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Monday, May 02, 2005
Ignoring the Warning Lights of Social Security
Ignoring the Warning Lights of Social Security
It's inconceivable that the Democrats would be opposed to fixing Social Security. After all, it's one of their "flagship" government programs, like Welfare, Medicare and Medicaid. Perhaps they just don't want it fixed under a Republican President, since he would certainly get the credit. Maybe they don't want it fixed at all, since they count on votes from government dependents. Could they really be so petty? Could they really need to insure votes that badly? The answer to both questions, sadly, is yes.
Social Security is a pyramid scheme in which the government takes money from people currently working to pay off their promises to retirees. When the system was set up, the average lifespan was lower than the retirement age, so it seemed a safe bet that most people wouldn't collect for long, if at all. Times change, however. People are living longer than they used to, and like all pyramid schemes, the system is going to break down. It's only a matter of time.
Within the next decade or so, the Social Security program will begin paying out more money than it takes in. Even the Obstructo-crats in the Democratic party agree on this -- you can't hide from mathematics. From that point forward, the government will be forced to reduce benefits, raise taxes, and borrow money in order to make up the shortfall, which will continue to grow every year. Some forty to fifty years after that, the system will be entirely bankrupt if left alone. Sixty years is not that long a time -- if you have a baby this year, Social Security will be dead just about the time he or she begins to draw benefits. Now, the idea of raising taxes on working people to pay out on promises made to a growing group of retirees is just fine with Democrats. It will guarantee an ever-expanding pool of citizens dependent on the government for sustenance. Such a voting block can always be counted on to vote for the party that promises to raise taxes even further and pass the money on to them.
The problem is that the higher taxes are raised, the less money working people have left over to put into the economy, and the less money businesses have with which to expand and hire more workers. The only industry that benefits from higher taxes is government bureaucracy, already bloated to the point of immobility.
Many Democrats certainly said that they wanted to fix Social Security in the past. Yet when they were in power, they did absolutely nothing about it but talk. In 1998, President Clinton said when submitting his 1999 budget, "We have a great opportunity now to take action now to avert a crisis in the Social Security system." Unfortunately, no such action was taken. Clinton also said, "You can see that in 1960, which wasn't so long ago, there were over five people working for every person drawing Social Security. In 1997, last year, there were over three people -- 3.3 people -- working for every person drawing. But by 2030, because of the increasing average age, if present birthrates and immigration rates and retirement rates continue, there will be only two people working for every person drawing Social Security." So what has changed between 1998 and 2005? Only the party affiliation of the President.
President Bush recently held a prime-time press conference to discuss Social Security. Echoing the same argument Clinton made, Bush said, "In 1950, there were 16 workers for every beneficiary; today there are 3.3 workers for every beneficiary. Soon there will be two workers for every beneficiary." He even proposed an idea that should be dear to the hearts of Democrats -- making the payout system progressive, in which "benefits for low-income workers will grow faster than benefits for people who are better off." Perhaps most telling, Bush said, "I'm willing to listen to any good idea from either party." The problem is that no good ideas are forthcoming, from either party -- not even any bad ones. Just a lot of complaints about "fearmongering" from the exact same people who warned of the exact same crisis only a few years ago. Does that make sense to you?
The longer we wait to do something about Social Security, the more expensive it will be. The effects will hit the retirees dependent on it harder, and aggressive tax hikes on the workers will hurt more. That may not bother the politicians, who are exempt from the Social Security system, but anyone who pays taxes or expects to collect Social Security should want a little preventive maintenance at the very least.
The time to stop a train wreck is when you see the warning lights ahead.
Posted at Monday, May 02, 2005 by CavalierX
 |  |  | Jamie May 2, 2005 07:26 PM PDT
The Federal Employee Retirement System (FERS) has something similar to what is being proposed in Bush's reform plan for Social Security. It is the "Thrift Savings Plan" - an investment account. When TSP was first started up, federal employees who were under the old CSRS plan were given the option of staying in the old plan or converting into TSP. New hires in the Federal Government are not allowed an option and are all automatically included in FERS. The people who stayed with CSRS can contribute into a TSP account and it acts as a traditional IRA for those folks.
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  |  |  | Jamie May 2, 2005 07:33 PM PDT
Under TSP the funds in which you can invest are
1) Fixed income funds (G and F).
or
2) Stock Index Funds (C, S and I).
Civil Servants can invest in any combination of the funds by allocating a percentage of each.
This is the same plan that members of Congress are under. If its good enough for them, why won't they allow the average citizen to have the same advantages? |  |
  |  |  | Jamie May 2, 2005 07:37 PM PDT
Thomas Sowell wrote a very interesting column about this issue back in October 2001: http://www.capmag.com/article.asp?id=1181
And I found this info on the internet:
===In reality, the Social Security Trust Fund does not hold any marketable assets to secure taxpayers' contributions. The Social Security Trust Fund "invests" surplus tax revenue in non-negotiable United States Treasury bonds and U.S. securities backed "by the full faith and credit of the government." In the case that these securities must be redeemed because future tax receipts are insufficient to meet Social Security obligations, the federal government will have to use other funds, such as those from tax receipts, additional debt, and/or from reducing other government expenditures.--- |  |
  |  |  | Jamie May 2, 2005 07:39 PM PDT
Our military also have TSP accounts. To read about TSP, go here:
http://www.tsp.gov/features/index.html
Remember - this plan is what the Social Security "personal accounts" is modeled after. |  |
  |  |  | Jamie May 2, 2005 07:45 PM PDT
One last comment and then I will go -
The AARP is vehemently against the personal accounts. Ever wondered WHY? Could it be that if people have the option to invest in Soc Security personal accounts when they are young, they would be less likely to invest in AARP's INVESTMENTS when they turn 50? Yes, AARP offers its own Investment Services and the investments sound remarkably similar to what is being proposed under Social Security!!!
Go here and see for yourself -
http://tinyurl.com/38llb
|  |
  |  |  | Virtus May 6, 2005 02:13 AM PDT
Can we just get rid of Social Security entirely?
Not that I don't LOVE investing in my own retirement plan AND investing in the pathetic government retirement plan at the same time...but uh...yeah...I don't love that at all.
Why should I be forced to pay into a substandard retirement plan, when there are so many private retirement investments that pay off at a much higher rate of return?
I say we take social security, do away with it, then all the people who need it, we just call it what it is, and give them welfare benefits. |  |
  |  |  | Joseph (OK Democrat) May 6, 2005 10:33 AM PDT
Good post! I don't think Democrats oppose SS reform. We oppose Bush's private accounts scheme, which is designed to play our savings right into the hands of his big-business allies on Wall Street. For anyone who forgot, the Stock Market crash is the reason SS was began in teh first place. As far as shoring up SS, has any Republican even considered that the reason Democrats are not out promoting ideas to reform SS is because Bush has made it clear his accounts scheme is non-negotiable? He refuses to drop it but keeps calling Democrats to "come to the negptiating table." Why bother to bring your ideas to the table when the President doesn't intend to listen anyway? Has any Republican even considered this fact? |  |
  |  |  | JM May 6, 2005 01:30 PM PDT
First of all, allowing people to put some of their SS money into accounts that cannot be stolen by the government is a great idea. The stock market always increases over time. The money will not be invested in individual stocks, so that's somewhat of a strawman argument. Second, I haven't heard even a ghost of an idea from the Democrats. If they have all these great ideas for revamping Social Security, then where were they during the Clinton years? And why aren't they all over the media today showing how their plans are so much better? Let's hear these grand plans! |  |
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