Opinion
What Social Security crisis?
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Also by Rob Deters:
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- Senate Republicans: be wary of 'nuclear option' (April 13, 2005)
- Strange allies for environmentalism (April 20, 2005)
- Reflections on 'real world' (April 27, 2005)
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I’m going to preface my first column back from winter break with an update on what has been bothering me of late.
My grandmother passed away just a bit after New Year’s. She was a strong, proud and educated woman who came to this country from the ruins of Europe after WWII and raised a family alongside my grandfather in a foreign land. She never doubted her children would prosper and took pains to make sure my mother and her two sisters took advantage of every public service our country had to offer.
When she passed, it was years after my grandfather. He had been a psychiatrist, but one who worked in state hospitals, never in lucrative private practice. His pension was acceptable, but like many Americans, my grandmother’s final days were supplemented by Social Security.
Today, ask any elderly person if they are receiving Social Security, and you will hear a yes from two out of three of them. Social Security pays today an average of $1,184 a month, or roughly $14,000 a year, and for 7 million elderly Americans, Social Security is all they have. In 2000, the Social Security Administration released a report that found that without Social Security, 48 percent of elderly Americans would live below the poverty line. For so many, Social Security is literally the safety net keeping our elderly independent and solvent.
Social Security is loved by the majority of Americans who have made it the untouchable ‘third rail’ of American politics for 45 years.
That is, until President Bush came along. His call to create private accounts held by workers is more a product of his political theme of an “ownership society” than sound economics.
Social Security has been under fire for many years by Libertarians and Republicans alike for two reasons.
First, they believe that the payroll tax your employer (and you) pay into the system is an unjust taxation. Especially on the rich who don’t receive as much from Social Security (or need it) but still pay just like everyone else. They contend that money would go to you if it didn’t go to the government (an unproven, and highly unlikely situation) and that is, to them, an unjust interference with the market.
Second, Karl Rove and Co. want Social Security to die for the simple reason that it works so well. It really annoys them that Social Security is actually as solvent as it is … and that is why the calls for the privatization (or dismemberment) of Social Security are premature and falling on deaf ears.
The majority of Americans do not support changing Social Security when told the cost. That cost, nearly $3 trillion dollars, will have to materialize from thin air (perhaps from the same thin air into which Iraq’s WMDs disappeared) or a tax hike or a reduction in Bush’s tax cuts.
Since none of that seems likely, Bush is, again, pushing an unfunded mandate as an emergency for short-term political gain, all while never looking to the future that we, and not his own trust-fund-endowed progeny, will have to live in.
The further intricacies of Social Security are beyond the scope of this article. Keep a few things clear though when this topic comes up. Social Security will pay out nearly all of its obligations until we retire. To fix Social Security for nearly the next two centuries, one of two things could happen. You can raise the payroll tax by 1.89 percent (less than a percent to you and your employer) or we could take one-sixth of Bush’s tax cut and put it in the Social Security Trust Fund right now. Also, private accounts will not make as much of a return as Social Security does, and that’s from the Social Security Administration itself (4 percent back on your private account vs. 6 percent from the fund).
Making Social Security optional would also destroy it.
First, it’s class warfare of the highest order, since any American making more than $90,000 (the current cap at contributions) would simply leave. This would gut Social Security and, more importantly, ruin its special purpose as a social contract. Social Security pays the benefits earned yesterday by the workers earning today. If we switch to an optional system, current retirees will be burned badly, unless their benefits are guaranteed, something nearly impossible given our current fiscal situation.
Second, the best feature of Social Security is the character it gives our nation. If as Americans we truly believe we can show the world that our liberty is not simply a ticket to the horse race for financial Nirvana but an effort to build a country that recognizes that no one in the richest nation on earth should die a pauper, then Social Security is one of the pillars of American society that should remain intact.
Suffice it to say that gutting Social Security in favor of an untested, unlikely to succeed, and unnecessary innovation is just like our current administration.
Always going off half-cocked.
Rob Deters (rvdeters@wisc.edu) is a third-year law student.
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The Elephant is on a fact-free diet. Logic and reason are useless. Submit to the propaganda. Private good. Private gooood. Screwing old people so bankers can have another widescreen TV is compassionate. Repugs are the moral party. Christ said "sell all your things and give them to the rich"
Your right of course Rob, but what's the point of arguing? Bush has a 51% mandate to trash our country and invade as many countries as he wants. Next stop? Iran.
Is it drafty in here?
What Social Security crisis?
The one that Bush AND Gore campaigned on in 2000.
Your Social Security is an Interesting Scheme. I find it a bit Contrary to my Beliefs, but I can also understand that the Great Engines of Wealth in your Country are far more developed than they were in my Time.
What your Social Security does, which I find Highly Laudable, is to make the current workers Care for those Who Came Before.
Since the Highest Goal of Government is to let all peoples pursue their own ends of Life, Liberty and to Protect Property, I think it Interesting that you would Reward the Industrious with a Government Pension.
That Idea, in my day, would have been High Treason. Namely because we couldn't conceive of Adminstering Such a Beast.
However, your Social Security is very well run indeed. It seems your InterWeb, or whathaveyou, shows that roughly $2 for every $100 goes to Administration, the Rest to Benefits.
That is very Effecient, a Goal I Support.
Dismantling Social Security to Benefit the Rich sound very Suspect Indeed, and I Do Not Support It.
Once again, Your Republicans Trample on the Rights of Man...I Disapprove.
Locke, out
Wait, so it's not moral to hate queers and to screw over old people?
SS is the biggest Ponzi game the world has ever seen. This pyramid scam will eventually go bust, just like every other.
the answer to the question in your headline:
the crisis that clinton talked about in 1998. Back then, of course, nobody in the media questioned it.
http://www.washingtontimes.com/op-ed/20050118-093611-1435r.htm
This Washington Times editorial illustrates why the voters' distrust of the Democrats is not misplaced. The Dems are now out in force insisting that, in the words of Harry Reid, "we have no crisis" when it comes to Social Security. Yet in 1998, President Clinton was just as emphatic in affirming the existence of "the looming fiscal crisis in Social Security," noting that it would be "unconscionable" not to deal now with that crisis. The flip-flopping of the party's leadership over a fairly straightforward accounting issue is further evidence that the Democrats are not fit to lead.
1. "For so many, Social Security is literally the safety net keeping our elderly independent and solvent."
Social Security was never meant to be the sole source of income for retirees, but to supplement their savings. Instead, it has become a federal pension. Why must we support those who have failed to save for their retirement? One "problem" with SS is that when it was implemented, a majority of those who paid taxes never lived to retirement. Now nearly everyone does, which means the ratio of beneficiaries to payees has changed drastically from what it was 70 years ago.
2. "They contend that money would go to you if it didn't go to the government (an unproven, and highly unlikely situation) and that is, to them, an unjust interference with the market."
The employee contribution would certainly 'go to you' if it wasn't taxed by the governement. Where else would it go when one cashed ones paycheck?
3. Social Security is NOT secure. It WILL fail. To be sure, I don't think Bush's plan is the answer. Unfortunately, the most faithful voters are those who won't be around in twenty years to see the results. And those who WILL suffer (the current 20-somethings) don't vote. Maybe it's not fixable at all.
"Why must we support those who have failed to save for their retirement?"
Because everyone in this country deserves better. We deserve better than to die destitute and alone. Social Security is a safety net and important social contract that provides for the needs of all Americans, something fundamental to our Constitution.
Oh great, Deter is back. So your granny is poor...we don't care. Go learn something about the law.
And another thing, you are a complete idiot with your ridiculous and unsupportable assertions:
"Second, Karl Rove and Co. want Social Security to die for the simple reason that it works so well. It really annoys them that Social Security is actually as solvent as it is ... and that is why the calls for the privatization (or dismemberment) of Social Security are premature and falling on deaf ears."
Get a clue Deter.
-3L
"Always going off half-cocked.
Rob Deters (rvdeters@wisc.edu) is a (pathetic) third-year law student."
"Always going off half-cocked.
Rob Deters (rvdeters@wisc.edu) is a (pathetic) third-year law student."
Always going off half-cocked.
Rob Deters (rvdeters@wisc.edu) is a (pathetic) third-year law student.
Let's see...
In 4 years we are 5 billion dollars in debt. Massive deficit spending. Bush continues to maintain that tax cuts for the wealthy are good (even your hero Reagan reversed his tax cuts when they weren't working) But Social Security is a Ponzi scheme?
Here's a newsflash. PONZI'S SCHEME WORKED and so does Social security.
http://home.nycap.rr.com/useless/ponzi/
Did Deters redshirt his Freshman year at UW? What gives? I don't understand how he is still eligible to write columns. He's like the Jess Settles of the Badger Herald.
Deter and other liberals have the view that the government should be in control of your money and feel that you are too stupid to invest it yourselves. BS!!! The thing is that if you do not want to take on risk or do not feel you're financially educated enough to make investment decisions then you do not have to have a private account. But at least let the educated majority invest their social security in the bonds, mutual funds, stocks or where they see fit so they can maximize their money. While Bush's plan may not solve the social security problem, at least it promotes liberty, ownership, and choice rather than big government and bureaucratic decision making.
Some people ARE too stupid to invest it themselves. Not most, but some. And what happens to the guy who gets swindled out of it?
Where does the money come to pay him back?
Obviously the gov't could require certain standards be met by organizations seeking retirement investors.
How ironic, for years and years the left has been telling us that Social Security is broken and the evil right will let it die (while the left did absolutely nothing to fix it). Now that someone is actually doing something to bring it into the 21st century, the left tells us there is no problem. To one who has a memory (and attention span) greater than that of a gold fish, it really makes the leadership on the left look like a bunch of fools.
Oh, BTW, Rob, there is no such thing as the "trust fund" it does not exist, it is a figment of the imagination (in other words, a buzz word lie propagated by the left).
The way to fix SS is not to raise taxes, that is VERY regressive. By putting a portion of the SS tax into private accounts (not all) two things are accomplished. First, each individual controls part of their own destiny (they either pass or fail) and there will still be a safety net for those who do not succeed. It also prevents Congress from getting their hands on the private portion, which will do more to save SS than anything anyone could ever imagine doing.
Perhaps you should check out the city of (I believe) it is Galviston TX. They opted out of SS in the 80s (when it could still be done), put in the equivalent of their SS deductions and have a retirement system far more valuable than it would be had it been is SS. Of course, the left does not want to hear such news.
If myself and ten of my neighbors decide we'd like to retire one day can you tell me what the difference is between each of us saving for ourselves, or the ten of us putting our money in a common pot?
Socialists use mysticism to decieve people into believing that something magical happens to money when there's common ownership. I much prefer MATH to magic. Personal retirement plans have been around for years, and they work.
Bush didn't invent SS Reform, he's answering the call of the people. The retirement revolution began with the end of the defined benefit pension and the advent of personal retirement accounts such as IRA's 401(k) SEP SIMPLE and other personal plans. The third rail notion evaporated when people began to see the kind of returns they could get on their own when they invested in safe, secure, long term plans.
State and Federal Workers already have the kind of plans Bush is proposing, so it's either ignorant, or disingenuous to assert that the plan is untested.
However, there's no better test case than Galviston Texas which opted city workers out of SS before a 1983 law closed the loophole that allowed qualified groups to opt out. Their average benefit is $4,000 a month, and they've enjoyed 10% increases every year for two decades.
It's desired. It's already well tested. And it's time.