Posted on 08/27/2002 3:21:15 PM PDT by BlackJack
Aug. 27 — More than 40 million Americans are depending on a little-known federal agency to protect their pensions if recession-wracked companies go belly up and can’t pay retirees what they’ve been promised. The Pension Benefit Guarantee Corporation is the backstop in the event firms can’t pay benefits to retirees. With many corporations sure to report under-funded pension plans by the end of this year, the PBGC is looming larger in importance as the protector of workers and retirees.
Apparently, you would not be satisfied to change the investment of the surplus to reflect your investment preferences while keeping the structure and goals of SS in tact. How, then, will your system be enforced? What about people who don't make enough to fund their retirement?(Your assumption that everyone will manage to earn sufficient returns is naive). The entire monetary system has blown up in Russia, Malaysia, Thailand, Argentina, and Brazil, but I guess you believe it can't happen here.
What if, they will need your employer's contribution plus half of your contribution for the next 40 years before they can start lowering it? Do you still favor the program? How about if it requires 3/4 of your contribution?
I don't see the government telling you how to safely invest your money is nearly as intrusive as them taking all your money with a promise that (wink-wink) it'll be here when you need it.
The fact that so many people have been hoodwinked into thinking SS is at risk of not being able to pay is frightening to me. Apparently, people who hadn't even given the issue a second thought, were sucked in after hearing (for the umpteeth time) in the establishment press that "more people believe in flying saucers than believe SS will be there for them." There is more reason to believe the dollar and all investments in dollars will become worthless (all while the US government finds some way to honor a commitment to pensioners in whatever new system comes in) than to believe the monetary system doesn't collapse but SS does.
If we do nothing to add a private investment portion to SS, all these changes will occur.
Your "suggestion" does not modify SS. It rejects it (after continuing it for people over 40 or some such cutoff). You replace SS with an individual retirement plan. Now, rather than a system that directs money from workers to non-workers you have people saving money for their own retirement and passing it to their heirs if they don't need it. Rather than a new system to achieve an old goal you've scrapped a system with one goal and instituted another system with an entirely different goal. If you said that's what you want to do, I'd just say I disagree completely. But, instead, you keep putting it forth as a new approach to the same issue.
Yes, I reject Social Security, it is a shitty deal for people my age and younger and will only get worse. Excuse for being interested in getting a good return on the 15.3% of my salary that gets sucked into this system evey paycheck.
I think the issue is how do we help people retire with some security. You seem to think that government does a good job, I disagree.
Now, rather than a system that directs money from workers to non-workers you have people saving money for their own retirement and passing it to their heirs if they don't need it.
You make it sound like this is a bad idea. What's wrong with making people more secure in retirement and less dependent on government?
Why should workers support non-workers anyway? Sounds like welfare or socialism. Why don't I quit my job and you can support me?
Investing the surplus would be a good start, but since the structure and goals of SS are mathematically suspect ( it's a pyramid scheme ) why prolong its existence?
My system will be enforced the same way it's enforced now, the money gets taken out of your paycheck, sounds simple, doesn't it? People who don't make enough money will always be there, that's not a good enough reason to screw the rest of us.
Without this huge unfunded liability out there, we can more easily provide for those people who don't have enough when they retire, just as we provide for them now. You doubt the returns of the private sector, I doubt the government. Who's being more naive? The less we give to the government, the lower the chance of the monetary system blowing up.
What if, they will need your employer's contribution plus half of your contribution for the next 40 years before they can start lowering it? Do you still favor the program? How about if it requires 3/4 of your contribution?
As I explained in my previous posts, I expect it to run a deficit until the number of recipients drops. Deficits early, surplus later. If we allow the government to take any of my contributions, they'll just waste it. I say let the government borrow at 4-6% and I'll make my higher returns.
People, corporations, governments borrow money because they think they can earn a higher return than the interest they will pay. I can't believe you don't think that private returns would be higher than treasury rates.
Well, if you believe that the surplus is sitting in a lockbox until you retire, then you'll be better off waiting for the UFO's to fund your retirement. You must not know the true demographic disaster we're heading for.
You say we need to reduce benefits and raise taxes and make the system needs based. How much would we need to raise taxes and cut benefits to make the system balance? Why not just raise taxes to 100% and let the government take care of all of our needs? It's naive to think the private sector can take care of our needs, isn't it?
SS is not an investment; it transfers money from current workers to retirees. You have no way of evaluating the “shittiness” of the deal without making a bunch of assumptions about the next 50 years. Every person, so far, that has lived to the life expectancy and beyond has gotten a sweet deal from SS (although, again, to evaluate it as a return, fundamentally misunderstands the system and its goals. Even while you acknowledge that it is not a retirement plan, you continually evaluate it as such and, therefore, see your “IRA” replacement as a viable option.)
I think the issue is how do we help people retire with some security. You seem to think that government does a good job, I disagree.
Yes, the current system does that job and your recommended replacement would not.
Deuce: Now, rather than a system that directs money from workers to non-workers you have people saving money for their own retirement and passing it to their heirs if they don't need it.
Todd: You make it sound like this is a bad idea.
As a replacement for SS it is, indeed, a bad idea. It DOES NOT transfer money from producers to retirees, but sets up individual retirement plans. Furthermore, your actual plan requires rose-colored glasses---first to believe we can pay current benefits to all people over 40, and, secondly to believe no one will fail to earn satisfactory returns from this process.
This is in total conflict with everything you've said so far. (e.g. Taking care of all 40+, plus implementation of a forced government program that you believe will eradicate income needs of the elderly).
Which represents your true position?
Your suggestion has the EXACT same recipients for the next 27 years. If the system will undergo strains in the future, none will be worse than this upcoming retirement of baby boomers. You have the system operating at half funding. Running a deficit indeed!
If we allow the government to take any of my contributions, they'll just waste it. I say let the government borrow at 4-6% and I'll make my higher returns.
Simplistic assumptions like this underlie your belief in your proposal.
I know EXACTLY what is sitting in the lockbox: un-backed, unspecified, but interest bearing IOUs from the general fund. The current paper/electronic fiat dollar that underlies our entire economy is the scary thing. (not any particular program like SS, as you seem to think.)
You say we need to reduce benefits and raise taxes and make the system needs based. How much would we need to raise taxes and cut benefits to make the system balance?
1. For every dollar a person earns in income from any source above, say $20,000 they lose 20 cents on their SS. Therefore, someone who earns 20,000 keeps entire SS benefit; someone who earns $40,000 loses $4,000 of benefits or some such schedule.
2. As longevity increases, raise the retirement age to 68, 69, 70, 71 etc.
3. Raise taxes if necessary beyond this and/or make bigger changes in 1 & 2 above.
This is in total conflict with everything you've said so far. (e.g. Taking care of all 40+, plus implementation of a forced government program that you believe will eradicate income needs of the elderly).
You're the one who said workers should support non-workers. I'm just taking that to its absurd extreme.
Which represents your true position?
My true position is that the Ponzi scheme can't continue forever. I'm curious, do you believe raising taxes hurts the economy and that lowering them helps the economy?
Isn't Social Security a forced government program?
It clearly depends on the situation. Furthermore, those who answers "yes" OR "no" are being overly simplistic.
How about this one?
Which of the following scenarios would be preferable for the U.S. economy?
9 trillion dollar GDP, federal spending 22% of GDP, 250 billion dollar surplus.
10 trillion dollar GDP, federal spending 20% of GDP, 0 surplus.
11 trillion dollar GDP, federal spending 18% of GDP, 250 billion dollar deficit.
10 trillion dollar GDP, federal spending 20% of GDP, 0 surplus.
11 trillion dollar GDP, federal spending 18% of GDP, 250 billion dollar deficit.
Your choices implicitly assume that reduced government leads to greater GDP. This is a simplistic assumption, which seems primarily designed to spare supply siders the need to think about complex issues since cut taxes automatically becomes the obvious solution to all problems. I will, however, ACCEPT this Laffable assumption in order to demonstrate to you that even if it were correct the issues are far more complex that your seem to think, but first let me add two more choices for you to choose from: :
14 trillion dollar GDP, federal spending 12% of GDP, 1 trillion dollar deficit;
16 trillion dollar GDP, federal spending 10% of GDP, 1.6 trillion deficit;
I guess you prefer the latter case, where taxes are zero (entire Federal budget covered by borrowing). Now lets further analyze your choices as if they represented reality:
Case 1: $9T=GDP; $1.98T=spending; $.25T= surplus; therefore, $2.23T=taxes:
Case 2: $10T=GDP; $2T=spending; no surplus; therefore, $2T=taxes
Case 3: $11T==GDP; $1.98T=spending; $.25T=deficit; therefore, $1.73T=taxes
Certainly without looking further case 3 looks best. It says, in effect, that if we cut taxes by $.5T the government stays the same size, but the economy "grows" by $2T. Now let me complicate it for you (I am not putting this forth as a realistic assessment; I'm just trying to turn on a lightbulb for you).
If the government stays the same size with a bigger economy and a bigger portion of its budget going to debt service as your example implies, some other services have to be cut. Let's assume, they eliminate everything related to evironmental protection controls. Further assume that $1.6T of $2T "growth" was due to medical expenditures due to the unhealthy environment and/or privately expended money to clean up polluted rivers streams and drinking water and the other $.4T was due to the inflationary impact. Which would you prefer under that scenario?
No, these 3 choices are unrelated to each other. I just wanted to see if you agree that the ability of the gov to pay Soc Sec in the coming years, when payments exceeds receipts, will depend on the size of the economy. Also that deficits need to be measured versus the size of the economy.
14 trillion dollar GDP, federal spending 12% of GDP, 1 trillion dollar deficit;
16 trillion dollar GDP, federal spending 10% of GDP, 1.6 trillion deficit;
I would prefer the latter example because the government controls a smaller percentage of a larger GDP. The deficit could become worrisome, but only if the growth of the economy was slower than the growth of the deficit. With a zero percent tax rate, I think we'd grow pretty fast.
Just because I think taxes are too high and the government wastes too much, that doesn't mean I like dirty air and water.
With a zero percent tax rate, government bonds have no value, the dollar has no value, no government exists, capital flows elsewhere, and the economy becomes non-existent. Now you are taking "voodoo economics" to ridiculous extremes.
No, it would depend on the government's capacity to borrow which you (incorrectly) implicitly assume is based on the size of the economy (which you incorrectly assume will grow) REGARDLESS of whether the government gets to tax that economy.
Doesn't the government have anything to back the bonds with, lets say 70% of Nevada? How about all that land/oil in Alaska? Gotta be worth something.
Help me out, please. I'm trying to pin your politics down and can't quite do it. You seem afraid of the debt, so I thought you were a bit of a Perot fan, now I'm not so sure.
Reagan democrat??
If I knew better where you were coming from, I might know better how to argue with you.
If the ability to borrow is not based on the size of the economy, what's it based on?
Isn't 10% of 10 trillion the same dollar amount as 5% of 20 trillion? Wouldn't the latter be preferred?
You're suggesting the government sell off assets to pay off interest and principal on bonds???? That's crazy, IMO---Ok, what about when that's all gone?
Help me out, please. I'm trying to pin your politics down and can't quite do it.
Here is my Presidential voting History:
64: Goldwater
68: DNV
72: McBride (Libertarian)
76: DNV
80: Clark (Libertarian)
84: DNV
88: Morreau (Libertarian)
92: Perot (Independent)
96: Perot (Independent)
00: Nader (Green)
In 1964, I was an Ayn Rand conservative. Since then, I have been a libertarian/populist. I vote for whatever 3rd party has the highest percent vote. I see abuse of power by the Liberal/Conservative establishment as the biggest threat to democracy/capitalism. I believe political parties, in general, are conspiracies in constraint of democracy. Rs pretend to be for limited government and Ds pretend to be "for the people" but their actions reveal that they actually both favor Big Government of, by, and for their Big Business benefactors. This threatens both democracy and capitalism.
My single biggest issue, BY FAR, is the monetary system which is characterized by special privileges granted by government to the monetary elite, which, IMO, is GUARANTEED to crash if not reformed.
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