Ignore the fear-mongering on Social Security

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

Today's Social Security critics use many of the same false arguments of those who tried to stop it 75 years ago. In fact, with only minor adjustments, the popular program will easily remain solvent.

By Peter Dreier and Donald Cohen

Alf Landon, the Kansas governor running as the Republican Party's 1936 presidential candidate, called it a "fraud on the working man." Silas Strawn, a former president of both the American Bar Assn. and the U.S. Chamber of Commerce, said it was part of President Franklin D. Roosevelt's attempt to "Sovietize the country." The American Medical Assn. denounced it as a "compulsory socialistic tax."

What was this threat to American prosperity, freedom and democracy they were all decrying? It was Social Security, which Roosevelt signed into law on Aug. 14, 1935 — 75 years ago Saturday.

The opponents of Social Security were not right-wing extremists (the counterparts of today's "tea party") but the business establishment and the Republican Party mainstream.

In the early Depression years, more than half of America's elderly lived in poverty. But most business leaders and conservatives considered the very idea that government had a moral responsibility to help senior citizens retire with dignity to be outrageously radical, a dangerous trampling of individual liberty. They predicted that the Social Security tax would bankrupt the country.

As New York's former governor, Roosevelt knew that business groups had opposed the most important pieces of social legislation on that state's books, including the factory inspection law (passed as a result of the 1911 Triangle Shirt Waist factory fire that killed 146 women), the law limiting women's workweek to 54 hours, unemployment insurance, pensions for the elderly and public works projects to put people back to work.

Once elected president, FDR viewed Social Security as part of his broader New Deal effort to humanize capitalism. Born to privilege, he understood that many wealthy people considered him a traitor to his class. They were, he thought, greedy, unenlightened and on the wrong side of history.

FDR outmaneuvered Social Security's opponents, using his bully pulpit to explain why they were misguided.

"A few timid people, who fear progress, will try to give you new and strange names for what we are doing," he said in a June 1934 "fireside chat" on the radio. "Sometimes they will call it fascism, sometimes communism, sometimes regimentation, sometimes socialism. But in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.... I believe that what we are doing today is a necessary fulfillment of what Americans have always been doing — a fulfillment of old and tested American ideals."

Most Americans agreed. Running for reelection the next year, FDR beat Landon in a 60.8% to 36.6% landslide.

Today, Social Security insures families against the loss of income caused by retirement, disability or death. It provides more than $600 billion in benefits to 51 million people. It lifts more than 35 million older Americans out of poverty. One-third of Social Security's beneficiaries collect survivors or disability insurance, keeping millions of families with a disabled or deceased breadwinner from destitution.

Americans view Social Security as a central component of the nation's social contract. It is probably the most popular federal government program. Not surprisingly, when President George W. Bush tried to privatize Social Security — essentially asking Americans to put the security of their future in the stock market — the people considered it a preposterous idea, especially after they had watched thousands of Enron investors lose their savings and saw the stock market lose 38% of its value between January 2000 and October 2002.

Today, 77% of Americans — even 68% of Republicans — believe that policymakers in Washington should "leave Social Security alone" and find other ways to reduce the deficit, according to a national poll in June by the University of New Hampshire. In fact, 75% of tea party supporters favor Social Security and Medicare, a New York Times/CBS News poll found in April.

There are still a handful of Americans who bash Social Security. They dress up their arguments in different clothing, but their views haven't changed much from those of their counterparts 75 years ago. We can't afford Social Security, they say. It's going bankrupt. It will destroy our economy and our society.

America, one of the world's wealthiest nations, can afford to provide an economic cushion for the elderly and the disabled. By making some minor adjustments, Social Security will remain vital and solvent for this and future generations. Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.

In retrospect, it is obvious that Social Security's Depression-era opponents engaged in fear-mongering, not economic reality. Their opposition was based on a free-market fundamentalist ideology that abhorred any attempt to use government to improve Americans' living conditions.

Just as the early battle over Social Security wasn't really about old-age insurance, current fights over public policy are really placeholders for broader concerns. They are about what kind of country we want to be and what values we consider most important. Today, business groups and right-wing zealots oppose healthcare reform, tougher financial regulations, stronger workplace safety laws, policies to limit climate change, higher taxes on the rich and extension of unemployment insurance to the long-term jobless. The issues vary, but the mantra is the same: This policy will kill jobs, undermine the entrepreneurial spirit and destroy freedom.

The White House and progressive activists should aggressively challenge assertions about the disasters that will befall us if government protects consumers, workers, seniors, children, the disabled and the environment. Throughout our history, progress has been made when activists and politicians proposed bold ideas and then won a series of steppingstone reforms that redefined the social contract.

Peter Dreier teaches politics and chairs the Urban & Environmental Policy program at Occidental College. Donald Cohen is the co-founder and president of the Center on Policy Initiatives, a San Diego-based think tank.

Copyright © 2010, Los Angeles Times

Edited August 15, 2010 by El Buscador

[^_^ 5,021]

[DEDixon 39]

Today's Social Security critics use many of the same false arguments of those who tried to stop it 75 years ago. In fact, with only minor adjustments, the popular program will easily remain solvent.

so glad too because in a few years i'm going to get seriously depressed and i'm going to get SSI.

[Danno 1,228]

Today's Social Security critics use many of the same false arguments of those who tried to stop it 75 years ago. In fact, with only minor adjustments, the popular program will easily remain solvent.

By Peter Dreier and Donald Cohen

Alf Landon, the Kansas governor running as the Republican Party's 1936 presidential candidate, called it a "fraud on the working man." Silas Strawn, a former president of both the American Bar Assn. and the U.S. Chamber of Commerce, said it was part of President Franklin D. Roosevelt's attempt to "Sovietize the country." The American Medical Assn. denounced it as a "compulsory socialistic tax."

What was this threat to American prosperity, freedom and democracy they were all decrying? It was Social Security, which Roosevelt signed into law on Aug. 14, 1935 — 75 years ago Saturday.

The opponents of Social Security were not right-wing extremists (the counterparts of today's "tea party") but the business establishment and the Republican Party mainstream.

In the early Depression years, more than half of America's elderly lived in poverty. But most business leaders and conservatives considered the very idea that government had a moral responsibility to help senior citizens retire with dignity to be outrageously radical, a dangerous trampling of individual liberty. They predicted that the Social Security tax would bankrupt the country.

As New York's former governor, Roosevelt knew that business groups had opposed the most important pieces of social legislation on that state's books, including the factory inspection law (passed as a result of the 1911 Triangle Shirt Waist factory fire that killed 146 women), the law limiting women's workweek to 54 hours, unemployment insurance, pensions for the elderly and public works projects to put people back to work.

Once elected president, FDR viewed Social Security as part of his broader New Deal effort to humanize capitalism. Born to privilege, he understood that many wealthy people considered him a traitor to his class. They were, he thought, greedy, unenlightened and on the wrong side of history.

FDR outmaneuvered Social Security's opponents, using his bully pulpit to explain why they were misguided.

"A few timid people, who fear progress, will try to give you new and strange names for what we are doing," he said in a June 1934 "fireside chat" on the radio. "Sometimes they will call it fascism, sometimes communism, sometimes regimentation, sometimes socialism. But in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.... I believe that what we are doing today is a necessary fulfillment of what Americans have always been doing — a fulfillment of old and tested American ideals."

Most Americans agreed. Running for reelection the next year, FDR beat Landon in a 60.8% to 36.6% landslide.

Today, Social Security insures families against the loss of income caused by retirement, disability or death. It provides more than $600 billion in benefits to 51 million people. It lifts more than 35 million older Americans out of poverty. One-third of Social Security's beneficiaries collect survivors or disability insurance, keeping millions of families with a disabled or deceased breadwinner from destitution.

Americans view Social Security as a central component of the nation's social contract. It is probably the most popular federal government program. Not surprisingly, when President George W. Bush tried to privatize Social Security — essentially asking Americans to put the security of their future in the stock market — the people considered it a preposterous idea, especially after they had watched thousands of Enron investors lose their savings and saw the stock market lose 38% of its value between January 2000 and October 2002.

Today, 77% of Americans — even 68% of Republicans — believe that policymakers in Washington should "leave Social Security alone" and find other ways to reduce the deficit, according to a national poll in June by the University of New Hampshire. In fact, 75% of tea party supporters favor Social Security and Medicare, a New York Times/CBS News poll found in April.

There are still a handful of Americans who bash Social Security. They dress up their arguments in different clothing, but their views haven't changed much from those of their counterparts 75 years ago. We can't afford Social Security, they say. It's going bankrupt. It will destroy our economy and our society.

America, one of the world's wealthiest nations, can afford to provide an economic cushion for the elderly and the disabled. By making some minor adjustments, Social Security will remain vital and solvent for this and future generations. Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.

In retrospect, it is obvious that Social Security's Depression-era opponents engaged in fear-mongering, not economic reality. Their opposition was based on a free-market fundamentalist ideology that abhorred any attempt to use government to improve Americans' living conditions.

Just as the early battle over Social Security wasn't really about old-age insurance, current fights over public policy are really placeholders for broader concerns. They are about what kind of country we want to be and what values we consider most important. Today, business groups and right-wing zealots oppose healthcare reform, tougher financial regulations, stronger workplace safety laws, policies to limit climate change, higher taxes on the rich and extension of unemployment insurance to the long-term jobless. The issues vary, but the mantra is the same: This policy will kill jobs, undermine the entrepreneurial spirit and destroy freedom.

The White House and progressive activists should aggressively challenge assertions about the disasters that will befall us if government protects consumers, workers, seniors, children, the disabled and the environment. Throughout our history, progress has been made when activists and politicians proposed bold ideas and then won a series of steppingstone reforms that redefined the social contract.

Peter Dreier teaches politics and chairs the Urban & Environmental Policy program at Occidental College. Donald Cohen is the co-founder and president of the Center on Policy Initiatives, a San Diego-based think tank.

Copyright © 2010, Los Angeles Times

NOt sure what past you are living in but Social Security is hardly a program for just the elderly..... like all GoV programs it has expanded way beyond the -selling point (grandma).

In fact it has even expanded beyond "our" seniors; I know of a few old people who immigrated here just to collect.

they could never have dreamed of getting such money back home...from their Government but they qualify with ours.. though they never paid a dime in.

A friend of mine who is on an expired green-card has a mother who collects .. and she doesn't even live here and hasn't for many years.

[JohnSmith2007 353]

Yeah right, just stick your head in the sand and pretend nothing is wrong.

2010 Social Security Trustees Report: Reform Needed Now

Published on August 11, 2010 by David C. John Backgrounder #2451

Abstract: The 2010 annual report by the Social Security trustees has been released. It comes as no surprise that the Trustees Report predicts massive—and permanent— yearly deficits if the Social Security system is not reformed. Though the report shows that Social Security payments are secure for another five years, Social Security already owes $7.9 trillion more in benefits this year than it will receive in tax revenues. The time for reform is now—delay will only make each challenge and problem harder to fix. Heritage Foundation financial and pension expert David C. John examines the findings of the new Trustees Report—and explains what they mean for Americans.

The debate about whether Social Security needs to be fixed is over. The 2010 Social Security Trustees Report, released on August 5, shows that the program faces massive permanent annual deficits starting in just five years. Now is the time to focus on solutions. Instead of blindly defending the current program,[1] both Congress and the Administration need to propose comprehensive programs that fix Social Security—permanently. (Opposing a potential solution is not the same as coming up with a plan.)

What Is the Trustees Report?

The Social Security Act requires the trustees of the Social Security Trust Funds to issue an annual report on the financial status of those trust funds. The report includes not only current financial information but also projections about the funds’ ability to finance promised benefit payments in the future. If the report shows that the trust funds will be unable to finance all of these payments (which is the case in all recent reports), the law requires the trustees to recommend ways to make up the shortfall. However, this requirement is regularly ignored.

The trustees include the Secretaries of the Treasury, Labor, and Health and Human Services; the Social Security Administration Commissioner and Deputy Commissioner; and two public trustees appointed by the President and confirmed by the Senate. Currently, the two public trustee spots are vacant, but President Obama has nominated Charles P. Blahous III and Robert D. Reischauer for the positions.

Three Scenarios for the Future of Social Security. The trustees use three scenarios based on differing assumptions about the economy and other factors to predict Social Security’s financial future. The middle scenario, called the “intermediate projection,” is the most likely to occur, and is usually cited when discussing the future of Social Security. Although the trustees also include a more optimistic projection and a more pessimistic projection, there is a 95 percent chance that the intermediate projection will occur.

Changes Since 2009

The 2010 report shows that over the next 75 years, Social Security owes $7.9 trillion more in benefits than it will receive in tax revenues. The 2010 number consists of $2.5 trillion to repay the special issue bonds in the trust funds and $5.4 trillion to pay benefits after the trust funds are exhausted in 2037. This is an increase of $0.1 trillion from last year’s report, but that number reflects several changes to assumptions and methodology. Otherwise, the unfunded liability for benefit payments after the trust funds are exhausted would have risen to about $5.7 trillion, mainly due to adding the year 2084, in which the program is predicted to run a massive deficit, into the calculation period.

A key change in this year’s report is that Social Security is predicted to run cash-flow deficits in both 2010 and 2011 due to the effects of the recession. The recession has increased the amount of benefits paid out by Social Security as older workers who have lost their jobs file for benefits earlier than they might have otherwise. At the same time, both they and younger unemployed workers are unable to pay Social Security taxes, while workers who suffer a drop in their income will pay lower amounts. The 2010 and 2011 cash-flow deficits will have the effect of reducing the revenues that are paid into the trust funds. Although this year’s report predicts that Social Security will subsequently have cash-flow surpluses of between $2 billion and $5 billion from 2012 to 2014, if the heightened unemployment continues, those surpluses may not materialize.

Net present value measures the amount of money that would have to be invested today in order to have enough money on hand to pay deficits in the future. In other words, Congress would have to invest $7.9 trillion today in order to have enough money to pay all of Social Security’s promised benefits between 2015 and 2084. This money would be in addition to what Social Security receives during those years from its payroll taxes.

The Trustees Report also includes a perpetual projection that extends well beyond the usual 75-year planning horizon. In net present value terms, the perpetual projected unfunded liability is $16.1 trillion, including money necessary to repay bonds in the trust fund. Last year’s number was $15.1 trillion. If the same assumptions and other details were the same as last year, this year’s number would still have grown to $15.9 trillion. This means that the net present value of Social Security’s unfunded liability after 2084 is $8.2 trillion. These projections show that Social Security’s total deficit continues to grow well beyond the 75-year projection period. Any reform that eliminates deficits only for the 75-year window will not be sufficient to solve the program’s fiscal problems.

In actuarial terms, Social Security’s long-term financing improved slightly from a 75-year deficit of 2 percent of taxable payroll in last year’s report to a deficit of 1.92 percent. Many opponents of reform claim that raising payroll taxes by about 2 percent (which in theory would close the average percentage difference between revenues and outlays over the 75-year period) would solve Social Security’s problems. The reality, however, is that the program’s future deficits are projected to be large and growing, so this tax increase would still leave a massive shortfall. These new projections should end the claims that Social Security’s impending financial crisis can be resolved with modest changes to the current system.

Social Security spending will exceed projected tax collections in 2015. These deficits will quickly balloon to alarming proportions. After adjusting for inflation, annual deficits will reach $78.3 billion in 2020, $267.5 billion in 2030, and $317.3 billion in 2035.

Because a significant proportion of the deficits that Social Security is predicted to run in 2010 and 2011 stem from the effects of the recession, the system is likely to return to small surpluses once the economy begins to recover. Although at that point, some will claim that the improvement “proves” the viability of the current system, the reality is that Social Security’s outlook remains clouded by perpetual deficits that will begin about 2015.

Which Year Counts Most—2010, 2015, or 2037?

The year when Social Security begins to permanently spend more than it takes in—2015—is the crucial year. From that point on, Social Security will require large and growing amounts of general revenue money in order to pay all of its promised benefits. Even though this money will technically come from cashing in the special-issue bonds in the trust funds, the money to repay those bonds will come from other tax collections or borrowing. The billions that go to Social Security each year will make it harder to find money for other government programs, thus requiring large and growing tax increases.

The second-most important year is 2010. Beginning this year, the annual Social Security surpluses that Congress has been borrowing in order to spend on other programs will disappear. Because the recession has both reduced Social Security payroll tax revenues and increased the amount of payments, Congress will have to either find other sources to replace the money that it borrows from Social Security, or scale back spending. This year, Social Security will have a cash-flow deficit of about $41 billion, followed with a predicted deficit of $7 billion next year. Although the Trustees Report predicts small surpluses for 2012 through 2014 as the economy recovers, Social Security surpluses can no longer be used to mask the real size of the deficit and finance other spending.

Compared to 2010 and 2015, 2037—the year in which the Social Security trust funds run out of special issue bonds—has little importance. Even though the end of those bonds will require a 22 percent benefit reduction, Congress would have been paying about $250 billion a year (in 2010 dollars) to repay those bonds for about seven years by the time the trust funds run out. Congress will have to do this through some combination of other spending cuts, new taxes, or additional borrowing. These are the same choices Congress would face without the existence of the trust funds.

Do Politics Influence the Trustees Report?

No. Social Security Administration (SSA) Chief Actuary Stephen Goss and his staff of non-partisan experts are the source for the data in the Trustees Report. They are respected professionals who never were, and are not now, subject to political pressure. Goss has been at SSA since 1973 and is internationally renowned. Although members of the President’s Cabinet serve as trustees, they have little influence over the numbers. The 2010 numbers are substantially similar to those in the Trustees Reports issued during the Clinton and both Bush Administrations.

When Will Social Security Begin to Run a Cash-Flow Deficit?

According to the 2010 Trustees Report, the year that Social Security will begin to spend more in benefits than it receives in payroll taxes is 2015—one year sooner than predicted in last year’s report. The year the “trust funds” are exhausted remains at 2037, the same as in last year’s report.

OASI Operating Numbers for 2010

The Trustees Report includes detailed information about the aggregate amount of payroll taxes paid in the previous calendar year and the aggregate amount of benefits paid in that year. It also includes data on operating expenses. In 2009, the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays for retirement and survivors’ benefits, took in $698.2 billion and paid out $564.3 billion. Its annual surplus was $133.9 billion, but only $26 billion of that came from payroll tax receipts. The remaining $107.9 billion of the surplus came from a paper transaction that credited interest to the trust fund.

What It All Means

* Good news for seniors. The benefits for current retirees and those close to retirement remain completely safe. Even allowing for the predicted cash-flow deficits this year and next, the 2010 report shows that the program will have enough resources to pay full benefits until 2015. Despite political scare tactics, seniors can rest assured that their benefits are safe for five more years and that they will receive every cent that they are due, including an annual cost-of-living increase.

* Bad news for younger workers. Unfortunately, younger workers have a great deal to worry about. Any worker born after 1970 will reach full retirement age after the trust fund is exhausted. Unless Congress acts soon, younger workers can look forward to paying full Social Security taxes throughout their careers only to receive 78 percent or less of the benefits that have been promised to them. In addition, younger workers will have to pay to re-fund the surpluses that have been borrowed from the Social Security trust fund, an expense that will total almost $6 trillion by the time the trust fund is exhausted in 2037.

* Social Security must be reformed—now. Today’s Social Security program cannot last. The report shows that there is a 95 percent chance that Social Security will run permanent annual multi-billion-dollar deficits starting around 2015. The system has promised trillions of dollars more in benefits than it will have the ability to pay.

* Delay makes reform harder. Every year, there is one year less of surplus and one year more of deficit. The Trustees Report demonstrates that once those permanent deficits start in 2015, they will never end. Each year, reforming Social Security becomes more expensive.

* Delay makes running the rest of the government harder. If Social Security is not reformed, by 2037 Social Security will require more than 10 percent of all income taxes collected that year—in addition to what the program would receive from its payroll taxes—to pay all promised benefits, and its draw on the general budget will continue to grow. This will make it much harder for our children and grandchildren to pay for government programs dealing with national security, health, education, and the environment.

* Delay makes massive tax hikes much more likely. The 2010 report shows that Social Security will begin to run permanent cash-flow deficits in about five years. However, of the three general ways to fix Social Security, two (changing benefits and establishing Social Security personal retirement accounts) will take years to have a real effect. Accounts of any size need to grow for about 20 to 25 years before they are large enough to pay much in the way of retirement benefits. Benefit changes are politically feasible only if current retirees and those close to retirement are not affected, which means that it would be at least 10 years before changes take effect. While tax increases would immediately pump money into Social Security, that Band-Aid would just delay the start of real long-term reform and make it much easier for Congress to continue taking the easy way out.

* Include a personal savings element. Allowing American workers to save and invest a portion of their income in accounts that they would own is the lowest-cost way to ensure that they have an adequate retirement income. Increasing the ability of workers to save for retirement will reduce their dependence on Social Security and allow them to increase retirement security.

Social Security Myths

* Social Security’s problems are so far in the future that Americans need not worry about them. It takes about 22 years to grow a taxpayer. Almost every new taxpayer who will begin a career after graduating from college in 2031 is living today and can be counted. Similarly, all Americans who will receive Social Security retirement benefits in the year 2040 are alive now, and most of them are paying taxes. Social Security’s funding problems are based on demographics, which do not change from year to year. The people who will be hurt if nothing is done to fix Social Security are not unknown strangers in the future: They are our children and grandchildren.

* Letting the 2001 and 2003 tax cuts expire will make it easier to pay for Social Security. Allowing those tax cuts to expire will not make it easier to pay for Social Security in the future. Social Security does not need any additional cash to pay benefits for about another five years. During the interim, Congress would just spend the additional money on new programs, and by the time it might be used to pay benefits, every dollar would be committed to new “essential” programs that cannot be cut.

What Is Missing from the Report?

* A measure of workers’ rate of return. The Trustees Report does not include any measure of what workers actually receive for their payroll taxes. The best way to accomplish such a measurement would be to include a chart that plots implicit rates of return by birth year. Similar to a chart found in the Government Accountability Office’s (GAO) August 1999 report on Social Security’s rate of return, this chart would illustrate to Americans that the rate of return from Social Security has steadily and dramatically decreased. For instance, the GAO chart shows that a worker born around 1920 could expect a rate of return from Social Security taxes of about 7 percent after inflation. A worker born in the mid-1980s, however, could expect a return of less than 2 percent. If provided with these figures, workers would see that, unless the current system is reformed, they can expect lower returns on their taxes than their parents and grandparents received. More important, they would see that their children and grandchildren will receive even less from Social Security.

* Information on the nature of the Social Security trust funds and how they differ from private-sector trust funds. The Office of Management and Budget (OMB) explained in its fiscal year 2000 budget document that the Social Security “trust funds” do not contain stocks, bonds, or other assets that could be sold directly for cash. Unlike private-sector trust funds, the Social Security trust funds contain only IOUs that will have to be paid back with future taxes. As OMB noted:

These balances are available to finance future benefit payments...only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits, or other expenditures.[2]

Conclusion

Social Security has served past generations well, and helped to significantly reduce the number of retirees forced to live in poverty. But its pending deficits mean that younger workers cannot receive the same level of benefits as their parents and grandparents did. Congress must fix Social Security now. Delay will only raise the cost of reforms and make it much more likely that Congress will resort to tax increases instead of the kind of fundamental reforms that are needed to enable Social Security to serve younger workers as well as it served older generations.

http://www.heritage.org/Research/Reports/2010/08/2010-Social-Security-Trustees-Report-Reform-Needed-Now

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

Yeah right, just stick your head in the sand and pretend nothing is wrong.

* Include a personal savings element. Allowing American workers to save and invest a portion of their income in accounts that they would own is the lowest-cost way to ensure that they have an adequate retirement income. Increasing the ability of workers to save for retirement will reduce their dependence on Social Security and allow them to increase retirement security.

Conclusion

Social Security has served past generations well, and helped to significantly reduce the number of retirees forced to live in poverty. But its pending deficits mean that younger workers cannot receive the same level of benefits as their parents and grandparents did. Congress must fix Social Security now. Delay will only raise the cost of reforms and make it much more likely that Congress will resort to tax increases instead of the kind of fundamental reforms that are needed to enable Social Security to serve younger workers as well as it served older generations.

http://www.heritage....form-Needed-Now

It's good to see that even the Heritage Foundation acknowledges the merits of the program. However, they still tow the line of the free market ideology by suggesting that individual retirement savings plans are the best way for future solvency instead of raising taxes.

Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.

In retrospect, it is obvious that Social Security's Depression-era opponents engaged in fear-mongering, not economic reality. Their opposition was based on a free-market fundamentalist ideology that abhorred any attempt to use government to improve Americans' living conditions.

Just as the early battle over Social Security wasn't really about old-age insurance, current fights over public policy are really placeholders for broader concerns. They are about what kind of country we want to be and what values we consider most important. Today, business groups and right-wing zealots oppose healthcare reform, tougher financial regulations, stronger workplace safety laws, policies to limit climate change, higher taxes on the rich and extension of unemployment insurance to the long-term jobless. The issues vary, but the mantra is the same: This policy will kill jobs, undermine the entrepreneurial spirit and destroy freedom.

[JohnSmith2007 353]

It's good to see that even the Heritage Foundation acknowledges the merits of the program. However, they still tow the line of the free market ideology by suggesting that individual retirement savings plans are the best way for future solvency instead of raising taxes.

Sure it has done some good but it has been run in a criminal manner and unless we do something drastic soon it will fold. If I could be offered all the money I ever paid in rather than my old age benefits I would jump at it. My return on my investment as it is will be negative unless I manage to live to see 100. SS should be privatized and taken out of the greedy hands of the government. If they had kept their hands out of the trust fund we wouldn't be having this conversation right now, there would be plenty of money. But because the crooks from both sides have raided the trust fund it is broke and minor "tweaks" will not fix it. The program isn't the problem, the government is.

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

Sure it has done some good but it has been run in a criminal manner and unless we do something drastic soon it will fold. If I could be offered all the money I ever paid in rather than my old age benefits I would jump at it. My return on my investment as it is will be negative unless I manage to live to see 100.

First of all, SSI is not an investment - it's insurance. Second, the maximum taxable income for 2010 is about 107g's at a rate of 7.65%. So assuming that you're not putting any money into a pretax retirement account, and were earning that max amount this year, your total FICA tax would be about 8g's. The max in 2005 was 90g's with a total FICA tax of about $6,800. The max SSI benefit for this year is $2,346 or about 28g's. Most retirees get paid out more in SSI than what they paid into it, especially if they've been receiving benefits for 20 years. But again, it is not an investment - it's insurance. If God forbid, you become disabled, you will receive SSI. If you, God forbid, die before your spouse does, she receives a benefit.

SS should be privatized and taken out of the greedy hands of the government. If they had kept their hands out of the trust fund we wouldn't be having this conversation right now, there would be plenty of money. But because the crooks from both sides have raided the trust fund it is broke and minor "tweaks" will not fix it. The program isn't the problem, the government is.

There is no private investment that can compete with SSI's benefits because, again, it's not an investment, it's insurance.

Edited August 15, 2010 by El Buscador

[I AM NOT THAT GUY 5,715]

will Social Security survive to see another 75 years or more?

Its long-term solvency remains in question. And staunch supporters worry that benefit cutbacks might be unavoidable now that President Barack Obama's deficit commission is looking at Social Security. A report is due in December.

The program needs shoring up. For the first time since 1983, Social Security will pay out more in benefits this year and next than it takes in through payroll taxes, according to the latest annual report. The shortfall stems from high unemployment, which left fewer people paying taxes and more older workers signing up for benefits.

Surpluses are expected to return in 2012 for a few years before costs again exceed revenues. By 2037, Social Security's fund will be exhausted, and taxes will cover only 78 percent of promised benefits.

Social Security accounts for 40 percent of the typical retiree's income, and almost all of the income for elderly singles. The program has lifted nearly 20 million people out of poverty, including 161,000 older Marylanders, reports the Center on Budget and Policy Priorities. And without Social Security, the nation's elderly poverty rate would be about 45 percent, instead of 9.7 percent.

Opinions about Social Security run strong and deep.

"It was a terrible idea to begin with," says Paul Cleveland, an economics professor at Birmingham-Southern College. He compares Social Security to a Ponzi scheme in which the first in get paid while later victims lose out.

Daniel Hamermesh, economics professor at the University of Texas at Austin, counters: "It is the most successful domestic program of the 20th century."

Ideas to fix Social Security fall into two camps: Cut benefits or raise taxes.

Republican Rep. Paul Ryan, a member of Obama's deficit commission, wants to reduce benefits for those under 55, but allow them to invest one-third of their Social Security taxes in private accounts.

House GOP leader John Boehner suggested raising the full-benefit retirement age to 70 and adding a means test so high-income retirees wouldn't get benefits.

Others recommend subjecting more wages to Social Security taxes or bumping up the tax rate. Nancy Altman, author of "The Battle for Social Security," says a 0.5 percent tax on financial transactions would eliminate any shortfall.

In 1983, Social Security was months away from not being able to mail checks before Congress acted. Legislators shouldn't wait so long this time. The sooner they act, the more options they have and the less painful it will be on workers and retirees.

http://www.baltimoresun.com/business/money/bs-bz-ambrose-social-security-birthda20100815,0,6311074.story

[Pinocchio Liberal 268]

There is no private investment that can compete with SSI's benefits because, again, it's not an investment, it's insurance.

How naive. you dont think Insurance companies invest their premium money?

[evli1966 88]

Thus one of the few reasons Steve and others with similar views do not want to stem the flow of illegal immigrants and mass amnesty.

They are relying on this system to support them when they retire and need more slaves to work and pay for their retirement.

They have know true long term view on this know in order to continue the cycle more and more must be enslaved.

They care not that the true economics of this has an end albeit most likely not in their life time or ours; there will only be so many people that will flow here to enslave themselves to pay with no return.

As this country crumbles to a 2nd possible 3rd world economy those illegals and alot of legal immigrants will move away and there will be no money.

[Mr. Big Dog 10,747]

Though the report shows that Social Security payments are secure for another five years, Social Security already owes $7.9 trillion more in benefits this year than it will receive in tax revenues.

The system owes 7.9 trillion more in benefits this year than it will receive? That's a low shot even for the Heritage Foundation. Obviously, the system doesn't owe 7.9 trillion more this year than it receives since Social Security doesn't owe benefits anywhere near this amount in any given year in the long run, let alone this year. But it makes for good scare tactics.

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

The vast majority of today's retired Americans will receive Social Security benefits that far exceed what they contributed in taxes during their working years. While that so-called "rate-of-return" is projected to decline somewhat for future retirees, the program still offers a far better deal than any other private alternative could conceivably provide. Here's why:

Focusing on retirement benefits alone, most workers with moderate and low incomes will receive an annual rate of return slightly in excess of the 2 percent that government bonds typically provide above inflation. For example, a couple with one worker who earned an average income and retires in 2029 would receive an average real rate of return of 3.97 percent. Those with high earnings would receive a lower, but still positive rate of return. Unlike Individual Retirement Accounts and 401(k)s, Social Security's retirement benefits are not subject to investment market fluctuations and provide benefits that increase with inflation. So the program's baseline retirement benefits in their own right constitute a good deal.

Retirement benefits are not all that Social Security offers. In addition, it provides insurance to workers and their families in the event of disability or death. More than a third of Social Security beneficiaries are survivors of deceased workers, spouses and children of retired or disabled workers, or disabled. For an average wage earner with a spouse and two children, in 2000 the disability coverage provided by Social Security was equivalent to a $353,000 disability policy in the private sector; Social Security's survivorship insurance was equivalent to a $403,000 life insurance policy. Moreover, Social Security's insurance payments are adjusted annually to protect against erosion caused by inflation; private insurance rarely, if ever, protects against inflation. Rate-of-return calculations do not take into account the significant value of that insurance protection.

From the standpoint of taxpayers, Social Security is enormously efficient. Its administrative costs are less than 1 percent of benefits. In contrast, the fees in privately managed investment accounts are likely to reduce the ultimate retirement value of the accounts by 20 percent, according to a study by University of Chicago economist Austan Goolsbee.

link

Edited August 15, 2010 by El Buscador

[JohnSmith2007 353]

First of all, SSI is not an investment - it's insurance. Second, the maximum taxable income for 2010 is about 107g's at a rate of 7.65%. So assuming that you're not putting any money into a pretax retirement account, and were earning that max amount this year, your total FICA tax would be about 8g's. The max in 2005 was 90g's with a total FICA tax of about $6,800. The max SSI benefit for this year is $2,346 or about 28g's. Most retirees get paid out more in SSI than what they paid into it, especially if they've been receiving benefits for 20 years. But again, it is not an investment - it's insurance. If God forbid, you become disabled, you will receive SSI. If you, God forbid, die before your spouse does, she receives a benefit.

There is no private investment that can compete with SSI's benefits because, again, it's not an investment, it's insurance.

Come on now, you have to see that the SS program must take in more than it pays out to stay solvent. We were running surpluses until Congress broke open that piggy bank. I don't care if you call it insurance or a retirement program that fact is still there. Now that all of the trust fund is gone and the boomers are retiring that means we have about 2 workers for every retiree. The math just isn't there. They system is broke and in major debt. Without drastically increasing premiums and reducing benefits it will not last for much longer. "Tweaks" will not fix it. The government is totally to blame. I say take SS out of the hands of the government and give it to a well regulated and controlled private company. The only alternative is not having it there when our kids want to retire.

Oh, and BTW. I will not see a total return on my investment if I live to the life expectancy of 75 years old. If I had that money that I was forced to give SS and invested it in a simple retirement account I could have a much better retirement. Case in point, After my divorce I had to cash in my retirement account and give my ex a bunch of it. Since then I have invested 15% of my gross (4 years) in a 401K. If I retire at 62 ten years from now the charts say I will have a income, FOR LIFE, of about $2000/month. I have been paying into SS for 35 years now and at age 62 I will get about $1200. Tell me which is the better investment. SS is only good for people that don't plan for the future. For everyone else it is a raw deal.

[mawilson 2,133]

However, they still tow the line of the free market ideology by suggesting that individual retirement savings plans are the best way for future solvency instead of raising taxes.

Because the government can manage your money better than you can?