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The Almighty Buck Government Politics

Mathematics of the Social Security "Crisis" 1910

Posted by CmdrTaco
from the brace-yourself-for-fun-and-excitement dept.
ScottyB writes "Here's a good start for reading into the economics and history of the much-discussed 'crisis' in Social Security. It's from the NY Times magazine, so you know the drill...'A Question of Numbers.'"
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Mathematics of the Social Security "Crisis"

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  • Liars (Score:3, Insightful)

    by Concern (819622) * on Tuesday January 18, 2005 @03:57PM (#11399210) Journal
    In this country, fools and paid liars say whatever they want about an issue on television and, as far as viewers are concerned, get away with it. The enterprise of journalism, which is suppoesed to help citizens in a democracy sort through the sewer of increasingly sophisticated misinformation that comes from a variety of interested parties is in a state of free-fall, either actively subverted by self-interested and sociopathic organizations and individuals, or simply crumbling under the unique demands and exigencies of continued survival in the mass media marketplace.

    The heart of the matter is that when Bill O'Reilly or Sean Hannity lie about something, no one is yet able to mod them down.
    • Re:Liars (Score:4, Insightful)

      by danheskett (178529) <danheskett@NOSPam.gmail.com> on Tuesday January 18, 2005 @04:07PM (#11399397)
      The enterprise of journalism, which is suppoesed to help citizens in a democracy sort through
      Since when has that been true? Take off your rose colored blinders. That's never what journalism has been about. Journalism has been about promoting a view, detracting from a view, and most of all selling media. If you want to see for yourself, go to a library and look back at 17th, 18th, and 19th century newspapers. Journalism has always been a taudry business. This business about journalists being the crusading do-gooder out to help democray is a post-World War II fantasy.

      and, as far as viewers are concerned, get away with it.
      That's in your opinion. They don't get away with in my view, because I refuse to consume their product and to become their product. Remember, when you watch most media, you are not only consuming their product but you become the product: eyeballs to an advertiser.

      increasingly sophisticated misinformation that comes from a variety of interested parties is in a state of free-fall
      Everything you disagree with is not misinformation. Everyone has an interest. Regardless of how much people might hand-wring about it, everyone has an interest.

      either actively subverted by self-interested and sociopathic organizations and individuals
      What a load of garbage. There are few very issues with objectively correct or incorrect answers or solutions. Individuals or organizations promoting their view is hardly sociopathic.

      or simply crumbling under the unique demands and exigencies of continued survival in the mass media marketplace.
      If you feel like a media outlet is not being principled in the face of competition, than abandon that outlet. There are others. You somehow think that intense competition and corporate involvement with media is new. It's not. It is, again, exceedingly old and well established within this country. You seem to have this perception that before a certain point in history things were good with regards to journalism, and then something happened, and now it is bad.

      The heart of the matter is that when Bill O'Reilly or Sean Hannity lie about something, no one is yet able to mod them down.
      That is not only an amazing generalization but also fundamentally incorrect. Both of the people you mention are fundamentally pushers of opinion. There is very little in terms of opinion which meets the definition of a lie. On top of all that, you are in fact able to "mod them down". Disregard their opinion, and move on to another source.

      It seems like you most upset because people with whom you disagree or believe to be lying are able to have power and influence despite your disapproval of them. This is, despite your view, a truly great thing.

      You need to celebrate diversity. Diversity of thought, diversity of opinion, and diversity of expression. If you can't accept a point of view, or the person giving it, then ignore that person and move on. There is no need to clamor for censorship.
      • Re:Liars (Score:4, Insightful)

        by Concern (819622) * on Tuesday January 18, 2005 @04:30PM (#11399880) Journal
        Journalism has always been a taudry business.

        That's tawdry.

        We have always put journalists on a pedestal in this country, because we understand their importance to our way of life.

        Bias in journalism is like drunk driving among teenagers. Some Conservatives say, let's take away the rules, since "you'll never stop those kids anyway," but I think the adults in the country know better - let alone remember better, from pretty recent times.

        That's in your opinion.

        No. That's a fact.

        Do I need to cite surveys confirming widely held beliefs among Americans in various notorious items of misinformation?

        Everything you disagree with is not misinformation. Everyone has an interest. Regardless of how much people might hand-wring about it, everyone has an interest.

        Translation: everything is fine. No need to worry as we gut the rule book and change the face of American mass media.

        Individuals or organizations promoting their view is hardly sociopathic.

        Why have the news at all? Why not just have 24/7 commercials?

        This is not Soviet Russia. People here have jobs, and we expect them to do them. When something is "the news" we do not expect propaganda, nor do we expect this 3rd-grade relativist "all news is propaganda" bullshit. We can perfectly well tell the difference between CBS and Fox News Network.

        I wonder if your bank cleaned out your account, you would claim it was your own fault, because "I'm a sucker for trusting them with all that money."

        You somehow think that intense competition and corporate involvement with media is new. It's not. It is, again, exceedingly old and well established within this country. You seem to have this perception that before a certain point in history things were good with regards to journalism, and then something happened, and now it is bad.

        You seem to be ignorant of the history of regulation in American media.

        Google the Fairness Doctrine.

        What's happening now on television and radio is quite new. Things were much better even 10 years ago. Basically, we had a successful conservative-sponsored scheme to eliminate the rules.

        Both of the people you mention are fundamentally pushers of opinion

        Fox News Network puts paid liars on TV. It lies about its motives and its methods. When it's convenient, its talking heads are "commentators" and are supposed to be excused for their more blatant prevarications. They know full well their audience doesn't understand the distinction any more than they know who was behind 9-11. They just think they are "watching the news."

        Making this point in itself is deceptive, since egregious bias in Fox News Network's ostensible "hard journalism" is well-documented.

        It seems like you most upset because people with whom you disagree or believe to be lying are able to have power and influence despite your disapproval of them.

        I am upset because there is nothing that separates this country from China but journalists and voting booths, and some Conservatives are in the process of crossing journalists off the list.

        Diversity of thought, diversity of opinion, and diversity of expression. If you can't accept a point of view, or the person giving it, then ignore that person and move on. There is no need to clamor for censorship.

        I do not clamor for censorship, and your misunderstanding is telling. Moderation on slashdot does not censor anything. It does what it is designed to do; control prominence; making the good stuff rise to the top, and relegating bad ideas, incorrect facts, propaganda, deception, and trolling to the bottom.
        • Banks and Suckers (Score:4, Interesting)

          by Tackhead (54550) on Tuesday January 18, 2005 @04:53PM (#11400327)
          [deliberately taking this quote out of its original context in a discussion on media integrity]

          > I wonder if your bank cleaned out your account, you would claim it was your own fault, because "I'm a sucker for trusting them with all that money."

          You choose an interesting analogy.

          There won't be enough younger people working to pay all of the benefits owed to those who are retiring. At that point, there will be enough money to pay only about 73 cents for each dollar of scheduled benefits.

          If your bank statement said "By 2042, there won't be enough other depositors depositing checks with us to pay all of the balance owed to you. At that point, there will be enough money to pay only about 73 cents for each dollar you deposited with us", would you continue to bank with them?

          • Re:Banks and Suckers (Score:4, Informative)

            by jackjumper (307961) on Tuesday January 18, 2005 @05:00PM (#11400450)
            That's why there's a surplus now. The above is *part of the plan*. Payroll taxes were raised in the '80s so that the trust would have enough of a surplus to cover the baby boomers. The surplus gets drawn down, as you mention, but once the boomers are gone, it shouldn't be a problem.

            See here [prospect.org] for more information
        • Re:Liars (Score:5, Insightful)

          by Martin Blank (154261) on Tuesday January 18, 2005 @05:05PM (#11400533) Journal
          When something is "the news" we do not expect propaganda, nor do we expect this 3rd-grade relativist "all news is propaganda" bullshit.

          Whether you get propaganda is often dependent on your own viewpoint. Consider the following statements that build with each iteration, and consider how they can be taken by people reading them.

          Adam was killed.
          Adam was killed by Bob.
          Adam was killed by Bob with a gun.
          Adam was killed by Bob with a gun that was stolen.
          Adam was killed by Bob with a gun that was stolen from his roommate.
          Adam was killed by Bob with a gun that was stolen from his roommate, who is a police officer.

          Depending on the details presented, which are often constrained by time on TV/radio or space in print, one could have various views based on the information presented. It could be a reaction that crime is a problem, that gun ownership is a problem, that gun theft is a problem, that gun storage is a problem, or that carelessness with guns is a problem. Depending on your viewpoint, each person will take each statement differently. For some people, a given statement will reinforce their beliefs, and for others, it will fly in the face of them. Some will be inquisitive and ask for more detail, and some will ignore it entirely because it doesn't affect them.

          I bounce around a lot of news organizations -- CNN, Fox, AP, Reuters, NYT, LA Times, OC Register, NPR, and a bunch of others. I even visit Pravda's English site sometimes, if only for the occasional chuckle at the oddities that appear there. Most of the stories are pretty much the same from organization to organization, no matter who originally wrote them, because journalism is, at its core, a pretty basic thing. Who, what, when, where, why, how?

          But if the story is more complex, or has conflicting information, then it gets much more difficult. For example, You have ten different sources for information; which information is considered the best? You have some long-time informants telling you one thing, and they've always panned out in the past, but you have two new informants telling you something quite different, neither of which know about each other but whose stories are almost exactly alike. Whom do you believe? Which do you put first in your story, and how much emphasis do you give them? From twelve hours of interviews, which quotes do you select to tell the story the most accurately? What does your gut tell you? Has your gut ever been wrong?

          Being a journalist is seriously hard work and can be painful, because no matter what you say, someone is going to say that you said too much or not enough, that you slanted something this way or that. I do not envy them.
      • Re:Liars (Score:5, Insightful)

        by starseeker (141897) on Tuesday January 18, 2005 @04:38PM (#11400063) Homepage
        "There are few very issues with objectively correct or incorrect answers or solutions."

        There are, however, quite a number that do have "correct" answers if you are willing to postulate that the commercial interests of a small number of people should not be more important than the good of the community.

        This is true at local, state, national, and world scales.

        The media used to regard the news as public service, and not so much a source of profit. This changed when they noticed two facts - their news hours have very high viewership by people who earn and spend money, and that even more people tuned in for senational news. I saw a history of TV with regards to that point, and IIRC there were three or four major scandals that got national coverage which were the beginning of the end. So yes it's never been great, but I think it is worse now. Any time news is treated as a money maker, you can forget about hearing about important issues from ANY viewpoint. It's too much like work to listen to important issues.

        I agree censorship is a bad idea, but the problem with a pervasive, persuasive and centralized media (e.g. ClearChannel) in a democracy is that without a critically thinking population the system becomes unstable. A functioning democracy is a self correcting system, but a hidden dependancy of that system is that accurate, verifiable information is provided to the people who must make the decisions. I.e., the voters. It's usually AVAILABLE, granted, but if they don't have it and settle for what they are told by an organized media the end result is EXACTLY the same as if they don't have it. If you can get statistically large numbers of them to dance to your tune, you have effectively taken over the country. The key question is, do enough people engage critical thinking to avoid the electorate being systematically manipulated by misinformation?

        Not that I advocate changing the system, except perhaps to compel news programs to function on a non-profit basis. People get the government they deserve in a democracy, that's pretty much the rule. So it's up to them, and if they want to throw it away they can.
        • Re:Liars (Score:3, Insightful)

          by danheskett (178529)
          The media used to regard the news as public service, and not so much a source of profit.
          What you mean to say is that ABC, NBC, and CBS used to do that. The media predates TV by some years.

          There are, however, quite a number that do have "correct" answers if you are willing to postulate that the commercial interests of a small number of people should not be more important than the good of the community.
          There are a number of people who do not follow that view.

          I agree censorship is a bad idea, but th
    • Re:Liars (Score:3, Insightful)

      by gowen (141411)

      In this country, fools and paid liars say whatever they want about an issue on television and, as far as viewers are concerned, get away with it.

      In my country, it's very different.

      One cannot hope to bribe or twist
      thank God, the British Journalist.
      But seeing what the man will do
      Unbribed, there's no occasion to.

      Or, as Kingsley Amis once wrote, "Laziness has become the chief characteristic of journalism, displacing incompetence."

    • What about (Score:3, Insightful)

      by paranode (671698)
      The heart of the matter is that when Bill O'Reilly or Sean Hannity lie about something, no one is yet able to mod them down.

      No one was able to mod down Dan Rather either, though I guess he at least had the decency to mod himself down. ;)

      All pundits fit this mold and politicians on either side of the fence are often the same.

      • Re:What about (Score:5, Insightful)

        by frank_adrian314159 (469671) on Wednesday January 19, 2005 @01:24AM (#11405222) Homepage
        All pundits fit this mold and politicians on either side of the fence are often the same.

        I hate this kind of "argument".

        Even though both sides have made mistakes, if you put CBS's long, distinguished history up against Fox's tawdry few months, there is a great difference in quality. It's the same comparing Rather's 40+ years in print and TV journalism and comparing it with O'Reilly's distinguished hisory on Inside Edition or Hannity's history of... oh yeah, nothing. Saying they're both "the same" is akin to saying that Pol Pot was like Abe Lincoln because they both declared war and, as a result, got people killed.

        Your statement is both disingenuous and stupid. But I guess, from your use of it, that Fox has also lifted the level of logic in this country by training it's viewers well in their tactics.

  • the real agenda (Score:4, Insightful)

    by titaniam (635291) * <slashdot@drpa.us> on Tuesday January 18, 2005 @03:59PM (#11399242) Homepage Journal
    The goal of the republicans is not to revamp social security. The goal is to abolish it entirely, along with medicaid. The easiest way to do so is to completely break it by privatizing it, while at the same time bankrupting the government. Then, of course, the private managers will be to blame. Something will have to go to balance the budget... and then they will eliminate social security. Now the tax cuts and war start to make sense. Expect a budget crisis shortly!
  • by doormat (63648) on Tuesday January 18, 2005 @04:01PM (#11399283) Homepage Journal
    and basically it says that there is a greate deal of misinformation coming from the right.

    Over the next 75 years, SS will run at a loss of 3.3T USD. Sounds like a lot huh? Well by comparison, the Bush tax cuts (both of them) will result in less revenue to the tune of 11.6T USD over the next 75 years. So even if you revoke 30% of the Bush tax cut, you can pay for SS over the next 75 years (or maybe a little more to cover interest since they tax revenue and SS benefits demand dont have similar demand curves).
    • by wizarddc (105860) on Tuesday January 18, 2005 @04:16PM (#11399577) Homepage Journal
      This is exactly what Presidents Reagan and Clinton did to save Social Security. They raised the upper bracket tax rate from 33 to 35%, and increased the payroll tax to 12.5% to make our nations social contract solvent.
    • and basically it says that there is a greate deal of misinformation coming from the right.

      I'm not right or left, I'm central. But, please tell me what platform Al Gore ran on in 2000. I do recall being hit on the head with the phrase "lock box" about a billion times. The Democrats are notorious for running on platforms of "But my opponent wants to plunder Social Security and hates old people!"

      Of course the numbers are political. But the reality is this:

      - Politicians don't know how to reduce spending.
      -
      • - Politicians have been spending the SS income rather than investing it for years now.
        Which is exactly what it was used for before it became social security.

        Just because the government is bad at saving money, does not mean that the general populace will be any better; they do however, have the possibility of being woefully worse.
      • I'm not right or left, I'm central. But, please tell me what platform Al Gore ran on in 2000. I do recall being hit on the head with the phrase "lock box" about a billion times. The Democrats are notorious for running on platforms of "But my opponent wants to plunder Social Security and hates old people!"
        Al Gore is going to be running in 2008 with the campaign slogan, "I told you so!"
      • by admiralh (21771) on Tuesday January 18, 2005 @05:29PM (#11400929) Homepage

        I'm not right or left, I'm central. But, please tell me what platform Al Gore ran on in 2000. I do recall being hit on the head with the phrase "lock box" about a billion times. The Democrats are notorious for running on platforms of "But my opponent wants to plunder Social Security and hates old people!"

        Bush may not hate old people, but he certainly wants to plunder Social Security.

        Remember, Bush and his supporters are ideological conservatives, and as such they are ideologically opposed to "wasteful" social programs, because they believe that giving things that aren't earned to people is immoral (fostering dependency). Social Security is by far the most successful U.S. social program ever, in that it has fostered a tremendous increase in the standard of living for retirees. Since a successful social program would endanger mass acceptance of their worldview, they are trying to destroy it, thereby "proving" that the conservative worldview is the correct one.

        Let's examine some of your other assertions:

        Politicians don't know how to reduce spending.

        Sure they do. Just not the kind of spending they like. Liberal politicians would love to eliminate spending for missile defence, and conservatives want to eliminate spending for Head Start.

        Politicians have been spending the SS income rather than investing it for years now.

        True. But SS was never designed as a "retirement savings" system. It was more like, "You pay to support your elders, and your youngers will pay to support you". There is a baby-boom bubble coming, and it will require increased taxes/reduced benefits to cover it, but it's not a crisis. It's fixable, and it's temporary.

        There are going to be more people collecting from SS when the baby boomers retire than there will be contributing to it.

        This statement is just plain wrong. If it were true, there would be more people over 65 than there are in the work force 18-65, which just doesn't compute. There will be a bubble, where they ratio may drop to 2 workers to 1 retiree, but it's temporary.

        Politicians bought votes in years past by adjusting the cost of living based on wage inflation, versus the previous (more reasonable) way of calculating it based on regular inflation.

        I'm in complete agreement with you here. And furthermore, this change alone would make the system solvent therough the baby-boom bubble. Nothing else need be done.

        If you raise taxes, it won't help social security, it will result in more spending, though. Want proof? Please refer to the last 70 years of spending increases by the government.

        70 years? Where did that come from? Ah yes. 1935. The Great Depression. Americans were literally starving in the streets.

        There's a reason for government spending and social programs. It's to smooth out the peaks and valleys in the natural economic system.

        I don't agree with Bush on much, but I like his ideas for SS reform. It's a broken system. You can either start to fix it, or you can try to prop it up until it completely collapses.

        You sound like you've been reading too many White House or Cato Institute press releases. The system is not broken. There is no crisis. This "crisis" is being manufactured by the right-wing because that's the only way they'll convince moderates to go along with such a risky, reactionary, and thoughoughly unecessary return to 1929.

  • by Realistic_Dragon (655151) on Tuesday January 18, 2005 @04:02PM (#11399285) Homepage
    ...and it solves both the food and the social security problem in one fel swoop.
  • Gah! (Score:5, Insightful)

    by ivan256 (17499) * on Tuesday January 18, 2005 @04:03PM (#11399308)
    It's always the same. Every "debate" or discussion about the numbers behind social security and they never talk about the numbers that matter. For people under 35, the most important number is the number of dollars in an employee's pocket on payday after deductions. As things stand right now, there's at least 30 years - at least seven presidential terms - between now and when those people start collecting. Chances are some politician is going to wreck social security between now and then even if the gloom and doom predictions don't come true. That means on top of the hefty deductions from your weekly paycheck, if you're under 35, you also have to assume social security won't be there for you and you have to put that much more money away personally. That is the number that matters.

    As for this article... Solving the social security budget gap by adding 2% to the payroll tax sounds great... Tax the corporations! Well, it would be great, but corporations take the payroll tax into account when they determin how much you cost them as an employee. As far as they're concerned, the payroll tax is part of the employee's compensation package... Raise the tax, and you're going to see a corresponding drop in salaries or a corresponding rise in unemployment over the long term.
    • Re:Gah! (Score:5, Interesting)

      by multiplexo (27356) on Tuesday January 18, 2005 @04:10PM (#11399455) Journal
      Social Security could be put on a sounder financial basis by eliminating the portion of the tax paid by corporations, increasing the amount of income subject to FICA witholding and applying FICA witholding to all income including short and long term capital gains, interest income, etc. Right now SS acts as a brake on employment, it's a "payroll" tax, and the percentage paid by corporations works to discourage them from employing people and it also really screws over the self-employed.

      The idea that SS taxes shouldn't be applied to capital gains and other forms of income is basically a huge giveaway to the rich. Now I know that some /.'er is going to talk about how we are in an ownership society and lots of people who aren't rich own stock and blah, blah, fucking blah, but if you look at the numbers you'll see that the people who make most of the money from capital gains and the like are pretty damned wealthy. I see no reason why they should enjoy a separate tax system designed to shield their gains while those of us who take home a paycheck as our primary source of income have an entirely separate tax system.

      • Re:Gah! (Score:3, Interesting)

        by DonGar (204570)
        SS could be put on a sound basis by not borrowing money from it for other portions of the goverment. The IOU's to SS are nearly as large the national public debt.

        This whole practice of borrowing money that can't be paid back because it doesn't look like a tax increase is horrific.

        In the following, public debt refers to money owed to external agencies (mostly China for new debt), and intergovenment mostly means IOU's from SS. However, I have not been able to find a detailed break down of which depts are in
    • Re:Gah! (Score:5, Interesting)

      by John Newman (444192) on Tuesday January 18, 2005 @06:03PM (#11401411)
      As things stand right now, there's at least 30 years - at least seven presidential terms - between now and when those people start collecting. Chances are some politician is going to wreck social security between now and then even if the gloom and doom predictions don't come true.
      Funny thing is, Barry Goldwater and Ronald Reagan - speaking for the nascent conservative wing of he Republican party - were saying the exact same thing forty-one years ago. Social Security was one of the central themes of the 1964 campaign. Glance over the bits about SS in Reagan's televised address [project21.org] in support of Goldwater. If you adjust the numbers for inflation, and didn't know the context, you'd think it was a GWB stump speech. The rhetoric is exactly the same today as it was then. Except, of course, SS has done just fine over the last 41 years, and after the Reagan/Greenspan reforms in the 80s it will do just fine for about the next forty or fifty years.

      SS is not in crisis - not within any reasonable horizon, and probably not at all. The general budget deficit, our foreign debt, and our current accounts deficit are all very serious crises, right now. Crises that are already imparing the national security of the United States, and that run a real risk of substantially affecting our standard of living in the near future. Why can't we, for once, focus on actual problems and have real discussion about them, rather then descending into ideologically-driven drivel?
  • by Anonymous Coward on Tuesday January 18, 2005 @04:04PM (#11399333)
    If Social Security is "broken" now, then the rest of the budget is HORRIBLY BROKEN. They currently use the surplus of SS to pay off a large portion of the deficit. The rest of the deficit is being paid for by our children and grandchildren.

  • I want out (Score:3, Interesting)

    by zcollier (583927) on Tuesday January 18, 2005 @04:07PM (#11399400)
    Regardless of the solvency or lack thereof in the system, I want out.

    The real problem that I see is that my parents signed me up as a child. I don't want to be in. I don't want to have to be in to get a job.

    I think that is the biggest problem. I don't have any choice in the matter, and unlike any other retirement scheme (IRA, Roth IRA, 401k, annuity), I can't get out if or when I want.

    So much for Land of the Free.
    • Re:I want out (Score:3, Insightful)

      by the_demiurge (26115)
      You have to follow traffic laws to drive a car. You have to pay sales tax when you buy a chair from a store. You have to pay into social security to get a job. Sucks, doesn't it?

      Maybe you want to move to a desert island.
  • by j. andrew rogers (774820) on Tuesday January 18, 2005 @04:09PM (#11399432)
    Seriously, if people are so concerned about investing in the stock market, there is nothing to prevent them from investing all the money in their private accounts in US Treasury debt like it is now. They could simulate their own private Social Security Administration, only better.

    No additional risk, and with some obvious added benefits. I'd welcome any extra freedom the government threw my way, even if I did not take advantage of it. Not that I personally would invest in US Treasury debt.

    • by jfengel (409917)
      The goal of Social Security has been to say, "We guarantee that our elderly will not be left to starve." It's not the best investment in the world.

      If Social Security really were pay-as-you-go, it wouldn't need investing at all: today's money is supposed to meet today's expenses. The Social Security Trust Fund had to be established to make up for the Baby Boomers having fewer children than was necessary to support themselves.

      You can formulate that several different ways; having more children wouldn't nec
    • by poot_rootbeer (188613) on Tuesday January 18, 2005 @05:09PM (#11400597)
      I'm not worried that *I* would make bad investments in stocks and bonds and end up penniless come retirement time. I'm worried that *other people* will invest their Social Security funds unwisely and will need new public funding just to stay alive; I don't want my kids and grandkids to have to foot THAT bill in addition to their own retirement planning.

  • by nightsweat (604367) on Tuesday January 18, 2005 @04:40PM (#11400121)
    We aren't savages.

    If we were, then the idea of privitizing Social Security would be no big deal. If someone misinvested by putting all his retirement money into Tyco or Enron stock, fine. We let him die broke and impoverished and that's that.

    But we're not savages and we won't do that. If a person screws up and loses all their retirement we'll cover them some other way via state or local government instead of via the Feds. You'll still pay for that person's retirement, just not in a predictable way, and it'll be more expensive as more poverty retakes America's elderly.

    Social Security is the SINGLE most effective government program ever. Elderly poverty was endemic in the 1930's and before. Unless you were really rich, you stood a really good chance of dying poor and dragging your children down with you. Now, that's much less prevelant.

    You object because you want to invest in a free market? Great. Most investors lose money, but if you really want to invest outside of the SS program, what's stopping you? Go ahead. You just can't risk this small percentage of your earnings. That goes to make sure you won't be too much of a burden on the rest of us when you get old.
  • How the Swedes Fared (Score:3, Informative)

    by adamontherun (660770) on Tuesday January 18, 2005 @04:58PM (#11400408) Homepage
    The article briefly mentions that Sweden reformed their pension system a few years ago. Annika Sunden, a researcher at Boston College, has written a rundown of the Swedish Experience [bc.edu] (I like the sound of that).

    In 2000, the new center-right Swedish government passed a law that mandated private pension accounts. Under the law,Swedes pay an 18% pension tax, 16% goes to the pay-as-you-go system (same as in the US) and 2% goes to private individual accounts.

    There are over 650 investment funds you can choose to invest in. You can own up to 5 funds. If you don't activly select a fund, your placed in a "default" fund, that's composed of about 75% stocks, and the rest bonds.

    When the program was launched, 70% of people in year one made an active choice and picked their own funds. In subsequent years, only 10% activley select a fund. This can be explained by all the media attention the new law caused, and a government marketing campaign in 2000 urging people to pick a fund.

    Most accounts have lost money since they began, and people are starting to question private accounts. Shitty timing to start this at the top of the bubble.

    A big lesson here is that if you are going to create private accounts, the composition of the default fund is hugely important. It needs to be very low risk and well diversified. (And, I'd be happy to run it for a mere 0.00001% management fee)
  • by tf23 (27474) <tf23&lottadot,com> on Tuesday January 18, 2005 @05:24PM (#11400850) Homepage Journal
    Congress issued bonds against what was the big Social Security cash hoard a while back, no?

    So those bonds (or loans, if I'm thinking incorrectly) will come calling sometime in the 2030's?

    I think that is the point where many analysts are saying that SS will be calling for the replayment on that.

    But who pays it?

    The US Taxpayer. Somehow, somewhere, the $ to repay the $ which was taken against the social security funds will need to be repaid.

    I think THIS is the bulk of the problem.

    Solve this, and make it so that we can't pass expenditures that aren't already funded.... basically cut those government credit cards up.

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