At some point in the future, SS will, no doubt become a problem, (say 30 years from now). But, Medicare is a very large problem, right now, and it needs to be addressed immediately.

I'm 51. I figure I have 15-25 years left to work and save. I want my private account, and I WANT IT NOW!

This issue makes me more angry than any other out there today.

I have more on some bad math still being peddled by Yglesias. Even Krugman backpedaled on this point, I should add.

Sorry sol, they tried last year, and were obstructed by Schumer and Co. I'd like the private account too.

I was listening to Laura Ingraham's show on Friday; she was off and her guest host, whose name eludes me, brought up illegal immigration. It appears that the main reason this issue has been largely ignored, by both Republicans and Demoncats, is the entitlements issue. A lot of these illegals have bogus SS numbers, so when they go to work, they are paying into a system that they won't be able to use when they're older. Our Baby Boomers are gonna be leaving the work force in droves soon, and someone's got to foot the bill. Heck, I'm a baby boomer, but on the younger side--49. I won't be retiring for a while--too many bills and not enough savings.

The cold hard facts are that our government, for decades, has robbed our SS, Medicare, and Medicaid coffers. Republicans and Demoncats have both spent our money. Guess who's gonna pay for it? You and I...

Keefer,

The cold hard facts are that our government, for decades, has robbed our SS, Medicare, and Medicaid coffers. Republicans and Demoncats have both spent our money. Guess who's gonna pay for it? You and I...

I think one of the problems is that they have been doing it so long, they are starting to think the money is their money, and that's why they fight tooth & nail to keep the people from having the control of their own money.

The Congress has control of their own retirement funds, and invest these funds into the markets. We as citizens should demand either:

1. Give us a plan just like you have.

2. Congress drops their retirement plans and go onto Social Security just like the rest of us.

2a. Congress take the funds in those old retirement accounts and deposit it into the Social Security fund (back to where they stole it from).

Where did their retirement money come from? How is it that they chose to rob from Social Security and left their funds intact?

It boils down to a matter of account ownership. Congress thinks they are the trustworthy ones, and not the american citizens. Let's see a poll on this question.

Who do you trust with your retirement?

a. congress

b. republicans

c. democrats

d. myself

e. my new email friend from africa

Mark, great post. I was just thinking about President Bush's social security reform this morning. The Dow Jones is just below 11,300, the S&P 500 and nasdaq are also moving up well. If President Bush's social security reform had passed last year, I was thinking of all the young people in this country who would have been putting part of their social security into the private accounts and it would have been growing with this strong market. They could have put their funds into the conservative accounts that President Bush had invisioned, something similar to the Vanguard Wellington fund, which is a mixture of stocks and bonds. So, instead of receiving 1 percent that they get now, they would be getting the 10 percent historical market average. The dems prevented this through their lies and Bush hatred. The dems hurt this country again like they always do, and it makes me sad to see it happen. For any conservative who is thinking about not voting in November because of a protest, think about this. Think also how the dems treated both John Roberts and Sam Alito. Think also how the dems main purpose in life is to impeach President Bush for preventing another terrorist attack in the USA for 4 1/2 years. Think about how the dems want to cut and run from the war on terror and want to apply the bill of rights to bin laden and his terror buddies. Think about how every election cycle the dems try to disenfranchise the military vote while pushing for the felon vote. Think about all the dems lies and baseless claims about President Bush and all conservatives and tell me if you really want to give them support by staying home in November. Do you really feel that the dems deserve to be rewarded for the above behavior.

Mark, if the dems had their way, saddam would still be in power, receiving 300 million dollars a month in oil revenue, filling mass graves, raping women in rape rooms, torturing, throwing people off of buildings, using power tools on people, supressing 25 million people even the sunnis, shooting at our airplanes on a daily basis, drawing down the UN sactions and training terrorists by the thousands. All this while his two charming sons were waiting in the wings. This is the dems view of the world if they had their way. Do any conservatives still want to stay home in November and give support to the dem party?

Maybe a modified version of a 12 step program would help congress. Go slowly, introduce each step and get them to all sign off on it.

step 1 - We admitted we were powerless over our addiction - that our programs had become unmanageable

I'd like to hear what others think about lagit workers not paying into the SS system but have their own accounts or system. Here in Connecticut the teachers do not pay into the SS system. Their system is funded (an issues now in the state) by taxpayers $$$. The US Postal Service is another and I'm sure there are more. So for you number crunchers is this a good thing for those who will rely on SS in our future?

With the progected 1 trillion price tag of the Iraq
war the US government could have fixed the SS sytem for the next 15 to 20 years

"It might seem like a waste of time and blog space, but it is my view that Social Security reform is going to have to happen - Democrats and the MSM megaphone can gum up the works quite a bit, but the simple demographic facts of life show that SS is going bankrupt, and thus it will have to be dealt with in the by and by"

If social security is ever threatened because there are too many people on it, then there will be quite the political payoff for the politician that saves it. No need to worry.

The people who DO need the hurry are the ones that want to cut SS, or privatize it, or otherwise destroy it. Because as demographics changes, it makes it harder and less popular for them to gut SS.

"(the 70-80 year historical average is in fact about 7%)."

Part of the calculus that claims SS is broke involves the fact that the economy will underperform over the next 70-80 years compared to the past 70-80. An economy that can give 7% equity returns is growing enough to not have a SS crisis.

Hey Brian, we were not in Iraq during the 90's. How come your buddy Bill did not fix it then? To Busy?

Dave

P.s. Love the way you spell

shortz,

No, an economy with 7% returns cannot sustain money being placed in SS and not into the private economy when there are nearly as many retirees as their are workers.

The imbalance is too great, shortz, we have to reform...our choices are massive tax increases, massive benefit cuts, or privatisation.

Choose.

"No, an economy with 7% returns cannot sustain money being placed in SS and not into the private economy when there are nearly as many retirees as their are workers."

Money in SS is not 'put away.' Its placed into hte hands of people that spend it, or put into the trust fund -- ie, the general budget.

"The imbalance is too great, shortz, we have to reform...our choices are massive tax increases, massive benefit cuts, or privatisation."

The predicted shortfall doesn't even rise to 1% of GDP. That's not 1% that goes down the drain. That's 1% that gets put into the hands of senior citizens and spent.

See... I don't think anyone disagrees with SS being in trouble. Nobody disagrees that something should be done about it.
The issue is what to do.
Private Accounts is an absolutely HORRIBLE way to go at it. The last thing I want to do is put my retirement savings into the stock market. I do invest in the stock market with my own money. I see the fluctuations up and down. That is not for retirement!

A few flaws with the whole Private Account thing...
1) It will cost so much money to get thing even started, it just can't happen. Maybe if we weren't spending 2.8billion a month on Iraq this piece could possibly get done. But with the Government already significantly in the red and now the debt is up to 9 TRILLION... no way can this happen.
2) Sure, maybe a personal account would be good for some. Some people can afford a Financial Advisor to tell them what to invest in and what not to invest in. Some people know the types of investments to go for. For those people, this would be wonderful. For the rest of the people that don't know what a stock is versus a bond and what a safe income investment is versus an Aggressive Growth stock, those people are doomed. Guess what... the latter people make up the vast majority of people. Again, this is another thing to benefit the wealthier people.
3) I work in the Financial Industry. The only people I see that would be guaranteed to make money is the investment managers. They will collect their fees at record levels. They would join the oil companies with their record profits.

The answer, to me, is simple.
Either raise the tax on the top 1% of Americans even 2% and collect millions or...
Raise the Social Security tax so you pay on more than the first $90,000. Raise it to $150,000. Again, that would raise more than enough to sustain Social Security.

So, please don't say how the Democrats don't believe there is a problem. Don't say how the Democrats want to see SS go bankrupt. That is absolutely false. Democrats just don't want to privatize it! There is such an easier, cheaper and quicker way to get this done.

sick of lies, If the account could be 'owned' by individuals, and not left in a slush fund for the government to borrow from. What is so wrong with that? The individuals would have the ability to control and invest in government securities, bonds or stocks.

But somehow it needs to be taken away from the government who have proven they cannot control themselves when it comes to our money. They are addicted to it, and we need to make them stop. How do you break their "sticky little fingers"?

And everyone laughed and ridiculed Al Gore when he talked about his "Lock Box".
I don't know how you do it, but you figure out a way to do it.
See my point #2 above about what is inherently wrong with private accounts "owned" by individuals.

I still think either a 2% increase in taxes on the top 1% (which most wouldn't even miss!) or increase the SS tax cap from 90k to 125k or 150k.
I guess it should have added PLUS find a way to lock that money up.

Boy does a "Lock Box" look good right now... doesn't it?

sol, I think before I want more money to be added I would want to make sure the politicians do not get access to it, or we'll be back in the same boat.

Condition # 1 they should stop touching it today, this hour, this minute, this second and forever more.

Then have the GAO run the numbers, and calculate how much is needed and give the choices of where that much money could be raised.

With all the numbers laid out on the table, and assurances that the government isn't ever again going to be able to use the money as their slush fund, only then determine the "Best Way" to fund whatever needs to be funded. Logical heads need to take over the decision making and away from all the political agendas.

Like Indian Trust Funds... The government continues to screw that up as well, I do not understand why the indians keep putting up with it.

I do not trust the government anymore to hold the retirement funds. I am 60 now, and way back at the age of 30 wanted to have a choice to get out of social security and do my own retirement account. If I were 30 now, I'd still be mighty upset at those who killed the Bush proposal.

You may agree that stock markets may go up and down, government securities are more stable, but government politicians are the VERY WORSE PLACE to put your money.

I think it would be easier to teach millions of people how to invest, than to stop the greedy politicans from stealing.

I do agree. We absolutely have to find a way to keep their hands out. Whatever it takes, it must be done. That should go without saying.
It is the "Best Way" that I am concerned with.
Being in the Financial Industry I can guarantee the average person off the street would not know what decisions to make.
I wish I could agree that it would easier to each people how to invest. That would, by default, mean we have a more intelligent populace. But think about it... we can't even teach everyone to read or do math. Do you really think you could teach them how to invest?
Also, think about this. A LOT of the people that do not and probably could not learn to invest are generally low income people. Those people may be less educated. Probably no college degree as they couldn't afford it. THOSE are the people that the government needs to look after. Those that do understand investing are generally more college educated. There is more of a chance that not only do they understand the markets, they also have the means to hire a financial advisor to help with the investments.
Bottom line... people that are barely getting by now REALLY couldn't get by in retirement. Those getting by with ease now can live even easier in retirement. The income disparity is giant right now, this would only guarantee it is that way in retirement as well.
Remember this... Social Security was not brought into American living for the purpose of investing and making as much money as you can. That is what personal savings is for. Social Security was built to try and force a safe savings account for ALL people. Even those that can't afford to start their own savings/investment accounts.

We need social security reform. President Bush tried to push it last year, but it didn't gather enough steam to go forward. Senator Hagel introduced on proposal that was along the lines of what President Bush was suggesting, but that died in the Senate. We need something, and soon.

Fifty cents for every dollar. That is the amount of my money I expect to receive from my SS account. Of course that is what I put in, but the amount my employer matched is lost to me. What is even worse, is the fact that my money that was taken into the system has the same return as if I had just put it into a jar and stored it on the shelf. With even a paltry 3% rate of return, it would have at least doubled over my working life time. As it is, at least my cat will be able to eat well.

SOL,

Whatever the reasons behind enacting SS, the environment is so changed 70 years later that whatever those assumptions were, they are no longer valid.

We know that two workers cannot support one retiree - it is just impossible. We can't just whistle up more workers, and we can't escape the fact that the number of retirees is about to explode. Nothing is ever going to be perfect, but retaining the antique SS system as is simply will not work.

Bob,

The way things worked, your money and your employers has already been spent. An IOU has replaced it, and they are trying to figure out what to do when the daily money coming in (and still being borrowed out right away) does not keep up with the money going out to those who retired already.

The moment the government puts in 1 penny more than they take in is effectively D-Day. The IOU's are still due, and the government has no more money.

The results are, your cat's gonna get hungry. Find a place next to where some field mice live, maybe the cat can catch some for you too.

"We can't just whistle up more workers"

sure we can. There are millions of people that want to come work in the US.

dl, when you say the government has no more money, that is true. There are other ways to drum-up more money. But since every rightie out here doesn't want to hear a word about the dreaded "T" word, it will never happen with a GOP controlled Congress.
Again, simply raise taxes on the top 1% by a mere 2% or raise the SS Tax from 90k to 125k. It really is that simple! You do that and it raises enough money to sustain SS until a true fix can be figured out.

Also.... Mark, you say things have changed in the last 70 years and SS as it is won't work.

Last I checked, people are still retiring. People still don't know how to save on their own.

What has changed? If this process has worked for 70 years, why can't it work in the future. Instead of trying to gut the thing and privatize it, just make changes to fix whatever is wrong with it.

Why spen a trillion dollars just to privatize this? Make changes that don't cost much money and sustain SS until we could fix it.
The country is already significantly in debt and it is only getting worse. Why throw away 1 trillion dollars for something that amount to just gambling?

Investing is NOT gambling. The balance of your propositions have equally sweeping and fatal cracks in their premises. What has changed? Plenty. I am disturbed that someone who claims to be a financial industry pro doesn't understand the demographic alterations of the last five decades (or the difference between investment and gambling); people are getting older, birth rates are not keeping pace. As the man said, two paying in cannot support one drawing down. Back in FDR's day it was about 12 to 1. Whatever, the problem is as always the Democrats. Always always always trying to slip socialism in the back door, through the window, through the transom. All your propositions are socialism, nothing more. Never does socialism PRODUCE anything. Never. It only distributes and destroys in equal measure. Private accounts on the other hand are REAL investments in REAL assets that produce new wealth. We call that "growth". That this distinction is lost on our Democrat wards is understandable. They never learned the meaning of "is".

"As the man said, two paying in cannot support one drawing down. Back in FDR's day it was about 12 to 1.

Hasn't productivity changed since FDR's day?

It has but also have our expectations. Are you saying we should gear SS payouts to a level of consumption commensurate with 1935? It is a foolish question, you never mean anything by your gaseous complaints. Well, that's a Lefty for ya.

Socialism. What we are for is equality.
As I said in an earlier post, the problem with privitizing this is most Americans don't know the difference between a safe investment an a risky investment.
The wealthy and the educated should do fine. To the lower income people and the uneducated, it is gambling. It would be the same as buying a scratch ticket.
I guess this is where we differ. I am for the Government helping make people's lives better. Not just the wealthy, but everyone. Call it Socialism if you want, but the gap between the wealthiest and poorest is greater than ever right now. I'm all for giving everyone the ability to live happily.

"It has but also have our expectations."

So? That's not what sets social security payments. Its a formula, not expectations.

And thats the wingnut for you: positions based on irrelevant arguments.

“Socialism. What we are for is equality.” – Sick of Lies

Are you REALLY for equality??? That is a big question that should be answered with care. One aspect of socialism is about the DISTRIBUTION of wealth to the extent that everyone would share in a rather “equal” portion. But that does not take into account how that wealth was gained in the first place. To a socialist it doesn’t much matter. To a capitalist, keeping the wealth one earns means a continued incentive to move toward a direction that will reward you for your work / risk / choices / ideas / efforts etc. Free giveaways of another persons wealth will lead to the decay of energy and motivation that helped create that wealth in the first place. Eventually what will be left is everyone demanding their “rights” to a wealth that no longer exist.

Take for example 2 workers doing the same job and earning the same pay.
Worker 1 lives a frugal life by saving and investing, buying used cars and keeping them as long as possible or using public transportation, buying or renting simple living accommodations, not being concerned with the latest in fashions, eating at home and so on.
Worker 2 lives life on the financial edge and therefore cannot seem to save anything. S/he gets a new car every 2 years, lives in a big fancy house, has a closet overloaded with the latest in fashions, eats out at expensive restaurants regularly and takes lavish vacations.
Now some 35-40 years later both retire from their jobs. As they’ve worked the same job and were paid the same salary, they would have paid the same amount of SS tax.
Worker 1 has a significant income from investments that allows him/her to maintain their previous lifestyle without touching the principal investments. Social Security denies or significantly reduces his/her benefits as they’ve exceeded the allowable annual income with those investment returns. Worker 2 receives full SS benefits as s/he now has no other income.
How is that fair? What is the incentive for worker 1 to act frugal and spend within his/her means? Why should worker 2 be allowed SS money where worker 1 was not? What context of “EQUAL” would you apply here? (Please note that I am not against big houses, new cars or cloths or eating out. This is simply an example to show a context for equal / unequal.)

You propose increasing SS tax on those earning over $90,000 to somewhere in the $125 – 150,000 dollar range. How is this fair / equal? Will the person putting more in get more out? If yes how will the “available funds” continue on their current path? If no then we have a different version of “equal”. Remember, SS was originally intended to be a retirement aid for those who worked and put money into the system, NOT an entitlement program such as Medicare.

For me, I do not see how the Individual Investment plan will help much OR hurt much. It’s a start and in the right direction. For those who oppose it, what problems do the Ind. Inv. Plan pose that can’t be dealt with proper guides and control?

What I do see is a President who understands that we cannot continue in the direction we are headed without consequences. Most economists agree, but disagree as to when this will happen. Regardless, it cannot sustain itself at the present rate indefinitely. This President is also attempting to make changes in a positive direction. Too many in Washington do little or nothing (and most of them appear to be Democrats and Liberals) . Why? – I’m guessing like most everything else I read lately is they don’t want the current administration to get credit for anything, an attempt to regain control of the Presidency. Either be part of the solution or get out of the way to allow those who provide positive ideas to be heard and move their message forward so that the people they serve will benefit. Doing nothing is NOT an option (unless you want failure).

I remember a movie where a teacher in a downtrodden area of LA was trying to get a very important message across to her students, all of minority or poor backgrounds. She stated - There are no victims! You have a choice! It does NOT matter who your parents are, where you live, what possessions you have or your level of education. You have the CHOICE to change who you are and what you have by moving toward a direction that will ALLOW you to achieve what you want. It is not your right to BE someone or HAVE something simply because you want it or because someone else has it, but rather you have the right to ACHIEVE those things. That presupposes that YOU have to DO something to get what you want, not just wait for someone else to EARN it and then take it away from them because??? “fill in meaningless reason” ???

If you chose to do nothing or do negative things then you should suffer the consequences of those actions. If you chose to act positively then you should enjoy the benefits of those actions.

“I'm all for giving everyone the ability to live happily. – Sick of Lies”

As are we – the key word here is “ability” which differs significantly from an illusionary “right” to live happily by giving people something they didn’t earn or taking it away from someone who did.