Posted on 05/28/2015 4:52:18 AM PDT by Eric Pode of Croydon
Between Chris Christie and Senator Warren (D-MA), Social Security reform is getting more media coverage today than at any time in the past 30 years. From hearing the details, you might conclude they are talking about different government programs. They aren’t.
These people are part of the changing debate that is taking shape in Washington. For decades, any problem that developed within Social Security was fixed by shifting the cost to future workers. Today that isn’t possible.
What is the problem? Social Security contains a massive imbalance between resources and promises. The Trustees of the Social Security’s Trust Funds estimate that the system carries roughly $25 trillion dollars of promises for which the system does not expect to generate cash. The figure means that we would have to add $25 trillion dollars today to the Trust Fund so that Social Security can work for all generations. That is more than $1.50 of brokenness for every $1 collected since its inception.
The primary force driving the gap wider is time, not demographics. According to the Trustees, adding a year to the clock created roughly 900 billion in unfunded liabilities because the gap grows just as though it were a bond charging the system interest. Time measures the nothing that Congress has done every year for the last 32 years, and it is driving the crisis forming in Social Security more than all other demographic forces combined.
Someone who is 32 today was born in the year of the last Social Security reform. Congress has done nothing about the imbalances since that time. Someone under the age of 50 didn’t even have a vote at the time. The point here is that less than half of voting aged-Americans had a vote in the how the system is structured today. So the Social Security debate is in part a discussion about how to allocate the brokenness of the system to people who had nothing to do with the creation of it.
For example,
Eliminating the cap would push the cost difference onto high wage workers.
Adding means-testing to the benefits formula means that wealthy retirees would absorb the gap.
Increasing the retirement age allocates the cost to future retirees.
Increasing the payroll tax distributes the cost to future workers.
In the past, Congress has largely shifted the cost from generation to generation. The last major reform to Social Security in 1983 allocated the highest tax increases and benefit cuts on people who were 11 and younger at the time. Today the costs to fix Social Security are so large that there is no way to completely insulate voters from the changes.
So the new debate that is forming today is how to redefine what Social Security does so that voters will agree that the system works. The Far Left would like to transform the program into a welfare program to keep the elderly out of poverty. The Far Right wants Social Security to become a form of forced savings, in which workers are required to save for their own retirement. These changes are somewhat like fixing a broken refrigerator by calling it a doorstop.
These ideas do not fix Social Security. They simply change the role that it plays in our lives. Originally Social Security was designed to be old-age insurance which would help a retiree hedge the potential cost of longevity. It is statistically possible that for a retiree to live to 100, the cost of which would be staggering. The point of Social Security 70 years ago was to give that worker some protection against outliving their resources.
Americans should think seriously about these transformations. We are trading what we can’t get for something that we already have. The government already offers many welfare programs. The government already incentivizes retirement savings with an alphabet soup of retirement plans. There is no alternative for the vast majority of Americans who need old-age insurance.
These changes haven’t been well thought out because the goal isn’t to fix Social Security. The goal of the real Social Security debate is to create a program named Social Security that doesn’t hemorrhage cash. For example, reformers would like to change the COLA to a new measure of inflation. This proposal would fix a system which is supposed to provide old-age insurance by reducing buying power of benefits as someone gets older. That is like auto insurance which increases the deductible as the car wreck gets worse.
Do you want to privatize Social Security? The math is simple. There is no way to privatize a negative number. We will have to fill in the $25 trillion dollar hole before there is anything to privatize.
Do you want Social Security to be a safety-net? Social Security has no visibility into the need of anyone. Millions of Americans are not even eligible for benefits. The irony of this approach is that the cost of supporting Social Security as a safety-net would drive even greater numbers of younger Americans into the poverty that the welfare program is supposed to alleviate.
There is no real debate about Social Security reform. It is a shouting match where few people are actually listening. We aren’t trying to fix a broken system. We are trying to find someone willing to pay for one.
Soylent Green meets Logans Run.
It’s not the same money. It would be new money coming in from new taxpayers after taxes are cut and welfare/poverty programs abolished.
No one in Washington is interested in “fixing” Social Security because most solutions would no longer allow Congress to dip into the money. Here’s Thad McCotter’s plan. Read it and tell me why it went nowhere and why, shortly after it was introduced, McCotter got set up and run out of office.http://spectator.org/articles/36775/mccotter-trailblazes-social-security-prosperity
I too am disgusted by these deadbeats. There are now so many of them it’s impossible to ignore them or give them the benefit of the doubt. Most older Americans have health issues that make it difficult for them to work. The interesting thing is; if they had never worked, they wouldn’t be eligible anyway. Not so for the millions of obviously able bodied, carefree dead weight I see every day riding around on ATVs, in nice cars, going on vacations and eating expensive food that me and my daughter and son-in-law, who work every day and overtime, couldn’t begin to afford because we’re taxed to death to support this scum.
I have also noticed a subtle but obvious change in the way medical care is given(or not) to older adults. Hospice is suggested sooner and it dispatches(can’t find a better word) its obvious duties more quickly than they used to as a last resort. This isn’t my imagination since I have been caring for my older family members for some years now.
After seventy-five collective years of hard work, my parents received a bare subsistence from Social Security before they died. Now, I watch young, gleeful, strong young men and women, eating, drinking, procreating and having their offspring cared for and educated with taxpayer’s money without ever working a day in their lives.
And yet, when the gargantuan national debt comes up in debate; the first thing politicians think of cutting is Social Security. Even the illegal aliens who are pouring into this country by the thousands will receive many more dollars worth of benefits than older American citizens who have worked all their lives.
You always get more of what you support. When the productive older generation is finally gone, their work ethic and productivity will die with them and the deadbeat, entitlement minded generations that are left will wonder what happened to the America their parents and grandparents sacrificed to build. That nation didn’t come about by its citizens sitting in government provided housing, eating government provided food and watching a TV that someone else paid for. However, the Socialist States of America are coming into being very nicely with that kind of people at the helm. It will be a fate that is well deserved by the lazy masses that allowed it.
Give me back the money you stole from me, .gov, and we’ll call it square.
The steps to rationalize SS are straightforward and logical.
1) Stop pouring gasoline on the fire. This means to no longer bring in new people into the system of SS-Medicare, which are paired together in the FICA tax. From a given date, all the money that would have gone to the government instead goes to private, tax free retirement-health accounts.
2) Means testing will never fly, because those who are getting SS paid into the system, and they want a square deal. So the way around this is to give them a choice. If they still earn taxable income, offer them tax credits slightly greater than the money they would have gotten from SS and Medicare, *if they want to*.
This means, if they need the money from SS and Medicare, they stay in the system that year. But if they would get more money through tax credits, saving it in the first place (many of the people who would have been means tested), then they can vie for this better deal.
In turn, this would take a lot of pressure off of both SS and Medicare, so their money would only go to the people who needed it. It also slashed the *projected* debt of these systems.
3) The biggest loser in this would be the federal government, that would no longer effectively double the income tax with the lies of Social Security and Medicare, which they then immediately spent. Which means that the federal government would *have* to cut back, perhaps as much as by 25-50%.
What’s not to like?
Heroin addicts and chronic alcoholics qualify as "disabled" thanks to Congress-critters who see expanding the Ponzi scheme as an excellent way to buy votes. The stipends paid out go toward buying more heroin and liquor, with the government subsidizing their dependency and robbing retirees of the funds they contributed over a lifetime of hard work.
There are also millions of Americans unable to work who truly need disability payments who have filed, been rejected (always happens the first time around), rinse and repeat... This cycle repeats until they can scrape together enough cash to hire a lawyer who specializes in handling Social Security disability cases. More often then not the case is then approved (this happened to my brother and he was not unique by any means).
Regards,
GtG
Soc Sec has already run out of a whole generation of other people's money.
And just look at all the "fixes" in this thread.
Like trying to put out the Chicago Fire with a sprayer bottle of water.
Ideas proposed by people who are in denial about what happened to "their money" and what the government "promised" them.
Can be grab that money too? Smacks of ‘entitlement’...
How many people in Baltimore sitting around ready to ‘protest’ are on ‘disability’?
My guess is MORE than those in Detroit.
Taking out ALL the fraud would seem to be the best first move,altho not a full solution. The problem with this comes in when everyone has their own idea of where the fraud is. Politicians & bureaucrats can kick this can down the road no longer.
I am not, not, not against getting rid of fraud. But it's delusional to think that doing so will do any more than postpone the inevitable by a few years.
Of course, those who think that that postponement will cover them for the rest of their retired lives are probably fine with the idea.....
GW fixed it so illegals could get SS after only a few quarters I forget how few but it was ridiculous. Another thing is how do we know that people living abroad are still alive when issuing those direct deposits? Answer is we don't.
During this administration people who were chronically unemployed were deemed to be disabled.
A "square deal" would be - once you've gotten back what you paid it, plus interest at prime over that time period, you're done. The checks stop.
On the surface, yes. But far too many people counted on the “promise” of the government, either to pay their retirement or to augment their retirement. So just “getting their money back” is a cheat.
Compare it to insurance. Say you take out a life insurance policy for $100k to support your family if you unexpectedly die. Then, after a decade of paying premiums that amount to say $20k, you die. Then the insurance company says they won’t pay the entire $100k they promised, but will give you your premiums back. In effect, your family is cheated out of $80k, but “it’s fair, because you got back the money you paid in.”
So who gets to cover the rest of what they were "promised"??
Easy, the government spent their FICA taxes as soon as it got them, instead of saving the money as it should have, so properly speaking, the money *should* come out of the “government’s hide”.
That is, large and illegitimate parts of the federal government were created with that money. By shutting them down, the government will likely have a surplus annual budget. And the trick they used of saying as long as they can pay just what is needed that month and they are still solvent, still applies.
So the promises will be kept.
The fact that you start your post with the word "Easy." leads me to suspect that you have not done this.
You’re forgetting the dodge congress used for many years, that as long as they pay what is owed to beneficiaries “that month”, as far as they are concerned, the program is solvent, even if it has a $25t *potential* debt.
As scurrilous as this is, it actually works, even at the low level. Your credit rating will be good even if you have a high debt, as long as you pay the interest on that debt on time.
So the way what I propose works is that you stop putting more people into the system, which will then slowly start to lower the potential debt. And you continue with the trick, paying beneficiaries what they are owed *that month*.
This means the cutback to government income comes from not being able to squander the FICA taxes immediately on receipt, as if the income tax was doubled. So yes, it will be an enormous hit to government revenues, but one they weren’t supposed to have in the first place.
The total hit to government revenue might be as much as 25-30% of the current budget, and that should be workable.
Nice try...but if you want parity across generations than every generation needs to take a hit.
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