View Poll Results: Your Identity and For/Against this SS Reform model

Voters
91. You may not vote on this poll
  • Socialist and Against

    10 10.99%
  • Socialist and For

    1 1.10%
  • Democrat and Against

    21 23.08%
  • Democrat and For

    6 6.59%
  • Republican and Against

    2 2.20%
  • Republican and For

    22 24.18%
  • Libertarian and Against

    9 9.89%
  • Liberarian and For

    9 9.89%
  • I am for it, but with a particular modification (explain)

    11 12.09%
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Thread: Social Security Fix

  1. #311
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    Re: Social Security Fix

    Quote Originally Posted by JoeTheEconomist View Post
    Your link is not an economic return it is a monthly projection. To get economic returns you have to add factors like birth date and whether someone is married
    that was the previous page. I used SS's calculator, gave them Low Income Joe's income numbers, birthdate, etc, and asked what his benefit would be. They came back with $948 a month if he retired at age 65.

    Here are the money's worth ratios from SSA. They tell you what the present value is of future benefits. These reports show SS in a favorable light in terms of discount rate. Like you I don't argue with the rates I just ask for sources.
    well it would seem to me that supporting source-material is something you are a bit shy on right now.
    Last edited by cpwill; 04-07-12 at 10:13 AM.

  2. #312
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    Re: Social Security Fix

    Quote Originally Posted by cpwill View Post
    no - I kept all numbers constant.
    If you visit our site, you will find that I do not defend the system. It's economic returns are terrible, and getting worse. The problem that I have with privatization plans is the overstatement of what they can do. This claim : a low wage worker will do better in the private market even at the lowest rate of return even cashing out at a market bottom is off the charts.

    In you case, you are using 10% which is more than what is withheld for SS today (8.6%). Your worker is not poor - on an inflation adjusted basis he looks more like a high-wage worker who took-up a low-paying hobby. This person's results will be the worst possible for SS. The economic returns that you use are almost the highest in the last 100 years. They are in fact higher than my sources say occurred in the 20th century - Crestmont takes out transactions fees. Mind you we aren't even touching the idea that wage-weighted investment will materially underperform the market averages. We aren't looking at the possibility that the low wage worker is a bad investor - well other than cashing out at a market bottom. We are ignoring the EITC which repaid Joe for much of his contribution.

    To your claim: we will say 10% withheld for a workers whose wage rose from $25,000(2012 dollars) to 34,670 in 2012. Assuming a 4.92 rate of return before a crash of 40% (the trough was actually 60% fall). Assuming 6% unemployment. At the end of 2012, he would have about $153,000. Assuming the crash occurred, at that point, he would have about $90,000 or a monthly payment of $225 a month at 5% interest. All of this ignores the fact that there is a cap on wages and the fact that you worker would have to buy life insurance that comes free with SS. This doesn't mean that SS was a good deal. You need to look at what the value of a $1,000 annuity inflation protected with survivor benefits was worth at the age of 65. It may well not be $90,000. Given that the life expectancy of a retiree is about 17 years my guess is that it is more than 90K.

    I could very well question any number of your claims. Your figures increase SS portion of payroll taxes by 2.4% - entirely to fund a personal account. Without payroll taxes, existing benefits would exhaust the Trust Fund in about three years. So Joe will be worse off to the extent that the Federal Government has to increase debt to fund benefits to existing people. Joe will have to pay that debt over his lifetime. In a worst case example, the Joe's portion of the increased debt is more than his entire Personal account.

    This doesn't say that SS is better than a privatized system. If the results today aren't superior for every case, they will be at some point. The economic returns of Social Security have fallen every year since its creation. The man who ran the system in 1944 told Congress, if you do not raise taxes now, the hidden costs of Social Security will force future generations to increase payroll taxes to a rate at which they would be able to get comparable insurance at a lower price from a private business. His testimony is an interesting read.
    Last edited by JoeTheEconomist; 04-07-12 at 10:47 AM.

  3. #313
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    Re: Social Security Fix

    I would like to have the option to take out all I put in and play the market with the caveat that if I lose it all I'am not entitled to any government assistance on any level.
    My family is more important than my party.
    -Zell Miller

  4. #314
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    Re: Social Security Fix

    Back when payroll taxes were generating more revenue than was being paid out in SS, the partial privatization of SS would have worked except for one thing: The feds wouldn't have been willing to give up a source of cash.

    Now that the balance is shifting the other way, we're starting to hear about at least partial privatization, but the big elephant everyone likes to ignore is the fact that money would have to be added to the system in the short term in order to pay current retirees.

    So, the time to have implemented a cpwill, or similar plan would have been a couple of decades ago, when the idea was politically unpopular as it would have eliminated a federal cash cow "needed" to fund everything from wars to welfare.

    There is no doubt at all that the vast majority of retirees would be far better off to have put 16% or so of their earnings into a diversified portfolio of stocks and bonds rather than into SS.
    "Donald Trump is a phony, a fraud... [he's] playing the American public for suckers." Mitt Romney

  5. #315
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    Re: Social Security Fix

    Quote Originally Posted by Dittohead not! View Post
    Now that the balance is shifting the other way, we're starting to hear about at least partial privatization, but the big elephant everyone likes to ignore is the fact that money would have to be added to the system in the short term in order to pay current retirees.

    So, the time to have implemented a cpwill, or similar plan would have been a couple of decades ago, when the idea was politically unpopular as it would have eliminated a federal cash cow "needed" to fund everything from wars to welfare.
    the cpwill plan includes popping the cap, raising the retirement age, and indexing COLA hikes to inflation rather than wages in order to cover that gap you identify. I wouldn't be averse to some means-testing, or averaging of the benefit, either.

  6. #316
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    Re: Social Security Fix

    Quote Originally Posted by cpwill View Post
    the cpwill plan includes popping the cap, raising the retirement age, and indexing COLA hikes to inflation rather than wages in order to cover that gap you identify. I wouldn't be averse to some means-testing, or averaging of the benefit, either.
    which would work in the real world. In the parallel universe that is partisan politics, how likely would it be that such measures could actually pass, I wonder.
    "Donald Trump is a phony, a fraud... [he's] playing the American public for suckers." Mitt Romney

  7. #317
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    Re: Social Security Fix

    One of the beautiful things about the real world is that you can only ignore it for so long. The Boomers are going to crash the entitlement systems, and when they do, formerly politically implausible solutions will suddenly be on the table as everyone desperately seeks to save what we can. And there is more popular support for privatized accounts than you might think.

  8. #318
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    Re: Social Security Fix

    Quote Originally Posted by cpwill View Post
    One of the beautiful things about the real world is that you can only ignore it for so long. The Boomers are going to crash the entitlement systems, and when they do, formerly politically implausible solutions will suddenly be on the table as everyone desperately seeks to save what we can. And there is more popular support for privatized accounts than you might think.
    There may be some support for privatized accounts now. Of course, when Bush proposed the idea, the Democrats shot him down, just as the Republicans will if a Democrat president proposes it. Maybe the real world will invade the realms of partisan politics, but only when the crisis has been reached and there is no other alternative. Where there may be even less support is the idea of popping the cap, raising the retirement age, and indexing COLA hikes to inflation, which would have to be an essential part of the fix.
    "Donald Trump is a phony, a fraud... [he's] playing the American public for suckers." Mitt Romney

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    Re: Social Security Fix

    Quote Originally Posted by cpwill View Post
    1. it's 7.65% and
    2. it's a marginal decision. so no, everyone making (say) $110,000 won't get fired. their employers will just see the costs of creating such positions go up, and will thus make fewer of them.

    what is it about the supply/demand curve that liberals Just Don't Get?
    I have to laugh at your logic. Why is it the right wingers see employees as drains on their profits that only exist because they are generous enough to pay them a salary? Is that how you marginalize workers as a commodity or is it because you really don't understand that employees MAKE your money for you. If you lay off workers you will LOSE money not save.

  10. #320
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    Re: Social Security Fix

    Quote Originally Posted by Dittohead not! View Post
    There may be some support for privatized accounts now. Of course, when Bush proposed the idea, the Democrats shot him down, just as the Republicans will if a Democrat president proposes it
    nah, I would think that Republicans would need a different reason than that (for example, if the D President would only allow privatized funds to be invested in government bonds).

    as for popularity:

    "As you may know, a proposal has been made that would allow workers to invest part of their Social Security taxes in the stock market or in bonds, while the rest of those taxes would remain in the Social Security system. Do you favor or oppose this proposal?"

    9/23-25/11:
    Favor: 52%
    Oppose: 46%
    Unsure: 2%


    "Please tell me which of the following statements comes closest to your opinion about the Social Security program. The Social Security program has no serious problems, certainly none that require changing the current system. Social Security has minor problems that can be fixed with minor changes to the current system. Social Security's problems are serious and can be fixed only with major changes to the current system. Social Security's problems are so bad that the system should be replaced."

    Doesn't Need Change: 4%
    Needs Minor Change: 28%
    Needs Major Change: 55%
    Should Be Replaced: 12%
    Unsure: 1%

    Maybe the real world will invade the realms of partisan politics, but only when the crisis has been reached and there is no other alternative. Where there may be even less support is the idea of popping the cap, raising the retirement age, and indexing COLA hikes to inflation, which would have to be an essential part of the fix.
    when it comes down to get a smaller benefit / means test the benefit, or get no benefit....

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