Mathematics of the Social Security "Crisis" 1910
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.'"
Liars (Score:3, Insightful)
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.
Comment removed (Score:4, Insightful)
Re:Liars (Score:4, Insightful)
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)
> 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.
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)
See here [prospect.org] for more information
Re:Liars (Score:5, Insightful)
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)
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: (Score:3, Insightful)
Re:Liars (Score:4, Insightful)
You obviously haven't watched them, have you? They will only --ever-- say that what they are saying is opinion when they've made a serious mistake and want to avoid being held responsible. In any condition other than that they loudly insist that they are totally objective, spin-free, fair, balanced and damn anyone else who doesn't think so. Seriously, watch Fox and see this pattern unfold.
Re:Liars (Score:3, Insightful)
In my country, it's very different.
Or, as Kingsley Amis once wrote, "Laziness has become the chief characteristic of journalism, displacing incompetence."
What about (Score:3, Insightful)
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)
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.
Re:Liars (Score:3, Informative)
Making this point in itself is deceptive
Re:Liars (Score:3, Insightful)
Some of it is, indeed. Some however is nothing more than groups like FAIR trying to get Fox censored for not sharing FAIR's political views (you know, the groups that push for "their" bias in media, and can't stand anyone else's).
"If you think Conservatism is special and its army of propagandists, advocates, and other helpers would do it for free, you are dreaming"
No. I
Re:Liars (Score:3, Insightful)
Forget how much you "belive" what they were saying was true, the journalists on CBS manufactured evidence to fit their story in order to make it "true".
When you go around preaching about the evils of having liars on television and then go on to point out only liars whose political beilefs don't agree with your own, you're just a h
Re:Liars (Score:4, Interesting)
On the other hand the pro-"leave it as it is" crowd rarely mention the coming boom of retirees and the growth in the number of retirees combined with a shrinking work force. For example; if people live too 100 in stead of 80 because of better nutrition, care and medicine it could cause problem with much higher health care costs than previously though. And the existing solution fail to account for the the slackers that work far less than they could.
So I have come to the conclusion that something needs to be done with the system at a point. But, and there is this this big but, at the same time I don't think the proposed solution is a good one. It seems to create far more problems than it solves. It is basically a free market solution with an add on to solve some of the problems with the people allready "inside" the existing soulution. Since they need to be covered in the future even if their children ("we under 30") stops funding them, Mr Bush needs to visit the bank and borrow an awful lot of money. I don't remember the exact number but i belive it was around $3 Trillion.
Also the new system places a lot of faith on both the market as a mechanism to handle money effectly without waste and more importantly peoples ability to handle their own money on the market. Quite frankly I don't think people will be able to handle their pension. Even if they are forced to invest them somewhere under some program people will waste them on stupid funds, expensive stock and all sort of scams that will pop up. I have faith in Wall Streets ability to lobby the administrators that regulate this new solution but I also think that many folks will lose much or substantial parts of their investment. Just look at how many people today pay insane amounts on various fees and administartion costs on their index funds.
One might think that well that is those peoples problem and lets leave it to Darwin, but there is this problem about what all those partially broke people will do when they approach retirement. My guess is that all those retirees close to 40% of the population and maybe 50% of the voters will vote for a social security system anyway.
So allthough I belive that something needs to be done in the long term; I don't think Mr. Bush is the man to handle such a big reform. Of Bush 20 biggest contributors at least 15 [opensecrets.org] of them, and all in the top 5, have serious finanial interests in this reform and I belive much of the money will eventually end up in their hands.
So as long as the system doesn't need to be changed now I see no reason to change it now with the risk of a failed reform.
Anyway; just my opinion.
Re:Liars (Score:4, Informative)
The coming boom in retirees was forseen twenty two years ago, and they enacted a plan to take care of them: they raised taxes to create the Social Security Surplus.
There is no SS crisis. And the privatization plan being floated cuts benefits more than the "do nothing" approach under the most pessimistic economic assumptions.
There were no WMDs, either. Judge the folks by their track record.
Re:Liars (Score:3, Interesting)
The story was fake (Score:5, Funny)
It was an entirely faked document. Right wing overdrive? I guess CBS is part of it (they have fully discredited the story after a review, and fired those responsible), and anyone who thinks that a "historic" document using modern MS Word fonts is fishy must be a "right winger".
Re:The story was fake (Score:5, Insightful)
The truth is that Bush _was_ AWOL. Did not meet his committments. Guardsmen today who did what Bush did would be in the brig for a long time or wose.
Re:Liars (Score:3, Informative)
A bit liberal by US standards, but more news about goings on around the world.
Re:Liars (Score:4, Informative)
Re:Liars (Score:3, Informative)
David Boylan, the WTVT general manager, was quoted as telling the reporters "We paid $3 billion for these television stations. We will decide what the news is. The news is what we tell you it is."
To be fair, this sort of thing, in itself, isn't the problem. I mean, an editor (or owner or someone else with editorial power) is within his rights to tell a reporter to rewrite stories. Sometimes the reporter disagrees, and might even believe that the editor's perspective on a story is "wrong". That an edito
Re:Liars (Score:3, Insightful)
>
> And stock is just a series of IOU's from corporations, and bank accounts are just a series of IOU's from the banks, etc. How is Social Security's investment in the Treasury any different than any other investment in anything?
Stock is not an IOU from a corporation. It represents ownership. When a corporation is worth something, a little sliver of it is also worth something. When you buy and sell stock, you're j
the real agenda (Score:4, Insightful)
Re:the real agenda (Score:4, Interesting)
In all honesty, I'd be more than happy if the government could help me live a decent life with me working less. I don't know why we have to work as much as we do; 40 hours a week doing a job is way too much time. There are so many other things I'd rather be doing with that time. I'm sure a lot of other people feel like this, too.
I don't understand why work is seen as a virtue. Just doin' a job for the sake of doin' a job sucks. I don't see how that makes you a good person.
I've read this article before it was on /.... (Score:5, Insightful)
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).
Re:I've read this article before it was on /.... (Score:4, Informative)
Re:I've read this article before it was on /.... (Score:3, Insightful)
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.
-
Re:I've read this article before it was on /.... (Score:3, Insightful)
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.
Al Gore's lock box (Score:3, Funny)
Re:I've read this article before it was on /.... (Score:5, Insightful)
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.
The social contract is being rewritten.... (Score:5, Insightful)
Taxes of 12-odd percent of our income are taken for SS.
That's 12.4% (6.2% of which is paid by the employer). Unless, of course, you make more that $87,000, in which case, your rate can be significantly lower. Someone with an annual income of $500,000 would pay about 2.16% in FICA Tax (Federal Insurance Contributions Act, a name we will get back to in a minute). Someone with $500,000 of unearned income (i.e. dividends, capital gains) would pay 0.00% in FICA tax. That makes the Social Security tax a regressive tax, in that low wage earners pay a higher percentage than high wage earners.
If you invested that money in private accounts, you'd be wealthy by the time you retired, even if you made some seriously bad investment decisions.
Yes, and if twinkies grew on pine trees, nobody would ever go hungry. The money is not a pension. It is not a retirement plan. It's not even yours. It's a fee you pay for the privledge of working in this country. In addition, it is an insurance policy. (Note the acronym above "Federal INSURANCE Contributions Act") It's poverty insurance. Congratulations! You're covered.
I'll assume you own a home and pay for fire insurance. I would even bet that your state or local government requires that you purchase fire insurance. With a little luck, your house will never burn down. After 20 years of good luck, are you going to start calling your insurance company to demand "return on your investment?" Feel free to try. Give them a call and tell them you're being "ripped off" because you haven't collected on your investment. Tell them that you're tired of them giving "your" money to people who weren't smart enough not to burn down their houses.
There's a difference between an investment and an expense. Insurance is an expense. Get used to it.
I know it's a social program, it's about the social contract and so on, but if the social contract is as one-sided as SS is, well, I want out. Period.
It IS a social contract. And if you want out of the contract move to Argentina, asshole. That's ssuming they'll take you. That's your way out of Social Security. Go somewhere else. Get a job making sneakers for Nike in Southeast Asia. Do it today and you'll never pay another cent in FICA.
I've never understood how so many the rich in this country think that they get no benefit from taxation. Do you think that your investments would be doing well if senior citizens were starving in the streets. Do you think that the social unrest that comes with extreme poverty is going to leave you untouched? (That's not to mention that the rich are the primary beneficiaries of most of the government spending in this country.)
You want to live here, pay your fair share and stop bitching. If you don't want to pay your fair share, what makes you think we want you here?
If you're making over $100K and you can't find another 12% of your income to stash away, you're doing something wrong. If you're making significantly less than $100K, you're probably going to need social security and you'd better hope it's there when you need it.
By the way, I'm rich... I'm also undertaxed.
Re:Social InSecurity (Score:5, Insightful)
But Social Security is bad insurance and a terrible investment.
Repeat after me: "Social Security is not an investment."
It offers a negative return on your money as a retirement program
Repeat after me: "Social Security is not a retirement program."
and negligible benefits as insurance.
Which are better than no benefits at all to those who need them.
The death benefit, for example, is $255, which isn't enough even for the most skimpy of funerals.
Repeat after me: "Social security if not life insurance. It's there to make sure you can eat at least once a day, even if you lose everything else."
I have a right to say that I want a specific fire insurance policy. If it's sold, I can buy it.
Yes, but this is not an individual policy. It's "social insurance." Insurance for society. Your retirement benefit is only one aspect and it's there to make sure you get to eat when you get old. The reason is that society benefits if you aren't starving. Society also benefits if you get to enough money to afford food after you get brain damaged in a motorcycle accident.
You have the right to buy any supplemental retirement insurance you want. In fact you'd better, assuming you want to do anything besides eat in your retirement.
I have a right to invest with about ten billion companies. If there's an investment approach, there's a fund to support it.
Yes, and you have a right to purchase any auto insurance that you want, but you still need that basic liability coverage (at least in California). If you want comprehensive, spend the extra bucks, but you can't drop your liability coverage. It's part of the social contract you entered when you got your driver's license.
What if I could invest in anything I wanted under the umbrella of social insurance?
I'm assuming that, out of self interest, you would choose the policy that you think benefits you the most, and that benefits society the least. Apparently you are short sighted enough to think that if your neighbor is starving, it doesn't affect you.
That's what Bush is proposing with Social Security Private Accounts. Tell me what's wrong with that. It seems to me that it's common sense that if you invest money for your retirement, or to protect you when you're sick and disabled, you should be able to manage that money on your own.
You are currently able to do all of that and much, much more with your own money. Go right ahead. I reccomend that everyone do exactly that. Invest for your retirement. Buy disability insurance. Repeat after me: "The FICA taxes I paid are NOT my money. It is money that I am required to spend for the benefit of society. The benefit I receive from this is beyond the financial benefit I receive during my retirement."
And, of course, that is most definitely not why GWB wants private accounts. The purpose of private accounts is to bankrupt a successful social insurance program in order to demonstrate the "failure of the welfare state" which "places undue burden on the wealthy."
Social Security hurts the poor more than anyone else, since they don't have the investment money we do. SS /is/ their investment money. If they had the freedom to invest it as they wanted, everyone would be better off. That's my argument, pure and simple.
Another GOP myth (i.e. lie). It is predominantly the poor who receive more of social security than they paid in FICA taxes. (That would be even more true if we got rid of the damn FICA ceiling.) For the wealthy, the converse is true, which explains the GOP maneuvers to kill it.
Re:I've read this article before it was on /.... (Score:3, Funny)
Re:I've read this article before it was on /.... (Score:3, Insightful)
Re:I've read this article before it was on /.... (Score:5, Insightful)
No, there isn't a problem at all. The governemnt has robbed the SS fund for years, diverting payments into the general fund and buying tanks and such with SS funds. SS will be viable as long as the governemnt makes the payments. When it is easier to pretend it is just another income source, they rob it blind. When it becomes a drain, then they pretend it is an independent program that can't be paid for out of the general fund.
Notice that prior to the present time that there was a surplus? Where is that money? Why wasn't that set aside to pay for future SS needs? The SS problem isn't one of the future, it is one of the past. We were robbed. The reparations would be to take the future money needed from the same place the stolen funds were diverted, the general fund.
Re:I've read this article before it was on /.... (Score:3, Informative)
Wrong. Federal tax receipts have dropped from $2.05 trillion in the last Clinton year to $1.85 trillion in 2003.
http://www.findarticles.com/p/articles/mi_m1ECO
Re:I've read this article before it was on /.... (Score:4, Insightful)
Nothing like looking at one number and not seeing or even understanding what it all means.
Make a simple graph (Score:5, Interesting)
If we tax at 0%, revenue is $0.
If we tax at 100%, revenue is $A (where A > $0 - this is basically Communism)
If we tax at something in between, let's say 50% for the sake of argument, revenue is $B (where B > A - this is Capitalism).
Ok, now draw a single line connecting those points. Obviously you can't do it with a straight line, it has to be curved. And therein lies the heart of the matter.
If the tax rate is below a certain point, cutting taxes decreases revenue.
If the tax rate is above a certain point, cutting taxes increases revenue.
You cannot argue that cutting taxes always decreases revenue. You cannot argue that cutting taxes always increases revenue. What's arguable is whether we're currently above or below the point where it switches from one to the other.
Re:Sure. (Score:3, Insightful)
You would work harder for the $10K right? Higher marginal tax rates suppress growth.
Would you hire an accountant if he could get you that extra $3K if you only got the $7K? Would you accept $2k in benefits over nothing? High tax rates cause avoidance of taxes. Low tax rates make the cost of avoidance higher than the benefit
Would you be more likely to start a business if you knew that you would be taxed on revenue even before you made a profit, making it a
Re:Sure. (Score:4, Interesting)
The Nobel Prize for economics a couple of years ago went to Daniel Kahneman [nobelprize.org], who demonstrated that
Kahneman also demonstrated that the Heritage foundation's intuition is poorly suited to understanding the economics and statistics of the real world.
Kahneman showed that people often prefer to choose a pair of gambles that equate to
- 25% odds of winning $240 and
- 75% odds of losing $760
over an alternative pair that equate to- 25% odds of winning $250 and
- 75% odds of losing $750
which violates the fundamental postulates of economic rationality. Specifically, economic preferences are not rational: It is easy to set up choices where people consistently prefer a to b and c to d, but prefer (b+d) to (a+c) (see D. Kahneman and A. Tversky, Eds., Choices, Values, and Frames [google.com]).Kahneman's colleague Colin Camerer [caltech.edu] also demonstrated [caltech.edu] that taxi drivers work longer hours on nights when they make less money per hour and knock off early when they make more money per hour. In other words, the supply of cab drivers increases when the demand decreases and vice-versa!
Camerer's results violate the Heritage Foundation's intuition and suggests that increasing taxes might well lead people to work harder because people often work until they earn a target, after which they decide to knock off early and enjoy their leisure.
In the real world, people's choices frequently violate in a fundamental manner the postulates of economic rationality and thus refute trite intuitive assumptions that people act to maximize their income, wealth, or other measures of utility.
Re:I've read this article before it was on /.... (Score:3, Insightful)
Too large of a tax and you reduce employment, reducing the total revenues. Why? Because FICA is a tax on employment. Most people have to work, but that still leaves a lot of people who don't have to. Maybe
The answer is obvious... (Score:5, Funny)
Re:The answer is obvious... (Score:3, Funny)
Soylent green? [soylent-green.com] Because in Korea, only old people are nutritious [wikipedia.org].
reg free (Score:4, Informative)
they allow google to refer to them registration free.
Or the generator! (Score:4, Informative)
Gah! (Score:5, Insightful)
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)
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)
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:FICA income cap (Score:3, Informative)
1998: $68400
1999: $72600 +6.1%
2000: $76200 +4.9%
2001: $80400 +5.5%
2002: $84900 +5.5%
2003: $87000 +2.4%
2004: $87900 +1.0%
2005: $90000 +2.3%
"You're Wrong."
Source: Social Security Administration - Annual maximum taxable earnings and contribution rates, 1937-2003 [ssa.gov].
Only recently has the cap risen less than the rate of inflation.
Re:Gah! (Score:5, Interesting)
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?
Re:Gah! (Score:5, Informative)
Well, this makes sense only if you use the life expectancy at age 18 (or 21, or whatever your cutoff is for when someone enters the workforce). Life expectancy at birth is a stupid measure to use for this, because having a bunch of children die before the age of 1 affects social security not a bit. (They don't pay in, and they don't withdraw)
So how has life expectancy changed over the last century? Well, in one sense, it's risen dramatically - the life expectancy at birth is now something like 15 years longer than it was in 1940. However, most of that increase is due to advancements in keeping children from dying. At the other end of the spectrum, someone who made it to 65 in 1940 could expect to live, on average, another 12.7 years. Nowadays, they could expect to live another 15.3. That's a whopping 2.6 year increase. (I admit, the increase has been greater for women now that we've gotten better at diagnosing breast cancer - a woman who reaches age 65 now can look forward to 4.9 years more than one could who reached age 65 in 1940)
Remember this: life expectancy for adults today is not radically different than it was 60 years ago. The difference is that today we don't have as many children being wiped out by childhood diseases, so the average looks much higher if you watch the wrong statistic.
Reference: http://www.ssa.gov/history/lifeexpect.html [ssa.gov]
"broken" my windows (Score:3, Insightful)
I want out (Score:3, Interesting)
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)
Maybe you want to move to a desert island.
Re:I want out (Score:3, Insightful)
You can always invest in Treasury debt (Score:5, Interesting)
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.
But what if you don't? (Score:3, Interesting)
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
Re:You can always invest in Treasury debt (Score:4, Insightful)
Why this is a horrible horrible idea (Score:5, Interesting)
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)
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)
The big problem is borrowing against SS (Score:5, Interesting)
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.
I can fix the problem (Score:5, Insightful)
Oh I forgot, they never put any of this money away for people's retirement like was originally planned. This money is part of their everyday operating expenses. It's just another way to get more tax money.
It was put away. (Score:3, Informative)
The problem is when the government cannot balance its budget. Then they have three options:
#1. Raise taxes to pay the bonds.
#2. Default on the bonds.
#3. Borrow more to pay the bonds.
NONE of this would be a problem IF the government could balance the budget.
Option #4. Declare that Social Security is in crisis and needs to be scrapped.
Bingo! (Score:3, Informative)
The issue SHOULD be, "you have X years to balance the budget and pay off the Social Security loans so Social Security stays solvent".
The Government BORROWED the Social Security money and now the Government doesn't want to pay it back.
Balance the budget, Bush. The Social Security money is there.
Re:I can fix the problem (Score:5, Insightful)
But, alas, people don't save. Instead they run up credit card debt. Rather than have savings that reap modest interest/dividend gains which accumulate over time, they pay out double digit interest on short term debt. That, unfortunately is the nature of our instant gratification lives.
What to do? I am in support of some sort of FORCED savings. You are required to do something to save sensibly for requirement, because I don't want to pay welfare for people that never saved or squandered their retirement savings. (And, no, I'm not a fan of people starving on the street.) We don't want welfare to replace SS. We want to either to fix SS or replace it.
Do I trust the govenment to do the best job of this? Nope. Do I trust private interests to do the best job of this? I'm not sure I do. Enron, World Com, etc. has made me re-evaluate my trust in how forthcoming and reliable the private sector is. Remember the Savings and Loan failures in the 80's?
What I am left to consider is that diversification is probably the best option, spread between both low-risk private and government programs.
One thing I do believe firmly is that the average person wont save suffiently if not required to do so.
Re:I can fix the problem (Score:3, Insightful)
Is that really our nature? Perhaps people don't save precisely because they know the welfare state will bail them out, no matter how much debt they run up. Maybe if we made people responsible for their own actions for once,
Re:I can fix the problem (Score:3, Insightful)
Here's a wild idea- let's give up 6% of corporate profits to make sure every single person gets a living wage. Let's protect those jobs by eliminating the WTO and the neo* death cults that Clinton and Bush have made public. Let's actually protect our borders. Let's not
Re:I can fix the problem (Score:3, Insightful)
Re:Shocked, shocked I am (Score:4, Insightful)
And don't depend are social security, I know that I am not.
Re:Shocked, shocked I am (Score:3, Interesting)
The problem is that more and more people are drawing on the system because people are living longer. At the time it was passed, very few people lived much past the age of about 60, let alone 65. It was designed as a "pay as you go" system, so your money is not really put aside for you somewhere so that it can earn interest. Your money is used to pay the benefits of those currently collecting. Your benefits (assuming the system is around that l
Re:Shocked, shocked I am (Score:4, Informative)
What's more, there is a strong case to be made that the agency is erring on the side of being overly pessimistic. If its more optimistic projection turns out to be correct, then there will be no need for any benefit cuts or payroll-tax increases over the full 75 years.
The 2018 is pretty much a worst case scenario. If the conditions occured that would make the system run a deficit in 15-20 years, the stck market would also flounder. Meaning private investments and 401K's would not be a great option to social security.
Social Security isn't truly designed to be 100% of retiree income. In fact, if you continued reading:
Social Security does not provide, and was not meant to provide, a satisfactory retirement on its own. The average stipend for a 65-year-old retiring today is $1,184 a month, or about $14,000 a year. About half of Americans also have private pension plans, but for two-thirds of the elderly, Social Security supplies the majority of day-to-day income. For the poorest 20 percent, about seven million, Social Security is all they have. Even those figures understate the program's importance. According to an agency publication, ''Income of the Population 55 or Older: 2000,'' 8 percent of elderly beneficiaries were poor, but a startling 48 percent would have been below the poverty line had they not been receiving Social Security.
So many seniors and retirees did save up, and try as they might, without Social Security, they'd be in poverty.
Re:Shocked, shocked I am (Score:3, Insightful)
Uh...exactly who does survive retirement:)?
Re:Shocked, shocked I am (Score:5, Informative)
Please read this article, it's probably the most well researched and insightful look at the current health of our social security program. The end conclusion: It's Fine. Seriously. No Really. Totally OK.
If you took the worst case scenario given out by the Social Security Trustees as the future exactly as it will happen, Everyone will continue to recieve 100% of benefits until 2048, and then, after that, we'd recieve only 75% of benefits, and the system would continue to hum. That's if the worst case scenario mixture of immigration and ecomonmic slowdown happen, and absolutley NOTHING done to the system. Their realistic scenario call for complete 100% solvency of the system for the next 75 years, again, with NOTHING done to the system.
Social Security is the best running government program ever devised in this country. Everyone here will be able to recieve their retirement benefits that they've been paying into their whole lives.
The Social Security "crisis" stems from that 25% reduction in benefits in 2048. If we were to give everyone 100%, then we'd run about a $3 trillion deficit in SS over the next 75 years, in the mean time, Medicare is projected to start deficit spending in only 10 years, and will run an $11 trillion hole. And both of these self financed systems have a better outlook than out general acocunt budget, the pot of money that pays for the rest of the government. Best guess estimates are that our government will go $15 TRILLION MORE into debt over that same $75 years.
So what is more in crisis, $3 trillion that we don't need to even go into deficit for, or $15 that we absolutely must? Our current $440 billion deficit is the real crisis.
The president and all of the conservative commentors here want to reneg on the deal President Reagan made in 1983 when he reformed social security. He raised payroll taxes beyond the amount needed so we would run a surplus, and that would go into a trust fund that would pay for the burden of the Baby Boomer retirement. That trust fund was mandated by law to buy treasury bills, which have consequently been used to finance the upper class tax cuts. Basically, the president has done a transfer of wealth from the working class who payed more into the system than they had to so the super rich could mooch off the government even more.
I Repeat: SOCIAL SECURITY IS FINE! RTFA!
See, that's just it (Score:3, Insightful)
It looks like you've bought it hook, line, and sinker. Either that or you work for the NY Times.
Re:See, that's just it (Score:4, Insightful)
So don't drive on their roads, apply for student loans, land got flooded out.. oops... no money for flood control.. were you just invaded.. oops.. no money for the military.. good thing you have your money.
I've got a little bit of news for all you "it's my money" people.. We're living in a *society* and it's not every man for himself. Society needs to be contributed to if it's going to work at all.
Re:Shocked, shocked I am (Score:3, Insightful)
I Repeat: SOCIAL SECURITY IS FINE! RTFA!
It was coughing up blood last night...
So if the Republicans increase their majority in the Senate in a couple of years, will the education system get better too?
I think the Democrats just don't want the Republicans writing the reform plan. From the Demodrats' point of view, there's nothing wrong with that. The Democrats don't want the Republicans messing it all up.
The problem is, every politician for the last many years has used the impending retirement of the b
Re:End Social Security (Score:3, Insightful)
Add to the fact, most people would rather buy a new pair of "kicks" compared to saving that $100 while they are 25 for retirement. People don't realize that if you save when you are young, you will be far better off than when you are in your 30's and decide to start saving.
Re:End Social Security (Score:3, Insightful)
It would, after all, be their own fault, for failing to save properly for old age.
Re:End Social Security (Score:5, Insightful)
well, of course, it isn't in the constitution. but the constitution does give congress the power to make laws to deal with the problems of society.
apparently congress thinks it's more important to make sure old people aren't starving on the streets than to give DataStalker an ideological hand-job.
Re:End Social Security (Score:5, Insightful)
No society has been able to progress and remain competitive with the shortsighted advice you've proposed here. Social Security is just a cheaper way to protect rights than "letting the market take care of it". Wealth equals power, the Social Security payments ensure that old people have the power to defend their rights instead of depending on the government to make sure they aren't violated.
The word justice is all over the Constitution and the Federalist Papers; Social Security fits the Founding Father's idea of justice, hence it's in the Constitution. Your argument about being something that people are unwilling to do for themselves is a canard. Only a half-hearted attempt to understand this nation's founding and history could lead you to the conclusions you've vomited all over this page.
Re:End Social Security (Score:5, Insightful)
What's wrong? (Score:5, Insightful)
Basically, what's wrong is that many people do not save money for their retirement. No doubt, most of these people do not read /., and yet are probably still aware that they should be saving money for their retirement, but either lack the ability or the will to do so.
The easy answer is to say, "Oh well, that's their fault," but when these people get to be in their 60's, 70's, etc., we as a society are not going to simply let them starve, go homeless, get sick, etc. Social Security could be scaled back by extending the age of collection, etc., and/or it's functionality could be wrapped up into other welfare programs, but it cannot be simply dropped.
Additionally, Social Security is something like a Ponzi scheme, and as such, if you stop paying into it now, then those who have already paid into it won't be able to get back what they put into it. So, it's either tough luck for the under-[insert age here] crowd in the future, or it's tough luck for the baby boomers now. Guess who will win that one?
SS isn't a Ponzi Scheme (Score:5, Informative)
State pension systems lack a number of basic features that define Ponzi schemes, and so are fundamentally different:
* There is no belief that there are large profits coming from something; rather, it is clear that these are pay-as-you go systems, where workers (at any given time) are providing money to those who have retired.
* There is no growth of incoming funds driven by the enticement of high returns over a short period of time, with new investors continually entering in order to support payouts to early investors.
* State pension systems are in some way insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in.
* Because receipts (taxes) and payouts (entitlements) can be calculated quite accurately in the short term (five to ten years), and predicted (with a range of assumptions) for periods beyond that timeframe, there will never be a sudden collapse.
* General tax revenues can be used to supplement worker payments into the systems, although many taxpayers will be unhappy with such supplementation. Similarly, benefits can be reduced through the political process, either across-the-board or by reducing benefits to the well-off, although there will clearly be opposition by those who will get less.
Hell yes SS is a Ponzi scheme (Score:5, Insightful)
Gotta disagree with you on this one. Granted SS is not an intentionally criminal enterprise, I think it's intentions are good, but it does have a strong resemblence to a pyramid scheme thanks to demographics. People are living longer which is not compensated for in the plan. To wit:
* There is no belief that there are large profits coming from something; rather, it is clear that these are pay-as-you go systems, where workers (at any given time) are providing money to those who have retired.
Sure there is a belief. There is a belief that the profits are going to come from future taxpayer dollars. Problem is that people are living longer and the population growth isn't sufficient to maintain this, especially after the baby boomers retire. The only reason it is a "pay-as-you-go" system is because Congress can't help themselves and raid SS for every extra penny that comes in every year for purposes other than Social Security. That money should be invested for future retirees and used for no other purpose but it isn't.
* There is no growth of incoming funds driven by the enticement of high returns over a short period of time, with new investors continually entering in order to support payouts to early investors.
There is a continual growth of incoming funds from working taxpayers funding "high" returns for existing retirees (read early investors). Granted it isn't to the level (50%+ returns) one usually associates with a Ponzi scheme but the principle is basically the same. Eventually demographics will catch up and the number of retirees will be too large to be supported by the workers without changes to the program. That's exactly how pyramid schemes fail.
* State pension systems are in some way insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in.
If it were truly an insurance program that intended to remain solvent, it would have to adjust either the retirement age or the benefits paid. Besides, do you know how insurance companies work? They take in payments, invest that money and then pay out what they have to in claims. Whatever is left over is profit. But SS money is NOT invested (pay-as-you-go remember?) so it really does not resemble an insurance program at all.
* Because receipts (taxes) and payouts (entitlements) can be calculated quite accurately in the short term (five to ten years), and predicted (with a range of assumptions) for periods beyond that timeframe, there will never be a sudden collapse.
The amount of money that comes in from taxes is HIGHLY variable and is not at all easy to calculate. Don't know where you got that idea. The reason California found itself way overbudget these last few years is precisely because they planned to spend money and then ended up with less in tax revenue than expected. Predicting tax revenue is anything but a science. One good recession will screw up even the best models.
* General tax revenues can be used to supplement worker payments into the systems, although many taxpayers will be unhappy with such supplementation. Similarly, benefits can be reduced through the political process, either across-the-board or by reducing benefits to the well-off, although there will clearly be opposition by those who will get less.
You ever tried to take away benefits or salary from someone? There is a reason SS is called the third rail. A politician touches it and he dies. True, in theory benefits can be adjusted but the political reality is that taking benefits away from old people is political suicide and not likely to happen anytime soon.
Re:SS isn't a state pension plan! (Score:5, Informative)
Social security invests NOTHING. Current contributions are immediately paid out to beneficiaries. The only deviation from this is when collections are greater than payouts, in which case the money is forwarded to the "general fund" and spent for government programs. The social security system receives an IOU from the government in the amount of the surplus that is filed somewhere, and is sometimes referred to as a "treasury security". Unlike a treasury security, however, it cannot be traded. It is not marketable in any way. No funds are set aside to meet these pseudo-obligations. As a security, these instruments have zero value and are only a political instrument used to cover the fact that payroll taxes are in excess of what is currently needed, and is used for non-social security purposes.
The social security system really is a lot like a ponzi scheme, but one supposedly supported by the ability of the U.S. Government to raise money (through taxation). As long as the government is willing to support social security when payroll taxes don't cover benefit payouts, we're fine. It's been the other way around for years now. But I sorta doubt that the feds will be able to do that when I retire.
Re:SS isn't a state pension plan! (Score:3, Informative)
Pardon me, but what a communist! To suggest US Treasury bonds are worthless!
Re:End Social Security (Score:3, Informative)
The short answer is politics. The long answer is that people about to retire believe that their life's worth of social security is in a bank someone, and its THEIR RIGHT to have it. Since they are the most consistent voting block (backed by the most power special interest group- AARP), they get anything they want. The reason that younger people today cannot just do away with social security is because it is their momney tha
Re:End Social Security (Score:3, Insightful)
this is unrealistic (Score:5, Insightful)
Life is unpredictable not everyone who is down and out is irresponcible. Here is a reality check, you get cancer and your insurance policy drops you, yea it happens. your retirement just went to paying for cemo (sp) the reality is social security is there for a reason. I think you shoudl be allowed to direct the investment of a portion of yoru social security however that should be it.
Re:End Social Security (Score:5, Funny)
Re:End Social Security (Score:3, Insightful)
Are you really that heartless? Do you think it's good for society to have tens of thousands of elerly people and children starving and homeless? It's too bad they didn't save, or perhaps it's too bad their investments went sour, or they were swindled, or some other circumstance you're not considering. But it's a disgusting to deny help to those who need it because you're deciding
Re:End Social Security (Score:3, Insightful)
Re:End Social Security (Score:3, Insightful)
If we do
Re:This whole "There is no crisis" (Score:5, Insightful)
The larger fact is that basic problem is a too large federal deficit, not a systemic social security problem, and the proposed "reform" makes the underlying problem worse, not better.
Clinton on the Social Security crisis (Score:5, Insightful)
July 27, 1998 [nara.gov] Were they singing a different tune back then? Is there only a crisis when a Democrat says there's a crisis?
I'm sorry but "only two people working for every person drawing Social Security" will not work. Social Security will not be able to support itself. Now you may not agree with what has been proposed by the President to reform Social Security, but you shouldn't be so childish and stupid to deny that a problem exists.
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Re:This whole "There is no crisis" (Score:3, Insightful)
Re:Ponzi scheme (Score:3, Insightful)
In Social Security, continuing generations are infinite. So it doesn't fall apart.
That's hardly a minor difference. It makes *all* the difference.
Yes, if earth gets blown up from a meteor, then the younger folks who have paid payroll taxes will be screwed out of their social security. But somehow I don't think they'll care.
Re:The frame is "only YOU can pay for YOUR SS" (Score:3)
What a rotten idea. Social Security is supposed to be a pension program, not a welfare program. If you're gonna cap my benefits when I'm old, you can cap what you're taking from me now.
taxing the substantial wealth of the plutocrats, and using that to pay for SS, and many other items. Just a small 1% tax on wealth of the rich would pay for SS, universal healthcare and colle