Social Security Primer

I wrote this e-mail today to a friend of mine who asked me about Social Security. She complimented me on the writing of it, and looking back, I thought it was pretty cogent for coming off the top of my head. So here it is (and tomorrow or something, I'll put up some stuff about the numbers I found on the SSA website about average wages and average benefits).

The way that the Social Security system works now is something like this: We pay 6.2% of our income into the Social Security system (and our employer kicks in the same amount, so 12.4% of our income goes into Social Security). That money goes to pay the current retirees who are collecting, and the leftovers go into the Social Security Trust Fund. Currently, that Trust Fund is valued at over $1.5 trillion, and it makes over $80 billion in interest every year.

But the Trust Fund is not filled with money. It's filled with United States Treasury Bills, or T-Bills, as they're affectionately known. They're considered the soundest investment in the world, and they've basically been the government's way of borrowing the money out of the Trust Fund to use on other programs. Opponents of the Social Security program will claim that because of this the Trust Fund is filled with worthless IOUs. If that's the case, then no T-Bills will retain their value, which would be disastrous to the economy (most of our national debt is held by Japan and China in the form of T-Bills).

In 1983, the Social Security system faced a real impending crisis. Not only had they been drawing off of the trust fund for some time, because payroll taxes were insufficient to cover benefits, it was two months from going completely bankrupt. This had happened for a number of reasons, the most prominent being what was called "stagflation" (high inflation, stagnant wages). As a result, Reagan brought a proposal before Congress that hiked the payroll tax up to a level that would be enough to build up the Trust Fund enough to provide a cushion for when the huge Baby Boomer generation retires (which is coming up before too long).

Also as a direct result of the crisis in 1983, the SSA (Social Security Administration) began making much more conservative and pessimistic projections. See, the SSA is required by law to put out a report every year (end of March, I think) that projects the state of Social Security for the next 75 years. They put out three projections: a pessimistic, middle-of-the-road, and optimistic projection. The middle-of-the-road projection is the one that everyone's been talking about, but the middle-of-the-road projections have been, for the last 10 or 15 years, too pessimistic in retrospect. They project a rate of growth of the economy that's typically been pretty far below the actual rate of growth.

Now you're exactly on the same wavelength as me about the civil/social responsibility aspect of Social Security. I read somewhere that they say about 48% of seniors who don't live in poverty would be living in poverty without Social Security. There are a hell of a lot of jobs that don't provide retirement investment options, or 401ks, and there are a hell of a lot of jobs that don't pay enough to allow people to save any substantial amount for their retirement anyway. It seems to me, anyway, that giving these people back their money that they pay in payroll taxes to Social Security wouldn't necessarily result in better retirements for them (particularly because of the employer kick-in).

But part of what opponents of the system don't like is its progressivity. What I mean by that is that if you were able to put less into the system, you get a bigger percentage back of what you gave. The theory behind such a thing is that the people who were able to put less into the system are the people who need a little more protection from poverty. Security from poverty, if you will. Mind you, people who put more in still get more out, but the percentages are skewed toward those who need it more.Social Security was never intended to be a main source of retirement income. It was planned to be a sort of social insurance against poverty in old age. You could look at it as welfare, I guess, but that would forget that the people receiving it are people who paid into the system to begin with. Welfare recipients are people just benefiting straight off of the government. But the other thing is that people who don't need it still do take it. I'm not saying that there's anything wrong with that, but that's how it is (making it even less of a "welfare" system).

As it stands right now, like I said, the payroll tax contribution is 12.4%, the retirement age is 65 and 8 (I believe) months, and the payroll tax cap is $90,000 or so. That means that any money you make above $90K is not subject to Social Securiity payroll taxes.

The thing about the supposed "crisis" being talked about right now is that it's just not true. Like I said, in 1983, the Trust Fund was 2 months from bankruptcy. Complete and total bankruptcy. Right now, in 2005, by the middle-of-the-road projections (which are historically unable to predict immigration growth, inflation rates specifically, etc. at any great length into the future), we're 37 years from the Trust Fund going bankrupt. Doesn't seem like a crisis to me.

The other thing is that these projections presume stagnation of the system as it stands. Like, they presume that the payroll tax level stays the same, the payroll tax cap only goes up with mean wage growth (which it always does), and that the retirement age slowly creeps up to 67 in a few years, as it's been scheduled to do. But in the 70 years that Social Security has existed, it's been a very very dynamic system. The amount of payroll tax has increased, the retirement age has increased, the benefits have been cut, etc. There have been many little maintenances along the way, and it seems silly to me to assume that it would stay exactly the same for the next 75 years.

Some proposed fixes include raising the retirement age, cutting benefits in some not-too-substantial way, raising the payroll tax cap, raising the payroll tax by a couple of tenths of a percent, etc.

Another NewsMax Editorial

Paul Craig Roberts does it again. I don't know if y'all read the links I put up here, but do yourself a favor and take five or ten minutes and read this one. Keep in mind, while you do, that it comes from NewsMax, a heavily conservative website. I don't know what they're thinking, keeping on putting this guy up there, but more power to 'em as long as they do.

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Sources?

Looks like Bush is using himself as a primary source now. Great.

"The fundamental question is: Can we advance that history?" the president asked rhetorically. "And that's what my inauguration speech said. It said yes we can."

And who was saying he was too insular?

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Jerome Corsi

Jerome Corsi, co-author of the Kerry-bashing Unfit for Command, plans to run for Senate against, you guessed it, Kerry himself.

See if you can't read that NewsMax article without having a good chuckle.

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Protection of Marriage!

Guess what? The Protection of Marriage Amendment has been brought back to the table in the Senate! Thank God such issues which have a chance of passing are getting shoved once more to the forefront of our national discourse! And guess who's overjoyed about it?

I'll give you a hint: He has a problem with absorbency.

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NewsMax continues...

...its criticism of the President's agenda in this editorial. Once again, like before, this is a conservative's editorial, but he sharply criticizes Bush's focus on Social Security as an immediate crisis while ignoring things like illegal immigration and the skyrocketing cost of health care.

Dissension in the ranks? Doesn't bode well for things to come for Mr. Bush, let's hope.

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Bush & abortion

I've decided to start looking through the rest of the news, because my focus has been too tight on Social Security lately. I'm still going to keep tabs on it, and I'm still going to post on it, but as of right now, there's nothing new to say, and I feel like I've been letting down my faithful reader(s) with my lack of posts. So here's something new.

Bush publicly spoke by phone with a large group of abortion protesters, telling them that he shared their vision of protecting the vulnerable, and that he wanted to promote a "culture of life."

Of all the empty, meaningless pieces of rhetoric that the Bush Administration puts out, this one might be the one that pisses me off the most. He promotes a culture of life. So the Democrats must be promoting the opposite, right? A culture of death, right? It's so much passive-agressive political posturing nonsense, and it just makes me sad to see it perpetuated.

Interestingly enough, the article gives this excerpt:

"You know, we come from many, different backgrounds, but what unites us is our understanding that the essence of civilization is this: The strong have a duty to protect the weak," Bush said. He has said he supports a constitutional amendment to outlaw abortion, but has not actively pushed for it.

So Bush, champion of the less-government Republican Party, supports not just one, but two constitutional amendments restricting personal freedoms by governmental means. I wish his supporters were in any way capable off seeing the hypocrisy here.

And "the strong have a duty to protect the weak," right? Unless, that is, that protection has anything to do with making sure senior citizens don't spend their final days in poverty. If they do, that's their own damn fault and they don't deserve protetction.

I have no smarmy closer. This just makes me sad.

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Democrats and Social Security

I just ran across this article on MSNBC, and I thought it was interesting. In it, they ask what the Democrats are prepared to offer as an alternative to Bush's plan. I know what it should be: Social Security.

Bush's plan is certainly not Social Security, much as he claims to want to "reform" the existing system. I know this even though Bush hasn't put out a plan. He wants to privatize, and that will end up destroying the system and driving the country into debt in short order.

So what are the Democrats dragging their feet on? Like Josh Marshall always says, we know the gist of Bush's plan, and that we don't support it. Why wait for him to put out the knuckleheaded specifics before outright opposing it? Better yet, why not beat him to the punch with a rock-solid proposal that shores up Social Security, in just that way that it's been periodically shored up since its inception?

Talk about personal accounts on top of Social Security, talk about investment and responsibility, etc. But for God's sake, talk. The Democrats who care about this issue can't afford to let Bush drag his feet and make the first move. By then, the public consciousness will be saturated with this talk of "crisis," and any Democratic plan will be too little too late.

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I think.....

.....that NewsMax must have missed this editorial when deciding what to put on their opinion pages. It sharply (and rightly) criticizes the Bush Administration for its handling of the war in Iraq, and more importantly, for its handling of its own members who had the gall to criticize the Administration. It calls the Administration a pack of liars and sycophants (citing Condi's sycophantishness as her prime qualification for being Bush's Secretary of State), and talks about what he sees as US plans to go into Iran next.

Turns out that this is this columnist's standard MO. In this editorial from the day before, he criticizes the neocon belief in American hegemony and domination as disastrous and unattainable, even in such a small corner of the world as Iraq.

This guy certainly would not be featured on NewsMax if he wasn't a conservative, so I can't help but think that he's a "paleoconservative," as they're titled in The Right Nation, by John Mickelthwait and Adrian Woolridge. They put Pat Buchanan in this category, and his sharp criticism of the Iraq war identifies him and his ilk, in my mind, with the fella who wrote these two editorials (Paul Craig Roberts).

But for the record, like I said, I'm pretty much astounded to see editorials so sharply blasting Bush on such a Teen Beat Bush Edition website as NewsMax.

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Social Security again

One thing that's important is to realize that Social Security is an insurance program. Though the bulk of its payments go to retirees, there also a good chunk that go to the disabled, the widowed, etc. It's your money, invested in US bonds, ostensibly the most secure investments in the world.

I'm not the first person to say this, but.....if, like some Conservatives claim, the US just plans to default on the bonds in which the Trust Fund has invested, then what does that mean for the rest of the countries that own portions of the US debt?

Excuse the crudity, but imagine China holding our collective nuts in a trillion dollar vise grip.

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New comments

OK, so I think that your comments may all have been erased, but that's because I installed a new comment thing. It'll pop up a little comment window, instead of reproducing the whole thing, and it'll let people who aren't members of Blogger leave names, e-mails, and homepages.

Go to it, and I'll be back later with some more actual posts.

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"Healthy" debate

I've been having various debates on the Social Security issue, mostly online, and it's very interesting to me how fundamentally different my views on the issue are from a conservative's views on the issue.

First, there's the difference in argument. As is becoming increasingly clear, conservatives are opposed to the idea of Social Security, mathematics and facts be damned. If the only way to get support up for "reform" is to make stuff up, then so be it. They will not be deterred. But their objection is that they shouldn't be made to give up any of their money to give to somebody else (and I'm sure the progressivity* of benefits gets them all furious, too). So pointing out that Bush's crisis is so much smoke and mirrors becomes a moot point when what they really want to argue is that Social Security is a philosophical quagmire. I think that there could be a legitimate debate to be had there, but that's not how the president's couching it.

And I know that they'll hate me for it, but I can't help but feel that there's this fundamental selfish, "greed is good" mentality going on with the conservatives, too. They believe that the free market solves anything, and I guess those who get caught in the crossfire and lose everything are just those proverbial eggs that get cracked for the making of the omelette. They get pretty enraged when the compassion issue gets brought up (i.e., keeping Social Security is more compassionate to the people who can't otherwise afford much retirement savings). They claim that it's more compassionate to not rob people of their money to pay other people with.

Please.

Social Security keeps a great many seniors out of poverty. To completely abolish Social Security (which is what they really want to do, and which Bush's plan really will accomplish in the long-run by weakening it so much) will be to subject everyone to the whims of the market. Conservatives, again, don't want to talk about administrative costs of running these market purchases, or brokerage fees, or the fact that not every US citizen is going to become a stock market expert overnight. Instead they'd like to stick their fingers in their ears, pretend that 100 million people are going to be able to invest in the highest-yield stocks in the market all at once without somehow changing its dynamic, and live forever in their glorious "ownership society."

Again, please.

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*For those who don't know, Social Security benefits are scaled so that people who contribute more get more monetarily, but people who didn't have enough money to contribute more get a greater percentage of their former wages.

New link

Just to let y'all know, in case you didn't notice, I put up a new picture link in my sidebar over there. It's a link to a site called There Is No Crisis, and it's filled with all sorts of information about Social Security and why this "crisis" being trumpeted by the Bush White House is so much smoke and mirrors, just like the crisis in the leadup to Iraq. There's also a list of affiliated bloggers, of which I think I'll soon be a part. I haven't gotten to check them all out, but I know that at least Talking Points Memo is some really top-notch stuff.

I'll get back to you after I've done some more reading.

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Censored in China

I just recently learned that I'm censored in China. Apparently my thoughts and musings blew their mind. I'm too much for them to handle.

NOTE: You might want to bring to my attention the fact that all blogger sites are censored in China. Don't. It'll kill my buzz.

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Thought you should see this

I didn't find it, but this article is a very good one. So's this one.

This is all about Social Security, by the way.

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Kennedy

Ted Kennedy, saying basically what I said two days ago about the Democrats needing to stay united, and not try to move to the right or create a "big tent" philosophy.

Insane

According to this article, the Bush Administration is breaking with precedent and forcing the city of Washington D.C. to use $11.9 million of its homeland security budget (money it was given because it's at high risk of attack) to pay for costs attendant to the forthcoming inauguration.

This defies comment.

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Abortion!

Consumer Reports recently did a study of different condom brands, checking for which were the best. At the same time, they did a study of other birth control methods, including abortion (both chemical and surgical). As you may be able to guess, one of my favorite websites, WorldNetDaily, took issue with this, claiming that Consumer Reports was advocating abortion. Wait, that's not quite right. The American Life League says that Consumer Reports is advocating killing.

There is a lively, ugly debate to be had on abortion in America, most of it centering around when life begins. But Consumer Reports gives information on options available. As this is one of the options, I fail to see exactly what the problem is.

"There were no details of the risks of abortion like breast cancer or
mental anguish, no pro-life alternatives like adoption, nothing," reader Marc
Smulowitz commented to WND. "Just a soulless 'consumer report' as if they were
recommending the acquisition of the latest blender."

I found this website detailing the links between abortion and breast cancer. That's from a pro-life website alleging media conspiracy in covering up the links between abortion and breast cancer. This one's from BreastCancer.org. It says that there's no link between abortion and breast cancer, and that's the same opinion as that of the National Cancer Institute's official study.

Sorry, WorldNetDaily, I think that the official sites on Breast Cancer and Cancer respectively win out over the American Life League's propaganda.

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The Effort Award?

Bush's new approval ratings came out, and while his overall approval rating went to 52% (an eight-point spread over those who disapprove of his job), the story is quite different on individual issues. 50% approved of his handling of the economy, and that's his highest marks on the economy in a year. 75% approved of his handling of the tsunami, and this is where the title of this post comes from. I'm not saying I think that Bush handled the tsunami poorly, but might this skew the results a little bit? I mean, was there really any kind of real choice made by Bush with regards to handling the tsunami?

There's a 14-point spread (56% to 42%) on disapproval of the war in Iraq. And surprisingly enough, to me, there's an 11-point spread (52% to 41%) on disapproval of Bush's Social Security plan. A full 55% of Americans feel that partial privatization is a bad idea.

But that doesn't mean that Bush's war of rhetoric has been lost; far from it. 18% of Americans describe Social Security as "in crisis," and 53% described it as having "major problems." Only 24% said that its problems were minor, and 3% said that it faces no problems.

Pretty funny that for a system that's been continuously changed and appended over its 70-year history (payroll tax caps, tax amounts, retirement ages), all of a sudden the assumption is that its supporters just want to keep it stagnant, exactly as it is now.

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Considerable money, considerable mouth

Bill O'Reilly's at it again, evidently, this time resuming a three-year-old tussle with George Clooney (or G-Cloo, as he's known in the 'hood). O'Reilly charged three years ago that the celebrity telethon following 9/11 was riddled with fundraising errors, and that the Red Cross changed its whole fundraising system thanks to his watchful eye. Clooney was one of the main organizers of the event, so he received a lot of O'Reilly's ire.

Well, Clooney's organizing another telethon, this one for the people hurt by the tsunami, and O'Reilly's launching a pre-emptive strike, staking out his watchdogging role early. Clooney responded to O'Reilly with a pretty scathing letter where, among other things, he said that the original 9/11 telethon was organized by the United Way, not the Red Cross. "An easy mistake to make.....if you're 3," the letter says. He also charges O'Reilly to put his "considerable money" where his "considerable mouth" is and get involved in the telethon, since his early criticism seems already to have reduced contributions.

Isn't it all just a bit silly? I mean, O'Reilly's a jackass for doing this the way that he is, but he's a jackass for doing just about everything the way that he does it. To insinuate before the fact that there's a better than likely possibility (he didn't say that, but it's the obvious implication) that there were going to be accounting errors and that the aid wouldn't reach the victims is petty and small, and really only indicative of the fact that O'Reilly has it out for "lefties" like Clooney.

And G-Cloo sits on the board of the United Way. I don't object to his writing a letter to O'Reilly, and I think it's entirely merited in this circumstance; but I think maybe his sarcasm could have been a bit more veiled. Especially as a representative of a charitable organization.

I come down pretty firmly on Clooney's side here, with some reservations about his manner of response.

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New leadership in the DNC

Terry McAuliffe's term as the Chairman of the Democratic National Committee is up, and the fight has begun to see who will replace him. Among the forerunners is former Congressman Tim Roemer, an anti-abortion Catholic. Ominous as some pro-choice Democrats might see this to be, Roemer has stated that he doesn't want to change the platform of the party; rather, he'd like to "expand the tent," so to speak, to make up for some of the losses of the Democrats in the recent elections.

I don't think it's a terrible idea, but I just feel like the idea of a "big tent" Democratic Party would probably ring false to the type of people that they'd be trying to reach with such a move. Namely, the social conservatives in "flyover country." I firmly believe that there should be a way to convince them that the fiscal interests of the lower- and middle-class workers are better served by the Democratic Party's economic platform, but I don't know if a symbolic move like having a pro-life Chairman is the way to do that. Already, during the 2004 campaign, Republicans were accusing Democrats of trying to be "too much like Republicans."

It sucks, but I think that the best course right now for the Democrats would be to present a united front and wait for the weakly bonded coalition of conservatives to self-destruct. It's already beginning to fray at the edges, with the ultra-cons saying Bush hasn't been conservative enough, and Schwarzenegger saying that the party should become more liberal, etc. Everyone's been promised something, and not all of those promises can be kept.

If the Democrats can weather the next little while without significant compromise, things should start looking up before too long.

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Social Security--What Else?

I've been obsessed with this Social Security issue lately, because it's a damned important issue. Bob Novak would like to claim that there's no transition costs, and that the long-term costs of doing nothing are much greater (based, of course, on an infinite horizon projection). Doing nothing, yes. But Social Security has ever been a dynamic system, with retirement ages increasing and percentages taken from income increasing, and with the caps on payroll taxes increasing. It's insane to think that now, for some reason, the system would be allowed to completely stagnate.

Novak also claims that the transition costs in the short term could be limited to $600 billion. I don't know where he gets this figure, and he conveniently neglects to really tell any of us (check, I dare you).

This morning before work, I was watching CNN, and there was a dude on there who was talking about costs of Social Security and Medicare (that's right, lumped together for some insane reason) as a percentage of income tax. His claim was that right now, at this moment, Social Security and Medicare account for a full seventh of all income taxes collected by the government, and that in the next twenty years, that number would go to somewhere between a fourth and a half.

Insanity by any measure, no? Well, unfortunately, not for those of us who don't bother to go out and find out what's really going on. Scare tactics work, plain and simple. Make stuff up, and people will believe you, because their laziness overrides their fear. This guy was allowed, on what conservatives call the "Communist News Network" for its blatant liberalism, to get off scot free saying that Social Security is currently running a deficit.

Here's a website I found that would undoubtedly be decried as the vilest of lies by the champions of privatization/reform (catch phrases for abolition), but which actually has some very interesting information that's not even being touched by the "liberal" media.

Be back later.

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For Johan

Johan,

The reason that the US was pissed off at the UN was because a UN official called Western Nations "stingy" in their aid given to relief efforts for the tsunami. Ever since then, it's been pretty much a competition, at least here, to measure ourselves by how much money is given.

Hope that clears things up, dude!

Ik heb trek,

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109th Congress

Just read an interesting article in the Washington Post about the problems posed to the 109th Congress. It's no surprise that the most bitter battles of the coming year will likely be those of judicial nominations and of Social Security.

Bush has re-nominated a number of formerly filibustered judicial nominees, signaling that his pledge to reach across the aisle was a lie at best (in my mind, anyway). This has raised questions as to whether Democrats would have the stones to filibuster a Supreme Court nominee, and not just circuit and appeals courts nominees. We'll have to see, but I wouldn't be surprised, especially if the Supreme Court nominee(s) in question is/are stanch anti-abortionist(s).

In addition, Bush's new Social Security plan would come up, and surprise surprise, it involves cutting benefits by nearly a third in the coming decades! Proponents of the plan hope that the slack will be picked up by private investment accounts, but the AARP has launched a $5 million advertising campaign against Bush's plan. That's not a very strong endorsement, is it?

Last but not least, the GOP has reversed course on its controversial DeLay Rule, deciding (evidently) that it wasn't worth risking the appearance of complete moral bankruptcy just to allow a Texas representative to keep his leadership post in the House while being indicted for criminal charges. This is a strange move, since the DeLay Rule has been fought tooth and nail by the Democrats, and defended tooth and nail by the Republicans, ever since it was proposed.

So anyway, these'll be the big issues in the Congress, and at least the judicial one will hinge on what I think will become one of the central debates in our public discourse. I'm talking, of course, about religion. The freedom to practice religion, the separation of church and state, government involvement in religion, religion's involvement in government, etc. There are a lot of people out there who are trying to get abortion outlawed because it's an offense against God. There are a lot of people out there who are against gay marriage for the same reasons. These same people are up in arms about how hard it's been made to practice their religion because of the "myth" of church-state separation. They refer to America as a Christian nation.

Increasingly, on the other side, proponents of church-state separation, as they feel it is prescribed in the Constitution, are making their cases heard as well. Prayer in public schools is out, the pledge of allegiance has been called into question, and an Alabama Supreme Court justice has been tossed out on the street for failure to remove a monument to the Ten Commandments. Just as the worlds of entertainment and politics are merging, so too are the worlds of religion and politics. The coming debates are going to be at the very least tinged with hints of religion, and at most driven by religion.

I'll post more later.

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Lexicon Update

Dr. James Dobson = Pat Robertson/Jerry Falwell

Expect the fight over religion to be a big one over the coming years. Christians think it's hard to be one of them in America these days.

Please.

It's hard to be a little girl in China.

It was hard to be black in the South years ago.

It's hard to be a Serb in Croatia.

It's hard to be a Tutsi in Rwanda.

It's not hard to be a Christian in America.

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