what is social security?

[WalterMitty]

option 2, of course.

[A18]

http://www.spectator.org/dsp_article.asp?art_id=8283

If you have paid much attention to the news these last few weeks, chances are good you are familiar with the San Diego pension fund scandal. If examined closely, this scandal offers important lessons for Social Security reform.

In May, San Diego District Attorney Bonnie Dumanis filed conflict of interest charges against one trustee and five former trustees of the San Diego City Employees Retirement System. The defendants, Ron Saathoff, Terri Webster, Cathy Lexin, Mary Vattimo, Sharon Wilkinson, and John Torres, are accused of designing and voting for a pension contract that greatly enhanced their own benefits. For example, Torres' monthly benefit increased from $386 to $4,016 and Saathoff's from $2,530 to $9,703. While they were stuffing their own pockets, the trustees voted twice, in 1996 and 2002, to expand retirement benefits for employees while at the same time allowing the City of San Diego to escape needed payments to the pension fund. As a result, the fund now faces a deficit of $1.4 billion.

Although the San Diego pension fund and Social Security are different in some ways, there are important parallels. Both systems are underfunded. The San Diego pension fund's $1.4 billion in underfunding rises to $2 billion if health-care costs are included. Social Security is underfunded over 75 years to the tune of $25.2 trillion in today's dollars.

In both cases the care of the program is entrusted not to the beneficiaries but to a third party, in the case of the San Diego pension fund a board of trustees, and in the case of Social Security, Congress. Such a system is ripe for abuse because the third party is spending other people's money, and we are never as careful with other people's money as we are with our own. With Social Security, Congress spends the annual Social Security surplus on many projects of dubious value -- witness the recent Highway Robbery Bill. It also uses the Social Security surplus to mask the true deficit of the federal budget, and then creates accounting gimmicks like the Social Security trust fund to fool the public into believing that its retirement money is being well cared for.

Finally, both systems are poster children for one of the prime benefits of personal accounts, that of ownership. Since an individual is far more likely to take good care of something when he owns it than when he does not, individual accounts would have gone a long way toward preventing the abuse of the San Diego pension fund and Social Security. Had a system of personal accounts been in place in San Diego, it would have been near impossible for the trustees to underfund it. Since the funds would have gone into the personal accounts, the city employees who owned the accounts would have noticed if the trustees were not putting enough money in them. Any attempt to short the city employees and the trustees would have been run out of town on a rail.

It is the same with Social Security. With personal accounts, Congress would not have used the surplus all these years for pork-barrel projects and masked it with accounting gimmicks. Instead, the surplus would have gone into the personal accounts. Had members of Congress even thought of touching the surplus, the voters would have sent them packing.

There are many advantages to the ownership that would be provided by adding personal accounts to Social Security; among them we can now add increased prevention of abuse and fraud. If personal accounts had been in place in San Diego, chances are the pension fund would not be in the mess it is in today. Similarly, Congress would not have squandered the Social Security surpluses all these years. All the more reason to reform Social Security now.

[Moooooo]

A sound program that has saved millions of elderly people from living in poverty.

[TheresNoMoney]

A sound program that has saved millions of elderly people from living in poverty.

Exactly.

[Ben Meyers]

A sound program that has saved millions of elderly people from living in poverty.

Exactly.

I agree with the Dems here.

[A18]

A sound program that has saved millions of elderly people from living in poverty.

And forced millions of young people to live in poverty.

[Filuwaúrdjan]

It's a pensions system

[Shira]

Thank you FDR

[Jake]

Option one

[Blue Rectangle]

A sound program that has saved millions of elderly people from living in poverty.

If you really want to help the poor later in life, you shouldn't base benefits on contributions.

As a welfare program, Social Security is utter nonsense.  Those in the middle and high income brackets are having their money wasted with a low interest savings program, while those in the lower income brackets are having their desperately needed income taken in order to pay a tiny benefit later.  Thus, the poor are ensured to continue being poor when they retire.

As a pension program, Social Security also fails.  There is no savings (the "Trust Fund" is BS), just the transfer of money from the young to the old.

As an insurance program, Social Security is a terrible deal.  Only minor children or a surviving spouse can receive benefits.  This is because, unlike an IRA or whole life insurance, the "insured" owns zero equity in anything.  The "contributions" never go into an account; they are simply given to someone else in the form of benefits.

Americans can't agree on what SS is or what it should be, but the discussion is moot: SS doesn't do anything well.

Oh, and on top of all that, SS is a Ponzi Scheme that is fundamentally structured to go broke.

[opebo]

A sound program that has saved millions of elderly people from living in poverty.

If you really want to help the poor later in life, you shouldn't base benefits on contributions.

As a welfare program, Social Security is utter nonsense.  Those in the

Actually it isn't a welfare program, it is an insurance program.  I would prefer a highly redistributive welfare program, but that is not what FDR created.  And nickshepDEM is correct, the existing program has saved a huge percentage of the working-class from poverty, so far be it from me to criticize.

[A18]

Yeah, and he pointed out that no matter what you want it to be, it makes no sense.

What we should do is:
(A) flatten the payroll tax, and lower the rate in proportion;
(B) repeal the personal income tax, and replace it with a 10% personal consumption tax; and
(C) gradually privatize Social Security

[opebo]

Yeah, and he pointed out that no matter what you want it to be, it makes no sense.

What we should do is:
(A) flatten the payroll tax, and lower the rate in proportion;
(B) repeal the personal income tax, and replace it with a 10% personal consumption tax; and
(C) gradually privatize Social Security

Instead, I would prefer to remove the income cut off on the payroll tax.  Also of course the personal income tax should hav higher rates at the higher income levels - certainly over $200K/year. 70% sounds like a good rate to me.  And privatizing social security would remove the security of having a State program to fall back on in worst case scenarios.

[Moooooo]

SS doesn't do anything well.

Tell that grandma's and grandad's living on SS.  Id say it pays their bills and puts food on the table pretty well.

[opebo]

SS doesn't do anything well.

Tell that grandma's and grandad's living on SS.  Id say it pays their bills and puts food on the table pretty well.

Good point nickshepDEM, the thing about liberal social programs is that even if they don't 'do anything well', they do something.  In the laissez-faire society envisioned by Republicans, the great majority of people are gauranteed a life of poverty - just like in the 19th century.  Redistributive programs can be a big mess, but they're still so much better than the nothing the Right proposes, for the majority.

[A18]

Yes, it does force millions of young Americans to live in poverty to pay for older Americans, but it still doesn't serve well as a welfare program, because you're just taking away their money, and giving them sh**t for a return.

[opebo]

Yes, it does force millions of young Americans to live in poverty to pay for older Americans, but it still doesn't serve well as a welfare program, because you're just taking away their money, and giving them sh**t for a return.

No, they're forced to live in poverty by the fact that their wages are too low.

I do agree that the poor should pay a much lower rate of payroll tax than the rich, of course.  Perhaps none at all for the lowest.

[A18]

Their after-tax pay would be a lot higher without Social Security.

[David S]

After viewing some of Opebos posts from last year it seems there has been a huge transformation in his philosophy. I'm reminded of Newtion's alleged epiphany after being conked on the head by an apple. Although in Opebo's case I suspect it was something much more massive than an apple, possibly a Thai coconut.

[A18]

Possibly an oversized bowling ball, or to be more precise, about nine of them, one right after the other.

[opebo]

Two coconuts - the revelation of the Bush administration's anti-sex efforts in Southeast Asia, and the Missouri anti-gay vote.  I suddenly realized I was lying with the most disgusting sort of intolerant.

[Blue Rectangle]

SS doesn't do anything well.

Tell that grandma's and grandad's living on SS.  Id say it pays their bills and puts food on the table pretty well.

Good point nickshepDEM, the thing about liberal social programs is that even if they don't 'do anything well', they do something.  In the laissez-faire society envisioned by Republicans, the great majority of people are gauranteed a life of poverty - just like in the 19th century.  Redistributive programs can be a big mess, but they're still so much better than the nothing the Right proposes, for the majority.

^^^Strawman argument

First you argue that Republicans would prefer to give the poor nothing (not true), then you use that "fact" to prove that Social Security is better than nothing (unintentional damning with faint praise).

The poor would be far better off if we ended their payments into Social Security (a tax they certainly do not need) and replaced their retirement "benefits" with a simple welfare program.  Too many poor people in their late 60s or 70s have to secretly work to live because SS pays so little.

Nick:
You'd be hard pressed to find people who live OK on SS benefits alone: the poor haven't paid enough into SS to have a meaningful benefit, and middle income people have to rely on their own retirement savings to enjoy a decent retirement (they find themselves in near-poverty if they try to get by on SS alone).

[opebo]

SS doesn't do anything well.

Tell that grandma's and grandad's living on SS.  Id say it pays their bills and puts food on the table pretty well.

Good point nickshepDEM, the thing about liberal social programs is that even if they don't 'do anything well', they do something.  In the laissez-faire society envisioned by Republicans, the great majority of people are gauranteed a life of poverty - just like in the 19th century.  Redistributive programs can be a big mess, but they're still so much better than the nothing the Right proposes, for the majority.

^^^Strawman argument

First you argue that Republicans would prefer to give the poor nothing (not true), then you use that "fact" to prove that Social Security is better than nothing (unintentional damning with faint praise).

No, Republicans propose doing away with all such 'socialist' programs.  And we know that the great majority of people were poor prior to the creation of such programs by the Democrats.

You must be logged in to read this quote.

I agree!  Payment should be moved up the income heirarchy so that the lowest pay nothing, and benefits should be increased greatly.

But this is hardly an argument for the Right's proposal to end all redistributive or social insurance programs.

[Blue Rectangle]

You must be logged in to read this quote.

I agree!  Payment should be moved up the income heirarchy so that the lowest pay nothing, and benefits should be increased greatly.

But this is hardly an argument for the Right's proposal to end all redistributive or social insurance programs.

Social Security cannot be converted into a wealth redistribution program.  It is not funded through the general fund, but from "contributions" that the large majority of Americans from all political parties view as savings (i.e., "their" money).  In order to redistribute wealth, SS benefits would have to be drastically cut for high and middle income workers.  Only then would there be sufficient money coming into the system that would be available to raise benefits for the poor.  The problem is that: 1) no Democrat is crazy enough to suggest such a thing and 2) even if it were suggested, there's no way it would pass.

Social Security as wealth redistribution is a absolute non-starter.  If you want the poor to be able to retire, then ditch the whole thing and replace it with a welfare system that only covers those who actually need it.  Pay for it out of the general fund and end the FICA tax for everyone.

[opebo]

You must be logged in to read this quote.

I agree!  Payment should be moved up the income heirarchy so that the lowest pay nothing, and benefits should be increased greatly.

But this is hardly an argument for the Right's proposal to end all redistributive or social insurance programs.

Social Security cannot be converted into a wealth redistribution program.  It is not funded through the general fund, but from "contributions" that the large majority of Americans from all political parties view as savings (i.e., "their" money).  In order to redistribute wealth, SS benefits would have to be drastically cut for high and middle income workers.  Only then would there be sufficient money coming into the system that would be available to raise benefits for the poor.  The problem is that: 1) no Democrat is crazy enough to suggest such a thing and 2) even if it were suggested, there's no way it would pass.

Social Security as wealth redistribution is a absolute non-starter.  If you want the poor to be able to retire, then ditch the whole thing and replace it with a welfare system that only covers those who actually need it.  Pay for it out of the general fund and end the FICA tax for everyone.

I think I have a way around this - a supplemental program.  Keep SS as it is, but add another highly redistributive program as well.  We need more government programs anyway, so even though I'd rather just have a redistributive one, there's no harm in keeping the current one as well.