Security Blanket: How Social Security Can Save Us All
Thank god, Bush failed to privatize Social Security. Now it can help to rescue the economy.
it's not widely enough appreciated just how hard this economic crisis is going to be on the old. Why? Because unlike the working population, they are often, well, no longer working. And while the laid off are, of course, in deep trouble, those who hold on to their jobs in a depression do fairly well. Their costs (like gasoline) tend to fall more than their incomes. That means real wages rise, as indeed they have, thus far, in this crisis.
But the elderly tend to live off their assets. These include homes, already down by nearly 30 percent nationally and much more in certain parts of the country. They include corporate stocks, often in 401(k) accounts, down by 50 percent or so, so far. They include cash and bonds, which earn the interest rate—enough said. And there's not much else. A sharp decline in any one of these would be a problem; the simultaneous crash of all three is a calamity for the ages—and the aged.
And not just for them. Last December Mark Zandi, the chief economist and cofounder of Moody's Economy.com, estimated that spending power for the elderly as a group would fall $200 billion as a result of their losses just up to that point. Given the usual multipliers, that's enough to knock perhaps two percentage points off total production and to cost millions of jobs. Losses to the old are not made up by gains elsewhere; the people they previously employed or gave business to are put at risk of losing their jobs too.
But the elderly do have a backstop: Social Security and Medicare. Thanks to these two programs (and to Medicaid, which covers long-term care at the end of life for many people), no matter how badly things go in the private sector, most of the aged will not become destitute. As things stood before the crisis, 22 percent of the elderly relied solely on Social Security, and while their living standard was very modest, most were still above the poverty line. For the most part we will not return to the days when the corpses of old paupers were collected from the city streets.
But imagine where we'd be if Congress had accepted George W. Bush's privatization plan. The part of Social Security siphoned off to private accounts would have suffered the market's losses, and recipients would be forced to live off a basic benefit substantially lower than Social Security presently is. At the lower end, Social Security is already not much. (The 2009 median is only $13,950 a year.) Cut it back enough and life expectancies could start to fall.
That's no joke. In Russia, male life expectancy following the industrial collapse in 1991 dropped from 65 to 58 years, mostly due to depression, alcoholism, violence, themselves due to the destruction of savings through hyperinflation and the lack of public health care. Don't think it can't happen here. It would, if Social Security and Medicare didn't stand in the way.
Given these conditions, it's quite amazing that we are still hearing private-equity mogul Peter G. Peterson, his employee David Walker (formerly the US comptroller general), and other Tory stalwarts caterwauling about the viability of Social Security and the risk that Medicare will somehow bankrupt the United States. The remedy, for those who accept this view, is "reform"—meaning cuts to Social Security benefits slowly phased in, and more rapid cuts in Medicare, probably by restricting the services for which doctors could expect reimbursements.
The caterwaulers' argument is based on something called "intergenerational accounting": comparing Social Security and Medicare's projected outlays to payroll-tax (a.k.a. fica) revenues over very long periods. The resulting "shortfalls," amounting to tens of trillions of dollars, are scary looking and headline grabbing. They lure the credulous into imagining that the country is struggling under an appalling burden, and that as a result the government is certain to do very bad things, like raise interest rates, or put us under the control of the communists in Beijing. As for raising interest rates or going bankrupt: The market has the same information as Peterson and Walker. You can check the long-term rate on Treasury bonds, if you're worried—for what it's worth, the financial markets plainly are not.
So, sure, Medicare's balance sheet reflects the overall problem of runaway health care costs—problems we need to fix whether or not social insurance is part of the equation. But the preoccupation with Social Security and Medicare is dangerous to the prospects for economic recovery. Why? Because it raises anxiety among workers—especially the young—who've been told repeatedly that these programs will not be there for them. The rational individual response, in that case, is to save more and spend less. I don't think this effect is very large, right now, but it is a risk. There are cases in the world (notably China) of distressed populations oversaving obsessively to try to provide for security that could be provided much more cheaply by social insurance.
Talk about the supposed need to cut back on Social Security and Medicare also gets in the way of the discussion we should be having on how to use these programs to get us out of the hole we're in. Each could be a powerful and useful weapon against the crisis. To wit:
- A permanent increase in Social Security benefits would help offset the losses that the elderly population is suffering on its housing, equity investments, and cash holdings. A 30 percent increase in benefits would not repair individual losses, but it would help keep the elderly, as a group, out of poverty, and relieve severe difficulties in many specific cases. As a bonus, there's a stimulative effect: Middle-aged folks won't need to put their diminished resources toward caring for their parents, freeing them to make other investments.
- A one-year, renewable payroll-tax holiday would greatly ease the financial strain on America's working families, giving them roughly an 8.3 percent pay increase and their employers a comparable reduction in the cost of keeping them on the job. Many mortgages would be paid, and many cars purchased, that would otherwise default or go unsold.
- A reduction in the age of eligibility for Medicare to (say) 55 would be a powerful response to the industrial crisis, permitting many older workers who would like to retire but cannot afford to lose health insurance to do so. It would also relieve private industry of part of its health care burden, while not abolishing employer-based insurance or infringing on existing health care benefits of the prime-age workforce.
These three measures are among the most promising tools policymakers have right now. Congress should be prepared to use them if and when it becomes clear that the present policies are insufficient.
Indeed, even if there were no crisis, the historical linkage between benefits paid out and payroll-tax revenues received should be broken. Social Security and Medicare should be treated as the bonded obligations of the government—like net interest—thus making explicit what is obvious, which is that these programs cannot go "bankrupt" any more than the government itself can. And, lest anyone forget, in more than two centuries of continuous operations, and despite crises far worse than this one, the government has never gone bankrupt.
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I thought it was a well
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I thought it was a well written article, but perhaps the author could clarify on the following:
I am confused as to his solutions, he says he would increase Social Security payments, while at the same time suspending payroll taxes??
I am confused as to where the money for Social Security would come from then?
I thought it was a well
>>I am confused as to where the money for Social Security would come from then?<<
The rich of course
The Money
Hi all,
From what I understand from JKG, and I was the Mojo fact checker for this article, the operative idea here is that we decouple SS payments from payroll tax revenue. Social Security isn't going anywhere so why pretend that its future is contingent on the FICA tax? We should think of SS like interest on government bonds or funding for the US military-- i.e. something that will always be there as a fundamental function of the federal government.
Holy Cow! Your solutions
Holy Cow! Your solutions are Marxist! I may has well close my business. There is no reason to work hard if America continues in the direction you are proposing. You are going to steal from me, steal that which I have worked many hours for, for many years to take it because YOU want to support the less fortunate. Who are you to pick and choose? Why can't I pick and choose who to give my money to? How many guys like me will throw in the towel, because there is no incentive anymore? Tons. A large part of the American economy is supported by small business. This kind of Marxist thinking discourages guys like me. Without hard working guys like me, you can kiss your free healthcare goodbye. You need to rethink the process you are describing. I happen to think it is contrary to how our founding fathers saw this Country.
Cows aren't Holy
Yo Dude! Maintain!
Before you go off half cocked, think first. Social security has a ton of money set aside to begin with. So it's not the pressing issues everyone is making it out to be.
Second, look at the $2 trillion bucks we're handing over to Wall Street.
Now compare Social security, which is funded by employer and employee contributions and has a huge reserve, and TARP which is a free give away of tax payer dollars to Wall Street that was playing a game of high stakes roulette, lost big time and doesn't have anything to fall back on.
There's plenty of time to work out a solution to the Social security problem. As for Wall Street, they need to start building a gallows for the CEO's responsible.
But the really big question to ask is ... are we going to get all of our money back?
Social security is nothing compared to the Wall Street bail out.
Reply to Marxist thinking
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I do not understand why anyone can argue that these proposals are in any way Marxist or anti achievement.
First, to answer a secondary question: Where do we get the money to do what the author says? We get it from the huge surplus present in the SS system. For years, the SS has taken in way more money than it sends out. The whole issue about solvency has been that at some future time, as the number of recipients increases and the number of workers decreases, the money going out will overtake the money coming in, but for now, we take in hundreds of billions of dollars more than is spent each year. Remember the "lockbox" discussion of the last couple of years of the first Bush term? They were trying to keep the rest of the government from raiding the "SS surplus". So we could declare a one year SS payroll tax holiday without a problem. (What it will do is more accurately state the amount of the deficit that Bush's spending racked up, because we've been playing games with the bottom line by using the SS surplus to offset the budget deficit.)
As to the larger claim as to whether the system is Marxist or not, all the author is proposing to do is recognize that SS is a permanent system in our country. People will still earn their retirement the same way they do now: As a factor of their wages during their working lives. ALL the author is proposing is that we give up this artificial "fiction" that there is a "Social Security" set of money (say, all $100 bills the governments receives) that comes in and goes out, and a "budget" stream of money apart from that (say, all $50 bills). The author is simply asserting that we treat SS like the governmental obligation that it is: That we recognize that we will not at some future time simply say, that's it; we may have a surplus in our budget ($50 bills), but the "SS" money pot ($100 bills) is empty, so no one gets benefits. Let's just recognize that SS is part of our national obligation to our workers: They pay into the government budget as "SS" currently exists, and at the appropriate age of retirement, they receive their retirement benefits. The author is correct: Younger workers will not face a bankrupt "SS" system when they retire. They will receive their retirement. As long as the US is still a functioning government, that policy will not cease, merely because of some accounting trick that says...sorry we ran out of $100 bills...and though we have tons of $50 bills...we won't substitute. No, the US will continue to meet our obligations to our citizens. Do you care whether your retirement comes in $100 bills or $50 bills...as long as it comes, and in the same total amount? Of course not.
Pr Chris
The money would come from
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The money would come from Florida. The politicians would all load up in a big caravan of limosines, and take I-95 south until they got to I-4, and they would take that exit to Orlando. When they passed through Orlando, and got just a little to the west (still on I-4), they would see a huge sign with giant round ears. That would be the exit to Disney World. They would take that exit, and proceed directly to the Magic Kingdom. Once in the Magic Kingdom, They would casully stroll over to Fantasyland, and presto, a combination of Magic and Fantasy is how they get the money.
Saving America
Saving America's retirement is easy by Americans Saving
It is easy to fix the problem with savings by Americans... Allow retirement savings to be invested tax deferred into a person's place of residence up to 50% of the original purchase price of the residence.
How many foreclosures would be stopped. How much equity would be built. And how much safer would our Savings be! Who cares about the fat cats on Wall Street.
don't think our revenue is taxes...
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don't think that personal income taxes is the government's revenue. Approximately $900 billion per year is collected in income taxes, and government revenue is over $2 trillion total, I believe.
Let me ask you something. Where does money come from? What is it?
If you are European or British, your idea of money is that it comes from rich people. Banks control their money. The governments go to the banks and ask THEM for money, and that is completely wrong and opposite the way it is in the nation state system. We forget these distinctions in this world that is quickly becoming fascist.
Our nation is a sovereign entity over its money supply. We do not have to ask banks for a loan to generate new credit. Think about how insane it is to have to go to a middle man. We are the USA, and we do not answer to banks, we do not answer to the Peterson Foundation, we do not answer to anyone. The preamble to the constitution says that the Federal Government's duty is to provide for the General Welfare. To take social security money (and medicare money) as the Peterson Foundation wishes and use it to fund bailouts is unconstitutional. In fact, I interpret not enacting Galbraith's recommendations as to being unconstitutional.
The question is not how we're going to pay for this. We do it as we devise a method TO pay for it. That's what's important about not being bound to someone else's debt. We will generate credit to pay for the recovery and the rest will happen as we rebuild the economy. We invest hundreds of billions of dollars of US credit annually into our economy building water systems, power systems, and maglev rail networks nationwide with public credit at 1% interest from the federal government. No more public-private partnerships, we fund it as we used to, and as we should. There will be no more bowing to international locust funds, there will be no more bowing to speculative finance. The empire does not rule the USA anymore... and please don't buy into this "balance the budget" fearmongering BS. In a time of crisis like now, to balance the budget now would be to drive the nails into the coffin.
Social Security
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The money would come from the same place all the rest of the money comes from. The US Government just prints it off and all is well. However, I have a job, commission, my husband was laid off due to "economic" reasons and neither of us can find full time other jobs. Too bad we are too young for SS. Just another 12 years. Then we'll be ok. Well maybe not.
Kill all politicians. The founders of this country did not foresee this. Nor did they foresee all the stupid poloticans out for themselves. If 8 years is enough for a President, supposed to be the most smart and capable person to run the US, then 8 years is enough for everyone else.
Yikes Mother Jones is still
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Yikes Mother Jones is still a socialist magazine huh? Did it receive stimulus money? If not, how does it stay afloat? Soros ?
Yeah Galbraith does not say how the govt could afford all his ideas to increase spending. So I say let's adopt his ideas but double the amounts!
How to pay for all this? I
How to pay for all this? I would suggest a 100% income tax on all bribes that politicians receive directly (e.g. Duke Cummins, William Jefferson) or indirectly (i.e. paid to their spouses E.G., Obama, Daschle, Feinstein, to their sons E.G. Biden, Reid, or their nephews E.G. Murtha). After all. it's the taxpayers' money anyway.
Privatization would have led to better capitalization
Who knows, maybe the extra capital in the markets from privatization would have made this recession a lot less severe. Maybe we'd even be flush.
If you don't believe in investing in our markets... where do you think we should invest?
You are insane to think the government can do more with our money. They don't even pretend to try to multiply it.
The markets are
The markets are fundamentally a game of who-thinks-what's-worth-what. If we put our public money into the private markets, we'd simply allow the markets to run a further before the reality of rational valuations started to kick in. Then we'd have the same 50% drop in market values, and no public money left to spend directly. Privatization. Stupidest. Idea. Evar.
ss
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I think a 30% increase in Social Security payments is a great idea. A better idea is to provide the 30% each year for the next 4 years and reduce the retirement age to 55.
Such a program would decouple the income people receive from economic growth. With or without production and investment the dollars would continue to flow to the people who need it most.
A similar program could be instituted for people under 30 who are still in school or learning a trade. A sort of reverse Social Security payment. As with my proposed Social Security reform this program would provide a steady stream of dollars for people under 30 years of age even if the economy comes to a screaching halt.
Can I just say that ss
Can I just say that ss posted an AWESOME solution. While they are doing that could they also pay for my house and car? That would be awesome.
Hmmm... reduce the age for
Hmmm... reduce the age for medicare benifits to 55 AND add a social insurence program for people under 30?
Gen X gets it in the neck once again. We're a TINY demographic and yet we're constantly expected to fund the huge generations that came before and after us. Why do we always have to be the only ones who are expected to work for a living? When do we get a break?
Why just 30%? Why not a
Why just 30%? Why not a 100%?
And why 55? I want to collect a check now.
As for the naysayers who question how Prof. Galbriath's plan will funded, that's no problem. It will be funded from the same source as the stimuli and TARP. If the Chinese won't lend us the money, Helicopter Ben stands ready to print up some more!
How to Pay...
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A "tax on all bribes" certainly sounds like a great idea but wouldn't it be a bit difficult to assess and collect? Do politicians get 1099's for the bribes they receive? Let's just tax anybody making more than $500,000 an extra 15% and eliminate most of the loopholes that allow the super-rich to write-off most of their income.
Wish to comment on: "It
Wish to comment on: "It would also relieve private industry of part of its health care burden, while not abolishing employer-based insurance or infringing on existing health care benefits of the prime-age workforce."
I think it's naive to believe anything but a single payer system will be able to control the outrageous costs of medical care in this country. England has a system that rewards doctors who have healthy patients. We in the US have a system that allows drug companies to charge for us for TV commercials we are bombarded with for designer drugs that in many cases do more harm than an exercise program or healthier diet would accomplish.
It's also naive to think we can continue to tax people without giving them a true safety net, as is the case in Canada, European, and some Asian countries (Singapore I think...). Though the wealthy should indeed pay a more of their fair share in taxes, we all know our legal system allows for the loop holes, which will always be found by the most wealthy. The tax increases will only screw the middle class...the small businesses and the many that provide jobs (and who don't shelter their income in the Cayman Islands).
We've got to say...ENOUGH...to drug companies, hospital administrators (who continue to gouge wherever possible, supposedly for covering the uninsured), the inefficient and greedy insurance companies, the ambulance chasing attorneys...plus find financial incentives to encourage everyone to be healthy so as not to have to end up in the hospital (or get swayed by some phony TV ad). Why should someone in Taiwan be able to purchase the same eye drops for 1/10 the cost charged in the States???
Furthermore, when we have a single payer system, it's got to be run efficiently or we'll be in the same boat we're in now. This is a genuine concern everyone better have. These public servants have to be made accountable!!!!
When Barbara Boxer sends us e-mails about the Congressional accomplishments...part of the "economic recovery"... How in HELL are we going to pull out of this mess when the money is going to removing dilapidated buildings (which could probably be refurbished for less!!!!)...funds that are supposedly intended for long term job creation. I'm not opposed to nice parks but I think long term jobs are more important than parks at this stage. I'm surrounded by beautiful parks yet I can't afford to even visit them any more (much less AFTER I lose my job!!...or in my case, my "green business" for lack of affordable Industrial space or low interest loans!). We lost our space when the land lord raised the rent and a defense contractor snapped it up!!
It's clear the bureaucrats have no clue with how to spend borrowed Chinese money. They cannot be trusted to spend money wisely and it's up to EVERYONE to revolt against this B.S...starting with going after the millions of TARP dollars already stolen. We need main street business people helping to decide how much (or little) to spend. It's also time Congress have retirement plans based on a percentage of the same Social Security retirement plans the rest of us have...
I quote from Barbara's e-mail..."the National Park Service will invest more than $97 million to improve National Parks in California. This funding is part of the American Recovery and Reinvestment Act (H.R.1) and is designed to create local jobs and stimulate the economy by revitalizing National Parks and infrastructure, rehabilitating visitors’ centers and completing long-deferred maintenance projects."
Meanwhile, local, state, and federal government are likely to suggest hospitals buy new ambulances from GM instead of making it possible for struggling businesses to survive this fiasco.
The Modesto, CA newspaper reported their supervisors were somewhat reluctant to take over 3 million intended for job training, when the jobs are likely not to exist when the training is over! They took the money anyway...but are they devising plans to help pay the salaries of on the job training for those of us trying to compete with $3/day Chinese laborers?? I doubt it!
Nuff said.
Much better still...
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Suggesting a mere 30% increase exposes the author as just another tired relic of the Bush years. I envision an annual doubling of Social Security payouts (means tested, natch), and a permanent abolishment of the FICA tax. To fund this, we can easily increase Federal income tax rates on earnings above 100k to, oh, around 95%. Honestly, no one needs anything more than that, but 5 cents on the dollar is probably enough of a giveaway to prevent cries of kleptocracy.
Also, income tax is only step one. What we really need is a large tax on accumulated wealth. Say, any wealth over 50k gets hit for 50% annually. That would allow for 100% funding of all Americans' health care needs, and probably leave enough left over to buy everyone a union-made electric car or three.
And the rich will just sit there and 'take it'?
"Say, any wealth over 50k gets hit for 50% annually."
Uhhh...so what happens after all those $50k+ assets already get plundered? Where will the funding come from then?
I love this, Can anyone tell
I love this,
Can anyone tell me why liberals just sleep with government every night? This columnist acts like the federal government has had an A+ record in providing services. For liberals, its never a question on what government has done wrong, but for me, what has government have done right? Public education, social security, medicare, medicaid, fiscal responsibility. Government is a diaster simply put.
Just remember this one thing. The more government gives you, the more they can take away from you.
This columnist acts like the
This columnist acts like the federal government has had an A+ record in providing services. For liberals, its never a question on what government has done wrong, but for me, what has government have done right?
Glad to see you're still getting your right wing talking point email every morning.
The fact is government doesn't always do complicated things well -- those are usually much better left to markets. No liberal I know is eager to see the government take over the production of laptops or Broadway musicals or interior design services.
But government DOES do at least one thing with exceeding efficiency and economy: write and process vast number of social insurance checks. Compare Social Security's overhead costs some time to those of your typical Wall Street mutual fund and you'll see there's no comparison: the so-called "wasteful" government does a bang up job, and Wall Street? Not so much.
So, there's absolutely no reason -- other than politics -- that the public sector in the US can't devote more economic resources to fostering economic security and shoring up living standards. Mr. Galbraith's are ideas are compelling, and should be given careful consideration.
"Compare Social Security's
"Compare Social Security's overhead costs some time to those of your typical Wall Street mutual fund and you'll see there's no comparison: the so-called 'wasteful' government does a bang up job, and Wall Street? Not so much."
Huh? Talk about apples to oranges comparisons . . .
A mutal fund has to spend money to find talent, then train and pay for that talent to identify growth opportunities in the markets. The fund then must pay to advertise to attract customers based on their performance versus their competition. Then there's the minor issue of compliance with SEC & IRS regulations. If after all of that, there is money to pay, THEN they also have to invest in the system to get those payments to the receipients. How does that even remotely compare to SS?
Why stop?
Why stop at only a 30% increase to benefits and a single year of no payroll taxes. Let's get this party really started with a doubling of benefits and a lifetime of no payroll taxes. I'd also really like to get all of my medical expenses paid for also. It's really unfair that I am not granted access to designer drugs and all the same tests that Bill Gates can enjoy.
It's my time to enjoy life. Those rich ba$tards have been yucking it up for 8 years (probably longer!) and I've had enough. They owe me! Big time!
good one!
Oh, James, for a minute there you really had me going. I was just about to slam the gearshift into high dudgeon when I caught on. Social Security was going to save US! Fabulous! You sly dog! What a sublimely witty send-up of Mr. Obama and his economic policies. ROTFLMAO!
You were kidding, weren't you, James?
James?
soc. sec.
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What the younger generation is not stopping to think about is that without the soc. sec. benefits, they would need to save even more to care for their parents in old age. Not all of us old poops are capable of being Walmart greeters or doing other menial work in our old age.
It takes money to get old after you have not just dropped over with a heart attack. Several generations ago, it was just expected that you would move in with the "kids" when you could no longer work.
Author lies about Bush's Privatization Plan
Uh...nobody would even be in that situation because under Bush's Plan, those at or near retirement age would even be allowed under the new plan when the stock market losses the author is referring to happened.
Nice to know that Mother Jones is into the lying business.
From "Live Free or Die" to "Please Care for Me"
And New Hampshire should change their flag from change "Live Free or Die" to "Please Care for Me."
Vote Democrat!
Get more free stuff and money....
paid for by someone else, in the future, maybe...
p.s. The USA currently already has unfunded liabilities of 65 trillion dollars accoring to the CBO.
So Reactionary
Folks could have an intelligent, serious discussion of the material before them--whether or NOT said material is "taken seriously". Instead we inevitably polarize thoughtlessly, to our own reactionary corners and hunker down for the duration.
There are many people who perform "Human Services" (the majority of them hardly better off then the people they are helping) to assist those less fortunate. It is difficult to understand "Why" an individual who earns $250,000+ annually, would object to paying a BIT higher Income Tax than someone who makes $20,000- $30,000. Then again, we're not wise enough to ask for "a bit" are we? Nope. We start out with a scary number, like 50%. Then we whine when nothing changes.
INCREASING SOCIAL SECURITY INCOME is a GREAT idea!!! AGAIN, you don't ASK for 30% up front!!! Why not ask for a graduated increase of 10% (which is what happened this year), for 3-years in a row? This sounds reasonable. 30% sounds just short of crazy.
And by "Social Security", Mr. Galbraith, what did you mean? Just the elderly/retired, or the whole program? Only Social Security, or also SSD & SSI? All of the programs receive financial increases at once, thus far at least.
We would have to ensure that the "Poverty Line" is increased simultaneously with benefit increases. Otherwise we could be hurting people more than helping them via loss of: Medicaid, Extra Help: Pmt of Medicare Part A + B Primaries, Foodstamps, Housing Vouchers from HUD (paying up to 80- 95% of rent)...
-The average monthly Social Security benefit for retired workers is: $1,156.80
-The average monthly Social Security Disability benefit for Disabled Workers (under
65, who have worked enough to be "insured") is: $1,061.90
-The AVERAGE monthly SSI benefit for for the "Needy Disabled" (under 65,
Disabled, NEVER worked/DID NOT WORK ENOUGH to be "insured") is $519.40
**(Statistics from: http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/)
-The 2009 FEDERAL POVERTY GUIDELINE for the 48 Contiguous States and the District of Columbia (which most states use to determine eligibility for Medicaid, Foodstamps, Housing Vouchers, etc) is $10,830 for 1 person, 14,570 for 2 (add $3,740 for each additional person).
**(Information from: http://aspe.hhs.gov/poverty/09poverty.shtml)
As we can see, most recipients under the Social Security Programs have "too much money" to qualify for assistance, being slightly over the poverty line. For those who DO qualify for needy programs, it would be an utter disaster to simply throw increased monthly income at them without raising the Poverty Line OR making Soc Sec recipients a SPECIAL POPULATION whose first $1500 (or some other arbitrary number) is waived when considering those programs. That way the programs would not be flooded with MILLIONS of people that raising the Poverty Line would make eligible for help.
One last comment. To say that the Government CANNOT go "broke" is clearly a fantasy.
~~~
No soul is desolate as long as there is a human being for whom it can feel trust and reverence.
~T.S. Eliot
The FedGov is my shepard, I shall not want
In "Democracy in America," Alexis de Tocqueville anticipated people being governed by "an immense, tutelary power" determined to take "sole charge of assuring their enjoyment and of watching over their fate." It would be a power "absolute, attentive to detail, regular, provident and gentle," aiming for our happiness but wanting "to be the only agent and the sole arbiter of that happiness." It would, Tocqueville said, provide people security, anticipate their needs, direct their industries and divide their inheritances. It would envelop society in "a network of petty regulations -- complicated, minute and uniform." But softly: "It does not break wills; it softens them, bends them, and directs them" until people resemble "a herd of timid and industrious animals, of which the government is the shepherd."
Don't Dismiss the Value of Social Security
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I suspect most people approach retirement without much attention to detail. OK, I'll save as much as I can. It seems to be more than my neighbor is saving, so I'll be OK. I've heard Social Security is a rip-off. I'm putting my money into the stock market, so I'll do better than most. I probably won't even need that Social Security check because I'll make a killing on Wall Street.
This roughly approximated my thinking just a few years back. I had a good job (by my standards), making a low six-figure income. I wasn't ready to retire, but I got laid of about eight years before I had planned to retire. They say we'll all have to retire a bit older, but don't believe it. If you're laid off and you're over 55 you are very unlikely to get another job unless you are ready for a (less than minimum wage) job at Wallmart with no benefits.
Together, my wife and I collect about $2500 in Social Security - that's $30K/year and it turns out to be almost enough to live on comfortably. No lavish vacations or expensive habits; our car is closing in on ten years old and we're crossing our fingers we'll reach 65 without health problems, but our mortgage is paid off and we're getting by.
So what if there were no Social Security? How much savings would I need to replace that $2500/month? Like most financial matters, it depends on how much risk you are willing to take, but most financial advisers will recommend that you depend on an earnings rate of about 4% (that's more than you are apt to get on a CD today). With that rate of earnings you will get something less than $600 a month for each $100,000 that you may have saved. So to replace that $2500/month from Social Security I need to have saved a bit more than $417,000.
I believe I read somewhere that the average family has saved less than $50,000 for their retirement. That will get you an annuity of about $300/month. In 1940 that might have sufficed to keep you barely out of poverty, but don't count on living on that today, even if you are lucky enough to be on Medicare (the good news is that you can probably get on Medicaid and maybe even on food stamps, but you should not count on eating more than once a day). I understand that dog food is more pallitable than cat food.
Social Security
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tagged as:
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Although George W. Bush repeatedly requested that Congress address the issue of Social Security while he was President they did not. Yes, President Bush presented various ideas to address this issue (One of which was pegged to the rise and fall of the stock market). But, Congress only "Kicked-The-Can-Down-The-Road" and still hasn't initiated any legislation to resolve the anticipated shortfall in the Social Security fund. Consequently, a law currently on the books requires our US government to start reducing Social Security payments by 25% beginning 2041 if legislation isn't enacted. The year 2041 sounds like a long period from now but it's just a little more than one generation away.
According to MediaMatters For America on April 24th of this year, "As the Social Security trustees' report explains, "Even if a trust fund's assets are exhausted ... tax income will continue to flow into the fund." For Social Security, under current law, "Present tax rates would be sufficient to pay 75 percent of scheduled benefits after trust fund exhaustion in 2041 and 70 percent of scheduled benefits in 2081.""
So, to address Social Security we have to know what we are dealing with in order to know what revenue we have to raise and distribute. To do this we will need every citizen in the US to be issued a National I.D. Card. When you enroll in a college or join a company you are currently required to have an I.D. card. On each card, the citizen’s picture and fingerprint would appear. Not only would this system help government in planning and managing our resources, but it is necessary for actuarial purposes so that we know exactly what to do with Social Security, Medicare, and immigration. Furthermore, it will also make it easier for our government to reduce crime and manage our borders (20% of prison inmates are illegal aliens). This type of card (Without the fingerprint) is currently being offered in Michigan.
However, there will have to be three requirements in place when a National I.D. Card plan is implemented:
1) In order to be recognized as a citizen, certain requirements will have to be placed on an individual, such as a time-period of residency.
2) If a person is found not to be a citizen, a panel of township citizens closest to them will decide on a case-by-case basis what should be done with that individual. Not only will this make sure that all illegal immigrants abide by our laws, but it will also mainstream them into our American society (i.e. Speaking English), and put a lot of people to work.
3) A review of all police departments nationwide will be undertaken to make sure they are following best practices, policies and procedures, and to ensure they are using the best technology available. This review will reduce the number of innocent people from being prosecuted.
Mark Memoly
Kansas City
mmemoly@gmail.com
2010 Candidate For US Senate - MO
He's Joking... Right?
Mr. Galbraith MUST be joking... right? First of all, 'privatizing' Social Security doesn't mean it has to be invested in stocks. It just means you put your SSN on it and you own it. Then you should be able to choose how you want it invested - stocks, bonds, mutual funds, money market, cash, whatever. Right now, you own nothing. My father in law died in his early 50's. All his kids were over 21. He was divorced. You know who got all his paid-in social security? Nobody. The gov't kept every penny he paid in. If it had been his, he could have left it as part of his estate for his children. But no, we have a nanny state that confiscates and doles back out only as it sees fit.
As far as INCREASING SS payments - LMAO. I am a small business (S-corp) owner. I already pay an extra 7.65% for each employee on top of the 15.3% for myself. This means I can hire fewer people, generating fewer goods and services, which in turn generates less tax revenue! I think a little light Adam Smith before he goes to bed might do Mr. Galbraith some good...
you are kidding?!
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tagged as:
- solution
This must be a joke? The cumulative unfunded deficit of Social Security and Medicare is $52 trillion dollars under current system.. After collapse of stocks and real estate the cumulative wealth of US citizens has been estimated around $60trn.. Legislating any of the changes that the author offers would greatly push the unfunded cost of SS/Mc programs.. If one includes regular national debt which is around $8trn - the cumulative wealth of our nation = assets-liabilities is around ZERO.. Higher costs ill make us bankrupt as a nation..
The author is oblivious to the costs and deficits of the program.. Social Security has to be dismantled because its an unsustainable program and saying otherwise only delays the day of reckoning.. Instead, the government should replaces payroll taxes by asking people to divert that money towards purchasing private insurance
P.S.
While we are at it, why not institute 30-hr week? Or how about give everyone a house, 2 cars, Plasma TV wit ha free cable subscription and guarantee private school tuition for all children.. Did I miss anything?
Of course. Let's spend
Of course. Let's spend another $25 trillion that we don't have (handing the bill to my children and grandchildren), cratering what shreds of fiscal health the country has left and not worry about it breaking the national bank because the bank has never broken before. Beautiful.
Let us be thankful for the fools; but for them the rest of us could not succeed.
-- Mark Twain
Well, there you have it, Mr. Galbraith...
You're proposing a solution to a severe recession and the commenters are concerned only with themselves. Perhaps the writers here are the reason the Republican Party is falling by the wayside. In a country of 300,000,000, we can't afford to think "me, me, me, I, I, I."
We're retired and quite well-off. As of Sept. 15, 2008 we're spending $2000 less per month. As one baby boomer couple, that can't be good for this economy. We have lost all the money you spoke of, so there is certainly no plan to spend more in the future. In fact, we may pull back another $1000 per month. Let's just say the retired life we planned and saved for our whole lives has been lost due to eight years of failed conservative ideology.
Your ideas are intriguing. We probably shouldn't be candidates for the 30% increase in SS you propose although it might place us in an upper tax bracket which would be a benefit to the government. I can't do the math right now. The age 55 Medicare proposal is a true winner for us as is the payroll tax holiday for others. One thing's for sure -- if all that happened in this household, we'd return to our previous spending level in a heartbeat. I take it that's your point.
"Let's just say the retired
"Let's just say the retired life we planned and saved for our whole lives has been lost due to eight years of failed conservative ideology."
So you spent your "whole lives" working to succeed in a capitalist system to maximize your earnings, while saving for your "whole lives" to maximize your return from the markets in retirement? Sorry to break it to you, but all conservatives cheer for people like you who take chances on education, job opportunities, investment options, etc, and succeed.
Since you can afford to cut back in retirement by $3000 per month, I'll assume that you've been a pretty high income earner in the past. Did you ever take a state or federal tax deduction? If so, why would you keep money that could have funded the changes in the article?
@ "Let's just say..."
I guess this is the part conservatives can't, don't or won't understand. We have no problem working hard and saving in a capitalist society AND paying taxes at all. What we do insist on is fairness through oversight and regulation of institutions and tax policy. You enjoy redistributing the wealth upward and we prefer it be distributed fairly -- or even downward if you like. Would we mind paying more taxes for President Obama's healthcare reform, education, and freedom from oil cartels? Absolutely not. We are proud to contribute to America.
I see all this concern about
I see all this concern about "socialism" for the middle class and poor but not one word about the trillions now spent for socialism for the rich. What is it with the hate Republicans have for the middle class and poor and love for the filthy rich? The Republicans want auto workers to take a cut in pay, but stand up for the millions in bonuses given the fat cats who virtually destroyed our country.
Back when I was a conservative Republican my Dad kept telling me Republicans never saw a Banana Republic they didn't love - I've come to believe him...
"The Republicans want auto
"The Republicans want auto workers to take a cut in pay, but stand up for the millions in bonuses given the fat cats who virtually destroyed our country."
How many Republicans wrote the law that protected the AIG bonuses? How many of them voted for the AIG bonuses? Which Republican president signed that bill into law?
On a more macro not, just what caliber of bullets did these "fat cats" use in the guns that they held to the heads of the people who bought houses they couldn't afford?
SS Bankruptcy
Truly amazing: not a single fact in the article. The childish, silly, inane suggestions reveal a mindset suited to the liberal intellectuals of the 1920's who so admired Lenin's Soviet Union. Lenin called them "useful idiots."
What ?
None off what he say`s makes much sence (except that Bush was stupid and we all now that) I see 5 or six holes that he most see if he gets paid to think about this stuff all day. Either he wants us to look at part`s of money in the U.S.of A. that not everyone is talking about or he has finally gone nuts I`m not sure which
anyway it is, I wish Krugman was writing for this Mag over him a simple way to retire would be to have Savings bond`s that gave 2or3 % over inflation rather then 1 ,and to pay less tax on it the older and or sicker you get single payer health care, and all the buricrates who use to work at insurance Co. could spend all day looking how to make paperwork shorter and catching Tax cheats and K street selfish folks, it takes a white coller to catch one in the meantime please Mother Jone`s think about another economist then this one sorry but I have yet to see a great Idea from this one .
