SS & savings
 

That's not true at all. If conservatives wanted to try to reform Social Security to avoid the funding problems projected for five decades from now, I have little doubt that they could get 60 Senators and enough representives to tweak things to get it done. A little increase in the retirement age, a little raise in the cap on earnings, and so on. If the President made the case that the system needed to be reformed and proposed that kind of reform, there's no doubt in my mind that he could get it passed.

But it would have to be real reform. He's trying to transform Social Security into something different, not save it.

SS & savings
 

So when Hillary runs, are you going to give her credit for attacking healthcare reform?

Sometimes it's tough to know when to give someone "credit" for being bold and when to scream at them because when they touch that third rail, they're not just going to fry themselves but cause that oncoming train to derail as well.

SS & savings
 

I'll give Bill credit for doing it in 1993, and then challenge his stupidity in assigning it to Hillary.

Agreed on the second point, but what I don't understand is why Ty's getting worked up about a proposal that he says is DOA on the ground that it will kill SS. It can't be both. If it's fearsome, there must be some chance it will pass.

SS & savings
 

So here's my program for reforming social security:

(1) Diversify the portfolio in there now, investing limited amounts in corporate bonds and stock and in overseas government and corporate bonds and stock. This should increase return while reducing risk, for reasons I explained above. The investment as a percentage of the portfolio should be small, the move into the market should be done over time, and we should outsource the management to a number of different vendors so it is not centrally directed.

(2) Broaden the tax base. Social security should become a surtax on all income, not just a tax on wages. Part of the base broadening should go to reduce the rate, part should go to reduce the pending imbalances.

(3) Take the cap off. The cap should be taken off, so all income is subject to the social security levy. The resulting revenue should be used in part to reduce the tax and in part to reduce the pending imbalances.

(4) Create tiered benefits. Social security has to deliver a certain level of benefit to everyone. But a plan should be put in place to, if revenues prove inadequate, cut back on benefits based on a mix of means testing and payments in. That is, the wealthy who have made few contributions should be cut back first, with additional cutbacks being applied on a formula basis. But I'd limit it so cutbacks would never exceed 20% of the benefit.

(5) Reduce deferral on other retirement funds. The government has created an enormous industry with tax-advantaged retirement savings, and by deferring taxes on 401(k) and other pension benefits has helped lots of high income Americans build enormous assets. If social security is falling short, this is exactly the place I would cut back on our tax expenditures, by doing something like leving a 5% or 10% tax on income of these otherwise tax-exempt vehicles. It's still a huge savings incentive.

The above plan is political suicide, but that's beside the point.

SS & savings
 

I didn't say it was DOA. I said that Bush's problem right now is in lining up support in his own party. Who knows how it'll turn out.

The thing that I find aggravating is the criticisms of the Democrats. You have a bunch of Republicans running the country into the ground, fiscally speaking, and people want to fault the Democrats for failing to propose some Platonic ideal of policy reform? I mean, WTF? In the current environment, criticizing what Democrats are saying is just a distraction from criticizing what Republicans are doing. Barring change in GOP leadership, or something earth-shaking, the Democrats are irrelevant except insofar as they can slow the Republicans down. This is because Republicans leaders have decided to operate this way. Think back to the intelligence reform bill, and to Hastert's explanation that he had the votes to pass the bill, his own ostensibly included, but wouldn't bring the bill to a vote because he didn't a majority of the Republicans.

etfs

SS & savings
 

I could work with this as a starting point. When's the committee meeting?

SS & savings
 

Tuesdays, 6:30. Bring your own coffee.

SS & savings
 

Kevin Drum puts it well:

• Democrats would be delighted to rescue Social Security by keeping the inheritance tax or undoing Bush's tax cuts for the wealthy. It's Republicans who won't hear of it. Democrats are also happy to support add-on private accounts. You can hardly swing a dead cat without hearing some Democrat saying so. But that's not what George Bush is proposing. And I imagine Democrats would be open to the idea of reducing the payroll tax and replacing it with something more progressive, too. But Bush's plan contains nothing of the kind.
  
  As happens so often, the journalistic community has decided that they're required to say that both sides are being equally irresponsible, regardless of the facts. The way to do this, apparently, is to (a) condemn Democrats for opposing a plan they all acknowledge is a bad one, and (b) then condemn them further for not supporting their own favored alternatives, even though they know perfectly well that the obstacle to these alternatives is not Democrats but Republicans.
  
  It's George Bush who's insisting on a private account plan that even his own people admit won't do anything to shore up Social Security's finances. It's George Bush who's insisting that the only cures he'll consider are ones that include huge — but quiet — benefit cuts. It's George Bush who has publicly refused to even consider proposals to increase Social Security revenue in any way. It's George Bush who has run up the unconscionable deficits that are far more responsible for our deterioriating finances than anything in the Social Security system.
  
  The facts: Social Security has modest problems that are many decades out. They could be easily solved with small benefit cuts combined with small tax increases. A bipartisan solution could be hammered out in a few days if it weren't for one person: George Bush.
  
  The problem isn't that Democrats aren't willing to negotiate. The problem is that Democrats don't have anyone to negotiate with. That ought to be the story.

SS & savings
 

I'm good with (1), (2) and (3), down on (4), and ambivalent at best on (5). But club, do you not see how radically different this is from what Bush is proposing? Incremental change of this sort is designed to ensure that Social Security is around for decades. What Bush is proposing is designed to ensure its demise. I'm just not clear why someone would support this and the Bush plan.

SS & savings
 

Have you seen the Bush plan? I have not so I don't know whether or not I support it. I like the idea of private accounts for netting me a greater return, but am not tied to it. If there are other suggestions to doing this, I may be able to budge. Calpers offers a pretty good example.

SS & savings
 

you're from taxachussets, right?

SS & savings
 

You are too?

SS & savings
 

Well, we know where you're from . . .

SS & savings
 

If I'm not mistaken, the (1) above that you were agreeing with involved the government investing the Social Security trust fund in the market rather than in government bonds. This is very different from what I think you have in mind.

eta: Bill Clinton proposed something of this sort back in the day. If you're confused about the distinction, join Brit Hume.

As for the Bush plan, I have seen enough reporting on what he has in mind to get the gist. People can divert about 2/3 of their contribution to a private account, and basically will get to keep (or be stuck with) anything over (or under) a 3% return. The government borrows trillions to pay for this and current benefits -- i.e., the private accounts don't do anything to improve the finances. That's paid for by benefit cuts.

SS & savings
 

I'm heading for the hot tub and some Sonoma zinfandel. What are you doing tonight?

SS & savings
 

unless this is a cut and paste, i really can't imagine how you can bother to type all this. is your career as fucked up as I suspect it is?

SS & savings
 

Speaking of which, the census data from 2004 apparently shows that Massachussets was the only state in the union to lose population in 2004.

Coincidentally, Roemer noted that 97 of the 100 fastest growing counties in the nation voted for Bush.

That's the beauty of federalism. Some states (e.g., Illinois, Massachussets) race to the bottom while those residents who can break chains and swim towards the surface. Hello Virginia! Hell. Hello Indiana. Its gonna be a hell of a (second, civil) war when the liberals realize all the taxpayers moved out.

SS & savings
 

[confidential to burger]This is a negotiating ploy[/confidential to burger]

SS & savings
 

No, I understood it completely. I'm not the idealouge here. My first concern is getting a better return on my money. I don't agree with G3s proposal whole cloth, but I could give up private accounts (this go around) in exchange for other concessions (e.g., an INCREASE in benefits based on market returns).

You've actually seen 2/3? I can't believe that is the number they are considering. Where did you find that, DU?

SS & savings
 

I'll defer to Michael Kinsley on why you won't see better returns. It's the financial equivalent of a perpetual motion machine.

I don't read DU. I suspect that you know that, and are goading me. But, no matter.

Bush said 4 percentage points in the SOTU. I thought the individual contribution was something like 6 percentage points. (None of this includes the employer contribution.) That's where I got 2/3.

for Adder
 

More on how the Social Security projections don't add up:

http://yglesias.typepad.com/matthew/..._baker_te.html

SS & savings
 

Yes, I was goading you.

Did he say 4% of income or 4% of total contribution? If the former, I see why you think he wants to dismantle SS.

for Adder
 

I rarely read yglesias, but I did try to read this link. If all his posts are like this, he is not readable. I take it though, that the gist of the argument is that economic growth will slow due to a decrease in the population? Do they take into account the slope (Hi Hank) of productivity?

ETA: How do you get internet access in the hot tub?

SS & savings
 

The reporting can be hard to follow, but I would bet dollars to donuts that he intends the former, not the latter.

for Adder
 

To be fair, I skimmed most of it, but I thought Adder might groove on it. The gist is that the predictions that Social Security is in trouble are hard to impossible to reconcile with the rosy predicted returns for private accounts. The former assume the economy will do worse than it has; the latter assume otherwise.

WiFi. Used very carefully.

SS & savings
 

This is a foolish discussion. Both parties plan to workers under 40 or 50. The Dems plan to do it by maintaining promised benefits until taxes are required to rise to a confiscatory level and workers react by forcing cuts in benefits until aggregate spending and taxes are managable. The Republicans will do it by promising less benefits but racking up federal debt until debt service and other government spending require a confiscatory level of taxes and workers react by forcing cuts in benefits until aggregate spending and taxes are managable.

Basically, both parties are planning to fuck the under 40 or 50 crowd by running up huge federal debt. The big difference is that the Dems want to downplay the debt by not counting promised benefits toward the federal debt, while republicans want to play it up by issuing federal debt so that promised benefits do count toward the federal debt.

What's really rich is the way the retirees and baby boomers complain that politicians spent the social security and medicare trust funds, these people directed the politicians to spend the trust funds so they could have lower income taxes, higher defense spending, pork barrel legislation, and every other fucking thing. These people wanted the so called trust fund money spent. And now they complain.

SS & savings
 

Your cynicism is wonderfully fresh, except that it ignores what Democrats actually did when Clinton was President. But sure, a pox on both houses, and the people too.

eta: Haven't you been on that moniker for a while? Isn't it time for 'skeksie and seventeen' or something?

SS, Medicare & savings
 

Saying Clinton did the under 40 or 50 crowd any good is like saying your better off driving off a cliff at 100 miles per hour than 110 miles per hour. You're fucked either way.

A proposal that would help the under 40 or 50 crowd is to immediately increase the retirement age for social security and medicare to a year beyond life expectancy, and every three years increase it to a year beyond life expectancy. Life expectancy in 2001 was about 77. If someone becomes disabled due to old age, let them collect disability earlier. If someone becomes disabled such that they are unemployable at a job with health care benefits, let them collect medicare earlier. Increasing the retirement age, right now, to 78 (with an exception for people that right now are at least 63) would help the under 40 or 50 crowd.

Originally, social security was set up this way. The retirement age was initially higher than life expectancy. In fact, this proposal is even more generous to oldsters because it provides disability benefits and social security originally didn't.

SS & savings
 

Though if you like stats, Mass. has one of the highest levels ofincome per capita and one of the lowest overall tax burdens.

[confidential to Hank] Some of us both think and type fast. Don't worry, we're not expecting the same of you.[/confidential to Hank]

SS & savings
 

Look at my five points - they will likely decrease the overall tax burden for the majority of Americans, because they would take a regressive tax and make it a flat tax and would take a tax focused on wage earners and businesses and spread it among everyone. There would be an increase in taxes on unearned income and on those who made substantially more than the cap (but note that if you lower the rate by a few percentage points it does need to be substantially above the cap).

Ty has problems with a number of my proposals, including the idea of some kind of reduction in the tax incentives for retirement benefits. He clearly doesn't like the idea of tiering benefits, and I expect most Democrats don't -- I have a lot of ambivalence myself. At the same time, if you're going to cut a retirement benefit, you owe to people to put them on notice of it in time for them to adjust expectations and possibly make up the difference. Dems probably need to put benefits on the table in some way to get to a bipartisan deal, and I put them on the table in a way I found palatable but not tasty.

SS & savings
 

This is the low hanging fruit I can't believe no one is focusing on. Shit, why not stick a little bit into the market? Yes, there are a few conservatives who don't think the government should invest in business, but they're completely outside mainstream thinking in their own party. Yes, there are a few Dems who think any investing in the stock market is risky, but intellectually that is an unsustainable position in my view.

Why not stick a few percent in?

And, Clubby, you have private accounts. They are called IRAs.

SS & savings
 

Because it means increased borrowing to cover the deficit. Accordingly, why not just have the gov't issue a bunch of extra bonds and put it in the market?

Heck, that's what I'm doing--I've mortgaged my house to the hilt, and have poured it all into .coms and aggressive growth tech stocks. Sweet! It's a can't-lose method.

SS & savings
 

Alright, I'll go on the merits, so we can talk more about this.

1) see previous post--you're issuing government debt to buy into the market. As a financial matter, you''re just swapping one form of debt for another, with greater gov't guarantees.

2) how do you define income--cap gains? withdrawls from IRAs? And you're taxing the poor on their first dollar of income--how do you do that? If you're going to do this, why not a national sales tax instead?

3) I think you've hit 3 in 2, but taking the cap off is a fundamental conversion of the program, although I agree that if you're just calling it a surtax this makes sense. But you're getting even further afield from the concept of a limited gov't pension. and how do you answer the pressure to uncap benefits as well?

4) no one who makes few contributions gets big payments, other than SSI. It's based on your wages over a lifetime, so right or wrong, your payments in relate to your payments out. And if there's one benefit of a gov't guarantee is that it will pay even if tax revenues aren't large. If we're going to take this approach, let's take it first with other programs, such as defense and discretionary spending. Not that tax-cycle spending is the most sensible approach.

5) You're taxing all of those accounts at some point, and, other than with Roths, all of the income/gains as well. Indeed--you have to withdraw from IRAs, so you have to pay the tax, either in retirement or when you die. Worse, eliminating (or reducing) tax deferral is exactly the wrong direction to encourage savings. Better to increase the availability of these accounts, but increase taxes on all spent income--either a consumption tax or a national sales tax. And since you tax on withdrawal, how to you account for interim taxes paid without having it become a wealth tax? What is the objection to having people accumulate "enormous assets"? Either they've done it by working hard and saving or by savvy investing. I don't see why either should be penalized (and it's not like these accounts were created by Rockefellers dumping all their assets into a tax-deferred account--IRAs and 401ks have always had contribution limits, so any value increases are a result of modest levels of saving.).

SS & savings
 

We are borrowing to address the deficit, just from retirees instead of investors. But, yes, I suppose you are right, its the ability to raid social security through a backdoor for the latest Pentagon pork that has kept social security trust funds from being more prudently invested.

By the way, when your house is gone, I'll sell you my trailer cheap. What's that you say about no-lose methods?

SS & savings
 

Does it come with your parents in the guest room?

And, no, we're borrowing from future retirees, not current ones.

SS & savings
 

The only "free money" (hi, Hank!) I found in my five points was in one, and, sure enough, there is no free lunch -- it has an impact on other government expenses and programs because we have to borrow from the market. (1) is a philosophical question: when we measure the extent to which SS is in balance, do we assume that one role of the program that must continue is its subsidy of other government programs. I'm answering no.

Yup, I change the tax burden for social security and fundamentally change the idea that there is a limited pay in, and the argument that you should take the cap off the benefit is legit. Let's tier that, though, so we only do it if we can afford it. Am I overlaying on this a Democratic approach to costs and benefits - yes.

I don't like sales taxes. It is a substitution of one tax that disincentivizes business activity for another tax that disincentives business activity. So that's why I didn't propose it. At the same time, I think I have slightly fewer objections to consumption taxes than wage taxes, so I'd consider it as an element.

And, yes, you are taxing retirement benefits at some point, but the deferral is a huge benefit. What are we doing providing enormous benefits for $2 and $3 million dollar indidivudal retirement pots if we can't afford $12,000 a year for grandma who lives in an old broken down ranch in Missouri after working her whole life? If you remove the wage tax you'll have a more direct incentive for business than by whatever impact lessening deferral has on the savings rate.

SS & savings
 

I think you're conflating two subjects, but maybe I did too. There are two questions: 1 is whether the SS surplus should be "on budget" such that it can be used to make the real deficit appear smaller (this year--2006--the projected surplus is $280B, compared to a nominal defiict of $390B). I believe it should not, but it's semantics. The second question is what should be done with that surplus. I'm comfortable having it in gov't debt, as opposed to corporate debt (bankruptcy), stocks (volatility), or international (oh, great, which countries).

not saying it's not legit, but at that point you've converted SS into just another gov't welfare program that uses, essentially, general revenues for funding and pure benefit formulas for payments. It's AFDC all over again, except for retirees.

all taxes distort economic activity, so your objection proves too much (or something like that). To the contrary, a flat sales tax (or VAT) is less likely to have odd disincentives, because it won't be filled with loopholes, other than perhaps for consumption (you know milk will be exempt). Businesses will pass the tax along to consumers, who will have a disincentive for consumption.

you make it sound like that 2-3M was acquired through some loophole or great luck. It wasn't. You won't have the pot at all if you eliminate tax deferral--it will just be a normal investment account (unless you want to pull the rug out from everyone midstream). It's just moving the wrong direction. Besides, people are constantly cashing in that 2-3M account (which it's pretty hard to get that large without some really savvy investing), and paying taxes on it. Why not just tax capital gains every year? It's the same problem--you can defer the gains until realization? And remind me why Gramma deserves something more than what she (or her hubby) put into SS or her own retirement savings? Does she own a farm, becaause that would be a good reason.

SS & savings
 

Either that, or it's an opposition to the only game in town. Let's not rush to judgment yet. I am sure I'm being naive, but I'd like to think that the next four years is going to be more positive than a Republican steamroller and a Democratic whine-fest.

A Modest Proposal
 

The solution to both SS and Medicare, at least in part, is simple, albeit brutal. Let more people die, and die younger.

Modern medical science has been obssessed for decades with chasing technologies and drugs that prolong life, simply for the sake of prolonging it. Why should a woman in her late 70's, with severely metastisized bone cancer, be given course after course of radiation and chemotherapy? So that she can live another five years in pain and waste away? The focus on such patients should be palliative care. And yet, this scenario is played out in every hospital in the country on a daily basis.

In a nation where we face an extreme shortage of donated organs, Mickey Mantle undergoes a transplant at a cost of over a million dollars to live another two years, while a 34 year-old father of three dies for lack of an organ.

Cardiologists are spending countless dollars on artificial hearts designed to work outside the body, passing along the cost to everyone in the health care system, so that terminal patients can spend months in the hospital while the rest of their organ systems slowly shut down. Why? Because we can.

The biggest problem is that we are aging as a population, medicine allows us to extend that aging period, and we are producing less babies to shunt the bill onto, which is what has kept the system going lo these past three generations. Nobody is setting priorities in health care and as a result the money for grants and research is going towards subsidizing our fear of death, instead of improving the general population's overall health and saving those who still have lives to live.

Iran
 

I hope the administration goes to war against Iran soon. That will be much more fun to argue about than Social Security.