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.
The President doesn't make the law, Congress does. And Baby Boomers were a LARGE portion of the voting population. We could have done more than just perpetuate the inter-generational transfer. It's not like we didn't have any warning -- Somewhere in my files I have an article published in the 80's warning that the "bailout" of Social Security in the 80's was hopelessly optimistic. History has proven the article to be correct.
More so, the boomers would not have made any changes that would have affected the recipients negatively - i.e. the Greatest Generation - their parents.
And that's why Social Security is in the shape it is today. You've just acknowledged responsibility by admitting that you wouldn't have made changes anyway.
And again I contend the biggest problem with SS today are the handouts to the Takers Of Society.
Your graph doesn't show the amount of the payroll tax and other income that is explicitly earmarked for disability benefits. In 2013, it was $105 billion, or 15% of payroll taxes that were collected. After accounting for other income, the net deficit (which is subtracted from the asset reserve) was $32 billion:
http://www.ssa.gov/oact/tr/2014/III_A_cyoper.html#105731
In comparison, the Old Age and Survivors beneficiaries received $679 billion in 2013. That means that disability benefits are only 17% of the total, if they were accounted together. But, Social Security accounts for them separately.
There are undoubtedly people that are abusing disability benefits. But, they are only a small contributor to the real problem with Social Security: demographics. We don't have enough people contributing payroll taxes, compared to the number of people collecting benefits. And since the fertility rate is currently below 2.0 (per woman), it's only going to get worse.
Without reducing benefits, the only choice is to raise taxes -- a lot. The Social Security Administration has already figured out how much:
That's a 50% increase in taxes, and that's with the optimistic assumption that the fertility rate will climb back up to 2.0 per woman before 2020.
As you may remember, there was a previous 50% increase in payroll taxes in the 70's and 80's, and it was supposed to "save" Social Security. That didn't out turn out so well.
See my post #42.
Actually, payroll taxes are indeed earmarked separately for DI and OASI. See my previous posting for the links. And as I noted, any abuse can only be a small portion of the problem with Social Security.
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 posted some links earlier: raising retirement age, by itself, won't solve the problem. Raising taxes by 50% -- again -- will kick the can down the road quite a ways, postponing the inevitable for a future generation. Decreasing benefits to the level that can be sustained by the incoming taxes -- and continuing to adjust benefits as taxes shrink -- is the only way to sustain Social Security in its current form.
I suppose there's a fourth--decrease the number of beneficiaries. I'll let others figure out how that can be accomplished.
Actually, you are close: what is really needed is to increase the ratio of contributors to beneficiaries. Reducing the number of beneficiaries is one way. The other: increase the number of contributors. If every family had 3 kids, and all of them went on to get a good job and paying lots of payroll taxes, Social Security would be in great shape.
I wish I could vote up this posting, or +1, "Like", or something. Because, you are 100% correct.
Social Security is part of the unified budget, but BY LAW, it is still required to be funded solely by the payroll tax.
Every dollar that was collected in excess of the benefits paid was invested in the equivalent of US Treasury Bonds (the "trust fund"). In the last year or so, the benefits started exceeding payroll taxes collected, so redemptions from the trust fund have started.
Once the trust fund is exhausted (predicted to be about 2033), benefits must be reduced to the amount that can be sustained by incoming payroll taxes. Currently, that's estimated to be about 77%, or a 23% reduction.
I'll repeat: unless the law is changed, this is the fate of Social Security: benefits will be substantially reduced in about 19 years.
Enough of this "SS is going broke" nonsense.
The only "nonsense" here is your complete ignorance about Social Security, and your unwillingness to accept your (collective) responsibility for its problems.
Kicking the can down the road is all it has to do.
Just give me my money and my employers’ contribution, plus interest back, and we will call it even. Pretend you are bailing out the banksters.
That's what we did in the 80's. The problem: the economic and demographic assumptions were hopelessly optimistic.
The massive payroll tax increase in the 80's was supposed to "save" Social Security for at least 75 years. We won't even make it to 50 years, under current projections.
I'm not willing to impose another tax increase on my children and grandchildren. They are already struggling to save any money at all, after paying the current taxes.
The SSA's analysis of removal of the payroll wage cap also overlooks something kinda important: the shifting of compensation from wages into non-wage income. Above the current cap, executives and self-employed professionals can easily change their compensation strategy. So, I'm skeptical that it will even achieve the SSA's projection.
There's no money to give you. The US government could issue a US Treasury Bond (or perhaps an equivalent) to you, but it would more than double the current national debt.
I don’t disagree with you, I’m just telling what the politicians will do, and indeed, what the People will demand they do.
Now, you are finally starting to understand.
Social Security has always been the "third rail" of politics. No politician dared touch it in the 80's, because we (collectively) fried them if they did. Anyone that questioned the wisdom of perpetuating a broken system was shouted down.
This time, it's not quite as bad. But, the collective response of people like you is almost a perfect echo of what our parents and grandparents said in the 80's.
And now, you can see the results.
No money to bail out the banksters either. I want that money.
Actually, that money was a loan. And, it was all paid back. On the other hand, repayment of the loan to GM was about $10 billion short.
But, so that you understand the magnitude: TARP was about $1 trillion. Social Security's unfunded liability is about $24 trillion.
We’re still bailing out the banksters. Everybody knows about the original $700 billion, few know about the $10 trillion (and counting) that followed. So no, they haven’t “paid it back”.
Since you are one of the "few" that "know" about the additional "$10 trillion", how about enlightening us?
And spare me the conspiracy BS.. I want to see the line item in the federal budget.
And, it was all paid back.
thanks. it looks like DOB => 1953 gets semi-hosed
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