Since more than one person wants to talk about it, I thought I'd open a thread.

My own opinion is that it makes no sense to look at Social Security independent of Medicare and the overall Federal budget. It seems to me especially silly to look at the mythical day the trust fund will be exhausted, since that date is muchly preceded by nearer D-Days--when Medicare becomes unmanageable, and when repayments of debt to the trust fund eats the Federal budget.

So, the floor is open, for thoughts, plans and debate.

Judy, you once posted some excellent reading for me on the subject. I've long since lost the links, but if you still have them, they are good overviews, I think.

The socialist that I am--I trust people here are educated enough to understand I am talking FDR socialism--I think the cap should be removed on contributions, and means testing be employed.

Now please tell me why that is stupid.



Thanks.

Bee

Not stupid. But you would have to admit then that all the system would then become for those "means tested" is an income redistribution device operated solely by thegovernment through coercive agencies.

Come to think of it, that might not actually be a bad thing. Honesty in government as concerns income confiscation.

Rather I would see them replace what is currently on the books with a system (if we must have one) that is both actuarily sound and economically affordable. Which could be a contradiction in terms. Or else admit that some form of social security system is simply one more government run, taxpayer-funded, income distribution/guarantee, entitlement and place it squarely on-budget as a line item, and cease this farce of it somehow being different from the rest of the budget, with terms like "trust fund" and "lock-box" and "contribution." It's a tax to fund a tax-supported welfare program that has accreted far more to it than ever originally intended simply because our government could do it with impunity during the "days of wine and roses" but now that we're down to "beer and pretzels" is in serious need of revision before we get to "tap water and small pebbles to suck on."

Rant mode/off

It all goes into the same pot. A pot with more people taking out than putting in. We can either put more in or take less out. You can slice it a lot of ways, but the basic problem is how to manage those two choices. What is the balance?

I see the basic political problem is that the decision is made more by the people taking out than the people putting in. If they can exptrapolate the pot running empty after they're dead, what do they care?

I used to hit the max, then when I started collecting I also hit a max. Why whould I pay more for my "retirement fund" than the next guy? That's what you get when you take off the contribution caps. Besides, caps have moved way up over my 45 years of paying in.

Russ,

I like beer (you can keep the pretzels), and I told you I was a socialist. I agree we should juat call it what it is, I think in Canada they call it "old-age pension" and be done with it. I think if pressed, most people would want to help out the elderly workers who through lack of earning potential or misfortune, needed it.

The alternative is awful.

Bee, simply lifting the cap and means testing are no-gos for several reasons.

First, it wouldn't generate anywhere near as much money as you think, since the FICA tax applies only to wages and income from self-employment. As you go up the income scale, less and less income (as a percentage of total income) comes from sources subject to the FICA tax. More comes, instead, from stock options and investments.

Second, it would make the FICA tax far, far more progressive than is the income tax. Already, while it's "regressive" when viewed as its impact on yearly income from work, it's very "progressive" when viewed in light of return received in retirement compared to the amount paid in over a lifetime.

Social Security benefit amounts are now calculated on a sort of "sliding scale". Yes, it's weighted so that absolute dollar amounts of benefits go up based on earnings toward the end of one's working life are always higher (up to the cap) as those earnings go up, but they don't go up in proportion to the amount paid in. The scale is instead tilted so that someone someone at the bottom of the income scale gets more in benefits, proportionately, than the better off. And then, there is the cap on maximum benefits. Already, those with higher incomes get screwed on their benefits compared to the less well off. Were the cap on FICA lifted but the cap on benefits left in place, SS would become shockingly unfair to the well off, making income taxes look flat by comparison.

As for means testing, that would be resisted to the death by present and near retirees--by most people over forty. Such folks are deeply, deeply invested both financially and emotionally. Financially, they've paid bunches of money into the system, and emotionally, they've been lead to believe that all that money they've paid in has been "saved up" in order to pay them benefits, especially since Reagan's 'reforms' in the early 80s. Rightly or wrongly, if they don't receive the benefits they've been led to expect, whether by means testing or through dissolution of the program, they are going to be furious beyond belief, postive that huge amounts of money have been flat-out stolen from them.

The above factors are what make any sort of reform so politcally difficult. It's not called the third rail of politics for nothing!

Because you had a good life and someone else didn't?

Because you are a really nice guy underneath all that hard exterior?

Because there but for the grace of God, go you?

I dunno.

Why not?

!!!

Nicely put!

So have the tax rates. In reality bee is just for another tax increase. Mentioning FDR ought to be balanced by also stating the original tax rate.

At some point you can no longer keep raising tax rates. A fact bee overlooks. You could keep raising the retirement age so more people get completely screwed, especially men who already live a shorter lifespan on average.

How "fair" is it that a CEO makes 100 times what the lowest paid employee does? Who says life is fair? If life were fair, we wouldn't need Social Security. It seems to me life is "more than fair" to the wealthy. They certainly can afford to give a little back to the people and the country that made it possible. IMHO.



I can see that.



I guess a massive re-education program is in order. People need to know what Social Security is and what it is not. It might actually encourage folks to save more and make it a lot less contentious.

Not really, AV. I am for those in need it to get it, and those that don't, to quit whining. I am not for "ever-increasing tax rates" I think those that can most afford the "charity," socially imposed as a "tax," to pay up. I am for people to quit looking at it as a retirement "benefit" and restoring it to it's original purpose. A safety net.

You dunno what? If you buy a whole life policy at a similar age it costs the same and it pays the same.

No you try and make a case why I should pay more than the guy that made 20 grand less, and turn around and he collects the same as I do. Go ahead, make a case.

Because you can make 20 grand more and he can't.

Yes, SS rates have gone up tremendously.

Something else people may not notice is all the "little things" income tax deductions that have been gradually dropped over the years, thus actually effecting tax increases.

He did just fine, though, not a hardship case. There's no basis for that.

You didn't say that.

If you both did "just fine" then give it away to someone who didn't.

It was never intended to be money for people who were doing "just fine."

It was meant to be a "safety net"

Do you really think a guy who makes 20 grand less than someone who makes 70 grand is a hardship case.?

What I give away is my biz, not the government's.

Maybe when the tax rate was 2%. Expectations change as it goes up six fold. If people are going to pay a lot more in, they will want a lot more out. Because the payment for that "safety net" comes out of money they could be investing at a much higher rate of return.

The money they put in isn't even a safety net, just a promise of one.

Even at that a safety net isn't expected to be living half way high on the hawg.

The main problem I see with socialist programs is that as they increase people expect more and private sources dry up. Why should WAl-Mart provide health ins and retirement if the government provides more welfare and better SS benefits? We just went over a million on our state health program and my guess is a lot of that is because if it's offered by the state private employers will offer higher pay rates as opposed to better medical benefits. Same with retirement.

Transplanted from the other thread:



Hu, that's what I meant by "can't be looked at independent of the total Federal budget".

Claims about THE PROGRAM being able to pay full benefits until 2053 (and similar dates) are based on the assumption that all the money "borrowed" (ha!) from SS can be repaid from the general fund--that is, from income taxes.

Unfortunately, even assuming that all non-SS spending is locked in at pre-Bush levels--that is, non-SS spending doesn't go up by one more dollar--we end up with the absurdity of having both SS spending AND more than half of all other government spending (read, income taxes for simplicity's sake) going to repaying what's already been borrowed.

Bottom line is, paying for it twice, once through the FICA taxes we've already paid (and still would be paying) and a second time throughour Year 2053 income taxes.

It's a non-starter, hu, especially with our non-SS debt and deficits going through the roof, too.

No. I agree.

Bee, get grip! You can only eat the rich so much!

Sometimes, I think your goal is to return to the tax structure before Kenney came into office and reformed it, when the tax rate on incomes over $1,000,000 was 90%.

The rich are doing better then ever Judy.

The pendulum swings.

I have quite a good grip.

Take a drive through Manhattan. Do yourself a favor.

Kewl.

OTOH a person who goes on SSI with a disability only collects between $550 and $600 per month. That ain't so great either.

Max for the fiscal year just ended was $564. In most places, this also makes you eligible for Medicaid and at least partial food stamps, possibly some housing assistance though the waiting list for that is years long.

What's wrong with a "Chevy"-level type of guaranteed health care coverage, independent of employment, financed through regular taxes, available to all? It would make the playing field for startups and small businesses, compared to larger businesses and corporations. The higher pay would result in higher income taxes which could finance the very same benefit.

Oh, and Bart...

SSI is also asset-based; you can't get it till you've liquidated assets exclusive of a home down to $2,000.

(Remember SSI and SSDI are two different things. SSDI is based on what you've paid into the Social Security system, calculated as if you had reached age 65. SSI is a pure anti-poverty program, independed of if/how much you've paid into social security.)

Even the larger companies are gradually increasing the employees' share of health insurance premiums. Our latest contract takes it up to 50% over a 4 year period.

I'm not against a guarantee of some level of healthcare. Especially one that includes some catastrophic care provisions. Of course with a fixed level of healthcare workers something will have to give.

Getting the catastrophic cases out of private plans and into a government pool (where they end up eventually anyway) is a 'Edwards/Kerry' plan. A very good one, too. One of the reasons, I believe, that we agreed on Edwards. He may be a 'tort lawyer' but he does seem to have a good plan to get kids covered, and rates lower for everyone.

Maybe a bit of stability. Wow.

Bush is semi-open about his goal of shifting away from employers as the primary source of medical insurance, period.

Though it's VERY worth noting, and seldom mentioned, that between Medicare A&B and the Medicaid program and CHIPS, the Federal government is already far and away THE single biggest "insurer" of Americans.

And I notice we're drifted off into discussion of health care, which as I noted is an important element of the whole SS/healthcare/aging question.

Medicare is the first domino.

Uh huh. Many seniors I know "receive", as a practical matter of dollars and cents, more money from Medicare and Medicaid than they do from SS. Just don't count it, cause it goes straight to docs and hospitals instead of into their pockets.

Yep. A lot of elderly jaws drop when I tell them my monthy insurance payments.

Oh, yeah, Bee, you asked for a "facts" site, and I forgot to answer.

Try http://publicagenda.org/issues/frontdoor.cfm?issue_type=ss for SS info, and http://publicagenda.org/issues/frontdoor.c...=federal_budget to look at the proportion of Federal spending going to SS and Medicare.

(And don't forget that more than half of Medicaid goes to the elderly, as well. Though many more children than elderly are enrolled, the dollars go disproportionately to the older, because of course they tend toward sicker.)

Thanks Judy, I'll review, I remember them as being 'real eye-openers.'

I'm not sure that's the same site I gave you before. I think I may have given you, once upon a time, a link to the "Grandfather Pages", a facts site that was run by an old fart concerned about his grandkids future. That site is now, I've heard, defunct, as the older gent who ran it finally passed on.

Private medical insurance used to primarily be catastrophic coverage. If you ask me, part of the going-to-hell started when everything started becoming "insured," even when services covered did not entail "risks spread" but rather ordinary maintenance items.

I'd venture to say that most of what is talked about as "health insurance" is about insurance. And everyone wants someone else to pay.

Now that's a doggie that won't hunt.

Well so far it's Insurance $8,000/Me$12,000+$5,000deduct/not covered.

I think the Insurance companies are doing just fine in my case this year.

$13,000 might not be "catastophic," but it's probably an average operable/curable infection/disease. It is certainly enough to sink someone like me, if you factor in lost wages, as well.

I think of "catastrophic" as $1,000,000 or more, like my nephew and Biggie's granddaughter.

What do you consider "catastrophic" and where would you draw the line for 'insurable' situations?

You have a business. Insurance should be part of your operating costs.

Are you sure that's allowed if you're your only employee? I thought that otherwise, it's just deductible from your profits as a medical expense.

Or did that not go through?

Oh, the insurance companies are making out like bandits all around. But the population fundamentally misunderstands what "insurance" is, misuses the concept and misapplies the term. (I meant to say "I'd venture to say that most of what is talked about as 'health insurance' is NOT about insurance" above.)

But no, $1,000,000 was not the limit for "catastrophic." More like .... prob'ly $20K. The big ticket items -- diseases or surgeries -- outside the check-up, test, run-of-the-mill visits and treatments. We run all of that through insurance companies now, so there is their profit and the payments for the insurance billing people stuffing every doctor's office these days.

Medical expenses are equating to 16 percent now of GDP. A year ago when I wrote that sentence it was not quite 15.

Yowza.

Medical expenses should be straight-out tax-deductible. That would be one huge bit of progressivity right there.

I have to admit I've wondered (and I'm not advocating it, mind you, just thinking about it) how many earaches, cases of the flu, sprains, backaches, migraines, bumped heads, fevers and such would end up in doctor's offices and emergency rooms if insurance didn't pay.

I've noticed that the uninsured, though they take it to the extreme, are considerably more conservative about when they think they "need" a doctor, and in particular, about when they need a real emergency room instead of an urgent care clinic. And how they tend to regard a great many "emergencies" like bronchitis as things that can wait till a cheaper doc in the morning.

We used to have a loophole like that in our coverage. Emergency room treatment was paid at 100%, so lots of people waited till after hours and took their sick kids, etc to the ER. It didn't take long for them to catch on to that trick.

You get thick into laws of unintended consequences here. Uninsured tend to put off regular treatment (whose cost schedules are all now at exorbitantly fattened rates -- and even higher for the personal direct payer!!) and end up with more costly illnesses at those emergency rooms.

It seems like a "damned if you do; damned if you don't" but there has to be a saner way around & through it than the crashing course we are currently on. I just do not want to see one-fifth of the nation's resources go to the medical industry. Like other things, it's a necessary evil, but not to be unnecessarily fattened and not a 'good' in & of itself if you have choices. And speaking of choices, there are all those examples out there of countries who spend fewer dollars and get better results. I can't but think this is one "reality" that will affect opinions to the extent it becomes known.

Maybe.

Heh, jumping fora. Article noted elsewhere:

"The Folly of Social Security Privatization"

http://www.motherjones.com/news/dailymojo/.../08/08_518.html

"...It's not as if the current system is in crisis, either, despite what conservatives claim. The most recent analysis by the Congressional Budget Office found that, even if no changes are made, the program will be able to pay full benefits to its retirees until 2053. If the country can turn its economy around, and wages start growing faster than inflation, than the outlook for Social Security will continue to improve -- since payroll revenue will rise faster than benefit payouts, which are index to the cost of living. With 50 years to go, there should be plenty of time to patch up the program in a fairly painless manner -- Peter Diamond and Peter Orszag outlined one such solution in Boston Review earlier this year....."

Ma'am, as you describe it, it is not a problem with SS, but rather with the financial raping of SS. The problem is the deficit. And creating real growth in the American economy again.

The CBO is generally considered to be the least of the political evaluations of such matters. The crisis is less about SS funding than the trashing of the SS surplus. To mask the deficit. The deficit will be sooner be a formidable issue than SS.

That said, in 2053, I'll be 103. If alive - doubtful- I'll vote down anyone who's killed SS.