Skip to comments.Government-Run Social Security Is Bad News for Blacks and other Minorities
Posted on 01/05/2014 6:35:47 AM PST by Kaslin
America desperately needs genuine entitlement reform to avoid a Greek-style fiscal future.
The biggest problems are the health entitlements such as Medicare, Medicaid, and Obamacare, but Social Security also has a huge long-run fiscal shortfall.
Thats why Im a big fan of the very successful reforms in places such as Chile and Australia, where personal accounts are producing big benefits for workers. These systems also boost national economies since they generate higher savings rather than added unfunded liabilities.
And Im very happy that we now have more than 30 nations with personal accounts, even tiny little jurisdictions such as the Faroe Islands.
But many statists object to reform, presumably because they dont want workers to become capitalists. They apparently prefer to make people dependent on government.
Not all leftists take that narrow and cramped approach, however. Some academics at Boston College, for instance, produced some research showing some big benefits from Australias private Social Security system.
And new we have some remarkable admissions about how minorities are net losers from Social Security in a study from the left-leaning Urban Institute.
We use historical and projected data from 1970 to 2040 to measure the ratio of old age, survivors, and disability insurance (OASDI) benefits received to taxes paid by members of each race or ethnicity each year. This measure captures the transfers that occur in a given year from current workers to current beneficiaries of each group. We then examine benefit-tax ratios for each race or ethnicity into the future to determine how these redistributions will play out in the coming years. Our conclusion: When considered across many decadeshistorically, currently, and in the near futureSocial Security redistributes from Hispanics, blacks, and other people of color to whites.
Why does the program have this perverse form of redistribution?
On average, blacks are more likely to be low income and short lived and are less likely to marry than whites. Given this, one would expect forced annuitization and auxiliary benefits related to marriage and divorce to redistribute from blacks to whites.
And thats exactly what the research found.
whites have clearly received a disproportionate share of benefits relative to the taxes that they pay in at a point in time. Their benefit-to-tax ratio has been higher than that of blacks, Hispanics, and other ethnic groups for as long as the system has existed, while projections continue that trend at least for decades to come.
Heres a chart from the study showing how different races have fared in terms of taxes paid and benefits received.
In other words, if folks on the left really cared about minorities, they would be among the biggest advocates of genuine reform.
By the way, its also worth noting that Social Security is a bad deal for everyone. The Urban Institute study simply investigates who loses the most.
And the system is getting worse for every new generation.
Recent studies have also documented how different generations are treated within Social Security, with succeeding generations achieving successively lower returns on their contributions.
This helps explain why the evidence shows personal retirement accounts are superior even for folks who would have retired at the peak of the recent financial crisis.
Heres my video on why we should replace the bankrupt tax-and-transfer Social Security system with personal retirement accounts.
P.S. You can enjoy some Social Security cartoons here, here, and here. And we also have a Social Security joke, though its not overly funny when you realize its a depiction of reality.
P.P.S. Thanks to Social Security, I made a $16 trillion mistake in a TV debate. Fortunately, it didnt really change the outcome since I was understating the fiscal shortfall of the current system.
As if an automatic communist governance was not tyranical, gay and inherently unilateralist racist and prosecutorial...
People never learn.welcome to militarization of society and police. You all are now incorporated, gay mariage contract style.
The Social Security system can not sustain the corrupt political system that uses it for a slush fund. Put back the $13.4T and it will survive greatly.
Good. They helped put this bastard in office, just like the juveniles who swallowed his bull crap.
Medicare, Medicaid, Welfare, Social Security, and Obamacare all need to be abolished.
The SS joke about the dead donkey reminds me of a firm I know that does not bill by the hour but takes a substantial retainer and considers it a flat fee. They do very little work. Occasionally a client will complain and then they refund the retainer. They claim to make a lot of money,
the bastard is in office because too many republicans simply refused to vote!
That was because the GOP elite gave us a candidate 70% of us didnt even want, let alone 100% of our opponents
“Frontrunner” Mitt was hailed as the leader from day 1 and they just systematically destroyed anyone else who wON primaries against him.
If you recall, he LOST every primary in the beginning. AND if you consider he never got over 30% he LOST every primary.
70% of the GOP voters wanted someone else- but it was divided among too many. The GOP should vote and vote again until someone achieves 50%
The answer to solving the problems could not be more simple.
First TERM LIMITS.
Next-Mandatory health savings accounts starting when first employment begins
Finally-Private SS accounts in the name of the citizen with all SS contributions going in the account. Since it is owned by the individual he passes it along to his family and the government gets squat.
What is lacking is not the solution to these problems but finding politicians with the stones to do anything other than figure ways to get themselves re elected. Term limits will solve that problem and free them up to MAYBE do the right thing.
“Medicare, Medicaid, Welfare, Social Security, and Obamacare all need to be abolished.”
I turn 63 this year, and I have no problem with Medicaid, Welfare, and even Medicare being abolished (though I have paid into these programs pretty much my entire working life: I was 16 when such taxes started being taken out of my paycheck).
However, I am adamantly opposed to getting stiffed on Social Security. Hell, I’d be happy to just get back, in cash, the full amount I have paid into the f***ing system since I was 16 (which is well into the six figures), and I won’t even demand any interest. I mean, I’d be willing to forego what amounts to a lifetime annuity, which — if I live long enough — would pay out more than I put in. Is that okay with you?
Great, you didn’t like the candidate so you in effect took your ball and went home....right?
So how are you feeling about the winner of the election? Tell us all how you think we are better off with the disaster in the WH than we would have been with Romney, as imperfect as he is to all of us here?
If you put into SS “well into 6 figures” and expect to get it back, think again. If you collect at age 65 about $25,000 annually and live to be about 83 you will get back $425,000 which is not imo “well into 6 figures.
I do agree private accounts are the way to go.
Why is it that women and minorities are always incapable of taking care of themselves?
As far as women, let’s not forget that the norm for centuries was for women to stay home and raise the children and take care of the home. Men were the bread-winners. This was the norm until 60’s....then women started to work outside the home..resulting in two income families..
Then we have Men, who left their wives, who had no “skills”....leaving them to find babysitters to care of their children so they could go and get a job to provide for themselves. Fast forward, you have millions of single women with children from men who don’t pay child support or the women refuse to name the father of their children so they can collect Medicaid. If you name the father, Medicaid attempts to collect from the Fathers...
It is now the cool norm to be single and pregnant...
The Feministas are now rapant in our country....replacing the white working male who now is a metrosexual who stays at home with the kids....
I am thinking of retiring this year, I turn 55 and an access my 403b without penalty because of IRS rule that in the year you turn 55 or after and are eligible to retire from your employer you won’t be penalized for early withdrawal.
I would take a lump sum benefit. I am terrified the government will seize 401k’s, 403b’s, etc and replace it with a monthly benefit (which Dems have discussed)...
Any one else do this? pro’s, con’s?
Where did you get the $13.4 T from?
Even if the SSTF contained cash instead of $2.4 trillion in interest bearing, non-market T-bills, SS would still go broke. It is not sustainable from an actuarial standpoint. You must either cut benefits or increase taxes or some combination thereof to keep it going.
SS is a pay as you go system. Today's workers pay for today's retirees. SS has been running in the red since 2010.
Source: CBO Combined OASDI Trust Funds; January 2011 Baseline 26 Jan 2011.
Note: See Primary Surplus line (which is negative, indicating a deficit)
A radio talk show on KOA I think said it. JFK was the first to break the piggy bank and remove monies and leave an IOU. When all the IOUs are added up it comes to $13.4T.
you are correct! which brings us to how do we stop that from happening again ...the press dictating who we should vote for
You made my point. Just give me back what I put into it and I’ll call it even.
I, too, think private accounts are the way to. But don’t stiff those of us who have paid into SS our entire working lives, and just when we get to see some of it, take it away from us. Hence, my proposition to just give me back what I paid into it, and not stiff me, and I’ll call it even.
This is another quick source to the IOUs but not the total. Newt Gingrich said a couple times on radio that he hated it each year when CONgress spent the “surplus”.
When I say abolished it’s not a right now type of thing except welfare. You need to wean folks off.
SS could have worked if implemented and run by competent people vice the government. Hell it’s a 100% return on investment, you pay 6.2%, employer matches 6.2% and when you decide to retire the government should hand you a tax free check in the total amount. Do what you want with it but when it’s gone you’re on your own.
Tell them to stay in school and work at it...and get a damn job. And tell Mommy to get a job, too.
Absolutely right...And Bubba with his balanced budget depended on the WHOLE of the fund available.
Here is the way SS works. All of the SS revenue collected thru the payroll tax is converted to T-bills, the benefits paid out, and the "surplus" is retained in the SSTF. We stopped running a surplus in 2010. These T-bills carry the full faith and credit of the USG to honor them, just like the T-bills issued to the Chinese or any other holder of our debt. Now that SS is no longer running a "surplus," the shortfall is made up to pay benefits by redeeming T-bills thru the General Fund. Of course, we borrow 40 cents out of every dollar, so we must borrow money to redeem the SS T-bills.
The T-bills in the SSTF earn interest. The SSTF is included in our $17.3 trillion national debt and held under "Intra-governmental Holdings" just like the other government trust funds (HI Trust Fund for Medicare Part A), the federal employee pension fund, etc.
If you look at our current national debt, 4,981,449,585,880.73 are held in Intra-governmental Holdings as distinguished from the publicly held debt Intragovernmental Holdings are Government Account Series securities held by Government trust funds, revolving funds, and special funds; and Federal Financing Bank securities. A small amount of marketable securities are held by government accounts.
According to the 2013 SS Trustee's report, the SSTF holds $2,609.7 trillion. There is no $13.4 trillion in the SSTF.
A looming problem is that the SS DI (Disability) Trust Fund will exhaust its T-bills in 2016 and will have to reduce benefits unless more money is pumped into the Trust fund. From the Trustees' report.
"Social Securitys Disability Insurance (DI) program satisfies neither the Trustees long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 85 percent at the beginning of 2013, and the Trustees project trust fund depletion in 2016, the same year projected in the last Trustees Report. DI cost has exceeded non-interest income since 2005, and the trust fund ratio has declined since peaking in 2003. While legislation is needed to address all of Social Securitys financial imbalances, the need has become most urgent with respect to the programs DI component. Lawmakers need to act soon to avoid reduced payments to DI beneficiaries three years from now." 4,981,449,585,880.73
You’re right; SS could have worked had it been implemented and run by competent people. The problem is that it was implemented by and is being run by the government, which does not enjoy a stellar track record of competency.
And I fully agree with you that there should NOT be and never should have been an annuity-style system. It should have been set up to pay the retiring employee, in a lump sum, what the employee and the employer paid into it.
The way it WAS set up, and was and is administered, is a recipe for disaster.
I really don’t trust what they say they are doing or what they are supposed to be doing. The system is so corrupt and unreliable.
It is not a matter of trust, just the clear, obvious facts. SS and Medicare are unsustainable. They will bankrupt the country unless they are reformed.
On the surface, that's all well and good, but any sane person who reads world news and news here in the country, can see that once these 'private' plans with big benefits start really making a difference, government with its inherent drive to pander to worthless nonproducers will confiscate that wealth. It has already happened in South America - it will happen here.
Of course you would.
But your proposal is incomplete. How do you suggest that the government get the cash to pay you? Tax the rich? Tax the poor? Print the money? Borrow the money from China?
The money you paid in HAS BEEN SPENT, along with almost 20 trillion more dollars. The money you paid in was spent by recipients many if not most of whom are now DEAD.
The money you might expect to receive in the future is part of what some have estimated to be in excess of 100 trillion dollars that would be required to satisfy all of the "entitlements".
The only real decision remaining is whether YOU end up paying for this horrendously irrational redistribution of wealth or whether that burden is shifted to future generations.
This is like the joke where God announces, to the major media outlets, he is going to destroy the world.
The Wall Stret Journal’s headline is “World to end in 5 days, stocks mixed.”
The New York Times headline “World to end in 5 days, Women and minorities hardest hit.”
Now social security is not fair to blacks and hispanics. END THE DAMNED PROGRAM THEN!!! It’s probably unfair to women and children too.
I understand that the money I paid into the system has already been spent. Hence my offer to get it refunded; meaning, I know it will never happen. So, if I have to get it back in dribs and drabs, that’s what I’ll have to do.
You must be young (and I don’t say that as a pejorative); thus, I can understand your anger of having to pay into something that might not be around for you when you get to my age. Well, look at it this way: You put in X, and I put in X + Y. If you lost your X, and I lost my X, would you begrudge me my Y?
Nope. Sixty-five, on Medicare and collecting SS.
Any anger I have is at progressives who built this monster. You're welcome to whatever the system will provide but neither you nor I are entitled to anything.
To put it in your terms, I put in X, Y, and Z. Whatever I get back will be in inflated dollars with much less purchasing power than if I had invested the contributions made on my behalf.
I find myself somewhat surprised that the system has lasted this long. I lived my life with no expectation of a return at all. Every dollar is an unexpected windfall that helps to preserve my modest savings.
I support an immediate end to COLA increases to be replaced by a reduction of benefits of 5% of the benefit amount each year for the next twenty years. This provides a period of adjustment for those who were foolish enough to count on the government while quickly decreasing the load on future taxpayers. Contributions to Social Security should be reduced as soon as the cash flow is sufficient to pay the remaining benefits.
To those who suggest that my plan is tailored to benefit me, I also support immediate cessation of both benefits and contributions. Anything is better than accelerating toward bankruptcy.
What I will definitely NOT support is converting the program into a "need-based" welfare program. We have enough of those already and the only "need" I can see is for people to live below their means and put money aside for their own welfare.
Government-run ANYTHING is bad news for EVERYONE.
Ah, I see.
So, you’re getting yours, but the hell with everyone else?
You’re 65 (I turn 63 this year). Thus, you chose to collect SS early, probably fearing that if you waited until your full retirement age of 66 there would be nothing in the pot.
Yup, you made sure you’d get yours.
I’m curious: Did you start collecting SS before you turned 65? I bet you did.
Yes. What's your intention?
Do you think it better that the system becomes bankrupt sooner or later?
Are you waiting so that you will get a higher benefit?
How do you propose that I help "everyone else"? How much of what I was forced to contribute should I sacrifice for "everyone else". What have they done for me aside from forcing me to survive in their socialist paradise?
I knew it! You made damn sure you’d get your piece of the pie, even if you had to grab it early and take a cut, just to make sure you got yours. And you say you’d like to see it abolished? Funny, if you really felt that way you would have foregone collecting ANY SS, and you would not have enrolled in Medicare.
You say you are against “entitlements” but you were so eager to avail yourself of entitlements that you rushed to the head of the pack to feed at the trough (i.e., you started collecting early so you’d be assured of getting something).
If you really meant what you said about entitlements you’d contact the SSA today and tell them you voluntarily waive your SS benefits. Somehow, I doubt you’d do that.
You ask what is my intention? My intention is to continue working, continue saving, and continue providing for my family. My wife has a terminal illness, and I don’t expect the American taxpayer to pay for her care (though I see you have no problem with having the American taxpayer pay for yours). Yeah, you can elect to waive Medicare benefits, too; but, as with SS, I doubt you will.
Don’t you see your own hypocrisy?
“How do you propose that I help ‘everyone else’? How much of what I was forced to contribute should I sacrifice for “everyone else”. What have they done for me aside from forcing me to survive in their socialist paradise?”
And wasn’t it you who criticized me for saying I’d gladly accept a refund of just what I paid into the system, without interest, and call it even?
Oh c'mon! ( sigh!) Should a person not see the Grand Canyon when he believes that these national parks should be returned to the states? Give me a break! Ditto for Social Security.
Here's another example: I think we should abolish the IRS. The fed should send out 50 bills to each state and the size of the bill should be based on the latest census. Gee! Should I stop paying my yearly tax to the IRS?
Many conservatives feel it would be best to begin privatizing all of the government's K-12 single-payer and socialist-entitlement schools. Are they monsters because their kids go to these schools? I don't think so.
Well...Guess what? I think Social Security should be abolished but I, too, took SS as soon as I could just to get back the money I paid it.
I am with you! And...No! You are not a hypocrite.
If you call it "criticism" to point out that you are not entitled to anything, regardless of what you paid in, then, yes, I criticized you. Not for asking for the money, but for suggesting that you were deserving of it.
Did I misunderstand you? Or do you claim that you deserve a refund of money that the government spent years ago?
If you were to get a refund today the money would have to be borrowed and paid back by future generations.
I would even support having the government print money for the purpose of buying off future recipients at a heavily discounted rate. I'm not sure what the discount would have to be in order to help shut down the system but it might be something like ten cents on the dollar or less.
I want what I paid into the system.
Yet, you were so eager to get yours you rushed to cash in early, so that you would be assured of getting yours.
I just want what you wanted — and got. I paid into it, and I want what I paid into it. You paid into it, and you wanted whst you paid into it.
So, it’s okay for you, bnut not for me?
Does the phrase “Paris, 1794” mean anything to you?
I understand that. I want what I paid in also.
But I am not entitled to ANYTHING. The money I paid in was spent long ago and was replaced by promises by the government to pay in the future. The whole system was a fraud from its first day and I hope it crashes sooner rather than later.
Based on the fraudulent nature of this coercive government theft I feel no obligation to sacrifice anything further on behalf of anyone else.
She is a crazy woman...did you know Pelosi’s husband picks out her clothes? REALLY! Lol...
“Based on the fraudulent nature of this coercive government theft I feel no obligation to sacrifice anything further on behalf of anyone else.”
Well, I agree with you on that.