A Forum for Grinches and Ho-Ho-Hoes

[sgtclub]

Originally posted by Greedy,Greedy,Greedy
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.

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

[Gattigap]

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

Tuesdays, 6:30. Bring your own coffee.

[Tyrone Slothrop]

Originally posted by Tyrone Slothrop
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?

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.

[Tyrone Slothrop]

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

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.

[sgtclub]

Originally posted by Tyrone Slothrop
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.

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.

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy
taxes, taxes, taxes

you're from taxachussets, right?

[Mmmm, Burger (C.J.)]

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

You are too?

[Mmmm, Burger (C.J.)]

Originally posted by Tyrone Slothrop
I'm good with (1), (2) and (3), down on (4), and ambivalent at best on (5). .

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

[Tyrone Slothrop]

Originally posted by sgtclub
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.

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.

[Tyrone Slothrop]

Originally posted by Mmmm, Burger (C.J.)
Well, we know where you're from . . .

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

[Hank Chinaski]

Originally posted by Greedy,Greedy,Greedy
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.

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?

[Say_hello_for_me]

Originally posted by Mmmm, Burger (C.J.)
you're from taxachussets, right?

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.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
You are too?

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

[sgtclub]

Originally posted by Tyrone Slothrop
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.

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).

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.

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

[Tyrone Slothrop]

Originally posted by sgtclub
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).

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

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

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.