jtr1962

Greenspan-cut Social Security

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I know it may be fairly old news but Federal Reserve Chairman Alan Greenspan urged Congress to cut Social Security, and not raise taxes. I'm really surprised nobody started a thread on this already.

I find his candor refreshing in this age of leaders who tell people what they want to hear. While it is uncertain what will happen, at least his comments will hopefully get people talking about the problem in a realistic manner. I for one don't understand why Congress added an expensive new drug benefit to Medicare when the system was already in such trouble. It just makes no sense. Either taxes should have been raised or there should have been cuts elsewhere in the system. It just amazes me the kind of irresponsible things our leaders will do just to get reelected. It's well past time the American people had a dose of reality regarding the true cost of all these government benefits they've come to love. Sooner or later someone has to pay the bill, and I'll be damned if it's my generation or the ones which come after.

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Sure. Keep on going the route of egoism instead of solidarity where a few get rich and a lot barely get by.

Unregulated free market DOES NOT WORK. It's good for companies wishing to exploit people, not for the people themselves. Typically the freer the market, the less social security.

If Greenspan had had any real guts he'd ask for a cut in the massive funds going to your military.

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...massive funds going to your military.

That's my real social security. :P

Not some slush fund the government raids when it needs more cash.

Who would willing put their money into a fund that returned 1.5-1.75% / year?

Unfortunately there are trillions of dollars locked up in the industries that surround social security programs.

So many things are broken (and wrong) with the Social Security system, including how it is payed out. Someone needs to put a stake in it.

Give me some credit. Let me save for my own retirement. WW II is been over for a long time.

Dogeared

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Who would willing put their money into a fund that returned 1.5-1.75% / year?

Unfortunately there are trillions of dollars locked up in the industries that surround social security programs.

So many things are broken (and wrong) with the Social Security system, including how it is payed out.  Someone needs to put a stake in it.

Who would put funds in with such low rates of return? Any of the tens of millions of Brazillians who lost their ENTIRE retirement accounts during the recent market slump, after it had been converted from a government pay-as-you-go system into a privatized invest-it-your-way system...

FS

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...massive funds going to your military.

That's my real social security. :P

Not some slush fund the government raids when it needs more cash.

Who would willing put their money into a fund that returned 1.5-1.75% / year?

Unfortunately there are trillions of dollars locked up in the industries that surround social security programs.

So many things are broken (and wrong) with the Social Security system, including how it is payed out. Someone needs to put a stake in it.

Then fix your social security system instead of abandoning the little you have.

So you'd rather pay through the nose for a military that gets your politicians rich eh?

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Who would put funds in with such low rates of return?  Any of the tens of millions of Brazillians who lost their ENTIRE retirement accounts during the recent market slump, after it had been converted from a government pay-as-you-go system into a privatized invest-it-your-way system...

Pay-as-you-go systems are usually structured as Ponzi schemes that require a significantly rising population level, on a continuous and indefinite basis, to make payments. Pay-as-you-go systems that don't assume substantial population rises aren't Ponzi schemes, but I don't know if these actually exist. The US form of pay-as-you-go is definitely a Ponzi scheme that will fail once the population levels off because the only way to cover rising payments is rising tax rates on income-earners, and that fails in a few years once the tax rate reaches 100% (i.e., once all national income is devoted to welfare payments the system collapses).

The US system was originally intended as a welfare system for poor retirees, as a supplemental system for those whose savings had failed. Unfortunately it’s now a general welfare program for everyone. I don’t know if the original system was financially stable but the current one clearly is not.

I don't know if the Brazilian pay-as-you-go requires a significant continuous population growth or not; i.e., if it's a Ponzi scheme.

I'm not familiar with the Brazilian problem. Were the investments confiscated? Were the investment choices restricted to bad choices? Or did people just make bad investment choices?

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Then fix your social security system instead of abandoning the little you have.

So you'd rather pay through the nose for a military that gets your politicians rich eh?

The fix, of necessity, requires abandoning the pay-as-you-go system in favor of the traditional save-as-you-go. The key is to figure out how to make payments on the systems next year, and the year after, etc, and design payments that are sustainable. That’s what Greenspan is saying: the current system will fail, perhaps in 40 years, perhaps in 75, but failure is certainty even if the exact date is unclear.

It worth noting that there is no debate in the US over the claim that the current will fail at some point. The debate is about how to change it. There are no changes that seem realistic to anyone that do not involve restraining payment growth and since “restrained growth†sounds like “cuts†no politician wants to get near the question.

US welfare programs account for substantially more spending than US military programs. Depending on what you count as military spending and what you count as welfare, welfare spending approaches three times the size of military spending. US welfare spending is more substantial than many foreigners realize, and military spending is a smaller percentage than one might suspect. Welfare spending largely stays at home but military hardware appears on TVs worldwide.

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When social security started in the untied states, the retirement age was set to 65. This was because the average life expecancy was 63. It was from the begining a Ponzi scheame that most poeple would never withdraw from... So we should now do the logical thing, and raise the retirement age to 90 (or whatever the average life expectancy is, + 2 years)

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Social Security Tax is just that, another tax. Nothing more, nothing less. I will never receive anything close to the amount I've paid in to the system, forgetting all about interest or anything else.

SS tax has been raised dramatically every few years, not by raising the rate, but by increasing the maximum amount of annual income which can be taxed, which was recently raised from about $65k to $85k. I'm quite happy that there is a cap at all, and that I'm able to exceed it, mind you, but I'm sure it won't last much longer.

What benefit do I see from the tax? I get to live in a society which does not leave elderly people who didn't plan for their own retirements out in the cold to beg or die in the streets.

I certainly do not expect Social Security to pay for my retirement, but I will do my best to recover what I can from the system for myself and my family when I retire.

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I'm 23, and grimace every time I pay taxes. The #1 reason for this is SS. I'm 100% confident I will never see a penny from this system.

Burning it right now, today, and then beginning discussions about a "strongly-encouraged investment" plan is the only way to go. I'm thinking of something very close to a 401k plan; possibly manditory, but not the crap we have now.

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They should run Social Security like most financial firms run their 401k plans. I'm oinly given about 20 funds I can invest my 401k in, and the firm I work for manages about 15 of them. Let citizens invest the money in government bonds or something. Perhaps give a few options so people feel like they have some choice. Let people buy gold with the money if they want for crissake.

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The inevitable reality of this issue is this: privatizing SS will lead to those who know how to invest (or are really lucky) making a great deal of money with a comfortable retirement (for example, while I'm no whiz investor, I understand the basics and could parley the 12% of my salary and my employer current pay into millions by retirement), while anyone who was irresponsible ends up with nothing, and we end up paying for them anyway. After all, hard to let a person starve.

However, the further I go in life, the more I'm tempted to say screw those who won't take responsibility. If I have to pay for them later, so be it. At least I'll have the money to do so.

The SS system is broken, as others have already noted, and will fail. I don't think anyone will ever see it fail, however: when the effects of the impending failure become too close (i.e., the voting generation is the one which will see the implosion in the near future), the system will be radically changed or dropped. And this, in the long run, will cost far more than trying to fix things now.

But what do we care? It will be our children who pay for it. In fact, we're so good at incrementally extending the life of programs like SS (which are political suicide to revise), it might even be our grandchildren or great-grandchildren who will ultimately pay. Our politicians (and by extension, our generation) will practice that most hallowed of American traditions, we will pass along the buck.

HMTK, your misperceptions about the relative lifestyles and wealth in the US are grossly inaccurate. Most people in the US do far better than "barely getting by" unless they are extremely irresponsible with their own money. And for those people, I have no sympathy. For example, a particular member of my family makes in excess of $100,000 per year, and yet has had to declare bankruptcy, may lose his house due to non-payment, and is pissing away the future of his children. I can only feel sorry for the kids. Or another example: some of my friends from college who spend all their money going out (i.e., liquor, cover charges, etc.) or dining out every night and every day for lunch, and can't afford things the want or need like a new car, or investing for their retirement/kids education, etc. There is certainly an "underclass" in the US, but it is much, much smaller than you seem to believe.

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The inevitable reality of this issue is this:  privatizing SS will lead to those who know how to invest (or are really lucky) making a great deal of money with a comfortable retirement (for example, while I'm no whiz investor, I understand the basics and could parley the 12% of my salary and my employer current pay into millions by retirement), while anyone who was irresponsible ends up with nothing, and we end up paying for them anyway.  After all, hard to let a person starve.

This would be very unlikely if the options were limited (like SC mentioned above)

However, the further I go in life, the more I'm tempted to say screw those who won't take responsibility.  If I have to pay for them later, so be it.  At least I'll have the money to do so.

But I am OK with this, too, and agree that it would be far better than what we have now.

But what do we care?  It will be our children who pay for it.  In fact, we're so good at incrementally extending the life of programs like SS (which are political suicide to revise), it might even be our grandchildren or great-grandchildren who will ultimately pay.  Our politicians (and by extension, our generation) will practice that most hallowed of American traditions, we will pass along the buck.

Speak for yourself, I find it highly unlikely that it will last until I can get some (~57 years)

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Speak for yourself, I find it highly unlikely that it will last until I can get some (~57 years)

I'm not entirely sure how I can speak for myself here, but okay. :P

Oh, I never said you'd get the same benefits that are currently offered (reduction in benefits is tough, but more likely than a privatization, I think), and you probably will be older before you get them (they'll raise the age of elegibility). Or, if you've been smart about your retirement, you won't get them at all (anyone over a certain income or net worth will be excluded from SS -- progressive system and all). I'm currently planning on investing enough for retirement to be "exempted" from SS. Plus, as SuperC said, they will remove the max income on which SS is based (which will yield a surprisingly large increase in funds, I think you'll find).

57 years? Retiring when you're 80+? Well, if you depend on SS in the future, you might HAVE to, but I had assumed you were not going to follow that plan. ;)

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Greenspan is not in a position to do anything but state his opinion regarding SS benefits. Of course that has not stopped John Forbes Kerry from telling a group of old folks in Florida yesterday that President Bush wants to cut their SS benefits!

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Greenspan is not in a position to do anything but state his opinion regarding SS benefits. Of course that has not stopped John Forbes Kerry from telling a group of old folks in Florida yesterday that President Bush wants to cut their SS benefits!

I'll say this much: the more I see about Kerry in the past week or so, the less I like what I see. He just criticized the administration's actions in Haiti which, IMHO, were appropriate and sensible. Following Kerry's idea to support the democratically-elected leader, despite his complete incompetence, seems stupid to me, since we'd just be there again to support him in two years time.

Here's to hoping that this post doesn't hijack the thread....

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Following Kerry's idea to support the democratically-elected leader, despite his complete incompetence, seems stupid to me, since we'd just be there again to support him in two years time.

I'll make a post right after this to re-track the thread, I promise ;)

Following Kerry's idea to support the democratically-elected leader, despite his complete incompetence, seems stupid to me, since we'd just be there again to support him in two years time.

I thought this was Bush's idea. :lol:

We really need to get some brains in the Whitehouse...it's been a while. I don't like any candidate I've seen, ever.

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57 years?  Retiring when you're 80+?  Well, if you depend on SS in the future, you might HAVE to, but I had assumed you were not going to follow that plan. ;)

Well, I don't plan on retireing at the SS age, nor do I plan on being eligible for it at that time (or even living that long, for that matter). But I would not be suprised if the SS age were moved to somewhere above 80 and payments cut to only those already on welfare. I hate lazy people. :angry:

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I think 80 is way too old to have a chance to enjoy retirement. The average life expectancy of a male is only around 72. I think 65 is just fine. My 401k and pension will take care of me. I've invested the max of my salary in my 401k over the last 5 years, and plan on continuing to do so, I expect to get more than my final annual salary in annual income. Every year I live beyond retirement could mean more than a million dollars for me. Now the big question is... what will a million dollars be worth in 2035.... There are so many variables.... it *might* be a better investment for me to buy mid-town manhattan real estate than to invest in my 401k.... but that's a pretty risky proposition compared to a well diversified portfolio of bonds, mutual funds and cash. The firm that handles my 401k has a retirement income calculator... you would be amazed at how much a slight increase in the average annual rate of return on your 401k can change your final income... also, retiring 5 years or so early seriously lowers the amount of money you get in retirement, as your fund appreciate the most towards the end when your principal is the largest. The more you have, the more you make... the more you make the more you have.... The rich get richer... exponentially.

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...massive funds going to your military.

That's my real social security. :P

Not some slush fund the government raids when it needs more cash.

Who would willing put their money into a fund that returned 1.5-1.75% / year?

Unfortunately there are trillions of dollars locked up in the industries that surround social security programs.

So many things are broken (and wrong) with the Social Security system, including how it is payed out. Someone needs to put a stake in it.

Give me some credit. Let me save for my own retirement. WW II is been over for a long time.

Dogeared

While military retirement is expensive, it is there for a good reason. Any cuts in the military budget should go to the rather sizeable funds sent to private military contractors, IMO. The money going to some contractors is obscene for what the military gets out of it.

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Any cuts in the military budget should go to the rather sizeable funds sent to private military contractors, IMO. The money going to some contractors is obscene for what the military gets out of it.

You got that right...while I was in HS I did some EE work; we picked up a small project for NASA. It was easy so the boss gave it to me (a 16 year old working in his garage for cash). I had it designed and proto'd in about 3 hours...I know he got 5 figures for it.

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US welfare programs account for substantially more spending than US military programs.  Depending on what you count as military spending and what you count as welfare, welfare spending approaches three times the size of military spending.  US welfare spending is more substantial than many foreigners realize, and military spending is a smaller percentage than one might suspect.  Welfare spending largely stays at home but military hardware appears on TVs worldwide.

I want to add to this by pointing out that medical entitlements like Medicare and Medicaid are the fastest growing part of US welfare programs. For the past decade at least the spending on these programs has grown at far more than the rate of inflation. In New York City alone, just the city's portion of the Medicaid tab was some $4 billion last year. This is ~$500 per capita not counting the state and Federal government's share, which I believe is equal to what the city pays. It is because of this that I'm very concerned when Congress adds yet more medical entitlements like prescription drug benefits to the Social Security program. It bothers me all the more because in many cases seniors can get off most of their drugs by a simple change in diet or lifestyle. Indeed, many of the common prescription drugs used by seniors are for obesity-related problems like heart disease, high blood pressure, high cholesterol, diabetes, joint problems aggravated by excessive weight, and so forth. I don't see why I as a taxpayer should pay for someone's poor lifestyle choices, especially when the cost of treatments for those choices is increasing at far faster than the rate of inflation.

N.B. I also think we should go back to not allowing advertising of prescription drugs to the general public. The doctors are aware of what's available, and the general public is not qualified to suggest their own medications based on a 30-second advertising spot. I wouldn't be surprised if doctors give in and prescribe something that's not medically necessary just to get a patient off their backs. As a nation we're obsessed with drugs, both legal and illegal. Sometimes I think legal drug addictions are a far worse problem than illegal ones.

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N.B. I also think we should go back to  not allowing advertising of prescription drugs to the general public.

I don't mind the advertisements - at least the ones that tell you what the drug is for - but I can live out the litany of side effects. :)

My favorite side effect is "decreased lung function." What is that? Failure to breath? :lol:

The lady on TV tells me to ask my doctor about PMDD and see if the drug is right for me. So I do. And my doctor informs me since I'm a male, I cannot have PMDD. TO which I reply..."Yeah, but I can still be affected by it." :rimshot:

(Yes, I really did ask.. :) )

Social programs account for a tremendous amount of money, but in an election year it all about Social Security. Baby Boomers are close to retirement and *highly* concerned about getting their money out of the system.

And on the drug issue, here in Illinois we're about to legalize the purchase of drugs from Canada. In fact a few of the Senate candidates have taken old folks up to Canada to get their drugs. HA!

Just wait until the drug companies make Canadians pay more since folks from the U.S. are buying in Canada. *sigh*

(Merck and GlaxoWellcom(?) have already stated that this is exactly what they will do.)

The retirement age should be raised to 70, but where do you draw the line in the workforce? All of those over 50 can retire at 65 and those under at 70? 67-1/2?

Hmmmmm....

And please be careful about taxing the rich. I was in that category a couple years ago, and it wasn't the "ton" of money that people think.

Increasing taxes in the top bracket will push the "lower upper class" back into the "upper middle class". While the wealthy have enough cash and investments to stay ahead of the curve.

My retirement plan has two options: both kids are 5 right now. :)

Wishing we could implement a truly flat tax,

Dogeared

8^)

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N.B. I also think we should go back to  not allowing advertising of prescription drugs to the general public.

I don't mind the advertisements - at least the ones that tell you what the drug is for - but I can live out the litany of side effects. :)

Funny you mentioned it but I can't say how many drug commercials I've seen where I haven't the faintest idea what the drug is for. This seems to be the rule rather than the exception. What's the point of advertising a drug if users have to guess what it's used for?

Side effects are a whole other story. Given the list of side effects for most drugs I'd rather live with whatever they are supposed to mitigate. I say mitigate rather than cure because I see most commonly used drugs as a band-aid. For example, why bother taking something for chronic acid indigestion when avoiding certain foods will alleviate the problem? And don't even get me started on the whole host of drugs for obesity-related problems. The cure is simple-eat less and exercise more. While I can understand someone maybe being 10% overweight, short of a predisposing condition like a thyroid disorder it really takes a lot of deliberate overeating and lack of exercise to become obese. Maybe it would be more fruitful to encourage a wholesale lifestyle change rather than compensate for an unhealthy lifestyle with drugs, which incidentally have a whole plethora of side effects.

With this post it looks like I'm a member of the 1K+ club around here. B) Or should that be 1024 posts? ;)

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