Skip to comments.Australia vs. USA: Two Charts that Tell You Everything You Need to Know about Social Security Reform
Posted on 05/03/2012 9:51:32 AM PDT by SeekAndFind
There are two serious problems with Americas Social Security system. Almost everyone knows about the first problem, which is that the system is bankrupt, with huge unfunded liabilities of about $30 trillion.
The other crisis is that the system gives workers a lousy level of retirement income compared to the amount of taxes they pay during their working years. Younger workers are particularly disadvantaged, as are African-Americans because of lower life expectancy.
These are critical issues, but perhaps looking at a couple of charts is the best way to illustrate why the Social Security system is inadequate.
Lets start by looking at some numbers from Australia, where workers set aside 9 percent of their income in personal retirement accounts.
This system, which was made universal by the Labor Party beginning in the 1980s, has turned every Australian worker into a capitalist and generated private wealth of nearly 100 percent of GDP. Heres a chart, based on data from the Australian Prudential Regulation Authority.
Now lets look at one of the key numbers generated by Americas tax-and-transfer entitlement system. Heres a chart showing the projected annual cash-flow deficits for the Social Security system, based on the just-released Trustees Report.
By the way, the chart shows inflation-adjusted 2012 dollars. The numbers would look far worse if I used the nominal numbers.
The two charts arent analogous, of course, but thats because theres nothing to compare. The Social Security system has no savings. Indeed, it discourages people from setting aside income.
And Australias superannuation system doesnt have anything akin to Americas unfunded liabilities. The closest thing to an analogy would be the safety net provision guaranteeing a basic pension to people with limited savings (presumably because of a spotty employment record).
So now ask yourself whether Australia should copy America or America should copy Australia? Seems like a no-brainer.
Bush tried to push privatization of Social Security and the majority didn’t want to hear that.
They did a terrible job selling it. He ran with it as platform issue starting in 2000, and it was good idea. They just let it get demagogued to death. It is a shame, and probably will prevent any sort of real solutions to be presented until it collapses.
Indeed and the MSM went nuts they made up any story they could to prevent it from happening.
Again Bush was right and the socialists eat more crow.
The current crop of republican’ts will never, ever reform SS or even take a coherent, solid stand on the issue. It’s just too scary for them and besides, what if they lost their jobs over it?
At the very least, they wouldn't be threatened with having to live on the criminally low ROI of Social Security. They are too good for that sort of thing...
At the very least, they wouldn't be threatened with having to live on the criminally low ROI of Social Security. They are too important for that sort of treatment...
Meanwhile in Australia, the socialist Labor/Greens government is working hard to help “the rich” “pay their fair share” by imposing additional taxes on “excess” superannuation contributions. This means the theft of 46.5% of amounts greater than $25,000 deposited in a single year, lowering the total amount that can be withdrawn at so-called concessional tax rates after retirement and raising the tax rates, and so on. They already tax earnings within the accounts and from time to time raise the age at which people may withdraw their retirement savings (their own money).
Socialists gotta loot. Eventually they will just steal the whole lot: the danger of any government scheme.