Personal attacks aren't a debate tactic.
I'm not really affected by your words nor your conclusions.
I'm not really affected by your words nor your conclusions.
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Re: Just saw an AARP SS ad [mopdahl]
[ In reply to ]
Re: Just saw an AARP SS ad [Brian286]
[ In reply to ]
Just saw a fine quote from the President given in reply to questions about the websites with his "plan" laid out.
"I have not laid out a plan yet, intentionally."
There is no "Bush plan for SS", although there may be general GOP ideas or plans, and there are certainly some ideas the President would like to have considered when the issue is addressed.
Slowguy
(insert pithy phrase here...)
"I have not laid out a plan yet, intentionally."
There is no "Bush plan for SS", although there may be general GOP ideas or plans, and there are certainly some ideas the President would like to have considered when the issue is addressed.
Slowguy
(insert pithy phrase here...)
Re: Just saw an AARP SS ad [slowguy]
[ In reply to ]
Slowguy,,, apparently you were watching the daily show...
that quote comes from a press conference on 3/16/05
http://www.whitehouse.gov/...5/03/20050316-3.html
favorite quote:
"Personal accounts do not solve the issue"
that quote comes from a press conference on 3/16/05
http://www.whitehouse.gov/...5/03/20050316-3.html
favorite quote:
"Personal accounts do not solve the issue"
Re: Just saw an AARP SS ad [slowguy]
[ In reply to ]
Here is the whole exchange:
Q Mr. President, you say you're making progress in the Social Security debate. Yet private accounts, as the centerpiece of that plan, something you first campaigned on five years ago and laid before the American people, remains, according to every measure we have, poll after poll, unpopular with a majority of Americans. So the question is, do you feel that this is a point in the debate where it's incumbent upon you, and nobody else, to lay out a plan to the American people for how you actually keep Social Security solvent for the long-term?
THE PRESIDENT: First of all, Dave, let me, if I might correct you, be so bold as to correct you, I have not laid out a plan yet, intentionally. I have laid out principles, I've talked about putting all options on the table, because I fully understand the administration must work with the Congress to permanently solve Social Security. So one aspect of the debate is, will we be willing to work together to permanently solve the issue.
Personal accounts do not solve the issue. But personal accounts will make sure that individual workers get a better deal with whatever emerges as a Social Security solution.
And the reason why is because a personal account would enable a worker to, voluntarily, by the way -- this is a voluntary program, you can choose to join or choose not to join. The government is not making you do that, it's your option, and you can decide whether or not you want to put some of your own money aside in a conservative mix of stocks and bonds to earn a better rate of return than that which you would earn -- your money would earn inside the Social Security system. And over time, that compounds, it grows, and you would end up with a nest egg you could call your own.
And so I think it's an interesting idea, and one that people ought to discuss to make sure the system works better for an individual worker. But it's very important for people to understand that the permanent solution will require Congress and the administration working together on a variety of different possibilities.
Q But, sir, but Democrats have made it pretty clear that they're not interested in that. They want you to lay it out. And so, what I'm asking is, don't --
THE PRESIDENT: I'm sure they do. The first bill on the Hill always is dead on arrival. I'm interested in coming up with a permanent solution. I'm not interested in playing political games. (Laughter.) I'm interested in working with members of both political parties.
Q Would you say if you're specifically supportive of an income test for the slowing of future benefits? Could that get some kind of bipartisan consensus going?
THE PRESIDENT: David, there's some interesting ideas out there. One of the interesting ideas was by the fellow -- by a Democrat economist name of Posen. He came to visit the White House -- he didn't see me, but came and tossed some interesting ideas out, talking about making sure the system was progressive. We're open for ideas. And I -- look, I can understand why people say, make -- force the President to either negotiate with himself, or lay out his own bill. I want to work with members of both political parties.
And I stood up in front of the Congress and said, bring your ideas forward. And I'm looking forward to people bringing ideas forward. That's how the process works. I'm confident we'll get something done. See, the American people want something done. They don't like partisan politics; they don't like people saying, I'm not going to accept so-and-so's idea because it happens to come from a particular political party. What they want is people coming together to solve this problem.
Q Mr. President, you say you're making progress in the Social Security debate. Yet private accounts, as the centerpiece of that plan, something you first campaigned on five years ago and laid before the American people, remains, according to every measure we have, poll after poll, unpopular with a majority of Americans. So the question is, do you feel that this is a point in the debate where it's incumbent upon you, and nobody else, to lay out a plan to the American people for how you actually keep Social Security solvent for the long-term?
THE PRESIDENT: First of all, Dave, let me, if I might correct you, be so bold as to correct you, I have not laid out a plan yet, intentionally. I have laid out principles, I've talked about putting all options on the table, because I fully understand the administration must work with the Congress to permanently solve Social Security. So one aspect of the debate is, will we be willing to work together to permanently solve the issue.
Personal accounts do not solve the issue. But personal accounts will make sure that individual workers get a better deal with whatever emerges as a Social Security solution.
And the reason why is because a personal account would enable a worker to, voluntarily, by the way -- this is a voluntary program, you can choose to join or choose not to join. The government is not making you do that, it's your option, and you can decide whether or not you want to put some of your own money aside in a conservative mix of stocks and bonds to earn a better rate of return than that which you would earn -- your money would earn inside the Social Security system. And over time, that compounds, it grows, and you would end up with a nest egg you could call your own.
And so I think it's an interesting idea, and one that people ought to discuss to make sure the system works better for an individual worker. But it's very important for people to understand that the permanent solution will require Congress and the administration working together on a variety of different possibilities.
Q But, sir, but Democrats have made it pretty clear that they're not interested in that. They want you to lay it out. And so, what I'm asking is, don't --
THE PRESIDENT: I'm sure they do. The first bill on the Hill always is dead on arrival. I'm interested in coming up with a permanent solution. I'm not interested in playing political games. (Laughter.) I'm interested in working with members of both political parties.
Q Would you say if you're specifically supportive of an income test for the slowing of future benefits? Could that get some kind of bipartisan consensus going?
THE PRESIDENT: David, there's some interesting ideas out there. One of the interesting ideas was by the fellow -- by a Democrat economist name of Posen. He came to visit the White House -- he didn't see me, but came and tossed some interesting ideas out, talking about making sure the system was progressive. We're open for ideas. And I -- look, I can understand why people say, make -- force the President to either negotiate with himself, or lay out his own bill. I want to work with members of both political parties.
And I stood up in front of the Congress and said, bring your ideas forward. And I'm looking forward to people bringing ideas forward. That's how the process works. I'm confident we'll get something done. See, the American people want something done. They don't like partisan politics; they don't like people saying, I'm not going to accept so-and-so's idea because it happens to come from a particular political party. What they want is people coming together to solve this problem.
Re: Just saw an AARP SS ad [ChiTownJack]
[ In reply to ]
Here's the last exchange in that press conference on SS:
Q Sir, on Social Security, what is the time line that you want to see for action by Congress on a bill? When do you start to get worried about not getting something done this year? And also, if I can add, would you be willing to drop personal accounts in order to get a bill?
THE PRESIDENT: Personal accounts are very important for the individuals. It's a -- you know, it's interesting -- David quoted some poll -- there's all kinds of polls. For every poll you quote, I'll quote another one. It's kind of the way Washington works these days. They poll everything. The one I read the other day said people like the idea of personal accounts.
I think people like the idea of being able to take some of their own money -- in other words, government says, you can decide, as opposed to, we'll decide for you, you get to decide if this is in your interest. And you get to decide whether you want to set some of your money aside in an account that will earn a better rate of return than that which will be earned in the Social Security system. That's an important part of making sure the system works for the individual.
I repeat, personal accounts do not permanently fix the solution. They make the solution more attractive for the individual worker. And that's important for people for understand, John, and that's why it's very important for Congress to discuss this issue.
In terms of timetables, as quickly as possible -- whatever that means. No, I am going to -- one of the things that I think is very important for people to understand is that I believe that we have a duty to work on big problems in Washington, D.C., and so I'm going to continue working on this. And it's, I guess -- I'm not going to go away on the issue, because the issue is not going to go away. The longer we wait, the more difficult it is to solve the problem.
And, listen, I fully understand it's a difficult issue; otherwise it would have been solved a long time ago. And I understand some members don't -- view this as a tough vote. In other words, why did you bring it up, it's a tough vote? And -- but that's just not the way I think, John. I think we have a duty. I truly do. This is -- now is the time to get this solved. I remember 1983, we've got a 75-year solution. It wasn't a 75-year solution that they came up with. It was a -- I like the spirit of people coming together from both parties to sit down and see if they couldn't solve the immediate problem, but it wasn't a 75-year solution because we're talking about it now. And in 2018, the situation starts to get worse because more money is coming into the system -- I mean, more money is going out of the system than coming in.
You know, one thing about Social Security -- I'm sorry to blow on here, but now that you asked -- a lot of people in America think there is a trust: your money goes in, the government holds it, and then the government gives your money back when you retire. That's just not the way it works. And it's important for the American citizens to understand. It's a pay-as-you-go system. And right now, we're paying for a lot of programs other than Social Security with the payroll tax coming in, thereby leaving a pile of IOUs. And part of why I think a personal account is an attractive option for a younger worker is that there will be real assets in the system at this point in time.
I also will continue reminding people, when it comes to personal accounts, that the system oftentimes doesn't work for a widow. You know, if a wage-earner dies prior to 62, there are no spousal benefits available until 62. If the spouse -- both spouses work, the spouse that survives will get the higher of his or her Social Security benefits, or the death benefits, but not both. In other words, somebody's contribution to the system just goes away. And a personal account will enable somebody to leave behind an asset base to whomever he or she chooses. And that's an important concept for people to understand.
.......
Q Mr. President, back to Social Security, if I may. You said right at the top today that you urged members of Congress to go out and talk about the problem with their constituents.
THE PRESIDENT: About solutions to the problem.
Q But also to talk about solutions. It's that part of it I want to ask about. Aren't you asking them to do something that you really haven't been willing to do yet?
THE PRESIDENT: No, I'm interested in -- first of all, I have laid out, in the State of the Union address -- I haven't looked at all previous State of the Union addresses, but I think I'm the first President ever to say, all options are on the table, and named a series of options. I think. Now, maybe somebody could go back and find out -- if you've got some idle time on your hand, you might want to go read previous State of the Union addresses and see if that's true.
I don't believe members should go write a bill, but I do believe a member should start discussing ideas with constituencies about how to solve the problem, as opposed to blocking ideas -- to say, here are some ideas, and come back and present them. That's what's happening, by the way. There's a lot of members are talking about different concepts. I've called a lot of them into the White House compound, I've listened to them. There's a variety of ideas. And that's positive. I view that as a positive sign that members of Congress, one, take the problem seriously -- I thought it was helpful yesterday when the United States Senate said that Social Security is a serious problem that requires a permanent solution.
And now it's time for people, when they get back from Easter, having talked to different constituency groups, to come back and sit down and start sharing ideas about how to move the process forward. And my pledge is that I will not take somebody's idea and use it as a political weapon against them. That's what's changed in this debate. In other words, the Social Security -- they used to call it the third rail of American politics, because when you talked about it, you got singed, at the minimum. And it's now time to talk about it in a serious way, to come up with a permanent solution.
Q Sir, on Social Security, what is the time line that you want to see for action by Congress on a bill? When do you start to get worried about not getting something done this year? And also, if I can add, would you be willing to drop personal accounts in order to get a bill?
THE PRESIDENT: Personal accounts are very important for the individuals. It's a -- you know, it's interesting -- David quoted some poll -- there's all kinds of polls. For every poll you quote, I'll quote another one. It's kind of the way Washington works these days. They poll everything. The one I read the other day said people like the idea of personal accounts.
I think people like the idea of being able to take some of their own money -- in other words, government says, you can decide, as opposed to, we'll decide for you, you get to decide if this is in your interest. And you get to decide whether you want to set some of your money aside in an account that will earn a better rate of return than that which will be earned in the Social Security system. That's an important part of making sure the system works for the individual.
I repeat, personal accounts do not permanently fix the solution. They make the solution more attractive for the individual worker. And that's important for people for understand, John, and that's why it's very important for Congress to discuss this issue.
In terms of timetables, as quickly as possible -- whatever that means. No, I am going to -- one of the things that I think is very important for people to understand is that I believe that we have a duty to work on big problems in Washington, D.C., and so I'm going to continue working on this. And it's, I guess -- I'm not going to go away on the issue, because the issue is not going to go away. The longer we wait, the more difficult it is to solve the problem.
And, listen, I fully understand it's a difficult issue; otherwise it would have been solved a long time ago. And I understand some members don't -- view this as a tough vote. In other words, why did you bring it up, it's a tough vote? And -- but that's just not the way I think, John. I think we have a duty. I truly do. This is -- now is the time to get this solved. I remember 1983, we've got a 75-year solution. It wasn't a 75-year solution that they came up with. It was a -- I like the spirit of people coming together from both parties to sit down and see if they couldn't solve the immediate problem, but it wasn't a 75-year solution because we're talking about it now. And in 2018, the situation starts to get worse because more money is coming into the system -- I mean, more money is going out of the system than coming in.
You know, one thing about Social Security -- I'm sorry to blow on here, but now that you asked -- a lot of people in America think there is a trust: your money goes in, the government holds it, and then the government gives your money back when you retire. That's just not the way it works. And it's important for the American citizens to understand. It's a pay-as-you-go system. And right now, we're paying for a lot of programs other than Social Security with the payroll tax coming in, thereby leaving a pile of IOUs. And part of why I think a personal account is an attractive option for a younger worker is that there will be real assets in the system at this point in time.
I also will continue reminding people, when it comes to personal accounts, that the system oftentimes doesn't work for a widow. You know, if a wage-earner dies prior to 62, there are no spousal benefits available until 62. If the spouse -- both spouses work, the spouse that survives will get the higher of his or her Social Security benefits, or the death benefits, but not both. In other words, somebody's contribution to the system just goes away. And a personal account will enable somebody to leave behind an asset base to whomever he or she chooses. And that's an important concept for people to understand.
.......
Q Mr. President, back to Social Security, if I may. You said right at the top today that you urged members of Congress to go out and talk about the problem with their constituents.
THE PRESIDENT: About solutions to the problem.
Q But also to talk about solutions. It's that part of it I want to ask about. Aren't you asking them to do something that you really haven't been willing to do yet?
THE PRESIDENT: No, I'm interested in -- first of all, I have laid out, in the State of the Union address -- I haven't looked at all previous State of the Union addresses, but I think I'm the first President ever to say, all options are on the table, and named a series of options. I think. Now, maybe somebody could go back and find out -- if you've got some idle time on your hand, you might want to go read previous State of the Union addresses and see if that's true.
I don't believe members should go write a bill, but I do believe a member should start discussing ideas with constituencies about how to solve the problem, as opposed to blocking ideas -- to say, here are some ideas, and come back and present them. That's what's happening, by the way. There's a lot of members are talking about different concepts. I've called a lot of them into the White House compound, I've listened to them. There's a variety of ideas. And that's positive. I view that as a positive sign that members of Congress, one, take the problem seriously -- I thought it was helpful yesterday when the United States Senate said that Social Security is a serious problem that requires a permanent solution.
And now it's time for people, when they get back from Easter, having talked to different constituency groups, to come back and sit down and start sharing ideas about how to move the process forward. And my pledge is that I will not take somebody's idea and use it as a political weapon against them. That's what's changed in this debate. In other words, the Social Security -- they used to call it the third rail of American politics, because when you talked about it, you got singed, at the minimum. And it's now time to talk about it in a serious way, to come up with a permanent solution.
Re: Just saw an AARP SS ad [Tridiot]
[ In reply to ]
THE PRESIDENT: First of all, Dave, let me, if I might correct you, be so bold as to correct you, I have not laid out a plan yet, intentionally.
Brian286 you must point out to the president that he has INDEED laid out a plan, and tell him where to find it!!!
Brian286 you must point out to the president that he has INDEED laid out a plan, and tell him where to find it!!!
Re: Just saw an AARP SS ad [Brian286]
[ In reply to ]
Brian:
Aren't you just answering a question with another question? If you're going for a Socratic Method-style of education, there has to be a bit more interchange than "go find it yourself."
This is a good example of a plan:
https://www.brookings.edu/...licybriefs/pb126.htm
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
No sidewindin bushwackin, hornswaglin, cracker croaker is gonna rouin me bishen cutter!
Aren't you just answering a question with another question? If you're going for a Socratic Method-style of education, there has to be a bit more interchange than "go find it yourself."
This is a good example of a plan:
https://www.brookings.edu/...licybriefs/pb126.htm
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
No sidewindin bushwackin, hornswaglin, cracker croaker is gonna rouin me bishen cutter!
Re: Just saw an AARP SS ad [Tridiot]
[ In reply to ]
For those of you with short attention spans or pressed for time, I'll summarize the press conference:
I think that covers of what he said. Oh yeah, he also mentioned something about how personal accounts are a nice feature but don't solve the funding issues. Beyond that, I think he said that everything is on the table and up for discussion. Real leadership and vision. I thought this was the big thing he was going to get done this term? You don't really need writers on the Daily Show. Just play clips fo press conferences.
__________________________________________________
What a drag it is getting old. -- Stones
Q: Mr. President, what is your plan for social security?
A: I don't have one. On purpose.
Q: When do propose to set forth your plan?
A: I don't. The first proposal always gets shot down.
Q: But if nobody else comes up with a proposal, at some point will you?
A: Blah, blah, blah . . . punt.
I think that covers of what he said. Oh yeah, he also mentioned something about how personal accounts are a nice feature but don't solve the funding issues. Beyond that, I think he said that everything is on the table and up for discussion. Real leadership and vision. I thought this was the big thing he was going to get done this term? You don't really need writers on the Daily Show. Just play clips fo press conferences.
__________________________________________________
What a drag it is getting old. -- Stones
Re: Just saw an AARP SS ad [dire wolf]
[ In reply to ]
Very amusing exchange. If you were here for the pre-presidential debates, you probably would not have engaged Brian in this debate, despite having all of the facts on your side. You'll find that to be not terribly useful when debating ideologues who take talking points as undisputed fact.
As for SS, Bush's plan is clearly to wait until the dust settles and decide if there's any political juice left for him to be able to do anything. As of yet, it appears that the citizens, and many Republicans are running away as quickly as they can, lest they get infected by the bad press.
What is interesting is the level of misinformation being spread by Republican operatives through the media, and by the President himself, which is quite amusing, given that I doubt that even his supporters would be confident in his command of numbers. Basically, he's allowing his proxies to trial-balloon proposals in the press to see how they do, and basically they're stinking up the joint.
What's funny is the facts are pretty accessible, and neither government officials or the press seem to find it worthy to go and find them. Here they are, courtesy of the Social Security Administration.
Based on their intermediate actuarial assumptions (and the SSA has actually hit their "optimistic" assumptions for the last 10 years - in this case the optimistic projections have no deficit at all) regarding births, deaths, immigration, wages, costs, etc, based on current law, they project that current SS payments will be outpaced by benefits by 2018. Likewise, the "trust fund" accumulated over the last 20 years and forthcoming 15 will begin to be reduced. This depletion will finish, based on current projections, by 2041. However, after 2041, the cash flow from workers will be able to pay 74% of then-current benefits, and by 2079 (74 years from now for those playing at home), that number drops to 68%. Those are the facts, and they are generally undisputed, if unmentioned. And before some nimrod says that the trust fund is "imaginary," keep in mind that this imaginary obligation is the same obligation that international investors and other countries invest in - US government bonds. So the President doesn't exactly do the US financial markets any favors by suggesting the US Treasury bonds are "imaginary."
In any case, is there a "crisis" and what are the options?
Well, as Alan Greenspan recently pointed out, a crisis is defined by something that will happen tomorrow, which for him is the rising budget deficit (talk about imaginary money!). Given that these depletions occur well into the future, and use what some would argue are somewhat conservative assumptions (especially regarding immigration - its a drop to 900k from 1.2mm now, which is curious given that the birthrate also drops and we'll need workers), the word crisis may be a bit alarmist, especially when we're talking about something 35 years off, and which doesn't result in catastrophe. It's not as if we're scheduling a nuclear war in 35 years. A lot can happen in 35 years, especially with actuarial assumptions - just ask your employer everytime they recalculate their pension liability for the year. Or for that matter, read an equity research report and see how often companies hit their numbers in the next year, much less 35 years in the future.
But, for argument's sake, let's assume it's a crisis. What do we do?
Well, the simplest answer gives us a few options. The first would be to raise the retirement age, especially given that the SSA life expectancies continue to ramp up throughout the model (up to 86 yrs old - woohoo). But that may be inhumane, and I don't have any particular plans to work when I'm 65. So another option would be to raise the cap on SS deductions, which currently represents a regressive tax (somebody making less than $87,900 pays a higher tax rate than somebody making more). That would seem reasonable, yes? Another less palatable option is to raise the deduction rate from 12.4%. This is what Greenspan proposed in 1983, and it is what generated the trust fund in the first place. In any case, some combination of these three solutions would likely forestall, if not end the "crisis" and allow us to move onto more important issues, like, you know, gay marriage.
However, bits and pieces of the President's "plan" that he so graciously has doled out include private accounts, the slow reduction of other benefits, and effectively over the long-term, the privatization of the system. That is ultimately more of an ideological goal than one rooted in the one social security was founded to prevent - elderly poverty. But that notwithstanding, what are the impacts of this plan?
Well, in immediate terms, the plan would cost somewhere between $2 and $5 trillion in additional borrowing over 25 years in order to make up the benefits already promised to retirees. That's pretty interesting given that the current trust fund only has $1.5 trillion in it, as of 12/31/2004. Seems that it would spend more in the first 25 years than we've accumulated over the last 25.
Participants would then have control of their payroll deductions to invest in (I assume) a pre-selected group of funds, with trading expenses coming out of their pockets, to hopefully produce a positive and compounded return, tax-deferred over time. The only problem is that in similar experiments in the UK, problems such as poor return, high expenses, and ultimately, fraud, cost taxpayers a boatload of money and ultimately the system is in doubt. Interestingly enough, even the CBO's analysis of a White House plan suggested that seniors would actually get less from a private accounts scenario than traditional benefits, based on the White House's projection of stock market return, conveniently without the volatility included. And this volatility is quite important, as nobody I know gets to retire only when the market is at its peak.
So let's sum up, boys and girls. You have a pending (13 years) shortfall in SS, depending on somewhat unsteady actuarial assumptions, the proposed solution which is to slowly phase out the system. Other solutions are available, which are simple and easy to administer or reverse, as the case may be. More interestingly, the President's solution does nothing to repair the solvency of the system, which if I recall correctly, was the "crisis" in the first place. In contrast, it places a great deal of additional debt on the system, while retirees are asked to give up benefits for the right to lose them in the market if they are foolish or underinformed.
So then why is he pushing this plan?
I can't speak for the man, but if I had to guess (and based on listening to other ideologues in DC), I would guess it has something to do with the long-historic hostility for SS that conservatives have always felt. What do I mean? Well, if you were to look back at the history of the program's development, as well as conservative philosophy regarding entitlement programs, it would become apparent that conservative dogma suggests that SS is this side of communism. It represents a transfer of assets from the wealthy to the elderly, and basically a bail-out of the elderly who weren't foresighted enough or smart enough to save for their own retirements. Why should anybody be liable to keep elderly off of dog food? In addition, it appeals to dogma about smaller government and government control, and appeals to the business sector.
But it does nothing to shield the elderly from poverty, does nothing to reduce the economic costs or ensure long-term solvency of the system, and clearly overstates potential actuarial impacts in the future. So why do it?
Your guess is as good as mine.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
As for SS, Bush's plan is clearly to wait until the dust settles and decide if there's any political juice left for him to be able to do anything. As of yet, it appears that the citizens, and many Republicans are running away as quickly as they can, lest they get infected by the bad press.
What is interesting is the level of misinformation being spread by Republican operatives through the media, and by the President himself, which is quite amusing, given that I doubt that even his supporters would be confident in his command of numbers. Basically, he's allowing his proxies to trial-balloon proposals in the press to see how they do, and basically they're stinking up the joint.
What's funny is the facts are pretty accessible, and neither government officials or the press seem to find it worthy to go and find them. Here they are, courtesy of the Social Security Administration.
Based on their intermediate actuarial assumptions (and the SSA has actually hit their "optimistic" assumptions for the last 10 years - in this case the optimistic projections have no deficit at all) regarding births, deaths, immigration, wages, costs, etc, based on current law, they project that current SS payments will be outpaced by benefits by 2018. Likewise, the "trust fund" accumulated over the last 20 years and forthcoming 15 will begin to be reduced. This depletion will finish, based on current projections, by 2041. However, after 2041, the cash flow from workers will be able to pay 74% of then-current benefits, and by 2079 (74 years from now for those playing at home), that number drops to 68%. Those are the facts, and they are generally undisputed, if unmentioned. And before some nimrod says that the trust fund is "imaginary," keep in mind that this imaginary obligation is the same obligation that international investors and other countries invest in - US government bonds. So the President doesn't exactly do the US financial markets any favors by suggesting the US Treasury bonds are "imaginary."
In any case, is there a "crisis" and what are the options?
Well, as Alan Greenspan recently pointed out, a crisis is defined by something that will happen tomorrow, which for him is the rising budget deficit (talk about imaginary money!). Given that these depletions occur well into the future, and use what some would argue are somewhat conservative assumptions (especially regarding immigration - its a drop to 900k from 1.2mm now, which is curious given that the birthrate also drops and we'll need workers), the word crisis may be a bit alarmist, especially when we're talking about something 35 years off, and which doesn't result in catastrophe. It's not as if we're scheduling a nuclear war in 35 years. A lot can happen in 35 years, especially with actuarial assumptions - just ask your employer everytime they recalculate their pension liability for the year. Or for that matter, read an equity research report and see how often companies hit their numbers in the next year, much less 35 years in the future.
But, for argument's sake, let's assume it's a crisis. What do we do?
Well, the simplest answer gives us a few options. The first would be to raise the retirement age, especially given that the SSA life expectancies continue to ramp up throughout the model (up to 86 yrs old - woohoo). But that may be inhumane, and I don't have any particular plans to work when I'm 65. So another option would be to raise the cap on SS deductions, which currently represents a regressive tax (somebody making less than $87,900 pays a higher tax rate than somebody making more). That would seem reasonable, yes? Another less palatable option is to raise the deduction rate from 12.4%. This is what Greenspan proposed in 1983, and it is what generated the trust fund in the first place. In any case, some combination of these three solutions would likely forestall, if not end the "crisis" and allow us to move onto more important issues, like, you know, gay marriage.
However, bits and pieces of the President's "plan" that he so graciously has doled out include private accounts, the slow reduction of other benefits, and effectively over the long-term, the privatization of the system. That is ultimately more of an ideological goal than one rooted in the one social security was founded to prevent - elderly poverty. But that notwithstanding, what are the impacts of this plan?
Well, in immediate terms, the plan would cost somewhere between $2 and $5 trillion in additional borrowing over 25 years in order to make up the benefits already promised to retirees. That's pretty interesting given that the current trust fund only has $1.5 trillion in it, as of 12/31/2004. Seems that it would spend more in the first 25 years than we've accumulated over the last 25.
Participants would then have control of their payroll deductions to invest in (I assume) a pre-selected group of funds, with trading expenses coming out of their pockets, to hopefully produce a positive and compounded return, tax-deferred over time. The only problem is that in similar experiments in the UK, problems such as poor return, high expenses, and ultimately, fraud, cost taxpayers a boatload of money and ultimately the system is in doubt. Interestingly enough, even the CBO's analysis of a White House plan suggested that seniors would actually get less from a private accounts scenario than traditional benefits, based on the White House's projection of stock market return, conveniently without the volatility included. And this volatility is quite important, as nobody I know gets to retire only when the market is at its peak.
So let's sum up, boys and girls. You have a pending (13 years) shortfall in SS, depending on somewhat unsteady actuarial assumptions, the proposed solution which is to slowly phase out the system. Other solutions are available, which are simple and easy to administer or reverse, as the case may be. More interestingly, the President's solution does nothing to repair the solvency of the system, which if I recall correctly, was the "crisis" in the first place. In contrast, it places a great deal of additional debt on the system, while retirees are asked to give up benefits for the right to lose them in the market if they are foolish or underinformed.
So then why is he pushing this plan?
I can't speak for the man, but if I had to guess (and based on listening to other ideologues in DC), I would guess it has something to do with the long-historic hostility for SS that conservatives have always felt. What do I mean? Well, if you were to look back at the history of the program's development, as well as conservative philosophy regarding entitlement programs, it would become apparent that conservative dogma suggests that SS is this side of communism. It represents a transfer of assets from the wealthy to the elderly, and basically a bail-out of the elderly who weren't foresighted enough or smart enough to save for their own retirements. Why should anybody be liable to keep elderly off of dog food? In addition, it appeals to dogma about smaller government and government control, and appeals to the business sector.
But it does nothing to shield the elderly from poverty, does nothing to reduce the economic costs or ensure long-term solvency of the system, and clearly overstates potential actuarial impacts in the future. So why do it?
Your guess is as good as mine.
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"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
Last edited by:
trio_jeepy: Apr 11, 05 1:37
Re: Just saw an AARP SS ad [trio_jeepy]
[ In reply to ]
excellent analysis. very canny insights.
__________________________________________________
What a drag it is getting old. -- Stones
__________________________________________________
What a drag it is getting old. -- Stones
Re: Just saw an AARP SS ad [dire wolf]
[ In reply to ]
Thanks. I try to be pretty factual, but my opinions are pretty obvious.
To be honest, I'm sort of sickened watching Brian and other Repubs bloviate as a replacement for actual factual debate. It seems they've associated repetitively hammering talking points as the same thing as being right, and it simply isn't the case. Watching your exchange was sort of depressing as he basically kept avoiding the question and sitting back saying "nyah-nyah." Something between infantile and sociopathic, I think.
I think there is a significant gap in honest debate about SS for the simple reason that the private accounts system simply doesn't work, and is an ideologically driven construct with a larger goal that would appeal to only a small segment of society, once the goals and implications were laid clearly on the table. Instead, you just hear the President parroting the line that the system is in crisis, and that the trust fund is a bunch of imaginary IOUs. I guess if you can con the country into believing about Saddam, WMDs, and his purported connection to 9/11, it emboldens you to consider the truth a meaningless roadblock to the future.
The larger problem is that if Social Security gets dismantled, which I think is unlikely, the next target is the tax system, as they've stated. Now I don't think that anybody is fundamentally a fan of the tax system, but the next attack may be to the core principles of it - progressivity, fairness, and inclusion.
Read up on flat tax and sales tax proposals and see if you can find the holes in the ideas.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
To be honest, I'm sort of sickened watching Brian and other Repubs bloviate as a replacement for actual factual debate. It seems they've associated repetitively hammering talking points as the same thing as being right, and it simply isn't the case. Watching your exchange was sort of depressing as he basically kept avoiding the question and sitting back saying "nyah-nyah." Something between infantile and sociopathic, I think.
I think there is a significant gap in honest debate about SS for the simple reason that the private accounts system simply doesn't work, and is an ideologically driven construct with a larger goal that would appeal to only a small segment of society, once the goals and implications were laid clearly on the table. Instead, you just hear the President parroting the line that the system is in crisis, and that the trust fund is a bunch of imaginary IOUs. I guess if you can con the country into believing about Saddam, WMDs, and his purported connection to 9/11, it emboldens you to consider the truth a meaningless roadblock to the future.
The larger problem is that if Social Security gets dismantled, which I think is unlikely, the next target is the tax system, as they've stated. Now I don't think that anybody is fundamentally a fan of the tax system, but the next attack may be to the core principles of it - progressivity, fairness, and inclusion.
Read up on flat tax and sales tax proposals and see if you can find the holes in the ideas.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
Re: Just saw an AARP SS ad [trio_jeepy]
[ In reply to ]
Read up on flat tax and sales tax proposals and see if you can find the holes in the ideas.
Didn't take me too long to figure that out. I was flabbergasted a few years back when Steve Forbes' flat tax idea seemed to garner so much popularity. Perhaps I completely misunderstood his proposal, but I think he was advocating an income tax with no deductions. This is so incredibly stupid that he should have been publicly ridiculed as soon as he proposed it. I hope I just was wrong about what he was saying. Maybe Art can explain it.
As for a sales tax, that's another bad idea. Regressive and will chill spending -- not good for economy.
__________________________________________________
What a drag it is getting old. -- Stones
Didn't take me too long to figure that out. I was flabbergasted a few years back when Steve Forbes' flat tax idea seemed to garner so much popularity. Perhaps I completely misunderstood his proposal, but I think he was advocating an income tax with no deductions. This is so incredibly stupid that he should have been publicly ridiculed as soon as he proposed it. I hope I just was wrong about what he was saying. Maybe Art can explain it.
As for a sales tax, that's another bad idea. Regressive and will chill spending -- not good for economy.
__________________________________________________
What a drag it is getting old. -- Stones
Re: Just saw an AARP SS ad [dire wolf]
[ In reply to ]
I don't think Art can explain it.
The flat tax, on the face of it, is an interesting proposal. Assuming you can get over the prima facie end of progressivity, it has simplistic appeal to it. However, the devil is in the details. Given that all tax proposals have to be designed to be revenue-neutral, the question then is what is the correct tax rate? The problem here is that every flat tax proposal I've seen includes carve-outs for capital gains and interest income. These are holes you can drive a truck through. And classic deductions, like the mortgage interest deduction would be done away with. So with no capital gains or interest tax you now have to ramp the rate up pretty high to be revenue-neutral, making it certainly worse for lower-income people. And then if you were to exclude the lower income ranges you would then need to boost the rate.
So, given that wealthier, and certainly the extremely wealthy, generate much of their income from capital gains and interest, this would be incredibly regressive. But even if you assume that regressivity is not a deterrent, it then begs the philosophical question - as a country, do we want our government, defense, roads, etc, being paid for exclusively by those who earn wage income, and not all by those who inherit assets and/or manage assets for income? It seems perverse to think that Joe the bus driver will be paying for defense while Steve Forbes won't. When framed in that way, the flat tax is simply a disaster.
The sales tax proposal has a similar problem. Poorer people spend all of their money to live, raise children, etc., while the wealthier can afford to save, leading to a inverted tax structure. While the notion of a consumption tax is less hateful than the flat tax, it still has this problem, as well as the problem of an underground economy. And of course the tax rate would be astronomical.
The sales tax would also lead to an interesting conundrum. Retirees and others who rely on passive income or drawing down of assets would then be essentially double-taxed - taxed once when income earned, and taxed even higher when consumed. And given that this would hit the wealthiest the hardest as well as retirees, you can safely say this proposal is stillborn. Basically only those who inherit assets would largely escape this, I think.
And then of course, any suggestion of simplicity would end up being submarined as every Senator and Congressman pushed through his local district pork-barrel, thereby gumming up what was originally an elegant, if unjust, solution.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
The flat tax, on the face of it, is an interesting proposal. Assuming you can get over the prima facie end of progressivity, it has simplistic appeal to it. However, the devil is in the details. Given that all tax proposals have to be designed to be revenue-neutral, the question then is what is the correct tax rate? The problem here is that every flat tax proposal I've seen includes carve-outs for capital gains and interest income. These are holes you can drive a truck through. And classic deductions, like the mortgage interest deduction would be done away with. So with no capital gains or interest tax you now have to ramp the rate up pretty high to be revenue-neutral, making it certainly worse for lower-income people. And then if you were to exclude the lower income ranges you would then need to boost the rate.
So, given that wealthier, and certainly the extremely wealthy, generate much of their income from capital gains and interest, this would be incredibly regressive. But even if you assume that regressivity is not a deterrent, it then begs the philosophical question - as a country, do we want our government, defense, roads, etc, being paid for exclusively by those who earn wage income, and not all by those who inherit assets and/or manage assets for income? It seems perverse to think that Joe the bus driver will be paying for defense while Steve Forbes won't. When framed in that way, the flat tax is simply a disaster.
The sales tax proposal has a similar problem. Poorer people spend all of their money to live, raise children, etc., while the wealthier can afford to save, leading to a inverted tax structure. While the notion of a consumption tax is less hateful than the flat tax, it still has this problem, as well as the problem of an underground economy. And of course the tax rate would be astronomical.
The sales tax would also lead to an interesting conundrum. Retirees and others who rely on passive income or drawing down of assets would then be essentially double-taxed - taxed once when income earned, and taxed even higher when consumed. And given that this would hit the wealthiest the hardest as well as retirees, you can safely say this proposal is stillborn. Basically only those who inherit assets would largely escape this, I think.
And then of course, any suggestion of simplicity would end up being submarined as every Senator and Congressman pushed through his local district pork-barrel, thereby gumming up what was originally an elegant, if unjust, solution.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
Re: Just saw an AARP SS ad [Brian286]
[ In reply to ]
hey what happened to Brian286?? he hasn't posted in a week.
Note to Brian... I'd LOVE personal accounts... but do the math... they make things worse...
Quick quiz: Currently SSA is projected to pay out more than it takes in starting around 2018. If you take some of the money that would have gone to SSA and divert it to private/personal accounts, then the date that SSA will pay out more than it takes in - will it be sooner or later?
Quick Quiz#2: If private/personal accounts are such a great idea, then why does the president's "plan" state that they won't start until 2009? AFTER he's left office.
Note to Brian... I'd LOVE personal accounts... but do the math... they make things worse...
Quick quiz: Currently SSA is projected to pay out more than it takes in starting around 2018. If you take some of the money that would have gone to SSA and divert it to private/personal accounts, then the date that SSA will pay out more than it takes in - will it be sooner or later?
Quick Quiz#2: If private/personal accounts are such a great idea, then why does the president's "plan" state that they won't start until 2009? AFTER he's left office.
Re: Just saw an AARP SS ad [trio_jeepy]
[ In reply to ]
The problem with the flat tax is much worse than you describe (again, if I understand the proposal). I'm not sure what the big advantage of one tax rate is, but that's a policy issue people can debate (i.e., rich people can argue with each other about whether those who earn less should be rewarded or punished).
The big problem is in doing away with deductions. Most people seem to think of deductions as these complicated, tricky pieces of special interest legislation and loopholes, and they are right in some cases. But the primary purpose of deductions is to calculate net income. Consider the following 2 cases:
Case 1: Mr. A owns a small grocery store. His overall profit margin is about 5%. He sells $2 million worth of groceries per year and takes home $100,000. In order to calculate his income taxes, you take his gross revenues of $2 million and then deduct $1.9 million in business expenses (cost of goods sold and overhead) to arrive at his net income of $100,000. Mr. A then pays taxes on $100,000.
Case 2: Mr. B is a well-regarded sole-practitioner lawyer. He bills 2,000 hours per year at $500/hr, for a gross of $1,000,000. His office expenses and overhead (rent, insurance, secretary, office equipment, etc.) are about $200,000 per year, leaving him a take-home pay of $800,000. In other words, he makes 8 times as much as Mr. A and currently pays taxes on a net income of $800k
Flat tax: Under a no-deductions system, Mr. A would pay taxes on $2 million of income, while Mr. B would only pay taxes on $1 million of income. This type of system simply rewards people whose businesses have higher profit margins. Sure, it's simple, but it's not much better than taxing people randomly, which is also simple.
Please tell me I'm ill-informed on the flat tax proposals that were made.
__________________________________________________
What a drag it is getting old. -- Stones
The big problem is in doing away with deductions. Most people seem to think of deductions as these complicated, tricky pieces of special interest legislation and loopholes, and they are right in some cases. But the primary purpose of deductions is to calculate net income. Consider the following 2 cases:
Case 1: Mr. A owns a small grocery store. His overall profit margin is about 5%. He sells $2 million worth of groceries per year and takes home $100,000. In order to calculate his income taxes, you take his gross revenues of $2 million and then deduct $1.9 million in business expenses (cost of goods sold and overhead) to arrive at his net income of $100,000. Mr. A then pays taxes on $100,000.
Case 2: Mr. B is a well-regarded sole-practitioner lawyer. He bills 2,000 hours per year at $500/hr, for a gross of $1,000,000. His office expenses and overhead (rent, insurance, secretary, office equipment, etc.) are about $200,000 per year, leaving him a take-home pay of $800,000. In other words, he makes 8 times as much as Mr. A and currently pays taxes on a net income of $800k
Flat tax: Under a no-deductions system, Mr. A would pay taxes on $2 million of income, while Mr. B would only pay taxes on $1 million of income. This type of system simply rewards people whose businesses have higher profit margins. Sure, it's simple, but it's not much better than taxing people randomly, which is also simple.
Please tell me I'm ill-informed on the flat tax proposals that were made.
__________________________________________________
What a drag it is getting old. -- Stones
Re: Just saw an AARP SS ad [dire wolf]
[ In reply to ]
Actually, I think you're incorrect. In both situations, they would be incorporated businesses, so that both guys would pay taxes on what they take home.
I think the flat tax is primarily focused on individuals, not businesses. While business tax is complex, it doesn't have the same structure and same political clout as appealing to individuals.
In any case, under a flat tax proposal they would both pay on their personal income, unless the attorney were able to shield some of his income by accruing it in asset values rather than take home pay. Another alternative would be if they took their salary as a dividend, but that would be such an obvious tax dodge that I can't imagine it would be allowed.
As for the appeal of the flat tax, the thrust of it is that the current tax system is so complex that the industries that exist to serve people just filing the tax is a deadweight loss. A simpler system would be more efficient and economically beneficial. However, as I said, that ignores the philosophical issues and the actual math involved.
Everything always looks good on paper, especially if you ignore or deliberately obscure that which won't be popular.
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"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
I think the flat tax is primarily focused on individuals, not businesses. While business tax is complex, it doesn't have the same structure and same political clout as appealing to individuals.
In any case, under a flat tax proposal they would both pay on their personal income, unless the attorney were able to shield some of his income by accruing it in asset values rather than take home pay. Another alternative would be if they took their salary as a dividend, but that would be such an obvious tax dodge that I can't imagine it would be allowed.
As for the appeal of the flat tax, the thrust of it is that the current tax system is so complex that the industries that exist to serve people just filing the tax is a deadweight loss. A simpler system would be more efficient and economically beneficial. However, as I said, that ignores the philosophical issues and the actual math involved.
Everything always looks good on paper, especially if you ignore or deliberately obscure that which won't be popular.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
Last edited by:
trio_jeepy: Apr 11, 05 18:26
Re: Just saw an AARP SS ad [trio_jeepy]
[ In reply to ]
In both situations, they would be incorporated businesses
Not necessarily true.
In any case, under a flat tax proposal they would both pay on their personal income
which is calculated how? (assume these are sole proprietorships, not corps). my point is that you can't determine somebody's net income unless you deduct their expenses.
__________________________________________________
What a drag it is getting old. -- Stones
Not necessarily true.
In any case, under a flat tax proposal they would both pay on their personal income
which is calculated how? (assume these are sole proprietorships, not corps). my point is that you can't determine somebody's net income unless you deduct their expenses.
__________________________________________________
What a drag it is getting old. -- Stones
Re: Just saw an AARP SS ad [dire wolf]
[ In reply to ]
Ok, I understand your point now. I think the reality of the situation is that there would either be a special form for unincorporated businesses (as there is now) or the former guy would end up incorporating or forming some type of LLC. I don't think the purpose of the flat tax is to screw small businessmen in this way - its pretty focused on personal income taxes and personal deductions.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
Re: Just saw an AARP SS ad [trio_jeepy]
[ In reply to ]
In which case my response is: BFD. Most of the complications with the tax code -- and most tax revenue, relates to businesses. Also, it's not that easy to draw the line between business and personal for many people.
__________________________________________________
What a drag it is getting old. -- Stones
__________________________________________________
What a drag it is getting old. -- Stones
That may very well be the case - I don't have an opinion either way.
I think the larger point is that the flat-taxers argue that the difficulty of the personal income tax system argues in favor of a simple flat tax, without fully disclosing who wins and who loses in the system.
I think that is problem. It is essentially a bait and switch, where they will simply avoid any discussion of who wins and who loses. Given that it will be revenue-neutral, there's simply no way around that fact. And nobody should be surprised that the Steve Forbes' of the world win and the bus drivers lose.
It then degenerates into a class war where those with funds can push Congress, etc. to work in their favor, while those without get the shaft. Notice the complete lack of discussion about what the right thing is to do, and where the national priority is. Don't hear much about that these days.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"
I think the larger point is that the flat-taxers argue that the difficulty of the personal income tax system argues in favor of a simple flat tax, without fully disclosing who wins and who loses in the system.
I think that is problem. It is essentially a bait and switch, where they will simply avoid any discussion of who wins and who loses. Given that it will be revenue-neutral, there's simply no way around that fact. And nobody should be surprised that the Steve Forbes' of the world win and the bus drivers lose.
It then degenerates into a class war where those with funds can push Congress, etc. to work in their favor, while those without get the shaft. Notice the complete lack of discussion about what the right thing is to do, and where the national priority is. Don't hear much about that these days.
------------------------------------------------------------------------------
"They who would give up an essential liberty for temporary security, deserve neither liberty or security" - Benjamin Franklin
"Don't you see the rest of the country looks upon New York like we're left-wing, communist, Jewish, homosexual pornographers? I think of us that way sometimes and I live here." - Alvy Singer, "Annie Hall"