Social Security isn't broken; don't "fix" it!

[ColbertWatcher]

From the Los Angeles Times
Social Security isn't broken; don't 'fix' it
The government program looks so solid and reliable compared with every other source of retirement income that people ought to respond well to the idea of expanding it.
Michael Hiltzik
February 12, 2009

They say that even the worst tragedies harbor the seed of something good. So here's something positive in the stock market's gruesome behavior over the last year: It may finally have driven a stake through the heart of the campaign to "fix" Social Security.

Let's be plain about one thing: This campaign, cooked up mostly by Wall Street investment houses and conservative Republicans,was always about “fixing” Social Security the way one "fixes" a cat.

The perpetrators employed what might charitably be labeled flapdoodle to scare soft-headed politicians, inattentive journalists and innocent citizens into thinking there's something fiscally out of whack with Social Security.

They proposed that the program be "privatized" instead. Rather than pay payroll taxes into a government fund in return for an inflation-indexed monthly retirement stipend guaranteed to the end of your days, they said, you should hold on to your own money and put it in the stock market.

One would have expected the bear market of 2000-02, which shaved roughly 50% from the value of stock portfolios, to have buried the idea of replacing Social Security with personal retirement accounts forever.

(more)

--Los Angeles Times

[MercutioATC]

1. In a worst-case scenario, SS is 100% solvent through 2041.

In 2042, if we do absolutely nothing, benefits would have to be reduced.

That certainly doesn't sound too broken to me, either.

[ColbertWatcher]

2. Exactly.

I'm sick of the GOP's push to privatize everything.

I just don't see how anyone who's been paying attention to the stock market would think putting Social Security into it would be an improvement somehow!

[Zynx]

4. There's not a chance in hell Social Security will be privatized.

The only that might happen is a slight in the benefit formula. That will remove any long term potential problems with Social Security and then some.

[ColbertWatcher]

11. But privatization is what the GOP want to do with every successful government-run ...

... program!

[Zynx]

13. They aren't getting their way. I'll bet my bottom dollar on that.

[ColbertWatcher]

24. Social Security is safe for now ...

... but unless we can keep the GOP's filthy paws off education, there may one day be a generation of kids who believe every other GOP lie (like the one where the New Deal didn't get us out of the Great Depression) and set out to privatize everything.

We may have won the White House and a bunch of seats in Congress, but the GOP still control education and the courts.

[Zynx]

28. I wouldn't go so far as to say the Republicans control education.

That strikes me as a stretch.

[ColbertWatcher]

31. Charter schools and vouchers are privatization by another name.

Not to mention all the religious bullshit being shoved into science classes.

(But that's for another thread)

[Zynx]

37. The vast majority of students are enrolled in public schools.

I would say they have more influence than they should.

[ColbertWatcher]

43. If by "they" you mean GOP I agree. n/t

[Nicholas D Wolfwood]

17. Uhm, no, that is not the worst case scenario.

From the CBO: http://www.cbo.gov/ftpdocs/96xx/doc9649/08-20-SocialSecurityUpdate.pdf

Consequently, CBO projects that beginning in 2019, annual outlays for Social Security will exceed the program’s revenues (see Figure 1 on page 9).5 Even if spending for the program ends up being lower and revenues higher than expected, a gap between the program’s income and outgo is likely to remain for the indefinite future.6

...there is a 10 percent chance that the trust funds will be exhausted in 2034 or earlier.

...The likelihood that outlays will exceed revenues in 2030 is about 97 percent, CBO projects, and there is almost a 50 percent chance that the gap will be larger than 1 percentage point of GDP; the chance of its being 2 percentage points (or more) of GDP is only 6 percent.

[MercutioATC]

18. Hmmm...they changed their numbers since Bush tried to privatize.

I used the numbers that the CBO gave when Bush was trying to sell that "partial privatization" thing.

[Nicholas D Wolfwood]

21. CBO isn't run by the President.

It's run by Congress, and it's from 2008, so if anything, it was skewed to the Democrats' side.

edit for clarity

[Nicholas D Wolfwood]

23. For the record, privitization would be abominable.

I tried to think of a worse word than "abominable" but came up a bit blank. It's that bad of an idea.

Still, I caution you that Social Security (along with Medicare and Medicaid) are in far, far more trouble than you think. Just because it was something Bush tried to do (and poorly, I might add), it doesn't mean there isn't a problem.

[ColbertWatcher]

26. That's probably true since we wasted so much money in Iraq.

Remind me again, how much of the federal budget went to Halliburton and Blackwater?

[Nicholas D Wolfwood]

44. Well, how much did they spend?

There's your answer. Total waste.

[Hannah Bell]

38. The worst case scenario is they use their phony projections to steal 30 years of surplus

contributions & feed them to the banksters.

[Nicholas D Wolfwood]

45. Do you know who the CBO is? (nt)

[Hannah Bell]

47. It's the congressional budget office, & their Social Security projections

are based on the same assumptions as the SSA's -

e.g. 75 years of Depression-era growth, an immediate decline in immigration, continuing increases in longevity at the same rate as the last 30 years, etc.

Have you looked at the 3 projections & the assumptions they're based on? Have you read each year's report? I have.

Here's a summary:

In 1997, SS was projected to go into deficit in 2012 & the TF depleted in 2029, with a 2.23% SS tax increase needed to close the gap between scheduled benefits & the projecte deficit. That means raising SS taxes 2.23% from the present rate in 2029 = full funding of scheduled benefits.

In 2004 (7 years later), deficit projected in 2018 (6 years later), exhaustion in 2042 (13 years later). 1.89% increase in 2042 needed to close the gap.

http://www.cbpp.org/3-23-04socsec.htm

The forecasted meltdown keeps receding into the future. It ain't broke, don't fix it. Raise taxes 1.89% or raise the 90% cap in 2042 if needed, why do it now? To give Congress more of your future retirement money to spend on wars, tax cuts for the rich, covert ops, etc.?

Let them fund that crap out of the general budget.

[SergeyDovlatov]

36. Is it? From where will it get the money when it will start ...

running deficit in 2017 or whatever is the current estimate when payroll taxes stop covering the payouts.

I don't care about "technically solvent". What matters is that when you have to cash out special issue treasuries that SSA stores, us government has to borrow that from somewhere to pay to the retirees.

Bill Clinton did a good job by paying of the debt with the surplus social security taxes. Bush destroyed it by running a ruinous war and increasing government spending by more than LBJ.

[ThomWV]

3. All that is aling with Social Security can be fixed by eliminating the cap

[Zynx]

6. That is even more than what is needed.

[FiveGoodMen]

7. Agreed!

[MercutioATC]

8. I don't think that completely fixes it, but it's like 90% of the shortfall.

Every August, I hit the cap and stop paying FICA. The extra money in my check is nice, but I'd gladly give it up if it would permanently stabilize Social Security.

Hell, I'd even support eliminating the cap and establishing a floor...say, the first $10k of earnings was exempt.

[ColbertWatcher]

9. Yup.

But, that;s not what the GOP want people to believe.

They want people to be afraid and cure it with privatization.

You know what I'd like to see the GOP-controlled media discuss? How America had a history of bank failures every twenty years and how all that ended with the New Deal. Social Security being a big part of that.

[TahitiNut]

22. BAD idea. The Social Security funding mechanism relies on FAIR payroll compensation.

For thirty-five years, labor (the "bottom 90%" of the working class) has been increasingly short-changed. The Gini Index tells the story. As the "bottom 90%" receive a diminishing share of the income pie, the payroll taxes on that "bottom 90%" ALSO fade in sustaining the Social Security system.

The OASDI funding shortfall projections are based on the continued impoverishment (of banana republic scale) of the working class. IT MUST STOP!

Social Security, as it's designed, is like a canary in the coal mine. You cannot fix the 'problem' by relocating the canary to the bosses offices!!

Living Wage. Honor Labor.

I'd FAR prefer a 1/2% sales tax on the sale or exchange of corporate stock (and derivatives) as a supplement to Social Security than rasing the "cap" ... since the "cap" delineates the benefit amount a recipient receives. By raising the "cap" you ALSO reduce proportional benefits given to lower paid workers. (It's part of how maximum benefits are calculated.) That would be INTOLERABLE.

So, I say "NO!" to raising the "cap" -- it's the WRONG answer.

[ColbertWatcher]

33. I agree and take my previous post back. I am convinced. n/t

[Lugnut]

29. Exactly.

I never understood the logic behind the caps.

[Hannah Bell]

48. The logic is, if you tax the top 10% (all income up to 90% of total us income is taxed)

they'd wind up funding more than half of SS.

Unless you want to pay them comparable benefits, they'd move their income stream out of wages & into e.g. stock options, per diems, & other forms not subject to SS tax. Or they'd demand cuts in taxes & benefits.

You want welfare programs, fund them through the general budget.

SS survives because ordinary workers pay for everything they get.

[Hannah Bell]

39. all that is ailing SS = nothing.

[ShadowLiberal]

50. That'll help but there's more things that need changed

I think just plain raising the social security tax is another thing we need to do.

Another thing we have to do, though it would obviously be the most unpopular, is raise the retirement age. The fact is when social security was made people didn't usually live very long past 65 years old, now I think a new born baby in America today is projected to live to be 80, and lots of people are living past 80. The longer people keep on living the worst the financial picture for social security is going to look, because there'll be less people working per retiree to help pay for their social security benefits.

[MiniMe]

5. They need to make some adjustments to funding

either raising the rate or the cap.

[TahitiNut]

10. It's not broken. Enactment of a Living Wage law would allow benefits to be increased.

The 'problem' with the Social Security Fund projections are based on the impoverishment of the working class -- the "class war" that has been enriching the rich and raping payroll workers. The Social Security system has always been based on ensuring that LABOR is fairly compensated, not only in the current generation but in future generations. Health, education, fair labor laws ... all are essential to ensuring that succeeding generations are equipped to provide "safety net" retirement income for their parents. It's a system that makes us a National Family -- instead of a collection of isolated third world families that give birth to several children in the hopes that one of more might survive to care for the parents.

Honor Labor. Living Wage.

[ColbertWatcher]

12. Perfectly put. Thank you! n/t

[Jack_DeLeon]

14. If they would only stop spending Social Security money as part of the general fund

and actually save it exclusively for social security I think that would go a long way towards fixing it.

Atleast after that we would have a clearer picture about what needs to be done to keep it going.

[ColbertWatcher]

20. THANK YOU! This, a thousand times THIS!!! n/t

[Nicholas D Wolfwood]

25. People SHOULD have listened to Gore.

They didn't, unfortunately, and now the problem is not so simply solved. Within 10 years, we'll have far more SS recipients than we will have people paying into it (a deficit of about 30 million people) and there is simply not time anymore to recoup.

[Hannah Bell]

41. Why? Tell me, what exactly *was* the "lockbox"?

Do you know?

[ColbertWatcher]

42. The way I understood the lock box was that it was to be a ...

... vow to not use Social Security funds for anything but Social Security.

[Hannah Bell]

46. Then why did Gore not demand a reduction in FICA taxes instead of talking about lockboxes,

since he'd be completely aware that under the terms of the 1936 SS Act, all SS taxes collected but not needed to pay current beneficiaries *must* be borrowed into the general fund in exchange for Treasury securities?

The lockbox rhetoric was intended to deceive. Both sides planned to continue collecting more in taxes than needed to pay beneficiaries & borrowing the money to fund tax cuts to the super-rich.

Not surprising since the 1982 "fix" that over-funded SS was a bipartisan scam.

[hay rick]

30. military budget(s)- hmmm

Our defense budget equals the spending of the rest of the world combined and a significant portion of "the rest of the world" are our allies. Of course, the defense budget doesn't include the costs of keeping our troops in Iraq and Afghanistan- they are funded by separate appropriation bills. Other obvious military budget items are parked in other agency budgets so the overall spending won't look so egregious: nuclear weapons- Dept. of Energy, spy satellites- NASA, the VA, the CIA, and Homeland Security...

The world is obviously a much more dangerous place for us than anybody else. Maybe it's because everybody hates us for our freedom. OK, that's not an original idea...

[ColbertWatcher]

32. I htink the biggest problem with the "defense budget" is the part that isn't on the books. n/t

[Hannah Bell]

40. Government can't "save". What are they going to do, put it in a money market account?

By 1936 law, if SS has surplus funds, they *must* be borrowed by the Feds in exchange for Treasury Securities.

If you don't want them to spend it, you'd better press for reducing FICA, because surplus collections are projected for about the next 10 years - to add to the last 25.

[MajorChode]

15. Here is why SS is "broken"

It really has nothing to do with what many fear-mongering politicians allege, but it is "broken" regardless.

Here's why it is broken:

1) People who rely on SS as their primary source of income typically receive payments of less than $800 per month. So many of these people also have to rely on many other forms of public assistance.

2) The payroll deduction is stifling to the lower and middle classes. The upper classes pay less or nothing at all which means the SS tax is extremely regressive.

3) People who don't have a need for SS income still get a check which siphons off most of the funds that could be used to lift the elderly poor out of poverty.

[Thrill]

16. Everyone says they are going to reform it. But they won't

Just a political talking point. To be able to get your spending done

[ColbertWatcher]

19. Maybe. However, when a GOPers says "reform" ...

... he means "privatize."

If anyone else said "reform," it probably means something closer to what people know it to mean.

[SharonAnn]

27. Actually, when GOPers say "reform" he means "steal". They just use "privatize" to hide their plans.

[ColbertWatcher]

34. Excuse me, you are correct. n/t

[KamaAina]

35. I had one minor tweak, in the nature of a stimulus

Right now, the SS surplus -- that's right, surplus -- is invested in Treasuries specially issued for the purpose.

The tweak is to bag the special issues and use the surplus to buy T-bills on the open market, much as the Fed does when it wants to pump money into the economy.

edit: spelling

[unkachuck]

49. K&R....n/t