"Triumph of the Redistributionist Left"

[Hutch]

Sorry to be late to the party...

HelmatCase, I have several questions for you:

Is it your assertion that the SI's backing of "the full faith and credit" of DotGov make it solvent?

Do you have an understanding of what the tax rates will have to rise to in order for SS to maintain the current benefit levels?

Is it your assertion that SS is indeed actuarily (sp?) sound as it is currently constituted? If not, how would YOU suggest it be made sound?

Just curious. It is refreshing for the divergence of opinion to identified without rancor.

 

[PCGS65]

The article leaves out the big problem. With the graying of the population there is not going to be enough people to tax.

Oh yes there will be! That's why the gov is letting illegal immigration run rampant. More young tax payers.

by xd9fan, Add up all of your SS taxes and take the Stock Market ave of 9% a year (since 1926) and calculate. And then compare to what you think you will get from SS. The saving rate and retirement worries would almost no longer be an issue!!!! But we cant have freedom because some may choose to spend thier money in Vagas and blow it all........well (^*$&&^.....Life has risks.

Just make it a mandatory investment like other plans(401k,403b ect.).
If you put 15% of an average lifetime annual salary of 40k into a plan getting 8% interest in 30 years you would have 745k. In 40 years 1.745 million. So if you start at 20yrs old at 60yrs your at 1.745 mil. Want to go to 65 2.6 million.
I think I could live off that for a long time. I can trust myself a lot more than I can trust the gov. But that's a no brainer!!

 

[CAnnoneer]

The SSA would take issue with that.

Is that a threat?

Problem is, it is not a slander/libel when it is true.

 

[cuchulainn]

Helmetcase: I think the strawman is adequately fleshed out

A strawman argument is still illogical and invalid no matter how "fleshed out" it is.

Helmetcase: A better way of saying it would that the benefits some govt programs don't need much explanation, because they're self-evident.

You've merely restated "self-justified." It's still a circular argument ... or at best, a cop-out, as in "I don't need to explain because anyone can see it's true."

Helmetcase: Society could probably function without a lot of things, but that doesn't mean it should.

The point is that murder laws can be justified outside their morality -- social security cannot; it relies solely on morality.

Helmetcase: As I find it refreshing that you admit to forcing your morality on us via prohibitions against murder, kiddie rape, armed robbery, etc.

<snip>

I was merely fleshing out the morals-as-codified-actions distinction.

Do you realize you are equivocating, which is another logical fallacy? You really need to learn the difference between:
a) prohibiting someone from violating others, and
b) forcing someone to do good by another.

Helmetcase: The argument is rather that "SS is justified because it provides a service that makes sure old people don't starve."

What you really need to justify is your overlying ethic -- forcing people to do good by others.

 

[cuchulainn]

thereisnospoon: I always thought the justification for SS was getting re-elected to your Powerful Congressional Office

You got me there

 

[gc70]

Helmetcase:

The Office of Management and Budget has described the distinction as follows:

These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (from FY 2000 Budget, Analytical Perspectives, p. 337)

The week after his State of the Union speech, Bush pointed to these facts in language that downplayed the importance of the Trust Fund:

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust.

You asked about an alternative to Social Security, so here is a really simple one...

• Let everyone who has paid even a cent into Social Security remain under the current terms of the social contract. It will become painful for a number of years for society to pay off the debt, but it can be done.
• Anyone who starts working in the future is required to contribute a fixed percentage of their income to something similar to the government's Thrift Savings Plan (TSP). The TSP is an investment program made up of a limited number of government-approved mutual funds. All of those new workers will actually be investing in assets that they personally own.

Unfortunately, I do not expect a resolution to the impending financial catastrophe that is Social Security.

Even a Frenchman foresaw the potential problem with our system more than 150 years ago.

"The American Republic will endure, until politicians realize they can bribe the people with their own money." - Alexis de Tocqueville

 

[Malone LaVeigh]

The point is that murder laws can be justified outside their morality -- social security cannot; it relies solely on morality.

Well, that's not true. SS was instituted because retired people were pretty much starving during the Great Depression. It's not practical to have large numbers of our elderly in destitution. Doesn't exactly encourage the working class to contribute their labor to society.

SS is basically the government guaranteeing everyone that if they contribute to the economy, they'll be minimally taken care of in their old age. Not necessarily in luxury, but enough to live. We have tax-deferred retirement savings instruments if people want more. But the SS fund is supposed to be very safe and conservative.

The argument that the stock markets have a better return over the long term is also a red herring. What if you retire when the market is down? This happened to my MIL and it was just SS that saved her from having to sell her house.

 

[cracked butt]

Hmmm. Why don't we just take it a step further and turn all of our income over to the federal government (minus state taxes of course)? The government can make sure that everyone is minimally taken care of throughout their entire lifespan this way.

 

[Helmetcase]

Sorry to be late to the party...

HelmatCase, I have several questions for you:

Is it your assertion that the SI's backing of "the full faith and credit" of DotGov make it solvent?

How is it that really any financial instrument is worth anything? We collectively understand that the the govt stands behind it. The real question is why would the SI's NOT be worth anything? Enough right wing talking heads have repeated the idea that "they're worthless IOUs" that no one has ever stopped to think about the devastation it would wreak on the world economy if suddenly the US Govt stopped paying its obligations.

Do you have an understanding of what the tax rates will have to rise to in order for SS to maintain the current benefit levels?

It depends on your estimates of how the US economy performs, but most of the pessimistic estimates that have SS going bankrupt over the next 40 years require that the US economy performs far worse than it ever has in ANY 40 year period. Most of the numbers I've seen run that split the difference between pessimistic and optimistic require only a slight tweak in benefits paid or the tax ceiling for paying in.

Is it your assertion that SS is indeed actuarily (sp?) sound as it is currently constituted? If not, how would YOU suggest it be made sound?

Me, I'd probably make graduated tweaks to when you can collect benefits as life expectancy increases.

Just curious. It is refreshing for the divergence of opinion to identified without rancor.

Yeah, for some reason people seem to think arguing on the Internet means you're arguing with someone who is your mortal enemy and the philosophical differences between you amount to the all consuming struggle between good and evil. I don't quite get that. People talk on the Internet in a manner in which they'd never converse in person. Especially given what a well armed crowd this is.

A strawman argument is still illogical and invalid no matter how "fleshed out" it is.

Frankly at this point I can't even remember which argument you're suggesting was a strawman. I think it was the idea that SS is justified because like other social programs it contributes to an ordered, moral society where old people have at least some small portion of their retirement taken care of. I won't apologize for pointing out that while that might not be a moral argument you find compelling, it's simply fallacious for you to suggest it's logically unsound or a strawman. Or maybe I'm thinking of a different argument. Who knows, it's after midnight.

You've merely restated "self-justified." It's still a circular argument ... or at best, a cop-out, as in "I don't need to explain because anyone can see it's true."

Ugh, fine, since you seem to want to break this down to the minutiae: taxes for schools are justified because we all benefit from smart kids. Taxes for the military are justified because we all benefit from defending our freedoms. Taxes for roads are justified cause we all need to drive. Taxes for SS are justified because we all benefit when old people are taken care of, as Malone put a lot more eloquently than I care to. There's no circularity there. Most people would agree that the military, roads, schools, etc. HAVE SELF EVIDENT BENEFITS and wouldn't infer any circularity there. You can disagree that having old people taken care of is a readily apparent benefit...but that doesn't mean it's a circular argument. You're confusing "self evident" for "circular", when the word you should be looking for is "obvious." I don't mean to be testy, but you keep using the circularity assertion when it's obvious that it doesn't apply. And I've made it abundantly clear why not in this passage...so for the love of all that is holy, please drop it. I have a BA in Modern Philosophy; I know circularity when I see it, so I'd cop to it if it was there. And it's not. It's just a difference of opinion about whether the benefits offered by SS are worth what it costs us in taxes. So let's move on...

You really need to learn the difference between:
a) prohibiting someone from violating others, and
b) forcing someone to do good by another.

Not really. There are some things like murder that are illegal because they physically, emotionally, or otherwise harm others. Then there are some things like tax evasion or not signing up for the selective service that are illegal because they fall into the category of not fulfilling a debt to society. You're forced to pay taxes for the second reason, SS taxes fall into that category. That's an obvious distinction, and any first year law student will tell you there are bunches of reasons different things are legal or illegal. So can the condescension, please.

What you really need to justify is your overlying ethic -- forcing people to do good by others.

See above. There are plenty of reasons you have to do things that benefit others to your own detriment.

 

[xd9fan]

Well, that's not true. SS was instituted because retired people were pretty much starving during the Great Depression. It's not practical to have large numbers of our elderly in destitution. Doesn't exactly encourage the working class to contribute their labor to society.

SS is basically the government guaranteeing everyone that if they contribute to the economy, they'll be minimally taken care of in their old age. Not necessarily in luxury, but enough to live. We have tax-deferred retirement savings instruments if people want more. But the SS fund is supposed to be very safe and conservative.

The argument that the stock markets have a better return over the long term is also a red herring. What if you retire when the market is down? This happened to my MIL and it was just SS that saved her from having to sell her house.

I dont know whether to laugh or cry at your conclusions.
The stock market out performing the SS system is just fact. period. SS is not safe....its broke....paying more and more for less and less is NOT safe and conservative!!!! And this is exactly where this 1930's idea is going. Give me the freedom to get off the titanic. But instead we keep rearranging chairs wondering my we are still taking on water. If people over 50 want to stay on it...great but give me the freedom...the choice to refuse bad Govt.

:banghead: :banghead: :banghead:

 

[Waitone]

I just love these conversations about SS. Exact same arguments were kicked around 30 years ago when I entered the workforce. Exact. The big stir then was the introduction of IRAs. Word got around (before alternative media, internet and freelance opinion writers) you could opt out of SS by merely informing SS that you were quitting. The response was astounding. Trouble is, it was not true. Watercooler discussions got just as heated. The same logic was used. The suggestions were the same. Just amazing.

Anyhow, to conclude our ancient history lesson, a very popular solution was developed which periodically is dusted off was developed.

--From Date Certain-1 anyone entering the workforce pays nothing to SS and receives nothing from SS. Instead they are to set up their own accounts, period.

--Everyone currently receiving SS will continue without change. Life continues.

--The third group has a decision to make. By Date Certain-2 every member of this group will have to decide. Option A--stay in the SS system and continue to pay SS tax and receive whatever the gods of SS bestow when they retire. Those opting for A would be free to set up private retirement stuff. Option B--leave the system. No payments to SS and no benefits at retirement. BUT they have to leave in the system everything they put in the system. They are now free (doncha lovit) to set up their own retirement.

Simpleminded plan which would free us of the system in less than one generation,

Will never happen because the man runnin' the federal plantation would no longer have anyone living on the plantation and he would have to go out and get a real job. SS and welfare, for that matter, is an issue of power and for that reason neither will disappear regardless of how strong our libertarian intent.

 

[roo_ster]

Faith Based Economics

How is it that really any financial instrument is worth anything? We collectively understand that the the govt stands behind it. The real question is why would the SI's NOT be worth anything?

What a beautiful thing. (jfruser holds back a tear, "sniff, sniff")

To see someone's faith unshaken by fact, history, logic, and corrupt human nature. There are examples of such faith being rewarded but those folks usually have G-d on their side, not JK Galbraith.

Let us take these one at a time.

How is it that really any financial instrument is worth anything?

Because the market expects the issuer to pay off the principle & interest. Those that the market has determined are less likely to do so have to pay more in the way of interest and those with the shakiest liklihood of paying off generally can't get anybody to help them issue bonds.

The real question is why would the SI's NOT be worth anything?

Because the US Gov't is not willing to put them to the test. US Gov't does not allow the market to make the judgement on their worth. US Gov't has deliberately cut the SSTF & the SIs from any connection with the T-whatevers the US Treasury floats on the market.

Special Issues are "special" in the way that the Special Olympics are "special."

We collectively understand that the the govt stands behind it.

Just who is "We?" Not the financial markets. Not those who can read an actuarial table. Not those US Gov't bureaucrats who decided that the SSTF ought not to possess T-whatevers and pollute the market for US Gov't debt.

I'll buy your point...for T-Bills, T-Notes, and T-Bonds. And so will a lot of folks. Nobody is willing to risk their investment monies on SSTF -related debt and everybody knows it...except the faithful few.

********

On another note, I have some terrific oportunities for real estate investment in south Florida you might be interested in...and sufficient fresh water is no problemo!

 

[longrifleman]

The political left in America is emerging victorious.

In othe news:

The sun rose in the east this morning.

The sky is blue.

Water is wet.

 

[Fred Fuller]

helmetcase,

It is refreshing to see such faith in government. You must be very young.

If that is the case, you will probably live long enough to get an unavoidable lesson in what "full faith and credit" means as far as government is concerned.

Too soon old, too late wise.

lpl/nc

 

[Marko Kloos]

We collectively understand that the the govt stands behind it.

Just how do you think the government will "stand behind" the I.O.U. stack in the SocSec till when it comes due?

Never mind, I'll tell you how:

The government of the United States uses the SocSec contributions out of every working person's paycheck to pay out the SocSec checks for the same tax period. Whatever is left goes into the General Fund in exchange for an I.O.U., so there's nothign at all in the SS "Trust Fund" except government promises to pay back those I.O.U.s with future taxpayer money when they come due.

That's right, the government "stands behind" those I.O.U.s in that they promise to pay them out of my children's paychecks.

Just how much of a loan do you think I could get at any bank if I was hugely in debt, couldn't stick to any budget I made, and then tried to borrow money with nothing but a note as collateral which promises that I'll be paying back the loan out of my son's paycheck when he's old enough to work?

 

[CAnnoneer]

In discussions like these, the mystical power of government is always invoked.

I prefer to think in simpler pagan terms:

Some time ago, Bob put a gun to Alice's and Adam's heads and told them to give him money, which he promised to return with interest. They complied. Bob spent the money. Now Alice and Adam are supposed to have their money back, but Bob is broke. So, Bob puts a gun to Charlie's head with the same unrefusable offer. Charlie pays, Bob spends the money and returns some to Alice and Adam. Problem is, Charlie has to support both Alice and Adam, and hope that a future David, Diane, and Deadre would have the gun to their heads too and would be able to pay enough to Bob, so that Charlie "gets back as much as he put in".

Anyway you look at it, everybody is getting screwed but Bob. Then again, Bob has the gun...

His name is his warning - B.O.B. = beware of bob

 

[Waitone]

Once upon a time SS was an off the book program. IIRC is Pres. Johnson who figured out he could minimize the apparent budget deficit by wrapping SS surplus into the budget. Everyone wins. Budget deficit drops and SS maintains the illusion of a "trust." In reality there is no pool of capital. There exists only chits which will have to be redeemed and in our current financial condition that means using borrowed funds. I do not see fed.gov cutting spending in any area and diverting freed up funds to pay off SS chits. I see only additional borrowing. Sooner or later the Federal Reserve (a private non-governmental franchise operation chartered by the fed.gov via a questionably ratified constitutional amendment) will kick in inflated currency. Fed.gov will pay its obligations with inflated funds. To paraphrase a well-known liberal lion, "We will pay our SS obligations. Recipients may need a wheelbarrow but they will be paid." Sorta paints the picture don't it?

 

[Kim]

A lot of elderly people starving to death in the great depression. HAHAHAHA> I don't buy it. My parents grew up in the great depression very, very poor. There was no starving though. Come to think of it hardly any crime. Maybe in some cities. But hey the Newspapers still say there are starving people in this country. HAHAHAHA. I don't buy it. I've been a physician for 20 years and have never seen a starving person unless they were being neglected by parents or children who were starving them. NOT because of relative poverty or lack of social welfare.. HAHAHAHA> Urban Myth. Many extremely overweight people now that I see everyday. Alot of those being corn fed by the government.

 

[xd9fan]

lol lol lol ohhh KIM