sant (01/20/83)
I would like to start a discussion on how netlanders feel about
social security. This week's Newsweek contains the following table:
AVERAGE WAGE EARNER
Year attaining Total social-security Benefits worker
65 taxes paid(1) can expect to
(includes interest) receive during
retirement
1940 $ 63 4,867
1960 1,972 25,995
1980 24,206 125,125
2000(2) 174,860 404,204
(1) Includes worker's and employer's payments
(2) Projections
Clearly this robbing Peter to pay Paul pyramid cannot continue
indefinitely. I myself am 28 and do not feel confident about social
security being around when I retire. How do you feel?
Do you think it would be fair to reimburse everyone whatever they
have paid into the system so far and then shut down the system altogether?
Does anyone know what overheads are associated with social
security? What fraction of the dollar you put into the system is actually
paid to the retirees?
I understand that there are several very powerful groups(e.g. AARP)
which vehemently oppose any tinkering with the system's present structure.
Is there any organization along the lines of 'People against
social security' ?
Please reply to the net.
Deepak Sant
HP Labssoreff (01/21/83)
The most important thing to remember about the social security system is that it is really a transfer payment system. It is not now, and is not going to be a savings system. In an inflationary economy of constant size with steady demographics, it would be perfectly possible for each generation to receive more dollars out of the system than they put in. The thing that would have to balance under those circumstances would be total payments after adjustment for inflation, since that determines what actual flows of goods are taking place. The real situation is not, of course, one of demographic stability. As the baby boom generation (myself included) eventually reaches retirement, we can't expect to do as well as the preceding generation for the same reason as will be true all our lives: our cohort's size will always mean more intense competition for availible resources than in smaller cohorts. Note that this applies regardless of whether our retirement system is a transfer payment one or a savings-based one. If it is transfer-payments-based, then payroll taxes will become very high when the number of retirees peak, with obvious political pressures to cut benifits. If it is savings-based, those savings must be held by someone, and that someone will have a huge debt at the time the number of retirees peak, with consequent pressure to reschedule or default on it. -Jeffrey Soreff (hplabsb!soreff)
nickles (01/21/83)
#R:hplabs:-112500:ihlpb:19100006: 0:1417 ihlpb!nickles Jan 21 9:21:00 1983 I haven't read the Newsweek article (I'll do that during lunch today!), but, why is it that you can put $60 in, and take much more out? This is ludicrous. I thought that FICA was more like manadatory retirement planning, i.e. a federal IRA. This is just welfare, and should be called welfare. The amount of money anyone can take out of the system should be exactly the amount that they put into the system, plus 5 1/4% interest (the interest level would have to be more flexible since the fed lets it free-float now). Any other payments should be made in the name of welfare. Welfare gets paid out of the general fund, and hence we can easily complain about welfare. I.e. there should be a change in terminology and bookkeeping. But, there need not be a change in payments, just where the money comes from. Taxes would rise to support the general fund. The real kicker is that we, the massive working class, seem to have a weaker lobby than the smaller SS benefit recievers. It seems that at the very least we should protect our interests and lobby hard against high SS taxes. I hate taxing, when the revenues are going into a system that can't even get input=output right. If that system were sound, and we were being taxed into the general fund, then at least I'd sleep knowing SS would be around in 40 years when I retire. Jack Nickles [harpo!ihnss!] ihlpb!nickles IH 6G-317 x6356 BTL
dfz (01/21/83)
I haven't heard of any organization called "People Against Social Security" but if there is one I'd sure appreciate some info on it so I can join. I do not favor the (fraudulent) removal of benefits from those who have something coming but they better stop the (also fraudulent) claim that people in their working prime now will live to see any benefits. Also, is there any information on tax reform groups looking into such issues as "flat income tax" and, in general, the elimination of the various tax deductions which favor special interests (such as the home construction industry)?
swatt (01/21/83)
In 1973 I attended a symposium given at the University of Chicago titled "The Economics of Financing Government", featuring Milton Freeman and others. One person who had worked at HEW gave a talk about the Social Security system. He said several co-workers had attempted to calculate the "unfunded deficit", the difference between obligations and income if SS enrollment were stopped right then. They came up with various numbers up to $800 BILLION. He said they had a special name for numbers of that size, "MEGO" numbers, for "My Eyes Glaze Over". The problems with SS are not entirely the fault of the federal government. I believe when it was first set up, the retirement age was 65, but in the 50 years since initiation the average lifespan has increased, and more people go to college before entering the work force. Thus people start paying into the system later and live longer to collect benefits. What IS the fault of the federal government is that this situation was not continually adjusted so the overall system remained actuarially sound ($outgo == $income). The political control over SS administration guarantees that "popular" changes get made (increase benefits), while "unpopular" ones don't (increase taxes). Looking at my W-2 summary for 1982, I find that just over $3,000 was deducted from my paycheck for FICA; ITT contributed the same amount. Under the IRA rules, I can only put $2,000 into my own private retirement account. Even so, if I put the maximum into the IRA each year, when I retire at 65, I will have MORE money available (before taxes) from the IRA than my benefits from SS, to which I will have contributed 3 times as much (this projection made certain assumptions about interest rates that may no longer be valid). Several general objections to present SS system: 1) I'll bet, without having to look, that the SS trust funds are invested in treasury notes. The government thus lends itself the money it collects for retirement at interest rates it choses to pay. As I believe the government borrows far too much anyway, this is a sneaky way to borrow more from "captive investors". BTW, this is part of the fraud administrations commit when they say "we spent X times as much on social programs as military programs". They are including the SS payments, which are by law separate from general revenues. 2) I'm willing to go along with a system that funds a decent retirement for all workers, even if it means the higher earners will pay more and get less, but the system ought to be actuarially sound overall. The true cost of the retirement program ought to be visible. This means taking it away from political control. 3) As long as the SS system is going to stiff the higher earners, the tax laws on IRA's should be liberalized for those who chose to put their own money into their own retirement. Say a maximum non-taxable contribution of up to the total individual + employer FICA payments. Since I am operating on the assumption that when I retire my effective available SS benefits will be 0, I would gladly pay more money into something that is mine personally. 4) Given an inflationary economy, the ONLY way to survive is to continually increase your income. This makes "retirement" a relative thing. People over 65 who still work to maintain their standard of living have their SS benefits reduced or eliminated. 5) The whole philosophy of "from each according to ability; to each according to need" simply CANNOT be fair given different opinions about "ability" and "need". A central government determination of both opens the way to the the worst kind of tyranny. There was a recent item in the news about the public employees of a city or state going OFF the social security system. Does anybody know what the provisions are in the SS act that allow this? Would it apply to any governing body? If so, it might be a possible answer to the SS mess. - Alan S. Watt
mmt (01/21/83)
The original article contained what looked like very misleading figures, for two reasons (1) they compare start-up time input to the system with ongoing output and income, and (2) they use current dollars, rather than allowing for inflation. The commentary by Sant also sounds like either a self-serving bit of propaganda (I don't want to pay for my retired relations and other old people to survive) or foolish misunderstanding (my dollar now is worth the same as a 1940 dollar or a 2000 dollar). Basically, social security is what we who are now working owe to those who made it possible for us to exist and to work. The business about getting out what you put in is baloney; it's a way of ensuring that we all can share the wealth when we are too old and sick to contribute any more. It is the workers NOW who are paying for benefits received NOW, not workers of 20 years ago paying for what they now receive. I hope our children believe that we should not starve when we are old. If they don't, BOY will there be a revolution!!! If we don't support our dependents, what kind of morals do we have? Will we deserve support later? Martin Taylor
gnu (01/22/83)
One group that truly cares about tax reform is the Libertarian Party. Whether they ever have enough political muscle to do something about it mostly depends on you, and you, and you too. John Gilmore, Association of Libertarian Feminists
bj (01/22/83)
Clearly this robbing Peter to pay Paul pyramid cannot continue
indefinitely. I myself am 28 and do not feel confident about social
security being around when I retire. How do you feel?
I believe that figures presented are misleading. The comparison being
made is between apples and oranges. To get figures which have any
value you have to look at real dollar ammounts.
For a contrived example, assume that people put in $1000/year for 40 years
and then collect $5000/year for 8 years. In this case the ammounts put in
and taken out are the same. If this happened for everybody and there was
a constant population, the system would work. Income each year would
exactly match expenses.
Now, assume there is an inflation rate of 10% per year and that all
collections and payments are indexed. The figures would then show
that a person puts in a little more than $440,000 and takes out almost
$2,600,000. In spite of the apparent imballance, the system still
works since the collections and payments in a given year have the same
1 to 5 ratio as they did when the system started. Income each year
would still exactly match expenses.
In order to get make the Newsweek figures meaningfull you have to
have a lot more information and do more compilcated things to it.
I suspect that meaningfull figures would show collections and payments
about even (except for the first generation). It is not a pyramid scheme.
Social Security does have some problems, mostly due to the fact that are
society is getting older. There are fewer and fewer people paying Social
Security and more and more collecting. It used to be around 5 workers per
collector. The ratio is somewhere around 4 to 1, will drop to 3 to 1 in the
next decade, and finally drop to 2 to 1 somewhere around 2020.
[caveat - all the numbers in this article are from memory (except for the
$44,000 and $2,600,000 which I just calculated). If you discover minor
errors in the numbers, please notify /dev/null.]
Do you think it would be fair to reimburse everyone whatever they
have paid into the system so far and then shut down the system altogether?
I won't make a judgement about fairness, but I do not think is should be done.
One reason is that the government could not to afford to. It has less than
one years income at the present time, it could never pay back all the money
it has collected (plus interest). Another reason is that the goverment does
a better job of supporting people than they would do. If you gave the money
back, millions of people would spend it rather than investing for later.
B.J.
decvax!yale-comix!herbison-bjwelsch (01/22/83)
Some comments on social security. First, SS is a commitment by our society to care for ALL older members of the society who have contributed to society. No it is not welfare nor should SS be confused as welfare. Second, the current cash flow problems faced by SS are caused by the high unemployment and general recession. Without SS the recession would be much worse than it currently is. Most of the money given out by SS is pumped right back into the economy. Third, there is a long term cash flow problem for SS based on the general aging of the population. Some suggestions to fix this problem are: a. Make the SS tax progressive. Note SS is not even a flat tax. It is regressive. b. Prevent double dipping by making the coverage universal, ie. Some federal, state and other employees can contribute a mimmal amount and still collect SS. Inother words everyone pays SS tax and everyone collects SS. c. Don't allow companies to force people to retire at a certain age. Also do not allow descrimation based on age. Allow older people to work for the same company in a different capacity without the opinion that she/he has been demoted. d. Provide more opportunities for older people to volunteer their services for the good of society, thus making those services less costly. e. Provide for universal medical coverage for everyone not just older people. Larry Welsch houxj!welsch
soreff (01/22/83)
I think that the current system should be altered to make it actuarially sound, but that adding a "need" criterion would be a bad idea. I suspect if enough need based criteria were added to social security then the middle class would wind up paying into it but not getting any return from it. This may present more of a problem in keeping social security viable then in keeping most transfer programs viable because a lot of the non-humanitarian arguments in favor of other transfer programs do not apply to social security. A lot of welfare programs, for instance, are partly justified because they keep the inner cities calmer then they would otherwise be. I suspect that the hazard from rioting low income retirees is not sufficient to help maintain a transfer payment system. Another argument that applies to some programs such as student loans and other educational programs (and, to some extent, aid to families with dependent children) and job training programs etc. is that they are really investments in human capital, on which the entire society can expect some returns when the immediate beneficiarys leave the program. As the typical retiree leaves retirement by expiring, human capital formation arguments don't really apply. Personally, I don't really expect social security to be there when I retire, simply for actuarial reasons. It is going to be hard to provide for the retirement of baby boom people no matter what happens. I DO have a stake in seeing the system assist my parents' retirement. A needs test added to the system would remove that stake in it for me, and probably for many others. -Jeffrey Soreff (hplabsb!soreff)
clif (01/23/83)
I think people are being awfully pessimistic to think that there
won't being any Social Security when they retire. Although I certainly concede
that the system cann't continue paying the same level of benifits without a major
change. I cann't imagine the Goverment suddenly stopping Social Security
since it would cause such a political backlash.
For what it is worth (does RR read net.politics ? he should)
here are my suggestions for saving our Social Security (SOSS).
1. Eliminate the current 36K limit on FICA taxes. When SS first
started most people were finished paying FICA taxes by June.
Now most people pay FICA the entire year. There are enough
tax breaks for the rich why give them an additional one.
2. Make everyone pay into the SS system most notably Federal and
State employees. (This scheme would generate 300,000 just from
members of Congress, the Supreme Court, RR and George Bush)
3. Tax Social Security benifits. The Administrations proposal
to tax Social Security benifits for those people with a an
adjusted gross income of more then 25K seems reasonable.
4. Index the increase in benifits to the average after tax! wage
increase, not the CPI (I believe this is also part of the Administration's
proposal)
5. Encourage old folks to die, by giving them special tax breaks
for kicking off before 65. :-) (just kidding)
Clif Purkiser
{ucbvax decwrl}!amd70!clifbcw (01/23/83)
From: Bruce C. Wright @ Duke University Re: Social Security Strictly speaking, Social Security is *not* a pyramid scheme as such things are usually constructed. A pyramid scheme *requires* that the pyramid keep growing in order for the system to work; this is not the case with Social Security (you can imagine situations in which Social Security would work: steady population cohorts, static medical technology, and so forth). Unfortunately, the nation is not standing still (this is always a problem for the government to handle since they find it difficult to deal with a changing environment). The population cohorts are changing all over the place (the 1946-1955 cohort is larger than the ones before or after, abut thw 1976-1985 cohort looks like it will be larger again). This means that there will be distortions when the larger cohorts retire. Secondly, medical technology is progressing rather rapidly; the average life expectancy has increased by around 10 years since Social Security was initiated. When Social Security was started, the marginal life expectancy was only about 5 years after age 65; now it is over 10 years, and many more people are making it to 65 than did when Social Security was started. This tendency shows every sign of continuing and perhaps even accelerating. Thirdly, people are retiring earlier than when the system started. When the system started, benefits could not start before age 65; now benefits start at age 55. The basic problem is that there is tremendous pressure on Congress to add benefits but not much pressure to stay within the system's means. In order for the system to stay solvent indefinitely, it will have to be indexed to population and technological dynamics (which will mean raising the minimum benefit age, not a politically popular move). A large part of the problem occurs because of the anti-savings bias of the government tax system (and we wonder why the US capital supply has been drying up...). Unfortunately, as long as all of the different special interest groups (Defense department, Welfare programs, etc, etc ad nauseum) continue to demand so much money and Congress is willing to cater to them for their votes, there isn't much that can be done about that problem. It probably isn't a good idea for *anyone* to rely on getting a single dime out of the system if you're under about 50 - I wouldn't be at all surprised if the above problems didn't exacerbate the system's financial status so badly that it goes broke by 2000. The current "fixups" will only keep it going until 1990 under fairly optimistic assumptions - not anything you'd want to stake your life on. Bruce C. Wright @ Duke University
bcw (01/24/83)
From: Bruce C. Wright @ Duke University Re: Social Security Strictly speaking, Social Security is *not* a pyramid scheme as such things are usually constructed. A pyramid scheme *requires* that the pyramid keep growing in order for the system to work; this is not the case with Social Security (you can imagine situations in which Social Security would work: steady population cohorts, static medical technology, and so forth). Unfortunately, the nation is not standing still (this is always a problem for the government to handle since they find it difficult to deal with a changing environment). The population cohorts are changing all over the place (the 1946-1955 cohort is larger than the ones before or after, but the 1976-1985 cohort looks like it will be larger again). This means that there will be distortions when the larger cohorts retire. Secondly, medical technology is progressing rather rapidly; the average life expectancy has increased by around 10 years since Social Security was initiated. When Social Security was started, the marginal life expectancy was only about 5 years after age 65; now it is over 10 years, and many more people are making it to 65 than did when Social Security was started. This tendency shows every sign of continuing and perhaps even accelerating. Thirdly, people are retiring earlier than when the system started. When the system started, benefits could not start before age 65; now benefits start at age 55. The basic problem is that there is tremendous pressure on Congress to add benefits but not much pressure to stay within the system's means. In order for the system to stay solvent indefinitely, it will have to be indexed to population and technological dynamics (which will mean raising the minimum benefit age, not a politically popular move). A large part of the problem occurs because of the anti-savings bias of the government tax system (and we wonder why the US capital supply has been drying up...). Unfortunately, as long as all of the different special interest groups (Defense department, Welfare programs, etc, etc ad nauseum) continue to demand so much money and Congress is willing to cater to them for their votes, there isn't much that can be done about that problem. It probably isn't a good idea for *anyone* to rely on getting a single dime out of the system if you're under about 50 - I wouldn't be at all surprised if the above problems didn't exacerbate the system's financial status so badly that it goes broke by 2000. The current "fixups" will only keep it going until 1990 under fairly optimistic assumptions - not anything you'd want to stake your life on. Bruce C. Wright @ Duke University
heliotis (01/24/83)
There is one thing about your "robbing Peter to pay Paul" problem that makes it less bad. The *current* workers are paying the older people's *current* benefits. It really is not a savings plan, no matter what they say. More importantly, I think the way to solve this problem is to look at the main cause: people are living longer, so the payer/payee ratio is getting samller. The solution: raise the retirement age; people are healthier at 65 than they used to be. (Yes, I know this does not work well when unem- ployment is high, but I think that in the long run it's the best way) Jim Heliotis P.S. Let's hear others' ideas on how to "save" S/S.
ken (01/24/83)
I do not have faith in the U.S Government as a manager of my finances;
it can not even manage its own. Therefore, I would like to unsubscribe
from the social security system, investing that money instead into my own
IRA or equivalent. Does anybody know whether it is possible to not
contribute to social security?
Ken Turkowski
{ucbvax,decvax}!decwrl!turtlevax!kenhansen (01/24/83)
IRA's may seem to be a winning proposition for those of us in the 'baby boom bulge,' but what makes you think that our friends in high places won't change the tax laws again and bleed all "your" little nest eggs away? If they increased the penalty for pre-retirement withdrawal from 10% to 50% and the "retirement" age up to 80 years, having an IRA would be a real liability. "I'm paranoid just 'cause they're already getting me..." Craig Hansen HP Labs
steve (01/26/83)
I agree with you 100% we should take care of our parents and grandparents who made it possible for us to live and work and share in this country. What I dissagree with is the premiss that my parents and grandparents are the governments responcibility. They are not.They are mine !! Milions of our older people(my grandmother included) thought that they wrer going to be able to retire on the government SS program. This program was started when an 8th grade education was concidered well educatated and children were working in sweatshops. People believed what the government told them and maybe the government believed it to. SS was realy supposed to SUPLEMENT privite plans such as pensions, investments, and savings(remember when people saved for retirement) but when all these people retired verry few of them had anything long term put away and besides the government had been saving for them. Well these people screwed up and we can't abandon them now but I would like a choise of wether or not to partisipate in SS. Get me out and pay those who are still in from general revenue untill they all die out. That takes care of them and lets me take care of mine. steve (bunker)
fair (01/27/83)
The way to stop contributing to the Social Security System is to become a federal employee. Erik E. Fair fair@Berkeley (ARPA) ucbvax!fair (UUCP) Former postal worker.
ech (01/29/83)
#N:whuxlb:10600002:000:2626 whuxlb!ech Jan 25 00:36:00 1983 Let's try to concentrate on objectives, shall we? The question is not so simple (and emotional) as "shall we let our parents starve?" or "shall we let anyone take out more than they put in?" The question is what we, as a society, are trying to accomplish with Social Security, and whether it meets those objectives. One objective is to provide a "safety net," a transfer of income from those who have more than they need to those who have less than they need. Whether you call this a tax and a welfare program or an insurance policy is of mainly emotional consequence. A very different objective is to provide an annuity, an investment which is expected to grow, which one pays into with the expectation that one can draw from it when the funds are needed. It is important to note that Social Security was conceived to meet the first objective but, since taxes and welfare are EMOTIONALLY distasteful, it has been "sold," since FDR's time, as an annuity. It is also no secret that Social Security is a failure at both objectives. As a welfare program, it clearly pays benefits to people who either don't need them or need less than they receive. Equally clearly, it taxes people with higher incomes less than people with lower ones, and a large group of people (federal and many state and local employees) don't pay in at all. And SS is not, and never was, an annuity: FICA is not forced savings, it's just another tax. It's time to replace Social Security, simply because it doesn't meet its objectives. Note that I said replace, not abolish. We can abolish or phase out the payroll (FICA) tax pretty quickly: it only pays into general funds anyway, but the phase-out necessarily means that other tax rates would increase. As an alternative, we could raise the FICA rate, abolish the income limit, and abolish all other taxes and, voila! a flat-rate income tax! We can also phase out the "annuity" aspects on a gradual basis. A gradual shift in benefits calculations from one based primarily on payments made to one based primarily on need would "break faith" with no one. But don't expect anybody who ever expects to be elected again to come out and advocate what I just suggested. What you CAN do is write your congresscritters and endorse the recommendations of the current blue-ribbon committee and it's inevitable successors: the dinosaur which is Social Security is already dead, and EVERYBODY knows it, but the body is big and messy and will have to be buried in small, politically feasible bites. The welfare program will, and should, continue, and you already bought into an IRA, right? =Ned Horvath=
cliff@unmvax.UUCP (01/08/85)
> It (replacing Social Security with IRA's or their ilk) sounds good BUT: > > what of the guy who waits till he's 59.5, takes all the money out of > his IRA account, and losses it it (spends it/ gambles it, etc.). > > Now he's old, and broke. Does society support him, or let him starve?? Do you mean society or government? Government should not support him. Let society do what it sees fit. If people want to be sure they won't screw up, I am sure there are banking institutions that would allow people to specify in their contract that they may only take a predetermined amount of money out per period (weekly/monthly/quarterly, you name it). Let's move this discussion to net.politics. > ------------------------------------------------------ > Ross M. Greenberg @ NYU ----> { allegra,ihnp4 }!cmcl2!acf4!greenber <---- --Cliff [Matthews] {purdue, cmcl2, ihnp4}!lanl!unmvax!cliff {csu-cs, pur-ee, convex, gatech, ucbvax}!unmvax!cliff 4744 Trumbull S.E. - Albuquerque NM 87108 - (505) 265-9143
welsch@houxu.UUCP (Larry Welsch) (01/20/85)
There seem to be a large number of folks on the net who do not like social security and seem to be of the opinion that they would be better off without it. Oh I hear you out there now. It sounds to me like you do not understand why social security was formed in the first place and why it is important today. The main reason social security was formed was to provide protection for all the hard working folks who worked their asses off being good citizens. They had savings, stocks, bonds and houses from their life's work and then the great depression hit. The savings, stocks and bonds were worthless and their houses were repossessed by the banks (oh yes there was this marvelous concept of demand mortgages back then, any time the bank wanted it could demand the mortgage paid in full and if you didn't have the money you lost your collateral.) Social security was a form of protection for people who worked all their lives just to discover that their life's savings was worthless, due to conditions beyond their control. Social Security is still necessary today for exactly the same reason. Think of the people who retired in 1970 say they had hundred and fifty thousand dollars to their name, which was a lot of money in 1970 Assume they owned their own home and planned on living off the interest at about 6% or $9 thousand a year. Possible in 70, forget it in 1984. Oh I grant that maybe they could get 10% a year now or 15 thousand a year, but it just wouldn't cut it. I make over 5 times my salary of 1970, but just to make 3 times or 27 thousand dollars would be significant to them. What happened, inflation! Social Security COLA's are protection against inflation. Now for some kickers. Banks are still failing, and not all banks are FDIC insured. Also to get 10% on your money you have to use non FDIC insured form of investment. Or another words people have to RISK their savings just to maintain a decent return. Finally, the single biggest expense older people have is medical. Medical expenses have gone up more than any other type, so the probability of older people being able to not touch their principle is low, since they would need to pay their medical expenses. Now, what about social security running out of money, well horse pukkey. The social security system is sound, as a matter of fact Reagan is eyeing the money in the social security trust fund to pay the cost of running government. How, you ask? Simple, buy government bonds at below the going interest rates. What social security needs is not to be disbanded, it should be strengthened. How? Simple, put the tax on one's whole income and make it progressive. Also, charge employers a progressive social security tax. For every dollar of an employees salary that is over a hundred thousand dollars, the employer must add a a matching dollar to the social security fund. Further, every time prices are raised for a given service or product, then the social security fund must get half the amount of the gross income due to the increase in price. Some other things that can be done is pass laws dictating that companies can not have mandatory retirement regulations. Raise the age that social security starts to 70 or 75. Larry Welsch houxu!welsch
faustus@ucbcad.UUCP (01/22/85)
> Now for some kickers. Banks are still failing, and not all banks are FDIC > insured. Also to get 10% on your money you have to use non FDIC insured > form of investment. Or another words people have to RISK their savings > just to maintain a decent return. Finally, the single biggest expense > older people have is medical. Medical expenses have gone up more than any > other type, so the probability of older people being able to not touch > their principle is low, since they would need to pay their medical > expenses. It would be a lot easier to just have the government pay all the medical expenses of people over a certain age. Also there could be government run "old people's homes" for those people who by some bad luck have lost all their savings. GIving SS money to people who don't absolutely need it is silly. Instead of letting people think, "I don't have to save up for my old age because I will get social security", they should be thinking "I'd better save my money and be careful with it, because all I can be sure of is that the government won't let me starve to death". Most people won't look forward to this sort of minimal support, but at least they won't die because of lack of food and medical care. > What social security needs is not to be disbanded, it should be > strengthened. How? Simple, put the tax on one's whole income and make it > progressive. Also, charge employers a progressive social security tax. > For every dollar of an employees salary that is over a hundred thousand > dollars, the employer must add a a matching dollar to the social security > fund. Further, every time prices are raised for a given service or > product, then the social security fund must get half the amount of the gross > income due to the increase in price. Great, more incentives not to make money. Just what we need. Wayne
laura@utzoo.UUCP (Laura Creighton) (01/22/85)
Larry, You are going to have to do some reading of economic history. You have your facts wrong. First of all, you do not appear to know where Social Security came from, both globally, and in the United States, and secondly you do not appear to know where the depression came from. You write: The main reason social security was formed was to provide protection for all the hard working folks who worked their asses off being good citizens. There are two problems with this statement. The first is that it assumes that it is possible to ``protect'' hard working folks and Social Security is actually doing it. But the second is more glaring -- *this is not where social security came from at all* -- the business of *protecting* came much leter as an extra justification for the existence of the whole thing. About 6 months ago, I posted ``How the Federal Reserve Act lead to the Depression''. How soon you all forget! The Depression was *caused* by government meddling -- in the forms of taxes, tarrifs, and most especially by how it enabled banks to inflate their currency (something now reserved for the government alone). Inflation causes depressions. I am now going to outline how SS cuases inflation (or rather, how the government, now committed to SS, is forced to inflate the dollar). SS, rather than protecting the hard workers, only causes the very things you want to protect them from! Social Security, like any other political institution, began with an idea. In the case of the United States, it came from a man (whose first name I forget) named Townsend. It was his claim that the Depression could be cured if one gave $200 (or $250? I forget) to everyone over sixty, each month, provided that they spend it within the month; the resultant demand would cause production to increase, and everybody would be better off. This sort of idea (that the government can much with the money supply and make everyone better off) was gaining tremendous respect among politicians and some economists at the time. The master of these sorts of theories was John Maynard Keynes, but the notion had been attractive to politicians since before his arrival on the horizon. Have you received Daniel Kian Mc Kiernan's article on inflation? If you study that one you can figure out what is wrong with Townsend's proposal -- besides the moral idea that it is immoral for you to take my money away from me for any purpose whatsoever. The market works a certain way. People do not come up to frogs and say ``gee, I wish you were a bird, so I will tack on wings and expect you to fly''. People do not try to make Crays out of IBM PCs. For some reason, though, politicians are *determined* to pretend that the market will operate according to their desires, and people are *determined* to agree with them. Okay, back to the depression. Nobody likes it. The politician who makes it go away will get lots of votes and lots of power and the eternal gratitude of the American people. Townsend's proposal gains popularilty, and eventually, after about a third of the American people think that it is a good idea, Social Security becomes law. (It is just too bad for the two thirds who either didn't like it or expressed no opinion on the subject, not to mention people like myself who weren't even born yet.) What is wrong with the idea? Why doesn't it *work*, you ask? Well, here is a very basic secret. *Consumers qua Consumers do not drive the market*. *Consumers qua Consumers determine which of the competing products they can buy will be bought, and thus which producers will do well and which will go bankrupt. They are influencial in the weeding out process whereby inferior products stop being produced, but as consumers they do not drive the market.* There is no such thing as a consumer who is not also a producer, unless, of course, he is on ``relief'' or otherwise being supported by somebody else. (Unemployed people who are living off their own savings are still producers, or at least they were.) It is *production*, not *consumption* which drives the market. Which brings us to a very basic truth. TANSTAAFL. There ain't no such thing as a free lunch. Townsend sounds like he is promising a free lunch, so *there* *must* *be* *something* *screwy* *around* *here*. Frogs don't fly... Look a bit. What he is saying is that just transferring bits of paper around is going to cure the depression. At that rate we can all become insurance salemen and sell insurance to each other and all become millionaires. Ooops, it doesn't work that way, alas. What Townsend has forgotten is that he is going to have to get those $200s from somewhere. He has 2 choices. He can either take it away from people who already have $200 or he can go to the presses and print more money. In either case he has not increased the wealth of the nation, because *Wealth is not Money*. Wealth is all the goods that the nation has and is producing. If Townsend takes the money away from the people that have it, all he has done is *transfer* wealth from the ``haves'' to the ``have nots''. What happens? Well, the ``haves'' no longer can spnd that money as they choose. They can't just keep it in the bank, either, if that is their choice. The bank no longer can invest the money as they would have if the ``have'' didn't have to withdraw it to pay the taxes. All the people who would have received the $200s, either directly from the ``haves'' or from the banks in the form of loans LOSE. All the people who receive the $200s WIN. The winners know whom they are. Most of the losers do not know whom they are -- indeed, some of them think that they are winners, not realising that they have lost more money in business then they received in SS. This is politically desirable -- the politicians appear to be doing good things. But, for every winner there is a loser -- TANSTAAFL. Eventually, either the government does not tax enough one year, by mischance, or, as is more likely, realises that if it raises taxes it stands to lose the next election. At this point it goes to the treasury and starts printing money. The nation doesn't know it yet, but it has just been poisoned. Take all the wealth in the nation and divide by the number of dollars in circulation. That is how much a dollar is worth. If you raise the number of dollars without creating any new wealth then you have devalued the dollar. TANSTAAFL. This (as you recall) is inflation. Inflation amounts to a tax on money. Your money is worth less, you have to pay more money, and the difference is used by the government to keep those SS payments going out the door. (Plus any other expeditures that the government might have.) The people on SS notice, as everybody else does, that they're dollar isn't buying as much as it used to. They clamour for more money. They want it ``indexed against inflation'' for instance. The people who pay taxes can't buy what they used to, either. They sure as hell don't want to pay any more taxes, so raising them is politically unfeasible. So the government prints more money. More poison. The nation gets sicker....and sicker....and sicker... and all the while most people think that ``inflation'' means ``raising prices'' and blame the fellow victims of inflation who are forced to raise their prices, rather than the government. A lovely scam for the government... Government officials are not all fools. if you read any history you will see that from the Athenian League through Germany in the 1930s-40s and many South American countries today the journey from inflation to total monetary collapse is quite well marked. The only way to avoid this is to either: stop spending what you can't afford or raise taxes so that you can afford more. Both of these are politically unfeasible. But if you can con the public into paying more into SS, you can keep the whole game running longer, perhaps until you retire or until someone else figures out a way to make frogs fly. What you do is to see the American public on insurance. You sell SS as insurance -- you pay now and it will all be there when you retire. This sounds like a RRSP. If this was what SS *really is*, then while I would have severe moral difficulties with a government that tells me I *must* save my money, and where I must save it, I could see the scheme working. RRSPs work, after all. However, the government is *not* investing my money. What it is doing is paying the people who are already at retirement age with it. This is not a RRSP -- this is a chain letter. If a private individual starts a scam like this -- either with a chain letter, or through the stock market (remember the guy who sold franchises of franchises of franchises to sell cosmetics?) the government sends him to jail pdq. The reason is that it rips off the guys at the bottom, who pay their money to the guys at the top (who get rich) and will never get any money back because by the time their name is at the top of this list there won't be anybody left who is willing to pay money at all -- the market is saturated. On to some more basic facts. The soundness of the SS system is unrelated to the trust fund. That was just set up to maintain the illusion that SS was some kind of insurance plan. Once you realise that there is no investment, just a chain letter, you can see this. The problem won't go away -- there aren't enough new people being born that we can send the SS chain letter to who will start paying. SS IS GOING TO STOP. We simply cannot afford it. We have a choice -- cut down on it, gradually, (thus not simply creaming the poor people who believed that SS was a RRSP when they started paying 40 years ago, or so.) -- or we can face monetary collapse. The government cannot continue inflating the dollar indefinitely. TANSTAFFL. Social Security, Military Spending, Aid to Farmers, the national debt --- all these things *cost money*. And inflation is no way to pay for it, it is just a way to trade political acclaim now for monetary collapse later. Laura Creighton utzoo!laura
cliff@unmvax.UUCP (01/22/85)
> Now, what about social security running out of money, well horse pukkey. > The social security system is sound, as a matter of fact Reagan is eyeing > the money in the social security trust fund to pay the cost of running > government. How, you ask? Simple, buy government bonds at below the going > interest rates. > > What social security needs is not to be disbanded, it should be > strengthened. How? Simple, put the tax on one's whole income and make it > progressive. Also, charge employers a progressive social security tax. > For every dollar of an employees salary that is over a hundred thousand > dollars, the employer must add a a matching dollar to the social security > fund. Further, every time prices are raised for a given service or > product, then the social security fund must get half the amount of the gross > income due to the increase in price. Er, if it is not running out of money, why does it need more? Your are full of it. Social Security is not fiscally sound. It is a pyramid scheme, like Amway... (I guess that's why they call it Amway). Whoever gets in early enough profits (not to mention the scores of bureaucrats that administer it. What is the point of helping anybody except those who can't help themselves? Is it an attempt to weaken the individual and get him/her hooked on big government? > Some other things that can be done is pass laws dictating that companies > can not have mandatory retirement regulations. Raise the age that social > security starts to 70 or 75. Good idea! Make sure that the money that is stolen from people who stat- istically have shorter lifespans will never see them again! Yeah, SS is such a good set up that we should raise the age to 100! > Larry Welsch > houxu!welsch --Cliff [Matthews] {purdue, cmcl2, ihnp4}!lanl!unmvax!cliff {csu-cs, pur-ee, convex, gatech, ucbvax}!unmvax!cliff 4744 Trumbull S.E. - Albuquerque NM 87108 - (505) 265-9143
muth@amdahl.UUCP (John A. Muth) (12/04/85)
<>
It looks like the annual net.politics social security fight is on again.
As long as its happening, I'll put my $.02 in.
Several people have said SS taxes are 6.5% of income. This is only true
if you make less money than the maximum for SS (this year about $40,000).
Someone making double the maximum (~$80,000) pays no more in SS taxes
than someone making the maximum. Therefore, the tax for someone making
$80,000 is about 3.25%. If you make triple the maximum ($120,000), the
tax is 2.17%. And so on ...
When I was in school, this was called a regressive tax. (Note: this is
also true if you count the employer's part of the tax. in that case
the tax rate if 13% for $40,000 ; 6.5 for $80,000 ; 3.25% for $120,000 ;
and so on)
Now look at the benefits. They are based on your tax. Therefore, if you
made the maximum (or more) for your entire working life, you are paid
a higher benefit than someone that made minimum wage all their life.
(Presumedly, someone making the maximum or more will have greater
private wealth at retirement than someone making minimum wage).
I call this inverse welfare (ie. the less you need it, the more they
give you).
So, we have a program based on a regressive tax that pays benefits
in inverse proportion to the need. This sounds like "take from the poor
and give to the rich" to me.
Given this, one would expect the liberals of this country to be fighting
SS while the Reaganites support it wholeheartedly. But what do we have?
The liberals support it and the conservatives are against it.
Truly amazing.
--
John A. Muth ...!{ihnp4,hplabs,sun,nsc}!amdahl!muth