Thread: The Problem With Privatizing Social Security...

Originally Posted by JoeTheEconomist

Your idea of facts and Webster's seem to have a difference. The Social Security Administration do not say that you will come out better, much less way better. They say on average he is losing money in the system.

If you have any documentation on your statement please share it with us.

My facts are right... how about you come to my clinic and explain it to may 23 year old paraplegic patient how he is going to do worse, now that he is getting his social security.

Then you can explain it to my 95 year old patient that's been retired for thirty years (after being a manual laborer) and now is only living on social security as he has played out all other investments. You explain to him how he would be better off with the money that he sent to social security.

Now.. if the 23 year old dies at 65.. yeah.. he is going to lose money on average.

And here is a funny thing... its because on AVERAGE you lose money on the deal.. why it pays for itself. If we were all making money on the deal,, and all getting back more than we put in.. then it would not run a surplus would it. That's why its insurance, that's why its a safety net.

but the facts are that

•Social Security provided at least half the income for 65 percent of the aged beneficiaries in 2010

Now.. for guys like me.. its probably a losing proposition.. UNLESS I get disabled or a myriad of other things that can happen in ones lifetime.

Originally Posted by JoeTheEconomist

The Social Security debate contains a lot of noise, where people argue in great earnest with the worst of cliches. Arguments are repeated over and over until people accept them out of volume rather than reason.

The idea to privatize Social Security deserves more consideration than it gets from either side. Opponents - with a straight face - will warn you about the risk of the stock market, when the money today sits in a system that is insolvent by any measure of the insurance industry. Proponents - with equal ardor - will promise you that a privatized Social Security system would create a pool of capital on which the economy will grow as though Social Security would be a magical money tree.

Um....no, not magic...investment.

Before we replace, the eggs with sausage, someone should ask why is it that a new Social Security will perform the job of accumulating wealth better than the savings programs that we already have, and already subsidized. Virtually every American has access to personal savings accounts. They may be 401Ks, IRAs, brokerage accounts. If savings accounts with tax incentives are not getting the job done, how is throwing more money at them going to work any better?

Well, you make an assumption that just isn't true. Most people don't have 401Ks or IRAs. They rely solely on Social Security. They are under the impression it will be enough.
Study shows most Americans have inadequate savings - World Socialist Web Site

This is what happens when you tax everyone for anything they do. Plus, everyone has multiple cell phones, high speed internet, 5,000 tv channels and at least 3 flat screens, 2 tablets, a lap top or two and several ipods. Add it all up, and savings aren't possible for most.

Originally Posted by ksu_aviator

Um....no, not magic...investment.

Invest what? Social Security has about 2.7 trillion in cash and about 26 trillion of liabilities held against that reserve. It is magic if you think you will generate 23 trillion in wealth.

Originally Posted by jaeger19

My facts are right... how about you come to my clinic and explain it to may 23 year old paraplegic patient how he is going to do worse, now that he is getting his social security.

Then you can explain it to my 95 year old patient that's been retired for thirty years (after being a manual laborer) and now is only living on social security as he has played out all other investments. You explain to him how he would be better off with the money that he sent to social security.

Now.. if the 23 year old dies at 65.. yeah.. he is going to lose money on average.

And here is a funny thing... its because on AVERAGE you lose money on the deal.. why it pays for itself. If we were all making money on the deal,, and all getting back more than we put in.. then it would not run a surplus would it. That's why its insurance, that's why its a safety net.

but the facts are that



Now.. for guys like me.. its probably a losing proposition.. UNLESS I get disabled or a myriad of other things that can happen in ones lifetime.

We don't have any facts. We have your word. The Urban Institute says that you are wrong, and so does the SSA's moneys-worths studies.

Of course they measure the return on insurance correctly, which includes the possibility of getting nothing.

Originally Posted by JoeTheEconomist

Invest what? Social Security has about 2.7 trillion in cash and about 26 trillion of liabilities held against that reserve. It is magic if you think you will generate 23 trillion in wealth.

What is the unfunded liability of the DoD? You see, when it's convenient using accrual accounting versus cash accounting principles the argument can go in many different directions...

Originally Posted by JoeTheEconomist

You do not even understand what you are quoting in all CAPs no less. Social Security was insolvent in 1983, so let's not pretend that it hasn't had massive changes already.

The Trustees information that you have quoted isn't a prediction much less a guarantee. They say that in A GOOD ECONOMY Social Security might be able to pay full benefits until 2033.



If you had read the document that you are quoting you would have found on page 58, it says that the system might also be dry in 2027.

The Trustees have provided this information as a warning not a guarantee of success.

What.. you are saying that it was insolvent.. and then became solvent again? Golly gee... how could that possible happen... Duh.. that's the point... things looked bleak in 83 and then we were running surpluses up to 2010. So lets not pretend that the expectation is that social security should never need to be updated.

Oh no.. I very much understand what you are quoting... I don't think you understand what you are stating...

Did you not bring up the Trustees position that social security needed to be changed? "are they liars" I believe you asked... Well, their prediction on needed to change social security is based on the SAME LONG TERM PREDICTION...

You apparently are fine with using the Trustee report when you attempt to skew the information your way.. but don't like all the facts being told.

Yep.. the system might be dry in 2027... it also might be fine.. that's the problem with predictions...

However, the social security Administration has come up with a variety of alternatives that will increase the solvency of the social security system... I have already posted them ad nauseum...

How about you post exactly how privatizing social security would work and provide concrete numbers on how every individual.. especially the most vulnerable in society.. will benefit more than the current system.

Originally Posted by JoeTheEconomist

We don't have any facts. We have your word. The Urban Institute says that you are wrong, and so does the SSA's moneys-worths studies.

Of course they measure the return on insurance correctly, which includes the possibility of getting nothing.

My word is better than yours quite frankly. Ho about you post the "urban institute" report and I will point out your error...

The fact is that 65% of elderly have social security as their only income..and stating that all those folks would be better if they put the money into a shoe box, or tried to figure out what investment they should make... you are completely nuts.

the urban institute doesn't say I am wrong and neither does SSA money's worth studies... You simply can't understand what I am saying which is that its insurance.. and its a safety net. and that while on AVERAGE.. someone might not do as well.. if they fall below that AVERAGE.. then it very much is a benefit.. very much.

And that number is skewed toward more people because higher incomes skew that average up.

Originally Posted by JoeTheEconomist

Everyone will leave. So how will you pay the existing retirees?

Age 46 to 65 would be excluded from the divestment. Twenty somethings are on the low end of the earning spectrum so the actual hit to SS in year one would be 3% or less even if there is a 100% buy in from everyone eligible, but likely that would be a lot less.

Any short fall that can't be covered by minor adjustments to benefits can be explained to the recipients that we already spent that money on them when they raided the trust fund.

Originally Posted by jmotivator

Age 46 to 65 would be excluded from the divestment. Twenty somethings are on the low end of the earning spectrum so the actual hit to SS in year one would be 3% or less even if there is a 100% buy in from everyone eligible, but likely that would be a lot less.

Any short fall that can't be covered by minor adjustments to benefits can be explained to the recipients that we already spent that money on them when they raided the trust fund.

Today with everyone paying 12.4%, not anyone leaving the system, Social Security cannot pay full benefits to anyone 64 or younger. Any money that is removed will only mean that the collapse happens faster. If we do not have a good economy, the collapse happens faster. The Trustees provide estimates which say that the system will not be able to pay full benefits to someone 72 today. Those 47 and younger today do not expect to ever collect full benefits. So without a massive tax increase there we will not be able to achieve even a baseline of your model.

I don't sense you realize the depth of the problem.

Originally Posted by AlabamaPaul

What is the unfunded liability of the DoD? You see, when it's convenient using accrual accounting versus cash accounting principles the argument can go in many different directions...

The comparison with DoD suggests that you aren't familiar with the operations of Social Security. Social Security gets revenue from a dedicate revenue stream. It is suppose to be a contributory benefits system. DoD is funded from the general fund by appropriation. Instead of turning Social Security into a welfare program. Why don't you suggest increasing the funding of actual welfare programs.