The Future of Social Security in Challenging Times
http://thedianerehmshow.org/shows/2011-09-12/future-social-security-challenging-times
One in seven Americans receives a Social Security benefit. More than ninety percent of all workers are in jobs covered by Social Security. But concerns are growing over the long-term viability of the program. Texas Governor and presidential front-runner Rick Perry says Social Security is "a Ponzi scheme" and "monstrous lie." the congressional debt supercommittee is expected to consider Social Security revisions. And advocates worry the payroll tax cut extension proposed by President Obama could shrink revenues. A panel joins Diane to discuss options for the future of Social Security.
Guests
Mark Miller
syndicated columnist and author of "The Hard Times Guide to Retirement Security"
Nancy Altman
co-director of Social Security Works, co-chair of the Strenghen Social Security coalition and campaign and author of "The Battle for Social Security."
Charles Blahous
a Hoover research fellow, one of two public trustees for the Social Security and Medicare Programs and author of "Social Security: The Unfinished Work."
Related Items
Program Highlights
Changes to the social security system will be on the congressional debt super committee's agenda. President Obama hopes to ignite to job market in part by extending cuts to payroll taxes that otherwise would go into the trust fund. Diane and guests looked at the history of the system, changes legislators have made to it, and how it compares to retirement plans.
Can Social Security Legitimately be Called a Ponzi Scheme?
Mark Miller said that Gov. Perry's comment was reckless and irresponsible. "The essence of Social Security is that people pay taxes and they accumulate credits, and in return, they get a pension. And that's a program that's been working for 75 years. And the essence of a Ponzi scheme, if you checked that in a dictionary, is criminal fraud," Miller said.
How Social Security Compares to Insurance and Pension Plans
"Social Security is an extremely good deal...some people talked about the need to modernize Social Security, but the concept is really thoroughly modern. The idea is that as long as workers are dependent and their families are dependent on wage income, they need insurance against the loss of those wages. They need unemployment insurance if they lose their jobs, disability insurance if they become disabled, life insurance, old-age insurance. Social Security provides the last three," said Nancy Altman.
Who Bears the Risk?
Altman:"A fundamental difference is, with individual accounts, the risk is all borne by the individual. If the stock market is down or your investments are down, you're in trouble if you have to retire. With Social Security and, generally, with defined-benefit plans, the risk is shared by everyone. With Social Security, it's shared by the entire nation. That’s what makes it work so well. "
Lifting the Income Cap
Blahous:"The more you pay into the system, the more you get out. It's not designed to be a welfare program. Basically, no matter how rich you are, no matter how poor you are, you get something back for your contributions. So if you lift the cap, then unless you sever that link between contributions and benefits, then you're gonna obligate a very large amount of additional benefit outlays to people who need them least. You're basically bringing in more revenue from rich people to pay more benefits to rich people."
Our Guests Suggest Fixes to the System
Miller:"I would do it by lifting and eliminating the cap on income subject to tax."
Blahous:"I would make progressive changes to restrain the growth of benefits, still above inflation, but restrain the growth to people on the higher income end. And I would, unlike my colleagues, raise the retirement age at least to get it back to where we were when the program first began."
Altman:"Some have talked about dedicating a tax on stocks speculation, a kind of tax that Great Britain has. Dedicate that to Social Security, you actually could raise the benefits. That's how much money is brought in. There are other kinds. Some have talked about dedicating the estate tax."
Comments
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The only important thing is that Social Security have guaranteed benefits. Dismantling Social Security to "save" it is a ruse to start plundering the trillions.
There has been a determined attack on Social Security to make it seem shaky and unable to pay out the guaranteed benefits. Stupidly, many Democrats and Independents have wasted time and tried to explain the silliness of the assertions as opposed to attacking the actual goal of the thieves who want to plunder the money that Social Security collects. Allowing these falsehoods to confuse the public into confusing concern with protecting our pensions with various plans to pry the pensions from all of us.
Democrats do not want Congress to borrow money from Social Security. It was a compromise with the Republicans. The only small positive for the public is that the Treasures in the Trust Fund creates a paper return for Social Security. Much better would be if the FICA were to be drawn at the same rate on all incomes. It is the wealthy, who profit by lending the money to the government with the money that they avoid by not paying their fair share in FICA, that prefer the government borrow money.
There is no actual crisis, except that the manufactured whole lies and half truths that are intended to open up the political process to dismantling Social Security.
Daniel
cc said:
"Democrats do not want Congress to borrow money from Social Security."
Then why have they been doing it since the 60's! That's when all this started, Daniel. Democrats controlled BOTH HOUSES (with the exception of 3 terms in the house only) from the 1950's to the Gingrich revolution in 1994. Democrats are MOSTLY responsible for raiding and spending the SS contribution excesses. To say, "Democrats do not want Congress to borrow money from Social Security" simply ISN'T CREDIBLE!
Another non sequitor which has nothing to do with saving Social Security benefits. And another deep lie about what compromise means.
Generally Democrats prefer to raise taxes, especially on those of us who can survive, eat, be clothed, be housed, on their net income, to pay for programs like Social Security. Democrats generally would rather tax the wealthy than borrow from the wealthy. Borrowing from the wealthy is a compromise that benefits the wealthy, but hurts the public eventually through higher taxes on working people and decreased benefits. I looked back especially through the 1983 compromise. It was the Republicans that insisted on government borrowing and cutting benefits over increasing FICA on the wealthy.
And the government borrowing is not only a substantial form of subsidizing the wealthy, it is a convenient way to attack the public and our ability to protect children, seniors, and life generally. It makes loan sharks seem like friendly neighbors compared to the Republicans that force our government to borrow instead of paying as we go or threatening outcomes worse than knee capping our seniors, children and working people.
Care about the elderly and the health of the economy, raise the cap on FICA. Almost everything else is just part of a plan to profit on the suffering of seniors.
Daniel
"And another deep lie about what compromise means. "
Compromise?! Are you kidding me? With whom? Themselves?
Listen ... carefully ...
Democrats controlled BOTH HOUSES (with the exception of 3 terms in the house only) from the 1950's to the Gingrich revolution in 1994; ALMOST A HALF CENTURY.
That is the period of time when SS was raided.
"Generally Democrats prefer to raise taxes"
Not when it's going to cost them votes.
Daniel, you are completely out of touch with reality. I recommend not spewing out what you "think". I recommend studying a little history if you are really interested in truth (which I strongly doubt - you seem more interested in demagoguery).
Here is an important lesson for you - do not pay attention to what people say they believe. LOOK AT WHAT THEY DO. That will SHOW you what they believe. Jesus said, "You can identify them by their fruit, that is, by the way they act. Can you pick grapes from thornbushes, or figs from thistles? A good tree produces good fruit, and a bad tree produces bad fruit. ...Yes, just as you can identify a tree by its fruit, so you can identify people by their actions.." Matt 7:16-20 (NLT).
So, unless you post another out and out falsehood, Goodbye.
I do look at what people do and what they say. You do not seem to actually either understand or represent how Social Security works (start at http://www.ssa.gov/ ). I have read the history and underlying law of it. And I seem to have a better understanding of economics and how government finance works and have tried over and over to point out resources for you to catch up. I have linked to articles quoting the statistics and main players. You do not seem to understand how or why the government borrows money outside of a veneer of knowing that there are bonds. I have pointed out links to the Treasury Department explaining the process. I have knowledge and extensive experience in government operations and finance.
I am exasperated that despite giving you the benefit of the doubt, you still seem to be unable to separate your ideology from reality. Instead you seem to misunderstand the nature of the borrowing for Social Security and how it really works or is counted.
Do you care if in your fantasy of private accounts, if someone is unlucky, they may do without or have to beg for charity that may or may not save them? Your ideology and beliefs hamstring your ability to get the math right or understand the nature of guarantees.
Do you live in a world where it is acceptable in a wealthy society where we all depend on each other to a large extent, to allow some to suffer needlessly? For you is this life just a game of winners or losers?
You remind me of the audience of last night's debate cheering the potential death of an unlucky soul who did not have health insurance. We as a society should value life and not pretend as if some parts of society are exempt from protecting life, whether government, private organizations or individuals. Gold and profits should never trump life.
But I have hope for you yet.
Daniel
"You do not seem to actually either understand or represent how Social Security works "
Well, considering that they pay me, I would take exception to that. And, no, I don't mean as a benficiary.
"And I seem to have a better understanding of economics and how government finance works "
No. You seem to THINK you do.
Blah blah blah, you do not have an answer to the FACT that it is Democrats who have raided the SS "Trust Fund" for decades.
"Do you care if in your fantasy of private accounts, if someone is unlucky"
If you understood private accounts, or even cared to TRY to understand, you would know that is not possible.
"Do you live in a world where it is acceptable in a wealthy society where we all depend on each other to a large extent, to allow some to suffer needlessly?"
A newspaper columnist once told me "The old country club Republicans understood that a safety net was necessary. They realized it was part of the price we pay to forestall revolution." Now I think that's a little harsh on the "old country club Republicans" and their motives, but I took his point.
"You remind me of the audience of last night's debate cheering the potential death of an unlucky soul who did not have health insurance. "
Completely misrepresented. 1) There is evidence that those who were cheering may have been "plants" 2) The hypothetical "soul" OPTED not to carry insurance.
"We as a society should value life and not pretend as if some parts of society are exempt from protecting life, whether government, private organizations or individuals. Gold and profits should never trump life."
Tell that to Planned Parenthood
I am confused by the statement Mr BLAHOUS made,
"Under the current system, the longer you work, the worse your returns."
I thought that it was beneficial to continue to work, even past the SS age of retirement.
can someone respond and tell me "How is it that the longer you work, the worse your returns"?
GantzerC asked:
"can someone respond and tell me "How is it that the longer you work, the worse your returns"?"
Because your contributions will max out, but so do your payments. So, assuming the simple case of sufficient earnings to require the maximum payment, if you max your contributions each year from age 25 and pay in for 42 years, you will receive the maximum payout at 67. With the same contributions starting 35, you pay in for 32 years (at the max) and receive the same payment each month as if you started paying at 25. You're going to die at the same date.
Make sense?
Dear Ganzter,
Social Security is a type of defined benefit plan. You are guaranteed a pension for as long as you live. (see: http://en.wikipedia.org/wiki/Pension ) The benefits are not calculated not on a total amount collected by you personally. Since there is both a minimum and maximum benefit level, the amount you put in and the amount you draw is not like a defined contribution where there is a closer relationship between the amount put in and taken out.
Mr. Blahous' comment is technically true, but not an intelligent way to understand Social Security. Of course the longer you work, the more money you earn overall. That the FICA contribution that is taken from your wages is redistributed based on the defined benefit plan does not make it a poor return. Only an idiot would start working later in life to avoid getting a "poor" return on their FICA contribution. But a smart person would try and stay healthy and enjoy a long life, not to get a better return on their FICA contributions, but because a long, happy and healthy life is the hope. Social Security and wages and other retirement vehicles make that possible.
Having an employer based defined benefit retirement plan has become exceedingly rare, so Social Security can be a life saver, especially the longer you live. Also, there can be benefits for your survivor (http://www.ssa.gov/survivorplan/ifyou2.htm ).
Life insurance is a similar defined benefit. Die young and your return (on investment, not reincarnation) will be higher than if you live longer. Obviously, we don't want to live shorter to get the better return.
Be careful, there is a lot of bad information out there.
Good luck and have a long, prosperous life, GantzerC.
Daniel
citizencontact wrote:
"But a smart person would try and stay healthy and enjoy a long life, not to get a better return on their FICA contributions, but because a long, happy and healthy life is the hope. Social Security and wages and other retirement vehicles make that possible. "
"Be careful, there is a lot of bad information out there."
GantzerC, citizencontact is right. There is a lot of bad information out there, and sometimes, what happens is things get painted in an incorrect light. For example, did you know, that when Social Security was instituted, the rate of collection was about 50%? By that, I mean, that on average people actually living to retirement age in the 30's was about 50%, slightly less for men, slightly more for women. That is, no matter what you paid in, your chances of collecting a dime was about 50/50. This made the system much more fiscally sound than it is today, but it also means that "social security helps make living a long, happy, and healthy life" was not a reasonble statement to make in the 30's. There was a 50% chance you would be dead at retirement age. Today, the numbers are much different. Life expectancy is about 78 on average (men and women), yet the full retirement age has only been raised to 67, as a feeble attempt to account for the retirement of the baby boomers. That doesn't go to your question directly, but I wanted to make sure you had the full picture with respect to SS and its intended purpose - a safety net, not a retirement program.
Finally, as to your quesiton directly, if you continue to work past your full retirement age, your contribution is no longer a contribution but a graduated tax. If you had retired, you would start collecting. But, because you continue working and contributing FICA, except for the small increase in benefit due to the delayed retirement credit, the opportunity cost of the money you could have collected and the additional FICA mean that, yes, Blahous is right, your return against social security is diminished. (Of course the decision to keep working is a very personal one and people work vs. retire for a whole range of reasons.) You could think of these elements as a graduated tax, that graduates to 100% after age 70. If you keep working after that age, you're purely being taxed to pay for other retirees. And just one more thought on this subject - one of the intents of that is to coax older folks into retirement to open up jobs for younger folks - but that's a discussion for another time.
Dear Ganzter,
You should do some research elsewhere. Talk to a financial counselor for ways to save for retirement.
Here are some sources of information regarding Social Security:
http://ssa.gov/retire2/
http://en.wikipedia.org/wiki/Social_Security_(United_States)
Daniel