Social Security Is Healthy -- There's No Need to "Save" It

[one...two...tree 2,762]

By Dean Baker, Comment Is Free

(edited)

...one step that President Obama can take to boost the economy without going through Congress: he can reaffirm his support for social security, and assure the baby boomers nearing retirement that he will not allow their benefits to be cut. If this huge cohort -- now in their late 40s, 50s and early 60s -- know that they can count on getting their promised benefits, they will feel more comfortable spending and supporting the economy at a time when it badly needs a boost.The impact of social security on boosting consumption has long been touted by economists, most importantly Harvard economics professor Martin Feldstein, who had been Ronald Reagan's chief economist and is now an advisor to President Obama. (We will ignore the fact that his early results on this topic were driven by a programming error and that his later results disappeared with government data revisions.)

Feldstein claimed that workers spent more money during their working years than they would have otherwise because they expected to receive social security benefits when they retired. Therefore they had less need to save for retirement.

However, many workers may not be expecting to receive their social security benefits because there has been a concerted effort over the last quarter of a century to undermine confidence in the program and to cut the level of benefits. If workers question whether they will get the social security benefits they have paid for, they will feel more need to save rather than spend.

Workers are likely to be especially fearful about the prospects of getting their social security benefits now due to an all out assault on the program financed by billionaire banker Peter Peterson. Peterson has spent much of the last two decades trying to cut social security, Medicare and other benefits for the elderly. He recently contributed a billion dollars to a foundation bearing his name that is primarily committed to this goal.

Peterson's investment has paid off both in exposure from the media and more importantly attention from many members of Congress and their staffers. There are now dozens of senators, congress people and their staff running around Capitol Hill crafting creative new ways to cut social security. Baby boomers are right to fear that Peterson and his crew will take away their benefits.

While the idea of taking away benefits for which workers had already paid was always outrageous, it especially outrageous at a time when these workers have just seen much of the wealth in their homes and their retirement savings disappear in the housing crash and the collapse of the stock market. Making matters even worse is that fact that Peterson's friends in the financial industry, along with many of the economists who would like to cut Social Security, were the primary culprits in this disaster story.

But, President Obama can quickly get us beyond this attempted heist to the benefit of both older workers and the economy. He can simply assure the baby boomers that he will not allow the Peter Petersons of the world attack their benefits.

In fact, he should assure the baby boom cohorts that their social security benefits are safer than having money in the banks (even the government insured ones) and that they can plan accordingly. This may not lead to a huge burst of new spending, but baby boomers will spend more confidently through time knowing that they can count on getting the benefits they have earned.

President Obama will clearly have to take other steps to get the economy fully back on its feet, but a simple speech assuring baby boomers that social security is safe will be an important step in the right direction. This speech also has the additional advantage that, unlike other forms of stimulus, it doesn't cost anything. As we all know, talk is cheap.

http://www.alternet.org/workplace/127500/p..._%22save%22_it/

[Jasman0717 9]

I paid into social security for over 30 years so would hope to get some sort of return

[alienlovechild 75]

...one step that President Obama can take to boost the economy without going through Congress: he can reaffirm his support for social security, and assure the baby boomers nearing retirement that he will not allow their benefits to be cut. If this huge cohort -- now in their late 40s, 50s and early 60s -- know that they can count on getting their promised benefits, they will feel more comfortable spending and supporting the economy at a time when it badly needs a boost.The impact of social security on boosting consumption has long been touted by economists, most importantly Harvard economics professor Martin Feldstein, who had been Ronald Reagan's chief economist and is now an advisor to President Obama.

People are going to jail for phony pyramid scams but Social Security is far worse. The problem isn't people spend more since the Americans have spent themselves into debt hoping someone else will cover their debts or bail them out.

Feldstein claimed that workers spent more money during their working years than they would have otherwise because they expected to receive social security benefits when they retired. Therefore they had less need to save for retirement.

That's a disaster as morons believe they could live off SS and not save anything themselves. At the very least IRAs and 401Ks (over the long term) make far more sense they put into the economy and encourage personal responsibilty.

However, many workers may not be expecting to receive their social security benefits because there has been a concerted effort over the last quarter of a century to undermine confidence in the program and to cut the level of benefits. If workers question whether they will get the social security benefits they have paid for, they will feel more need to save rather than spend.

That's a huge lie because there's been no major reforms and one party uses scare tactics to prevent any changes to one generation gang raping succeeding generations. Smart people know SS is a bad deal and make their own retirement plans.

In fact, he should assure the baby boom cohorts that their social security benefits are safer than having money in the banks (even the government insured ones) and that they can plan accordingly.

Great way to kill off yet more banks is reduce for people to reduce placing more money in banks.

President Obama will clearly have to take other steps to get the economy fully back on its feet, but a simple speech assuring baby boomers that social security is safe will be an important step in the right direction. This speech also has the additional advantage that, unlike other forms of stimulus, it doesn't cost anything. As we all know, talk is cheap.

His speeches don't offer hope (funny considering his campaign slogan) in the economy and the stock market is dropping to record lows. His reassurance on SS will have the opposite effect and will have people stuffing their money under their beds and into gold.

[I AM NOT THAT GUY 5,715]

Figure II.D4.—Cumulative OASDI Income Less Cost, Based on Present Law Tax Rates

and Scheduled Benefits

[Present value as of January 1, 2008, in trillions]

http://www.ssa.gov/OACT/TR/TR08/II_project.html#105724

Edited February 20, 2009 by Mister_Bill

[NickD 203]

FICA taxes have risen for the employee's share to 7.65% as well as the maximum income that this amount is taken from, but only limits on a lower rate. Benefits are very low in comparison, have to be 67 years of age to apply now and they are hoping you will be dead at 68, if you even make it to 67, if you do kick the bucket, your whatever gets 300 bucks to dig a hole for you. If you have kids, will get something until they are of 18 years of age, but not very many people over 60 are having kids, if they do, probably 17 years and 11 months old.

FICA taxes are post tax, in that whatever you pay in FICA taxes is not deducted from your gross income, so you are also paying income taxes on your FICA taxes. If you do live long enough to get benefits, treated as pretax, so you have to pay income taxes again on whatever your benefits are.

SS funds are suppose to be used to buy bonds and paid at the current interest rate. Just for the fun of it, calculated at a trend what I am already paying in by compounding the interest, and how long I would have to live to get all of that money back, came back with, would have to live until I am 167 years of age to break even. And they say SS is going broke, fvcken liars. If it is going broke, not treating that money like they are suppose to, but spending it quicker than it's coming in, and I believe that is what is happening.

[one...two...tree 2,762]

The latest report of the Social Security Trustees is out. I think the key message is what has happened to the estimate of actuarial balance — the difference between projected outlays and projected revenues over the next 75 years. This is the thing that's supposed to get steadily worse as time goes by, as the 75-year window contains ever fewer years in which the baby boomers are in the work force, paying payroll taxes, and ever more years when the boomers are out of the work force and collecting benefits.

In fact, however, the actuarial balance has been improving rather than worsening. It's now better than it's been since 1993. What this tells us is that projections made in the mid-to-late 1990s were, in the light of subsequent revisions, way too pessimistic.

Moral: Social Security's financial problem is relatively minor. It doesn't deserve the emphasis it receives from most pundits.

~ Krugman, NYT

http://krugman.blogs.nytimes.com/2008/03/2...-years-younger/

[rclouse 0]

Social Security needs to be saved from the Republicans who have tried to kill it from inception.

[one...two...tree 2,762]

Social Security needs to be saved from the Republicans who have tried to kill it from inception.

Spot on, brother.

[one...two...tree 2,762]

Healthcare Debate: So This is Why Conservatives Hate Social Security

Michael Cannon of Cato comes out against Obama's health care plan – no surprise there. James Pethokouskis makes it explicit as to Cannon's real concern:

Passage would be a political gamechanger. Recently, I stumbled across this analysis of how nationalized healthcare in Great Britain affected the political environment there. As Norman Markowitz in Political Affairs, a journal of "Marxist thought," puts it: "After the Labor Party established the National Health Service after World War II, supposedly conservative workers and low-income people under religious and other influences who tended to support the Conservatives were much more likely to vote for the Labor Party when health care, social welfare, education and pro-working class policies were enacted by labor-supported governments."

As Hilzoy notes:

An honest conservative might accept this claim and say: well, I guess our ideas are unpopular, so we'll just have to make our case more persuasively. But that's not the conclusion they draw. Pethokoukis and Cannon say: because people will like health care reform, if we do not block it, our party will lose support. So precisely because people would like it if they tried it, we need to make sure that it fails. At least they're honest about it.

Truth be told – this is a major reason why conservatives want to undermine the Social Security program. Yes – they do try to tell us it's some sort of Ponzi scheme, which of course, is just blatant dishonesty. But the real reason that they hate Social Security is that it is popular – as well as good policy from the perspective of those who care at least as much about the working class as the investor class.

Update: Steve Benen takes us back to late 1993 and the Kristol memo:

Leading conservative operative William Kristol privately circulates a strategy document to Republicans in Congress. Kristol writes that congressional Republicans should work to "kill" - not amend - the Clinton plan because it presents a real danger to the Republican future: Its passage will give the Democrats a lock on the crucial middle-class vote and revive the reputation of the party. Nearly a full year before Republicans will unite behind the "Contract With America," Kristol has provided the rationale and the steel for them to achieve their aims of winning control of Congress and becoming America's majority party. Killing health care will serve both ends. The timing of the memo dovetails with a growing private consensus among Republicans that all-out opposition to the Clinton plan is in their best political interest.

Kristol does belong to the wing of the Republican where good policy and good politics have been at war for years.

http://econospeak.blogspot.com/2008/11/hea...his-is-why.html

Edited February 20, 2009 by Mister Fancypants

[alienlovechild 75]

In fact, however, the actuarial balance has been improving rather than worsening. It's now better than it's been since 1993. What this tells us is that projections made in the mid-to-late 1990s were, in the light of subsequent revisions, way too pessimistic.

Moral: Social Security's financial problem is relatively minor. It doesn't deserve the emphasis it receives from most pundits.

Just ignore the largest single expenditure of the Federal budget. Ignore the the declining benefits, tax increases, demographic changes and raising of the eligibility age. Listen to anyone who tells you to ignore the issue.

http://en.wikipedia.org/wiki/United_States...al_budget,_2008

[NickD 203]

In fact, however, the actuarial balance has been improving rather than worsening. It's now better than it's been since 1993. What this tells us is that projections made in the mid-to-late 1990s were, in the light of subsequent revisions, way too pessimistic.

Moral: Social Security's financial problem is relatively minor. It doesn't deserve the emphasis it receives from most pundits.

Just ignore the largest single expenditure of the Federal budget. Ignore the the declining benefits, tax increases, demographic changes and raising of the eligibility age. Listen to anyone who tells you to ignore the issue.

http://en.wikipedia.org/wiki/United_States...al_budget,_2008

Also ignore the fact, if you do not pay into it, you will not get any benefits, and the less you pay, the smaller your benefit will be. Based on interest rates they claim are supposed to be added, the vast majority of the people will never get back what they paid in.

Regarding the popular vote making demands, about the most ridiculous referendum I have ever heard of is where the City of Milwaukee past a referendum where all the employers have to provide paid sick leave. Exactly who is going to pay for that? Would give major employers a damn good reason to get the hell out of that city and that is exactly what will happen.

[one...two...tree 2,762]

Most Americans would be astonished to discover that the most efficient insurance program in the world—in the history of the world, in fact—is the United States Social Security system. No private insurance company can come close to the returns Social Security has generated—ninety-nine cents on every dollar that comes in. Moreover, Social Security has never failed to send checks when they fall due, a sterling record that private industry cannot begin to match.

.....

...far from being a system on the verge of collapse, Social Security in fact does exactly what it was created to do: keep America’s aged (and later her infirm, disabled, or orphaned) out of poverty without prejudice and with universal access.

[NickD 203]

Most Americans would be astonished to discover that the most efficient insurance program in the world—in the history of the world, in fact—is the United States Social Security system. No private insurance company can come close to the returns Social Security has generated—ninety-nine cents on every dollar that comes in. Moreover, Social Security has never failed to send checks when they fall due, a sterling record that private industry cannot begin to match.

.....

...far from being a system on the verge of collapse, Social Security in fact does exactly what it was created to do: keep America's aged (and later her infirm, disabled, or orphaned) out of poverty without prejudice and with universal access.

It was subtly pointed out if SS went private like Bush suggested, and with the current status of the stock market, these old folks would be hurting.

[one...two...tree 2,762]

Most Americans would be astonished to discover that the most efficient insurance program in the world—in the history of the world, in fact—is the United States Social Security system. No private insurance company can come close to the returns Social Security has generated—ninety-nine cents on every dollar that comes in. Moreover, Social Security has never failed to send checks when they fall due, a sterling record that private industry cannot begin to match.

.....

...far from being a system on the verge of collapse, Social Security in fact does exactly what it was created to do: keep America's aged (and later her infirm, disabled, or orphaned) out of poverty without prejudice and with universal access.

It was subtly pointed out if SS went private like Bush suggested, and with the current status of the stock market, these old folks would be hurting.

Yep. Bush had touted that SS wasn't earning enough on the investment...but it's really not an investment but insurance.

Edited February 20, 2009 by Mister Fancypants

[Ban Hammer 13,355]

Social Security needs to be saved from the Republicans who have tried to kill it from inception.

Spot on, brother.

lets not forget the dems raided the coffers too.