. Hell it’s a 100% return on investment, you pay 6.2%, employer matches 6.2% and when you decide to retire the government should hand you a tax free check in the total amount. Do what you want with it but when it’s gone you’re on your own.
Tell them to stay in school and work at it...and get a damn job. And tell Mommy to get a job, too.
Absolutely right...And Bubba with his balanced budget depended on the WHOLE of the fund available.
Here is the way SS works. All of the SS revenue collected thru the payroll tax is converted to T-bills, the benefits paid out, and the "surplus" is retained in the SSTF. We stopped running a surplus in 2010. These T-bills carry the full faith and credit of the USG to honor them, just like the T-bills issued to the Chinese or any other holder of our debt. Now that SS is no longer running a "surplus," the shortfall is made up to pay benefits by redeeming T-bills thru the General Fund. Of course, we borrow 40 cents out of every dollar, so we must borrow money to redeem the SS T-bills.
The T-bills in the SSTF earn interest. The SSTF is included in our $17.3 trillion national debt and held under "Intra-governmental Holdings" just like the other government trust funds (HI Trust Fund for Medicare Part A), the federal employee pension fund, etc.
If you look at our current national debt, 4,981,449,585,880.73 are held in Intra-governmental Holdings as distinguished from the publicly held debt Intragovernmental Holdings are Government Account Series securities held by Government trust funds, revolving funds, and special funds; and Federal Financing Bank securities. A small amount of marketable securities are held by government accounts.
According to the 2013 SS Trustee's report, the SSTF holds $2,609.7 trillion. There is no $13.4 trillion in the SSTF.
A looming problem is that the SS DI (Disability) Trust Fund will exhaust its T-bills in 2016 and will have to reduce benefits unless more money is pumped into the Trust fund. From the Trustees' report.
"Social Security’s Disability Insurance (DI) program satisfies neither the Trustees’ long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 85 percent at the beginning of 2013, and the Trustees project trust fund depletion in 2016, the same year projected in the last Trustees Report. DI cost has exceeded non-interest income since 2005, and the trust fund ratio has declined since peaking in 2003. While legislation is needed to address all of Social Security’s financial imbalances, the need has become most urgent with respect to the program’s DI component. Lawmakers need to act soon to avoid reduced payments to DI beneficiaries three years from now." 4,981,449,585,880.73
You’re right; SS could have worked had it been implemented and run by competent people. The problem is that it was implemented by and is being run by the government, which does not enjoy a stellar track record of competency.
And I fully agree with you that there should NOT be and never should have been an annuity-style system. It should have been set up to pay the retiring employee, in a lump sum, what the employee and the employer paid into it.
The way it WAS set up, and was and is administered, is a recipe for disaster.
I really don’t trust what they say they are doing or what they are supposed to be doing. The system is so corrupt and unreliable.
It is not a matter of trust, just the clear, obvious facts. SS and Medicare are unsustainable. They will bankrupt the country unless they are reformed.
On the surface, that's all well and good, but any sane person who reads world news and news here in the country, can see that once these 'private' plans with big benefits start really making a difference, government with its inherent drive to pander to worthless nonproducers will confiscate that wealth. It has already happened in South America - it will happen here.
Of course you would.
But your proposal is incomplete. How do you suggest that the government get the cash to pay you? Tax the rich? Tax the poor? Print the money? Borrow the money from China?
The money you paid in HAS BEEN SPENT, along with almost 20 trillion more dollars. The money you paid in was spent by recipients many if not most of whom are now DEAD.
The money you might expect to receive in the future is part of what some have estimated to be in excess of 100 trillion dollars that would be required to satisfy all of the "entitlements".
The only real decision remaining is whether YOU end up paying for this horrendously irrational redistribution of wealth or whether that burden is shifted to future generations.
This is like the joke where God announces, to the major media outlets, he is going to destroy the world.
The Wall Stret Journal’s headline is “World to end in 5 days, stocks mixed.”
The New York Times headline “World to end in 5 days, Women and minorities hardest hit.”
Now social security is not fair to blacks and hispanics. END THE DAMNED PROGRAM THEN!!! It’s probably unfair to women and children too.
I understand that the money I paid into the system has already been spent. Hence my offer to get it refunded; meaning, I know it will never happen. So, if I have to get it back in dribs and drabs, that’s what I’ll have to do.
You must be young (and I don’t say that as a pejorative); thus, I can understand your anger of having to pay into something that might not be around for you when you get to my age. Well, look at it this way: You put in X, and I put in X + Y. If you lost your X, and I lost my X, would you begrudge me my Y?
Nope. Sixty-five, on Medicare and collecting SS.
Any anger I have is at progressives who built this monster. You're welcome to whatever the system will provide but neither you nor I are entitled to anything.
To put it in your terms, I put in X, Y, and Z. Whatever I get back will be in inflated dollars with much less purchasing power than if I had invested the contributions made on my behalf.
I find myself somewhat surprised that the system has lasted this long. I lived my life with no expectation of a return at all. Every dollar is an unexpected windfall that helps to preserve my modest savings.
I support an immediate end to COLA increases to be replaced by a reduction of benefits of 5% of the benefit amount each year for the next twenty years. This provides a period of adjustment for those who were foolish enough to count on the government while quickly decreasing the load on future taxpayers. Contributions to Social Security should be reduced as soon as the cash flow is sufficient to pay the remaining benefits.
To those who suggest that my plan is tailored to benefit me, I also support immediate cessation of both benefits and contributions. Anything is better than accelerating toward bankruptcy.
What I will definitely NOT support is converting the program into a "need-based" welfare program. We have enough of those already and the only "need" I can see is for people to live below their means and put money aside for their own welfare.
Government-run ANYTHING is bad news for EVERYONE.
Ah, I see.
So, you’re getting yours, but the hell with everyone else?
You’re 65 (I turn 63 this year). Thus, you chose to collect SS early, probably fearing that if you waited until your full retirement age of 66 there would be nothing in the pot.
Yup, you made sure you’d get yours.
I’m curious: Did you start collecting SS before you turned 65? I bet you did.
Yes. What's your intention?
Do you think it better that the system becomes bankrupt sooner or later?
Are you waiting so that you will get a higher benefit?
How do you propose that I help "everyone else"? How much of what I was forced to contribute should I sacrifice for "everyone else". What have they done for me aside from forcing me to survive in their socialist paradise?
I knew it! You made damn sure you’d get your piece of the pie, even if you had to grab it early and take a cut, just to make sure you got yours. And you say you’d like to see it abolished? Funny, if you really felt that way you would have foregone collecting ANY SS, and you would not have enrolled in Medicare.
You say you are against “entitlements” but you were so eager to avail yourself of entitlements that you rushed to the head of the pack to feed at the trough (i.e., you started collecting early so you’d be assured of getting something).
If you really meant what you said about entitlements you’d contact the SSA today and tell them you voluntarily waive your SS benefits. Somehow, I doubt you’d do that.
You ask what is my intention? My intention is to continue working, continue saving, and continue providing for my family. My wife has a terminal illness, and I don’t expect the American taxpayer to pay for her care (though I see you have no problem with having the American taxpayer pay for yours). Yeah, you can elect to waive Medicare benefits, too; but, as with SS, I doubt you will.
Don’t you see your own hypocrisy?
“How do you propose that I help ‘everyone else’? How much of what I was forced to contribute should I sacrifice for “everyone else”. What have they done for me aside from forcing me to survive in their socialist paradise?”
And wasn’t it you who criticized me for saying I’d gladly accept a refund of just what I paid into the system, without interest, and call it even?
Chutzpah!
Oh c'mon! ( sigh!) Should a person not see the Grand Canyon when he believes that these national parks should be returned to the states? Give me a break! Ditto for Social Security.
Here's another example: I think we should abolish the IRS. The fed should send out 50 bills to each state and the size of the bill should be based on the latest census. Gee! Should I stop paying my yearly tax to the IRS?
Many conservatives feel it would be best to begin privatizing all of the government's K-12 single-payer and socialist-entitlement schools. Are they monsters because their kids go to these schools? I don't think so.
Well...Guess what? I think Social Security should be abolished but I, too, took SS as soon as I could just to get back the money I paid it.
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