Posted on 04/22/2015 5:28:14 AM PDT by Kaslin
Some are touting New Jersey Gov. Chris Christie's proposal to take an ax to Social Security as an act of bold political leadership.
Sorry, I see the opposite.
America needs leadership to replace old dysfunctional baggage with new programs and ideas fitting for a free 21st-century country. We don't need those who think leadership is retrofitting the country into our old baggage.
It's the latter that Christie proposes. His "solution" to the impending bankruptcy of Social Security is to phase out benefits for retirees earning $80,000 to $200,000 and above and increase the retirement age from 67 to 69, and 62 to 64 for early retirement.
Social Security started out as a safety net for America's elderly. It then grew into a national retirement program. Now Christie wants to transform it into a new welfare program. And like most welfare ideas, where the force of government is used to transfer wealth from the "haves" to the "have-nots," it hurts both.
To add unfortunate irony to the picture, Social Security, whose existing structure Christie is so committed to saving, already disadvantages low-income Americans.
Here's the conclusion of a 2013 study published by the Urban Institute in Washington, D.C.: "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."
According to the calculations of the authors of the Urban Institute study, for every $100 that white beneficiaries pay in Social Security payroll taxes, they receive $113 in benefits. But blacks receive only $89 in benefits and Hispanics only $58 in benefits for every $100 they pay in taxes.
There are a number of factors contributing to this disparity.
Social Security penalizes those with shorter lifespans. Whereas national life expectancy is 79 years, for blacks it is 74 years. For black males, it is 71 years.
Social Security is biased toward married households rather than singles, because marrieds can take advantage of spousal benefits. According to the Pew Research Center, in 2008, 32 percent of the adult black population was married compared to 56 percent of the adult white population.
Social Security penalizes younger workers. Over time, Social Security taxes have gone up, so younger workers pay more than their predecessors. As of the 2010 census, the median age of whites was 41, blacks 32, and Hispanics 27.
So despite what we hear from the political left about how critical Social Security is for minority Americans, the truth is quite the opposite.
We just need to appreciate that Social Security is a government-planning program. It limits the freedom of individuals to control and manage their own earnings and savings in a fashion that reflects their own circumstances.
According to the Social Security Administration, about 165 million Americans are covered by Social Security. How can government bureaucrats sitting in Washington design a retirement program appropriate for 165 million unique individual realities?
Social Security taxes preclude wealth creation for low-income workers by taxing away the only funds they have available for investing in real retirement savings.
Median white household wealth, according to Pew, is $141,000, contrasted with $13,700 for blacks and $11,700 for Hispanics. The percentage of whites with IRAs or Keogh plans is 35 percent, contrasted with 10 percent for blacks and 11 percent for Hispanics. The percentage of whites with 401(k) plans is 45 percent, contrasted with 24 percent of blacks and 30 percent of Hispanics.
As a step toward real reform, my organization, CURE, has proposed what we call a 30/30 plan. Young workers 30 years old and younger and earning $30,000 or less should be given the option of opting out of Social Security and investing their payroll tax in their own personal retirement account.
America needs real change. And that doesn't mean tweaking a broken system and forcing all Americans into it, as Christie wants to do.
Overheard a couple of “minority” folks at the Y the other day saying “I wish I was 62, then I could get X dollars more a month”.
So, welfare all her life, looking forward to welfare + “retirement” Social Security.
Regardless of how it got there, SS is going broke. The system is a Ponzi scheme, and it would've arrived in the same place at some future date, regardless of how much corruption took extra money out.
The government will be unable to meet its obligations and there are only so many things we can do in order to correct the problem. We can raise the retirement age, reduce the benefits, or we can raise taxes. A combination of all, or some of those things is also possible.
Some might say that we can take money from some other government program, and that may be true, but the money paid in SS dwarfs most other spending.
I hear it all the time and not only from minorities. I heard someone who hasn’t worked for 15 years saying they can’t wait to retire. Retire from what?
And it doesn't solve the problem.
The Social Security administration has already evaluated this proposal:
All either proposal does is kick the can down the road a little farther, so that someone else has to deal with it.
A lot of freepers are suggesting it is okay for “means testing”. Any way you try to rationalize it, that is wealth redistribution and a socialist ideology! It is my money that went into the system, and I don’t cotton to supporting you in your old age! You might as well vote democrat if you support socialist progressive theft!
“How about we separate SSDI from SS and let American seniors live out their “golden” years with some dignity.”
What does that accomplish? There’s only one federal budget, everything ultimately gets funded from there, and we are already effectively bankrupt and trillions in debt. The money’s gone, not just for your generation, but for everyone.
Do you expect your generation to get full benefits, while other generations pay for them while never receiving anything themselves?
Your money’s long gone buddy, the government spent it as soon as you paid in. You are essentially demanding others be taxed to pay for your benefits now, when they will never receive any benefits themselves.
Yeah, I know all about it. Why is the Fed keeping rates so low? So, the Government interest on its debt can be kept minimal and the Entitlement State bandwagon can keep rolling on.
How does the Fed get away with it? Simple: ALL Central Banks are following essentially the same policy. This is because they all have the same basic problem: too few producers, too many “clients” and too many promises to those clients. If the US Government had to pay the full cost of the deficit, it would bankrupt the country. The fact that the US Dollar is strong despite all this helps us too.
If the 10Y UST rate ever goes above 4%, you will see the Elites start to panic. Because, at that rate, the deficit becomes unaffordable.
Another thing is that almost ALL Public pension plans are underfunded. If asset prices drop significantly, the pension funds go bust without massive & immediate taxpayer infusion of funds. Yet another problem being held in check by Fed policy.
Maybe so, but it doesn't solve the problem. Here's the SSA's evaluation of a similar proposal:
I'd add three years instead of two to the retirement ages, two months of age for each year that passes (so it would take eighteen years to add the full three years), since the program is not sustainable otherwise.
The SSA has already evaluated a similar proposal. It's spread over 43 years, rather than 18:
As you can see, it's still not sustainable. And, if you consider the first one I cited above, which increases the retirement age by 3 months per year, it's clear that accelerating the change doesn't make up the gap.
It's actually worse than that.
After your annual earnings are adjusted for wage growth, they take the highest 35 years. Then, all those are averaged.
Then, they apply a formula. There are two "bend points". It's not a flat percentage: it starts at 90% for lowest income, then 32%, then 15%.
So, if your average indexed wage is above about $5,000/month, every additional $1 you earn only adds 15 cents to your monthly Social Security benefit.
The calculation is described here: http://www.ssa.gov/pubs/EN-05-10070.pdf
The above calculation is described in step 5.
Collectively, you are indeed the one "breaking it".
The baby boomer generation didn't have the courage to reform Social Security back in the 80's when we had the chance to do it without much pain. All we did was kick the can down the road a bit.
Other countries like Australia and Chile took that opportunity to switch to privately-held accounts, and are reaping the benefits.
Unlike our parents, we didn't have large families. The fertility rate has dropped below 2.0 (per women), and that's the largest driver of the problems with Social Security.
“Damned right I do.”
Yep, that’s why the system will never be fixed and soon nobody will get any social security.
You keep bringing up SSDI, and SSDI fraud is problematic, but it is just a drop in the bucket of SS spending. Even if we eliminate SSDI completely, SS itself is still going to be insolvent.
Hey, I'm just the messenger here, just as Christie is. I don't think the money is ear-marked like you think it is. I agree that the SSDI is corrupt and abused. Regardless, there's no easy fix.
And what I said before is not "BS," to argue otherwise is ignorant. There are only three ways to fix the problem: raise retirement ages; decrease benefits; or, raise taxes.
I suppose there's a fourth--decrease the number of beneficiaries. I'll let others figure out how that can be accomplished.
That's probably a partial reason. Again, I wasn't advocating for a specific monetary policy, I was just pointing that out to a previous poster who asked for better savings' rates at banks.
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