A Forum for Grinches and Ho-Ho-Hoes

[Tyrone Slothrop]

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

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

[sgtclub]

Originally posted by Tyrone Slothrop
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.

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.

[sgtclub]

Originally posted by Tyrone Slothrop
More on how the Social Security projections don't add up:

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

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?

[Tyrone Slothrop]

Originally posted by sgtclub
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.

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

[Tyrone Slothrop]

Originally posted by sgtclub
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?

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.

[Skeks in the city]

Originally posted by Greedy,Greedy,Greedy
This President doesn't work on bi-partisan solutions.

I think the Dems need to view our role as offering an alternative, showing what can be done, and doing our best to defeat any unwise solutions.

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.

[Tyrone Slothrop]

Originally posted by Skeks in the city
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.

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?

[Skeks in the city]

Originally posted by Tyrone Slothrop
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.

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.

[Greedy,Greedy,Greedy]

Originally posted by Say_hello_for_me
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.

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]

[Greedy,Greedy,Greedy]

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

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.

[Greedy,Greedy,Greedy]

Originally posted by sgtclub
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).

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.

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy


Why not stick a few percent in?

.

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.

[Mmmm, Burger (C.J.)]

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.

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.).

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
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.

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?

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy

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

Does it come with your parents in the guest room?

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