SS Trust Fund

February 10, 2005 7:30 AM

Yesterday President Bush said,"Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent." Is he advocating that the US default on its Treasury bonds?
posted by Sixtieslibber (115 comments total)

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. We're on the ultimate pay-as-you-go system -- what goes in comes out. And so, starting in 2018, what's going in -- what's coming out is greater than what's going in. It says we've got a problem. And we'd better start dealing with it now. The longer we wait, the harder it is to fix the problem.

No, this seems like a fair representation of the problem to me. We have this problem in Canada - a common public perception that there's a fund of pension money, while the reality is that workers are bankrolling retirees and changing demographics will make it impossible to maintain the existing system.
posted by orange swan at 7:37 AM on February 10, 2005

So it seems. They'll argue that its not defaulting; how can you default on yourself?

I've worried for awhile now that this is his motivation- to use the trust fund to pay for the tax cuts.
posted by gsteff at 7:38 AM on February 10, 2005

it's a very fair representation. now, who is it that keeps spending that money and sending us into record deficit? oh, that's right.
posted by es_de_bah at 7:48 AM on February 10, 2005

No, that's actually a genuine description of the system. Your SS money isn't deposited, it's used to support retirees. Then when you become a retiree, you are supported by the next generation of workers. It's quite factual. I'm not saying that Bush won't default, but it doesn't seem like that's what he's saying here.
posted by unreason at 7:50 AM on February 10, 2005

Ok. Then fix the problem. Don't create another problem that will actually cost more over time than the initial problem it was supposed to fix though.
posted by Arch Stanton at 7:53 AM on February 10, 2005

There is no trust. ... between this administration and half its citizens, between parties, between generations ...
posted by R. Mutt at 7:53 AM on February 10, 2005

Please read and dwell upon this section of the 14th Amendment. Then think of what the president said up on that platform in front of the capitol on inauguration day, and connect the dots.

4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned . . .
posted by raysmj at 7:56 AM on February 10, 2005

Well, supposedly when the babyboomers tarted to enter the workforce, more money was taken by SS then was needed to pay for the current crop of retires.

The idea was, since the babyboom generation was so large, it was going to need to help pay for itself.

This was the social security trust fund. Anyway, the government spent all that money, plus billions more it didn't even have.
posted by delmoi at 7:57 AM on February 10, 2005

Remember how the lying right wing media and the wing nut pundits ridiculed Al Gore whenever he recommended a "lockbox" for Social Security funds that were accumulating?

Man, wouldn't it be nice if his idea had been implemented?

Remember during the 2000 campaign season how Dubya PROMISED to put 2.4 trillion in Social Security funds in reserve to assure its solvency?
Is he a bald faced liar or what?
And don't give me that bullshit line about 9/11 "changing everything!"

Privatize profit, socialize risk.

Exploit confirmation bias and cognitive dissonance for corporate profit. F*cking stupid lemmings. There's more than one born every minute Mr. Barnum!
posted by nofundy at 8:00 AM on February 10, 2005

Talking Points Memo has a good breakdown of this issue. Apparently, we buy government bonds with the trust fund money which of course funds expenditures elsewhere in the budget. One part of the government borrows from the other. If so, then Bush is correct in saying that from an overall government point of view we are pay as you go. Will there be a push to default on the trust fund owned bonds?
posted by caddis at 8:02 AM on February 10, 2005

The TPS discussion on how the fund works is here.
posted by caddis at 8:06 AM on February 10, 2005

Yeah, some people do seem to think there's a trust fund.

More scare tactics, and nothing to indicate that he has a solution, just attempts to push more money into the stock market. There have never been any problems with using that as a place to park your retirement money.
posted by mzurer at 8:08 AM on February 10, 2005

Here's the kicker: People are still paying extra payroll taxes up to $90,000 of income into the trust fund.

If Bush really doesn't believe that the trust fund exists, then why are we still paying more into Social Security than it needs?

Either he is fibbing about the trust fund not existing, or he is planning to steal our retirement money.

A liar or a thief, that's our president.
posted by nathanrudy at 8:10 AM on February 10, 2005

If we are going to push money into the stock market I would rather see trust fund money go there than individual retirement accounts. That leaves the risk of failure on the government not the individual. If we leave it with the individual and they invest poorly how will we handle that?
posted by caddis at 8:11 AM on February 10, 2005

I think President Bush is doing the right thing. Also, since when is a proposal to privatize/change 6% of something radical?

This is more of the same stupid liberal paranoia.
posted by ParisParamus at 8:16 AM on February 10, 2005

Please explain 6%.
posted by caddis at 8:17 AM on February 10, 2005

This whole I Hate Bush thing is really tired. What would you do to save social security (or at least reasonably assure its future existence?

While it's true that the problem is not as extreme as some have represented, there is a problem. And to answer your question:

http://www.startribune.com/stories/587/5176291.html

"At present, all wages up to $90,000 for each individual are subject to a payroll tax. The worker and the employer each pay an amount equal to 6.2 percent of the worker's wages to Social Security.

Four bills now in Congress would allow younger workers (in most cases, those younger than 55) to divert part of their payroll taxes into individual accounts that would be invested in mutual funds. The workers would draw on the accounts during retirement and, under most plans, could leave the unused value to their heirs.

The size of the diversion ranges from 2.25 percent of wages in one bill to 6.4 percent in another.

The Associated Press reported last week that Bush was closing in on a 4 percentage point plan. The White House has since reiterated that it has not embraced any specific level."
posted by ParisParamus at 8:33 AM on February 10, 2005

Personally, I would favor raising the aforementioned $90K ceiling, and making the whole system needs-tested. But your (your in the plural) hatred needs to go, or find its way to a therapist's couch (or chair).
posted by ParisParamus at 8:37 AM on February 10, 2005

nofundy, 9/11 changed everything. Accept it.
posted by loquax at 8:41 AM on February 10, 2005

Man, wouldn't it be nice if [a Social Security lockbox] had been implemented?

No. How would the economy support the outflow of billions (trillions?) of dollars each year that don't go anywhere?
posted by yerfatma at 8:54 AM on February 10, 2005

There is a trust fund, as Talking Points Memo explains (see earlier link). In the early 1980s, the Reagan administration spearheaded changes to Social Security, including a large increase in the payroll tax, so that Social Security would collect more money than it needed for 25-30 years. That money was invested in government securities, and was intended to help pay for the Baby Boom retirees, when the system would not take in as much payroll tax as it needed to pay promised benefits.

The system, as redesigned 20+ years ago, is supposed to start drawing off these savings in the next 10 years or so, and continue doing so for about 30 years. Everyone who pays Social Security taxes has been building up the trust fund to advance pay for everyone's Social Security needs in the next few decades.

That said, it's important to recognize that there is no personal trust fund. Your payroll taxes today pay for today's benefits, and to build the trust fund for everyone's use in the next few decades. The program is a safety net to try to keep old people from being homeless and hungry, not a personal retirement scheme.
posted by mdeatherage at 8:55 AM on February 10, 2005

Paris, it is a radical change as it moves the risk to the individual. What will happen to those folks who invest poorly and lose all of their money? Who will take care of then? That is my fundamental issue with these changes. Essentially, it moves the system from a defined benefit plan into a defined contribution plan. That in itself is a pretty big change because if the investments do poorly the retiree makes do with less, and the current benefit is not very high. As a lawyer I am sure you are living at a standard far above that of the typical SS pensioner. More radical than the shift from defined benefit to defined contribution is the shift in investment oversight from the plan administrator to the individual. We are the land of individuals no doubt but this fundamentally changes SS. Someone who works their whole life is no longer guaranteed a small pension that at least keeps them above the poverty line.

For the well to do this change would be great news. Under the current system as costs grow there will be more pressure to implement means testing. Even you are advocating that Paris. With individual accounts it will be well nigh impossible to implement means testing, at least on the payout.
posted by caddis at 8:55 AM on February 10, 2005

The simplest way to solve any problems with Social Security is to *eliminate* the ceiling. Let Bill Gates pay in as big a percentage of his income as I do and the system will be stable for the next thousand years. The fact that SS is the single most regressive tax in existence is the root of the problem, "solutions" that do not address this are not based in reality.

ParisParamus: The problem with private accounts is a) the multi-TRILLION dollar transition expense, b) the fact that its a huge giveaway to stockbrokers, and c) the fact that the stock market sometimes goes down as well as up.

Then there's the "clawback" provisions of the various privatization proposals which render fictional the notion that the accounts are actually personal or private, etc.

Many people, including me, are seeing a repeat of the prelude to Bush's War (that is, an unrelenting chorus of lies and exaggerations about the impending crisis). The government lost whatever credibility it might have had when it cried wolf about Iraq. It was either lying or wrong then, why should we believe it now?
posted by sotonohito at 8:58 AM on February 10, 2005

Also, since when is a proposal to privatize/change 6% of something radical?

Using your numbers of 2.25 to 6.4 percent of wages for diversion, that is between 36% and 103% of an employee's current contribution Bush wants to put into private accounts. Most people would consider that a radical change.
posted by JackFlash at 8:58 AM on February 10, 2005

One thought on 6% being a radical change. To demonstrate that 6% can be quite radical let's try a simple experiment: ParisParamus we can quite easily increase the amount of insulin in your blood by 6%. Since 6% can't possibly be radical a radical change that means there's no possible way it can hurt you, right? Or, if you don't think that is a good enough example, we could replace 6% of your blood with blood of a different blood type. Either way, I'll bet the results would be "radical".
posted by sotonohito at 9:01 AM on February 10, 2005

I thought the rule of thumb was one trillion to change 1% of social security funds to privitization. Does that mean the cost will be between 2.4 trillion and 6 trillion, with the president maybe settling on 4 trillion?

And, that doesn't actually fix the problem. Raise the $90,000 barrier to $200,000, decrease benefits, raise the age at which people can collect, and you make the program solvent for generations to come.
posted by Arch Stanton at 9:05 AM on February 10, 2005

GEORGE:
"No, but you...you...you're thinking of this place all wrong. As if I had the money back in a safe. The, the money's not here. Well, your money's in Joe's house... that's right next to yours. And in the Kennedy House, and Mrs. Macklin's house, and, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?"
posted by koeselitz at 9:06 AM on February 10, 2005

But wait!

Didn't Saint Raygun and Lord Greenspan fix Social Security by creating this large trust fund that could be tapped as baby boomers retired??
Who does Bush think he is messing with Saint Raygun's wondrous creation?
Does Lord Greenspan know about this heresy?

Smells like someone is lying again and it has a Bush stink to it.
posted by nofundy at 9:11 AM on February 10, 2005

This is more of the same stupid liberal paranoia.

yeah, same as when the paranoid liberals said Iraq was going to be very messy, not the cakewalk neocons liked to describe.

oh, and PrincetonParamus is the same economist who said, here, that "the War in Iraq is going to pay for itself in lower oil prices".

just sayin'
posted by matteo at 9:16 AM on February 10, 2005

The war will pay for itself. It's just that your attention span and patience were formed by MTV and video games.
posted by ParisParamus at 9:19 AM on February 10, 2005

I like the Let Gates Pay To Idea mucho. And, to be quite candid, even if what the President is proposing is a good idea, I also think its motivated by Wall Street to an inappropriate degree.
posted by ParisParamus at 9:20 AM on February 10, 2005

From this article:
At his rallies, the crowds cheered his words against terrorism as though it were a nostalgic re-enactment of his campaign, and then fell into befuddled silence.

His convoluted explanations on social security were so confusing that Bush confessed: "Does that make any sense to you? It's kind of muddled. Look, there's a series of things that cause the... like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate ... the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those ... if that growth is affected, it will help on the red. OK, better? I'll keep working on it."

Adds nothing to the social security debate but then that's your problem, I'm just giggling at your funny president.
posted by dodgygeezer at 9:24 AM on February 10, 2005

The simplest way to solve any problems with Social Security is to *eliminate* the ceiling. Let Bill Gates pay in as big a percentage of his income as I do and the system will be stable for the next thousand years. The fact that SS is the single most regressive tax in existence is the root of the problem, "solutions" that do not address this are not based in reality.

Bingo! that's all that's needed. Even just doubling the ceiling would keep it solvent for over 100 years i've heard.

And i've heard Bush isn't even presenting his plan to Congress--he knows it's dead on arrival.
posted by amberglow at 9:29 AM on February 10, 2005

Oh, okay, so according to the arguments and linked materials here, it's not a fair representation, which means either Bush is lying or he doesn't know what he's talking about. Or both.

Frankly, I'm afraid for you USians.
posted by orange swan at 9:32 AM on February 10, 2005

Robert Reich explained it quite well on Marketplace. [note: commentary is RealAudio]

Leftys beware: what Reich says may make you even angrier. I needed to beat my dog for about an hour last night to vent my rage.
posted by Human Stain at 9:33 AM on February 10, 2005

Correction: Leftys and fiscal conservatives beware.
posted by Human Stain at 9:34 AM on February 10, 2005

I know it's off-topic, but I must ask - ParisParamus, please explain exactly how the war is going to pay for itself.
posted by kyrademon at 9:37 AM on February 10, 2005

My understanding of this is that the government intends to only allow investment in specific funds. I had concerns over this idea as it seemed - originally - that the idea was simply to allow people to take a certain percentage of their SS and invest at will. This would fail miserably as the lower income folks and those that use check cashing services would either have no interest in investing, be extremely poor at it or simply not have the resources available to do it.

If it is the case that the funds are targeted, it does suggest some sort of a safety net. I'm not sure how it deals with the problem of people who refuse to use any banking institutions (and by way of that, would probably also be reluctant of any involvement in a government institution).

All in all, it is a good step to get more of our money back in our hands. I'm all for that (remember...it's YOUR money). The concept that Bill Gates would throw more of his money into SS is probably not realistic. Why would he want to give anymore to the gov't than they get now, unless there was some significant tax advantage.
posted by j.p. Hung at 9:41 AM on February 10, 2005

I'm sure that eliminating or doubling the ceiling will have no consequences whatsoever.
posted by trharlan at 9:43 AM on February 10, 2005

It's just that your attention span and patience were formed by MTV and video games.

...both products of a corrupt system you appear to worship fawningly.
posted by quonsar at 9:44 AM on February 10, 2005

Face it, the real issue is that Bush just doesn't want to give the Social Security surplus back, and this his way if trying to accomplish it.

Yes, there is a problem many decades down the road that can be addressed with minor changes -- but Bush wants radical surgery, because he's not interested in simply solving the problem. He wants the "conservative New Deal," as Stephen Moore of the antitax-obsessed Club for Growth puts it.

Why should we believe any numbers this administration puts out? They lied about the cost of the Iraq war. They lied about the cost of Medicare drug benefits. Why believe them on the subject of Social Security?

The war will pay for itself.

I have a perpetual motion device you may be interested in purchasing.
posted by pmurray63 at 9:46 AM on February 10, 2005

Why would he want to give anymore to the gov't than they get now, unless there was some significant tax advantage.
He already gets significant tax advantages--all wealthy people do. Even the Social Security cap is a tax break for rich people.
posted by amberglow at 9:47 AM on February 10, 2005

The war will pay for itself. It's just that your attention span and patience were formed by MTV and video games.

So, how much should we pay each of the widows and children of dead soldiers?
posted by odinsdream at 9:54 AM on February 10, 2005

How will the war pay for itself, PP? In lower oil prices?

Let's take a look. From about 1930 on the price goes up. That giant mountain near the right side is the Iran/Iraq war. Lop that part off. Hmmm. Trend is still up.

Iraq might hold 11% of the world oil reserves. When will it get to market? Five years from now? Ten? If Iraq remains in OPEC, will that group let production drive prices down?
posted by mzurer at 10:01 AM on February 10, 2005

Meh. Sorry for following the train off the tracks.
posted by mzurer at 10:03 AM on February 10, 2005

I don't expect SS to be there for me when I retire. While I'm happy to foot the bill for those who need it, too many don't and still receive benefits. They outta opt the hell out. If I could use my contribution to support those who aren't on the golf course all day or cruising Arbuba with black socks pulled up to the knees, that'd be fine.
posted by moonbird at 10:03 AM on February 10, 2005

For ParisParamus, denial is a river in Greater Israel.
posted by liam at 10:08 AM on February 10, 2005

We should also look at not giving SS to wealthy retirees.
posted by delmoi at 10:17 AM on February 10, 2005

ParisLogic: "Sure, my son died horribly, but by 2020 I'll be paying less in inflation ajusted dollars for a tank of gas! It'll be a real help too, since without social security, I'll be destitute!"
posted by delmoi at 10:19 AM on February 10, 2005

What in the name of Jezzuah does this have to do with defaulting on Treasury bonds? The US has the most stable long-term debt in the world and even Bush wouldn't dare turn our economy into a 3rd-world debt system.

Stop being ridiculous.
posted by thedevildancedlightly at 10:29 AM on February 10, 2005

My understanding of this is that the government intends to only allow investment in specific funds.

Including Treasury bond funds.

(if you don't find this funny-sad, you're Bush's target audience.)
posted by riviera at 10:34 AM on February 10, 2005

even Bush wouldn't dare turn our economy into a 3rd-world debt system.

Stop being ridiculous.
posted by thedevildancedlightly at 10:29 AM PST on February 10


Only if you stop being gullible and blindly trusting of Dubya first. Here's what he said yesterday:

"The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust."

Now read the links above once again. The SS says there is a trust. Bush is saying he won't honor the trust. Where's Gore's lockbox now that the foxes are in the hen house?
posted by nofundy at 10:58 AM on February 10, 2005

>Your SS money isn't deposited, it's used to support retirees.

Um, no. Starting in 1983 the payroll tax was raised so SS was taking in more money than it was paying out in benefits, the excess being invested in US government securities (the "trust fund").

US government securities are an obligation of the government to pay sums in the future. They are considered the safest investments possible, since the government has taxing power, and so it can always honor those obligations if it has the will to do so.

The Republicans are now saying they intend to default on those securities.
posted by grytpype at 11:05 AM on February 10, 2005

> What would you do to save social security (or at least reasonably assure its future existence?)

Short answer; Vote Democrat. SS does need to be "saved" from the Republicans who are trying to destroy it.

Long answer: If the economy is going to grow as strongly as the privitizers say it will, then we don't need to do anything because SS will be solvent forever. If not, then raise payroll taxes (maybe by raising the FICA cap) and/or cut/delay benefits until SS is as solvent as you want.

What not to do: add trillions to the national debt so we can have "private accounts" that do not improve SS solvency.
posted by grytpype at 11:14 AM on February 10, 2005

THERE IS NO TRUST--obviously.
posted by ParisParamus at 11:18 AM on February 10, 2005

Personally, I would favor raising the aforementioned $90K ceiling, and making the whole system needs-tested.

I agree with ParisParamus here. Possibly in concert with a slight overall rate reduction (maybe to 10-11% total, still split 50/50 between employer and employee). Has anyone heard a better idea for closing the eventual gap?

I think it's important to draw a distinction between privatization and the coming income/payout deficit (the "crisis"). They really have nothing to do with each other: privatization in no way addresses the deficit. In fact, it makes it worse. If anything about Bush's treatment of this situation angers me, it's his disingenuousness in regard to this fact.
posted by mr_roboto at 11:24 AM on February 10, 2005

And here's the thing that really bothers me: is anyone in government actually addressing the problem? It seems that the Democratic solution is to ignore it (an acceptable position for an opposition party faced with nothing but bad ideas, I'd say), while the Republicans favor more government debt. Great. More debt. Just what the dollar needs. Just what interest rates need. Bush is hell-bent on making the Euro the de facto international reserve currency, it seems.
posted by mr_roboto at 11:29 AM on February 10, 2005

It is only a lock box in terms of commitment. With the money in T-Bills that money just represents a promise by the government to pay in the future, we don't have the money yet. Since we are going to pay the SS benefits I do not think he is advocating breaking into the so called lock box and I am pretty sure doing so would require statutory change, any proposal of which is sure to be DOA. I think this is just Bush's way of saying we don't actually have money in our trust fund, merely IOUs from ourselves.
posted by caddis at 11:35 AM on February 10, 2005

Many of you have this half right. Yes, the money was taken into the SS trust fund in excess of its expenditures. But this money was invested in US Treasuries. The government promptly spent that money on other expenditures (mainly the military and Medicare). So this trust fund is now holding US Securities that will pay for the future. Those securities HAVE worth. They can be redeemed. But where does the government get the money to pay back the Treasuries? The federal government has only one way of making money. *Income Taxes.* And lets not forget that the gov is running a huge deficit right now, without the added expense of paying back the trust fund. What that means is that in 2018, the federal government is going to have to SHARPLY hike income taxes to cover both the lost extra money it was getting from selling treasuries to the trust fund AND to start paying back the trust fund as it redeems them to cover it's obligations to retirees. In other words, we're spending WAY too much right now and leaving ourselves with pieces of paper that say we have to tax ourselves in the future to pay them back. Another way to look at it is that this generation is screwing over the next financially, and most people don't even know it.
posted by zwemer at 11:46 AM on February 10, 2005

When Bush says there is no trust fund, I don't think he's talking about the extra payroll taxes that have been collected for the past few years. He's addressing the misperception that the money you pay in is sitting in an account somewhere and that that money is yours and will be returned to you. That's not he way the system works, and he's just saying that's not the way the system works.

I dislike Bush about as much as it's possible to dislike somebody, but that intended meaning seems crystal clear to me. Is everybody commenting here really confused about this, or is everybody being deliberately obtuse for the sake of scoring some inconsequential partisan point?
posted by willnot at 11:52 AM on February 10, 2005

It's not simply a sell-out to Wall Street to want to privatize SS (despite what the Left's imagination sees) It's possibly a win-win to invest in low risk stocks, or limit investment stupidity by only allowing investment in some indexed funds. But it's not at all clear what would happen to the equity markets is an additional $250 billion or more were made available to Wall Street, or whether people living longer will break the system, or people will not want to retire as early (or ever), and so on...

Maybe some combination of all ideas can be introduced: raise the $90,000 to $150,000, and an experiment in, say, 1 or 2% of FICA being made available for investment.

As it is, people invest in the market and succeed in creating a comfy retirement--don't sell people's investment savvy short.

Anyway, this issue will be resolved in compromise fashion, because even Republican office holders know their constituents are not entirely comfortable with the President's ideas on the subject.
posted by ParisParamus at 11:57 AM on February 10, 2005

PP: What are talking about? Spell it out and adress the questions raised.

Caddis (and on preview willnot): What are you talking about? Do you think the USA should not issue T-Bills? It's the same as any fixed rate/fixed term investment: a promise to pay back the principal with interest at the end of the term.

Zwemer: Income tax is not the only way for the federal government the to raise money. We have payroll tax, federal taxes on gasoline, and various trade tarriffs, among other devices. If we can stimulate trade income and strengthen the dollar abroad, income from other sources can be stimulated.
posted by mzurer at 11:57 AM on February 10, 2005

Good analysis zwemer, but that ain't what Bush is saying.

And even if it was, then the obvious solution is to reduce the national debt, not push it higher with some hare-brained piratization scheme.

Won't someone think of the children? (now where have I heard that before?)
posted by nofundy at 11:57 AM on February 10, 2005

You know, I would transfer all of the money I have in the world -- and that all I ever earn, for that matter -- not very much in all honesty -- straight to GW's bank account if, he would just cut his despicably pandering, two-bit peddling, cutesy à vomir song and dance.

I was raised in Midland, Texas, and the fellow who lives across the street from him in North Carolina's father, was the baby doctor for my three little brothers. (mindless laughter)

Does the American public, or even those present, give a flying fuck about this?

How did Senator Cornyn treat you?

Right across the street. Well, that's good. So that seems like an unusual connection. Here you are, sitting next to the President talking about class-action lawsuit and it seems like you're really not involved in the law, but are you?

"Fantastic"

MS. DITKOWSKY: I have two children.

THE PRESIDENT: They don't happen to be here, are they?

"Fabulous"

MS. DITKOWSKY: Yes, they are.

THE PRESIDENT: I can see them. How old are they?

MS. DITKOWSKY: Marissa is 10 and Jessica is going to be nine in two weeks -- three weeks.

THE PRESIDENT: Going to be nine. Fabulous. Well, happy birthday-to-be. Got mom up here on stage. Pretty cool, huh? (Laughter.) Where do you live?

MS. DITKOWSKY: I live in Commack. Commack, Long Island.

THE PRESIDENT: State? New York?

MS. DITKOWSKY: New York.

THE PRESIDENT: Not everybody knows where Commack is. Of course, I did. (Laughter.) So why are you here? No --

Yuck. Just, yuck. Enough of the everybody's favorite fratboy routine.

Maybe I've been out of the country for two long. Maybe I'm an asshole. I do know I feel genuinely embarrassed every time I see this drivel and think of other leaders who have at least a notion of formaility. Is it too much to ask for the president to conduct himself as a statesman instead of like a used-car salesman -- or the ringleader of a circle jerk? Could we the people insist on not being addressed as though we at one of his kindergarten book readings?

Virginia is banning slight display of underwear. I propose a class action with the aim of wiring a certain head of state's jaw shut.

As for social security being a trust fund or not, I really could care less.
posted by pwedza at 12:00 PM on February 10, 2005

PP - I agree with most of what you have said in terms of ideas to keep SS safe and useful. They are not what Bush is proposing.
posted by mzurer at 12:00 PM on February 10, 2005

Does China know we plan to default on Treasury bills?
This could be very, very bad.

What else could the Social Security funds have possilby been invested in that would have been safer or more secure? I mean, we're not going to quit issuing T bills are we?

Balance the budget and the problem takes care of itself.
posted by nofundy at 12:02 PM on February 10, 2005

mzurer- Non-income taxes only account for less that 5% of government income. Hundreds of billions of dollars will be owed every year in excess of what we collect now.
posted by zwemer at 12:03 PM on February 10, 2005

No one is suggesting we default on treasuries. So just stop it. But we will either have to SHARPLY raise taxes or take out MUCH more debt to cover the obligations coming due..

Now GW Bush and his rich friends hate taxes. They’ve had a great ride the last 20 years because the payroll tax is regressive and taxes only the first $90k of income. But the rich are far-sighted people, and some are doing everything they can to forestall the coming tax/deficit shitstorm. That’s why I believe GW wants to “fix” social security now.
posted by zwemer at 12:05 PM on February 10, 2005

THERE IS NO TRUST--obviously.

Not between me and the government, that's for sure.

(ps: You should try reading these links.)
posted by salad spork at 12:07 PM on February 10, 2005

The problem is just as nofundy put it. "Balance the budget and the problem takes care of itself." And because of Bush and Congress's spending, we aren't even close.
posted by zwemer at 12:09 PM on February 10, 2005

Only if you stop being gullible and blindly trusting of Dubya first.

nofundy - Sure, but that has nothing to do with defaulting on government debt, which was the premise of the FPP. Acknowledging or changing the social security funding system is not defaulting on government treasury obligations.

It's not about trusting Dubya, it's about understanding the difference between social security and t-bills.
posted by thedevildancedlightly at 12:29 PM on February 10, 2005

Let me ask a question: why is SS necessary? Personally, I think the whole thing is stupid.

If I didn't have to pay 7.5% of my paycheck, then I'd have more to spend/save/invest. IMO, I could do a lot better with my money than the gov't can. If my employer didn't have to match my 7.5%, maybe I'd get a raise. Maybe they'd hire more workers. Maybe I wouldn't be laid off as soon when times are bad.

I'm not saying cut off all the old people who've paid into it their entire lives, but I've always figured the system will crash by the time I come of age. I'll gladly pay a few more years if we could just call the whole thing off when I'm, say, 30 (2011).

OK, Metafilter. Tell me why I'm wrong.
posted by b_thinky at 1:19 PM on February 10, 2005

For me, it is a matter of trust, at least partly. Assuming I could be convinced this was a fabulous idea (I'm not), I can't see entrusting it to Bush to carry it out. Not because I hate Bush (though I do), but because of his record. It's clear he likes to gamble, clear he loves big ideas, not clear that he carry them out. I'm not for this if it's not going to be carried out by people I can trust to do the job.

Also, it seems to me like Bush has other fish to fry. His Medicaid plan is going to put this country in debt faster and is in more need of immediate attention than social security. He needs to fix some of the problems he's created before taking on new grand initiatives. Bush may say he has political capital, but from my point of view he has to earn it.

This isn't about political affiliations for me. I am treating Bush the same as I would anyone else who was working for me. It doesn't matter how good the idea is at this point, Bush needs to work on convincing people he can handle it. Another thing, If Bush can't explain this idea, I am not going to be supporting him to carry it out. Again, this isn't personal, I would do the same in any case.
posted by xammerboy at 1:21 PM on February 10, 2005

why is SS necessary?

You'll know when you are 70, never stayed at one job long enough to accumulate much of a pension and invested your own money badly. Perhaps that won't be you (I hope not) but it sure will to a lot of somebodies and SS takes care of them, as well as the rest of us. It provides a baseline retirement. Hopefully you will end up with more, but if not you will be very glad it is there.
posted by caddis at 1:33 PM on February 10, 2005

It's also there if you become disabled, and it's there for your dependant children if you die or become disabled.

We need it so your grandma won't have to move in with you, and you won't have to move in with YOUR grandkids, should the stock market take a dive.
posted by Floydd at 1:58 PM on February 10, 2005

... assuming of course you have any grandkids or relatives to take you.
posted by caddis at 2:10 PM on February 10, 2005

I wish someone with a high profile megaphone would make the point that Social Security is a Social Insurance program, not a retirement plan. Each paycheck we pay our premium on an insurance policy (and our employers kick in to help us pay it).

Somehow, employers decided to pretend that SS was a pension plan and started converting fixed-benefit pension plans into 401k's. Fine. Their choice. If they want to treat SS like a retirement plan, then we should make them pay more of the premium. A modest increse in payroll taxes will keep SS solvent.
posted by Cassford at 2:16 PM on February 10, 2005

If I didn't have to pay 7.5% of my paycheck, then I'd have more to spend/save/invest. IMO, I could do a lot better with my money than the gov't can.

Private accounts are inefficient.
You'll pay to administer your private account, and you'll be subject to the vagaries of a volatile market. Social Security is insurance against irresponsibility, poor planning, bad choices, and just plain bad luck.
posted by Floydd at 2:17 PM on February 10, 2005

If my employer didn't have to match my 7.5%, maybe I'd get a raise. Maybe they'd hire more workers. Maybe I wouldn't be laid off as soon when times are bad.

Maybe, but history tells us, probably not.
posted by Cassford at 2:18 PM on February 10, 2005

Privatization of Social Security funds is probably the way to go.

However, I don't trust this administration to do it correctly.
President Bush has never given a rat's ass about going overbudget on anything, the plight of the common Joe who will reach retirement age one day, or shrinking government's role in any subject you wish to pick. He doesn't have a fiscally responsible bone in his body.
All he's ever cared about is getting his buddies rich beyond their wildest dreams at the expense of everyone else.

I have a feeling it's his Wall Street, investment banker, and stock broker friends this round.
This will cost millions (billions?) to create. That is a cost right now, when we need to be looking at ways to slow spending, for a ~probable~ benefit much later.

What could be the worst possible case of failure for this?
(I mention worst case, because that seems to be the going trend in this administration, and they never seem to take the time to think about it beforehand)
The economy in the shitter and your account is worthless?
Are there others?

Who really benefits?
Well, immediately, it'll be Bush's buddies mentioned above.

The president said in his SOTU address that the money would be YOURS, to leave to your grandchildren, but that was an untruthitude. You won't be able to collect it, except in the form of government regulated payments after your retirement criteria have been met. This just adds jobs for supervisors and moneychangers on top of those already in place.


Two very interesting articles from Factcheck.org concerning this.
posted by Balisong at 2:33 PM on February 10, 2005

What would you do to save social security

raise payroll taxes. Cassford said it well.
posted by mrgrimm at 2:36 PM on February 10, 2005

It seems pretty simple to me.

1. Social security is generating surpluses now.

2. If those surpluses were earmarked for paying Social Security benefits in the future, then SS wouldn't have a problem.

3. But they're not. Instead, the government is using SS's surpluses to reduce the impact of their deficit spending! Which means that...

4. The solvency of SS is being threatened NOT by any weakness in the SS program, but by egregiously irresponsible fiscal mismanagement by the government (raiding SS surpluses to pay for other budgetary expenditures), and

5. This means that the flat-tax SS revenues are being repurposed by the government to be a regressive income tax, which disproportionately nails everyone making $90k or less annually.

Basically, Bush and the Republicans in congress seem to like this idea, because it means they can reduce the impact of their grotesquely irresponsible deficit spending, pump trillion$ into the private investment market, and renege on the social contract Reagan made with wage-earners to require the wealthy to pick up their fair share of the tab.

Any member of congress that has any sense of ethics or at LEAST fiscal responsibility is going to have nothing to do with Bush's plan.
posted by darkstar at 2:38 PM on February 10, 2005

It's important to remember the following: market efficiency is a myth (at times public management is many times better). Also consider the following...... why should powerful people engage in insider trading ( the "thing" behind the jailing of Martha Steward ) if market was soooo efficient as somebody would like you to think ?

Why should they get in legal troubles, are they stupid ? Not really if they have millions of dollars.

In insider trading market "rules" are violated as the violator gains an unfair advantage over ordinary people by getting her "friends in the high circles" to give tips about what's going to happen to a company....basicallly they sell people lemons.

You really think that , even with really heavy regulation, YOU are going to survive the trial and tribulation of hiring a lawyer, fight a court battle, win against a private entity with bottomless funds ? Or that your friend in the knows will hesitate from manipulating you into buying junk bonds or anything he gets a cut into ?
posted by elpapacito at 2:40 PM on February 10, 2005

But it will be false to call it Social Security anymore..

Privatization makes it;

A. Not social anymore.

B. Not secure anymore.

Do you think there might/will be an instance or two where someone is found scamming this new system?

Both from the investor and investment sides, I'm sure.
posted by Balisong at 2:41 PM on February 10, 2005

a fact check on claims made about SS
posted by amberglow at 2:56 PM on February 10, 2005

Is he advocating that the US default on its Treasury bonds?

Meh... it's going to happen some day.
posted by pompomtom at 4:17 PM on February 10, 2005

RE: Trust Fund

In the situation a where we pay more money into social security than it pays out. This means that it is a money sink - deflationary, in other words.

If you have a situation where social security pays out more money than you pay into it, then it is inflationary.

If you pay more money into SS than it pays out within a given year, then it has been deflationary, and vice versa.

Thus, the effect of spending the money that has been taken in via SS taxes on other parts of the government only has the effect of avoiding the deflationary effect of payroll taxes.



RE: Ways the government makes money.

The government makes money by printing it. Taxes have nothing to do with the government making money - they are merely a deflationary offset to the inflationary effect of government spending.



This episode of Econ 091 has been brought to you by the letter Zzz.
posted by Ptrin at 4:19 PM on February 10, 2005

I still say SS is dumb. Whow would the 7.5% additional cash to take home each pay period help more: Joe Factory Worker or Bill Gates?

I'd rather have that money now than in 50 years - when I probably won't get as much as I put in anyways. SS is a farce. Get rid of it and we'll all be the better off - at least those of us who won't drink/gamble/smoke our money away. Those that do probably deserve what they get anyways.
posted by b_thinky at 5:22 PM on February 10, 2005

Mr. Roboto was 100% correct. Bush IS making the Euro the defacto international currency. And if that happens (the loss of petro dollar) Paris, oil will get more expensive. Much more.

That said what Bush is proposing with SS is not a bad by itself, it is however a fools game when he simply spends and spends and spends. Essentially forcing the Government to borrow against SS. Damn it but that darn "no-nation building" nation building is expensive.

What I wouldn't give for an actual CONSERVATIVE in the Whitehouse.
posted by tkchrist at 5:42 PM on February 10, 2005

actual conservative or actual liberal, it's a thin line.
posted by oldleada at 6:49 PM on February 10, 2005

I still say SS is dumb. Whow would the 7.5% additional cash to take home each pay period help more: Joe Factory Worker or Bill Gates?

Considering that Bill Gates doesn't PAY 7.5% of his income toward SS, b_thinky, your point is meaningless.

Do you have a retirement plan where you work, b_thinky? Do you have income continuation insurance? Health insurance? Do you put the maximum into your IRA every year? Because, at your age, the need for all that seems pretty distant, but the minute you run that bitchin' Camaro you bought (with that extra seventy-five cents an hour that would have gone into SS) into a light pole you'll wish you had a little help to pay for that new set of wheels you'll be needing.

On your chair.

It's insurance. Remember that.
posted by Floydd at 7:49 PM on February 10, 2005

Well, Floydd, I don't think any mainstream politicos are talking about overhauling the widowed/blind/disabled portion of SS. They're just trying to change the old-age part.

And if the remaining old-age benefit is insurance, it makes sense that it's capped and regressive. It's a welfare system, otherwise.
posted by trharlan at 5:04 AM on February 11, 2005

Reading this thread I’m reminded of episode 94, wherein a con-man/banker convinces Granny to demand to see her eleven million dollars. Mr. Drysdale can’t produce the bucks, and finds it impossible to explain to Granny just where it is. She moves her money to the con-man’s bank.

Apparently someone on the bush economic team is a Beverly Hillbillies fan.
posted by custis at 6:26 AM on February 11, 2005

How do you trust a guy who ran a few companies into the ground before he even entered public service? He's now the CEO of a company that employs over a million people with a budget way larger than any he's ever run before. I think his record sucks and I don't like eating cat food.
posted by LouReedsSon at 7:12 AM on February 11, 2005

trharlan, And if the remaining old-age benefit is insurance, it makes sense that it's capped and regressive. It's a welfare system, otherwise.

I'm not sure what you're saying here. SocSec is capped and regressive today. It takes a larger percentage of income from people whose income is low than it does from those whose income is high. On top of that, poorer people live shorter lives than more affluent people (on average). It is capped by the Grim Reaper -- just like many private long-term care insurance plans.
posted by Cassford at 7:51 AM on February 11, 2005

What a great discussion, I've had this conversation with my friends over drinks and didn't realize how much I didn't know before.

A couple of solutions:
1) raise the contribution cap
-pro: generates more money, makes the system less regressive.
-con: majority of workforce (those who contribute) make less than 90K, so raising the cap might not generate enough money.

2) stop paying benefits to those who don't need it
-pros: doesn't 'harm' those who are well off and benefits those who need it.
-cons: affluent people screaming about being robbed.

3) decrease benefits
-pros: keeps the system solvent
-cons: now generation x/y,who have been contributing 10 years or less, screw over baby boomers who have been contributing for 40 years. (two wrongs don't make a right)

4) increase ssn contributions (taxes)
-pros: keeps system solvent
-cons: even more burden of current workforce by baby boomers.

I would suggest a mix of 1 and 2 and suggest to those who complain that they suck it up. They had a pretty good run in a pretty decent country and they need to give back to those who didn't get such a good chance as they did.

but I'm also labeled a commie in my circle of friends
posted by kookywon at 8:58 AM on February 11, 2005

This is a nice discussion, kookywon. I, too, am learning a lot.
I'd add a couple points to your suggestions:
A shift from wage to price indexing of the formula for calculating initial benefits, and a decrease in the cost-of-living adjustment (COLA.)

There, we fixed it!

Next problem, please!

(...right...)
posted by Floydd at 9:49 AM on February 11, 2005

Floydd, your theory on SS is the ultimate Big Brother attitude. Since I can't handle my money and will just waste it on stupd things like Camaros, the goverment should do it for me.

Given the choice between having my cash now and investing it, or having the goverment hijack it and "save it for me," I'd bet on myself every time. And this is BEFORE you take into consideration that my money probably won't be there by the time I retire.

SS is completely stupid.
posted by b_thinky at 10:18 AM on February 11, 2005

Cassford-- Floydd claimed that SS is insurance, and I said that if that's so, than it makes sense to have a cap. I understand that it's capped already. My response was to him. Got it?
posted by trharlan at 11:19 AM on February 11, 2005

Oh, it's not all about you, b_thinky. It's about the other folks with whom we share this society. The ones who will clutter up the sidewalks begging for food, mess up our lovely highway underpasses with their cardboard box shelters, and crowd our nice lakefronts washing their laundry on the rocks. Social Security is the difference for some people between starving in the street and a room in a residential hotel after spending their whole life living paycheck to paycheck. Now, I'm sure YOU are already socking away the maximum amount of savings in your tax-deferred individual retirement account, and have health insurance so you won't have to depend on charity or the government to cover your medical bills. You probably even have a nice defined-benefit retirement plan. But there are a lot of folks in this country who don't have that luxury. Folks who cook your food, clean your motel room, change your oil and run the check-out when you shop at Wal-Mart. Every penny some people make goes to keep a roof over their heads and feed themselves and their families. They've got nothing left over TO save. And if they get sick or hurt and can't work, they end up with less than nothing.
They're the ones who'll be in cluttering up the landscape if we don't provide a little pittance for them when they're too old to work..
It's not all about you.

Oh, and trharlan? Yes, I agree. It makes sense to have a an income cap and a benefit cap.
posted by Floydd at 11:35 AM on February 11, 2005

Given the choice between having my cash now and investing it, or having the goverment hijack it and "save it for me," I'd bet on myself every time.

but you're just going to give it to some brokerage to 'save it for you' ... why do you imagine you're being so much more proactive by following the advice of a wall street business than the fed? You can't make money on an island (take that metaphorically, yes?).

The gov't is actually the one entity that can actually guarantee your money - because they actually get to decide how much money to "make" - that is, they can print more if they want to. Different economists have different theories about how dangerous or not this is, but the gov't does have the capacity to come through, whereas your brokerage could just oopsydaisily lose your retirement fund.

Anyway, even if you personally are a very forward thinking sort who sets up a retirement fund early on, plenty of people simply aren't, and will spend what extra money doesn't go into SS on getting a new TV or whatever. This is proven with how many people go uninsured healthcare-wise. When it's deducted from a salary, it's accepted as a fact of the pay. When it's up to you to seek out an insurance plan and send them $400/month for something distant and vague, a lot of people will simply not get around to it, even if they are generally disposed to think it's probably a reasonable idea.
posted by mdn at 11:42 AM on February 11, 2005

Trust?
posted by breezeway at 1:17 PM on February 11, 2005

but you're just going to give it to some brokerage to 'save it for you' ... why do you imagine you're being so much more proactive by following the advice of a wall street business than the fed?

If I'm responsible for my own investment decisions, I have millions of options. Save it in the bank and collect interest. Buy stock in one of thousands of companies. Start a business. Collect Beanie Babies. Whatever. Point is, it's MY choice.

The gov't is actually the one entity that can actually guarantee your money - because they actually get to decide how much money to "make" - that is, they can print more if they want to.

Did you seriously just say that? Let's see GWB propose a trillion dollars of new spending on Iraq, and say he'll pay for it by printing a $1 trillion bill. It doesn't work that way dude.

Floydd: Every penny some people make goes to keep a roof over their heads and feed themselves and their families. They've got nothing left over TO save.

But if they had 7.5% more per pay period, they'd have something extra. If they're smart, they'll save/invest it.

I am 24 and financially successful. I have friends who are not. Believe me, they could use the 7.5% more than I could.
posted by b_thinky at 4:11 PM on February 11, 2005

The gov't is actually the one entity that can actually guarantee your money - because they actually get to decide how much money to "make" - that is, they can print more if they want to.

Did you seriously just say that? Let's see GWB propose a trillion dollars of new spending on Iraq, and say he'll pay for it by printing a $1 trillion bill. It doesn't work that way dude.

THAT IS EXACTLY WHAT HE HAS DONE
It's called deficit spending, b_thinky.
posted by mzurer at 4:26 PM on February 11, 2005

But if they had 7.5% more per pay period, they'd have something extra. If they're smart, they'll save/invest it.

I am 24 and financially successful. I have friends who are not. Believe me, they could use the 7.5% more than I could.
posted by b_thinky at 4:11 PM PST on February 11

My point exactly. Your friends would use that 7.5% on current needs. That's what I would do at that age, because retirement seems such a long way off. Not everybody is smart. Not everybody has the ability to take the long term view. Social Security was established because we recognized that there are not just personal consequences to a lack of planning, but social ones. As a "financially successful" 24 year old, you have health insurance for when you get sick or injured, income continuation insurance for if you become disabled, you have at least six months living expenses saved, just in case, and you are saving every possible penny toward your retirement, right?

Because if you don't, you are not "financially successful." But Social Security is there for you.
posted by Floydd at 4:45 PM on February 11, 2005

The White House is doing all it can avert the impending Social Security “crisis” by killing off as many young soldiers as possible before 2018, a spokesman said. “We can send them to Iraq, send them into Iran, send them into Syria and even send them to Watts, “ the source said, “ but we just can’t kill them off fast enough before the trust fund runs out.”-- a smart, satirical look at this, from americanstreet
posted by amberglow at 8:04 PM on February 11, 2005

Whatever. Point is, it's MY choice.

Point is, it's your choice who to give it to you to save for retirement! Money is inherently a social thing. You can't make money by hoarding it under your mattress (it will just depreciate), so the question then becomes, generally, what's the best way to save for retirement? To go on about having control, making a personal choice, etc, is largely missing the point, because if you actually want to a reliable retirement fund, you won't have many choices - you'll invest in a low risk diversified mutual fund thru some brokerage, and in all reality, you'll have just as little to do with the mgmt of your money as people have with their SS funds.

You can say each person should have the option to invest their retirement on something risky like starting a business, but how do you handle this when 10 million elderly americans have no income because they thought their beanie babies would see them through? You just let them die on the street?

Did you seriously just say that? Let's see GWB propose a trillion dollars of new spending on Iraq, and say he'll pay for it by printing a $1 trillion bill. It doesn't work that way dude.

actually, dude, it does. As mzurer said, it's called deficit spending. When money goes into the gov't, they burn it. When they put money out, they print it. They keep track of the difference between the in and the out, and they call that the deficit.

As I said, different economists take different positions on how dangerous deficit spending is, but the gov't can't "pass the buck", so to speak, on this one. They can say that giving you your retirement money will weaken the dollar and ultimately crash the economy, but they can't say, sorry man, it's gone, because it's up to them to make it exist in the first place. A brokerage can just flat out lose your money.
posted by mdn at 10:56 AM on February 12, 2005

I understand the concept of deficit spending, but what you said above was totally different. You said a brokerage would just lose my money, but if the government lost my money, it's OK because they could just print me some more. Maybe you're just trying to use an example, but it was quite an extreme.

I trust a brokerage a million times more than the goverment (though I don't have a stock broker or company who makes my decisions for me, I make my own) and here's why: SOMEONE MY AGE WILL NEVER SEE A PENNY FROM SOCIAL SECURITY! It's a gigantic pyramid scheme and the bottom will fall out on my generation.

Since I know this, I realize that 7.5% of my earnings basically go in the trash. I make enough money, and have enough saved up where I can still afford to get by. But my friend Keith, who works part time at UPS and makes $11 an hour could use his 7.5% more than I could use mine.

Yes, Keith might waste his 7.5% on stuff "now," like buying groceries or putting gas in his car, or taking college courses, but why do that now when he can pretend that money will be there waiting for him when he's old and gray?

Republicans and Democrats both like to lie to us about SS and come up with ways to make it last just a bit longer. It gets them votes, which is what they really care about. But when the system comes tumbling down and takes the country with it, I'm moving to China. But it will probably be OK here since they'll just start printing more money.
posted by b_thinky at 12:09 PM on February 12, 2005

it'll never come tumbling down, as long as we keep adjusting it (and not privatizing it), like what was done in the 80s. raising the income cap will do it alone, and you will see it, b_thinky--don't buy the hype.
posted by amberglow at 12:19 PM on February 12, 2005

You said a brokerage would just lose my money, but if the government lost my money, it's OK because they could just print me some more.

The point is, they can't "lose" it; they can only "not prioritize" it.
posted by mdn at 1:26 PM on February 12, 2005

Raising the cap is unfair. If I pay money into the system, I want to be paid back every dime I deposited. Don't penalize me because I'm successful.

Amberglow, suppose you deposit money into a bank account your entire life. Your deposits totaled $500,000 (to throw out a number). Upon entering the bank to withdraw your life savings and buy your dream ______, the teller says to you: "Well, Mr. Amberglow, I see you drove up in a nice new Toyota, so we've decided to give you only 40% of your savings. You obviously don't need all 100%." I'm sure you'd be really happy with that arrangement, no?

Or suppose you go into a nice restaurant and order a $20 meat loaf. When the bill comes, you see you're being charged $35 for the meat loaf. When you ask about the discrepency, the waiter says, "Mr. Amberglow, you're wearing a nice pair of wrinkle free Dockers and can obviously afford to pay extra." Hey, who could disagree with such logic? Not me!

The point is, they can't "lose" it; they can only "not prioritize" it.

It won't be "lost" because you can only lose something you once had. I will lose because theoretically the money was once mine, though I never touched it. The goverment won't lose it, because it never existed. In other words, there won't be enough money left to pay my generation. I know what you mean, that goverment will be able to come up with the money somehow, as they do for other programs. But this program is larger than all the others combined. The risk is much greater.

My point is, why wait until it comes to that? Let's just call the whole thing off now before it becomes more of a pain than it is. It'd be horribly unfair to those who've already paid into it for decades, so we should come up with some way to reimburse those who've paid into it.

The thing about pyramid schemes is that they all come crashing down. The taller they go, the harder they crash. Let's crash it now before it gets even taller.
posted by b_thinky at 2:50 PM on February 12, 2005

I sure hope you don't ever get really, seriously ill, b_thinky. You'd learn a few things the hard way, as has happened to more than one friend of mine who thought their income and insurance would cover them.

After running through their maximum lifetime benefit - one in less than a year - both of these friends of mine now are on permanent Social Security disability, with Medicare covering their medical bills for the rest of their lives. One is 41, the other is 37.

Your tax dollars keep my friends alive - and a whole lot of other unfortunate people, too. Crash it now, and my friends will die.

And that will really, really piss me off.
posted by zoogleplex at 9:02 PM on February 12, 2005

Thanks for hoping I don't get sick! You're too kind?

Why is disliking Social Security the same as cutting off support for the legitimately sick and poor? If you cut all the crap out of Social Security and re-made it to be specifially and only to benefit the legitimately incapable amongst us, you'd have a much nicer program. Smaller payments, smaller payouts, lower expectations, better results.

But that just requires too much work and unconventional thinking doesn't it?
posted by b_thinky at 12:25 AM on February 13, 2005

It's a gigantic pyramid scheme and the bottom will fall out on my generation.

A pyramid scheme is based on a specific output being necessarily linked to exponential input. A pyramid scheme must grow exponentially and fail after a limited number of generations (of the process, not nec. of people). A pyramid scheme make the originator rich while everyone else loses. Social security, on the other hand, has worked for generations, and is in no danger of falling short before about 2050.

Even then it will not be empty, but due to fluctuations in birth rates etc, will only be able to pay out about 70% of promised dividends. It had a surplus for a long time, and at that point would go into deficit. But that does not mean it necessarily would fail - it is up to the government to decide what to prioritize, and it could very easily decide to prioritize social security, or to adjust it/make some reforms, but still make sure the population is covered.

The real issue is, this administration doesn't think the government should secure a retirement fund for its citizens. It is ideologically opposed to these kinds of social welfare programs, and espouses the idea that each citizen can figure out his or her own retirement plan.

We began social security because we needed it - people don't always plan ahead and it's simply not civilized to let your elderly die on the streets because they can no longer work, but didn't plan well. It's possible that in the modern age, people can be better educated to plan for the future, but it's worth remembering that people often don't take the long term future that seriously, as I tried to illustrate with the health insurance example.
posted by mdn at 12:36 PM on February 13, 2005

What bugs me so much about this particular situation is Bush's unwillingness to accept anything less than what he's decided is best for the system, the best way to fix it in his opinion being private accounts. Putting aside the question of whether or not it is the best way, I take issue with the fact that he thinks it's at all proper or useful for him to dictate like this. If I were the president, and I thought there was a problem with the social security program, I'd announce that I'd like to form a committee of people well versed in social security, finance in general, and so on, and give them a timeframe for evaluating the problem and crafting some solutions. When they're done, I'd pick one and see how it goes from there.

The problem with his handling of this situation is his unwavering hubris and staunch unwillingness to listen to any other opinions. If the plan doesn't include private accounts, he isn't going to take it, because that's his catchphrase now. That's the problem with this man – it doesn't matter how wrong he is, he will drive any idea he thinks up as far as he can, even if it means plowing head-first into the ground with it, in flames.
posted by odinsdream at 2:30 PM on February 14, 2005