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Political Hay
Grabbing the Third Rail
Are entitlements the paper tiger of American politics?
(Page 2 of 2)
That said, Ryan predicts that the real battle over these issues will be deferred until the presidential election.
“2010 is a proxy fight, or a shadow boxing match, to the real fight in 2012,” Ryan said. “2012 is the fight for the soul of America. What kind of country do we want to be in the 21st century? Do we want to be a mediocre nation where we manage our decline like Western Europe, and we become a cradle to grave welfare society, or do we want to get the American idea back?”
But if there’s any hope of having a real debate over entitlement reform — whether now or two years from now — at some point, more candidates will have to be willing to force a discussion on it.
“My experience in a very competitive district is if you just own up to it, defend your ideas, people are fine,” Ryan said. “They’re okay with it. They understand it. These things aren’t the third rails they used to be.”
Republicans may want to start considering whether in reality, entitlements are the paper tiger of American politics.
About the Author
Philip Klein is The American Spectator’s Washington correspondent. You can follow him on Twitter at: http://twitter.com/Philipaklein
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Appleby| 10.15.10 @ 6:32AM
Social Security was originally designed to SUPPLEMENT the income of working men who saved and prepared for retirement, and the age of eligibility was set about 15 years past the age when the average working man was expected to die. So it was a viable and sustainable system.
Nowadays it is festooned with Goodies, and the wagon is filled with hangers-on who never contributed Dime One to the program -- not to mention the fact that the age when people die has risen by 25 to 30 years (depending on gender) and that many people believe and plan for SSI to be their total income after retirement.
If someone was brave enough to cut the program back to what it was originally, there would be no problem continuing it for future generations who wanted it. (I would make it far more advantageous to prepare individually for retirement; after a firm cutoff date above which benefits would continue for those forced to pay in, SSI could remain a supplement available only to those who voluntarily choose to sign up for the program, and those who reach retirement age having p***ed away their productive years would be SOL. A generation of that and people would learn, especially if SSI was granted soverign immunity.
GIMMEEGOODIESNOW has to stop being the battle cry of Generation Yne. Let them eat Justin Bieber ticket stubs.
Alan Brooks| 10.15.10 @ 9:14AM
All the author has to do is say:
"let's slowly terminate the Welfare State."
Always helps a bit when you don't obfuscate so much.
Rev. Jesse Jackson| 10.15.10 @ 4:12PM
Alan Brooks,
Go back to yesterday's special report, "Internet Freedom Under Siege", where you said that, "God is a woman and Jesus is his daughter." I have a rebuttal there waiting for you.
Alan Brooks| 10.16.10 @ 9:03PM
"Go back to yesterday's special report, "Internet Freedom Under Siege", where you said that, "God is a woman and Jesus is his daughter." I have a rebuttal there waiting for you."
It must be important, because you mention the above more than once. Question is, why do you identity-thieve Jesse Jackson? only a young quite immature person would do such a thing.
Brad| 10.15.10 @ 5:00PM
Take out the word "slowly" and you've got something.
Madge| 10.15.10 @ 5:19PM
Alan, you're such sissy boy.
Alan Brooks| 10.16.10 @ 9:05PM
"Alan, you're such sissy boy."
Go ahead, destroy the welfare state; do what you want-- this is your country. The rich own America.
Alan Brooks| 10.17.10 @ 11:12PM
"Take out the word 'slowly' and you've got something."
You are bluffing; you want the state to help your people.
Notary Sojac| 10.15.10 @ 9:27AM
"the age of eligibility was set about 15 years past the age when the average working man was expected to die"
We go to that standard and the SS trust fund will be able to support the rest of the FedGov, easily!
carnot| 10.15.10 @ 1:06PM
don't care. I want the money back I put into it. otherwise.......someone is going top be held accountable
John2| 10.15.10 @ 1:21PM
That is a fundamental point, SS is supposed to be a supplement. It will help you stay out of the "eating peanut butter in a tarpaper shack" standard of living.
Not support you to the same standard as your job did in the working years. You did have working years, now didn't you? Come on now, you made some kind of plan to retire, didn't you? Did you?
Oh, dear, .... screwed up again!
Mike| 10.15.10 @ 1:40PM
Social Security was sold to the public as a program for widows and orphans, who would be the immediate beneficiaries. That was packaged into the mandatory retirement account verbage. in 1965 the Supreme Court decided that Social Security could be spent like the general fund. The rest is history and now social security is a welfare program.
wodiej| 10.18.10 @ 5:49PM
great analysis...not too short and not too long.
Roy| 10.19.10 @ 8:58AM
Lol. And the battlecry of our current crop of "senior citizens"?
"Cut SS? Aaaaaargh!! IT BURNSSS!"
logmank| 10.15.10 @ 7:21AM
One: The combined unfunded mandates for Social Security and Medicare are in excess of $130 Trillion.
Two: Failure to dramatically reform these two programs will drag the United States into economic ruin.
Three: In most districts of the country, you cannot get elected if you suggest dramatic reform of these programs.
Doesn't bode well for the future of the country, does it?
idalily| 10.15.10 @ 2:25PM
No, it doesn't. Because people refuse to face facts. There is only one fate for SS. It will die. Slowly. Painfully. But somehow, it will die. It must, because like all liberal, "compassionate" social entitlement programs that are supposed to "help people", it's good-intention paver on the long, cold road to hell. IT DOESN'T WORK. There are too many retirees living longer, and too few post-boomers to pay for these longer and longer retirements. Why can't people figure that out? All they have to do is look at demographics and do simple math. Why is it so hard?
Joe Oliva| 10.15.10 @ 3:36PM
It isn't hard to figure out. We all have to make some sacrifices.
I am 64 and will retire soon. I think the promised benefits should AT THE LEAST, be capped and kept from COLA raises. Further, I think the actual benefits should be decreased.
Personally, while I need SS, I am not willing to screw over my grandkids so I can have some fabulous retirement. It isn't right and I wish other seniors would wake up and get the message.
That message by the way, is that those already on SS & Medicare won't be dumped into the streets like the Dems proclaim as they try to scare everyone.
Au Contraire| 10.15.10 @ 7:32AM
Couldn't you find a better picture of Ryan than one in which he looks like he's doing a Hitler salute?
Johnson Johnson| 10.15.10 @ 1:29PM
It's from his meeting with Obama.
InLineFour| 10.15.10 @ 3:06PM
...and he's proud of his brand of antiperspirant.
RCV| 10.16.10 @ 7:22PM
The picture should be the poster for the new GOP - it captures its very essence: extreme ultranationism, psuedo-Christian piety, so-called "traditional values", scaring people with the bogeyman of Bolshevism, feeding on economic bad times. Haven't we seen this movie before?
Margie| 10.16.10 @ 9:59PM
This means Ryan is good. Real good.
RCV| 10.17.10 @ 12:02AM
Actually, Ryan IS good. Real Good. Unlike most of the spokespersons for the "new GOP" (Palin, O'Donnell, Rand Paul), he has a brain, articulates an intelligent, thought-out program, and is a reasonable, thinking person. The party would be smart to focus on him and his like, as opposed to the know-nothing wing that is on the rise.
Tim*| 10.17.10 @ 9:22AM
Spoken like one more " Fellow Traveler " & Alinskiite .
Bill Hussein O'Stalin| 10.15.10 @ 8:04AM
Generally speaking, social security is really socialism. It's simply a transfer or payments from the working class to those who have reached a certain age. If the system is to be supported, then the payments made by the working will have to go up.
Forget the fact that long recessions seriously dampen contributions to the fund.
Social security is simply a stupid idea. And it's become more stupid over the years. Just about anyone who wants can get a disability claim in with social security and many do. Some families receive SSDI checks for all their children, claiming ADHD.
While the social security funds are being robbed by those who never contributed a dime, gracious politicians stand by and spout political slogans which will do little to save anything.
Citizens should have a choice about their financial future. While Obama, Biden, Redi and Pelosi whine about the lack of protections in the financial sector for the average citizen, they fight tooth and nail to protect a system which leads millions of citizens down the primrose path to poverty.
Siegfried X| 10.15.10 @ 8:31AM
"Ryan noted how Republicans throughout the nation have been blasted with attack ads claiming they want to destroy Social Security ..."
Welcome to reality, Rep. Ryan. It happens every election. Running on a vague promise to change social security and other entitlements is a p0litical disaster.
Lots of extremist left-wingers got elected in 2008 because of voter anger. That doesn't mean the majority of America is Marxist.
Likewise some libertarians like Ryan will be elected this year, but that doesn't prove that America is libertarian. Klein and Ryan seem to be making the same mistake that Obama and Pelosi did by reading a mandate into the election.
Siegfried X| 10.15.10 @ 8:35AM
I support budget cuts, but know from painful experience in the 1980's and 90's that it will be a hard battle. REAL budget cuts are mostly a political loser. Even though everyone likes the IDEA of budget cutting, once the actual cuts are named, then many voters turn against it.
For each and every small budget cut, even a freeze, expect thousands of Democratic attack ads about how the elderly, the poor, and children are being slaughtered by those cuts. The media will "put a face on it" by interview people who actually claim to be hurt by the cuts.
Shamus| 10.15.10 @ 8:57AM
The easiest cut to make would be in federal salaries. States have been furloughing worker for several days each month without any dire consequence.
Neanderthal| 10.15.10 @ 9:43AM
Real cuts would be nice, and certainly there are vast areas within the federal budget which could be swallowed by a black hole tomorrow without anyone other than the friends and relations of the bureaucrats involved noticing, but in point of fact, all that really needs to be done to make the leviathan solvent is to hold the rate of increase below the inflation rate for a few years. That's essentially what Newt's congress did, and a solid Republican House and Senate could do it starting next year, if people like Ryan are in charge.
idalily| 10.15.10 @ 2:27PM
Three words:
Balanced. Budget. Amendment.
Clinton nee Publius | 10.15.10 @ 8:40AM
I hope he is serious, because; his history is one of someone who just wants to get his ticket punched on the way up. There is only one way these entitlements can be reformed and that is to privatize them. Everything else is a continuation of the current scam. As long as government has the exclusive right to operate these programs the corruption and moral hazards and failures will continue.
John T. | 10.15.10 @ 8:50AM
Some of US do not expect much if anything out of Government entitlements. It makes no difference to me what the retirement age is set at. I plan to work to at least 70 and would be embarrassed to be like a French protestor upset that the retirement age go up to 62 from 60!
Sooner or later a generation will have to step up and say we will be the first to show the way. The soc. security age was originally set when life expectancy was a lot lower than it is today. Why should people be allowed to suck off the Govt. for 25 to 30 years?
John2| 10.15.10 @ 1:28PM
Zey are French, you see Monsieur American, eet ees the answer to all your questions.
I, too, plan to work into my 70s and will be pleased to explain that I want to pay my own way as long as possible in this life. The alternative is acceptable only if I become disabled.
Petronius| 10.15.10 @ 8:58AM
Those who are now receiving the SS benefits know that the FICA taxes collected last month will be disbursed to them next month. That's why the privatizing scare works so easily. They also hate anybody who has money to invest in anything except a CD at the bank.
Nothing scared the liberals more than the Charticle in Forbes back in '85 which demonstrated that a person graduating that year and beginning a career at $25,000 annually, only doubling that salary over time until retirement at age 67 would not live to collect what was paid in with an average loss of 6%. The author went on
proposing that investing the same amount deducted for Social Security being invested in the markets at an average compounded annual return of 6% would enable the account holder to withdraw $5000 a month indefinitely upon retirement never touching the principle which would go to his heirs.
But the real problem is the flawed views most people have about wealth. And their hatred of the markets stems from their refusal to learn and understand how they function. One of their kind told me flat out, "all the money is ours"; meaning that if he didn't bring home enough to meet his family's needs the state should confiscate money from others to give to him. The next time he saw me and the bumper sticker on my car he cringed a little. It says; "Your Fair Share is Not in MY Wallet."
Notary Sojac| 10.15.10 @ 9:30AM
"invested in the markets at an average compounded annual return of 6%"
There's your problem right there. Show me where I can park a six-figure sum at 6% with reasonable safety of principal. Or do you think we can become a nation of day traders?
Neanderthal| 10.15.10 @ 9:49AM
You can probably make 5% by paying down your mortgage. Otherwise 6% is probably conservative if you are invested in diversified equities, over time. Of course that doesn't mean you can't lose over the short run, and that's what scares off the "don't privatize my SS" crowd.
Al Adab| 10.15.10 @ 11:33AM
Had my mandatory Social Security deductions been invested in any of a number of mututal funds over my lifetime, I would- even in today's markets- be a wealthy man. Could I not use that money to pay down my mortgage; to pay unexpected medical expenses; to provide a retirement income and so on all without being beholden to a federal system of allotment?
But the real entitlement issue is the huge number of Federal funded programs which aid few, cost many and provide little in the way of societal benefits. Look through the grants program or the multitude of NGO programs that taxpayers finance. Even the very worth entitlement should be anathema to Americans. Who is entitled to anything at someone else's expense?
Petronius| 10.15.10 @ 9:35PM
There are two given facts of life in a free society; social and material inequality, and risk. When the tech bubble popped I took a 68% hit that year. I'm still here. My portfolio is my problem. How you handle Your money is not. Heed the words of the late Malcom Forbes. "With all thy getting, get understanding."
uncle curmudgeon| 10.15.10 @ 9:11AM
It is a paper tiger, Philip. And the Dems are the man behind the curtain to whom we are to pay no attention. Generation Y types of my aquaintance are universally contemptuous of Boomers (and their parents) who have sold their birthright for this particular mess of pottage. Sez them, "We ain't paying for this." The legs on this issue grow longer every day. Consevatism works every time it is tried. The kids, as they say, are alright. Rep. Ryan: keep your hand on that plow and don't turn aside.
Louis Jenkins| 10.15.10 @ 9:23AM
Like it or not we have all been (voluntarily) vested in the ponzi scheme. It started out as a way to suppliment our income when we retire, and has turned into money for everyone. I have been vested in the system for several years now and expect to see little if any of it. I doubt any of the politicians will take Ryan's bitter pill which would help set this country right. But if the bullet has to be bitten let it begin with us. Time to cowboy up.
Ken (Old Texican)| 10.15.10 @ 9:37AM
Our whole message, it seems to me is that young people under 40...say...need to have a privatized account for a decent retirement.
Perhaps lump their funds into decent sized investment amount with say fifty people lumps.
There really are some splendid honest money managers out there.
Jay Walker | 10.15.10 @ 9:38AM
the real paper tiger in the room is the reluctance of Republicans to address our foreign policy. Why are we subsidizing European Defense? The Japanese don't want us on their island. WHy are we staying there? WHy are we engaing in NAtion Building in the middle east. Bush vehemently opposed the idea of nation building in 2000. YEt he and the majority of the Republicans have wasted an obscene amount of money, and more importantly american lives trying to nation build. There is no reason for the US to account for almsot half of the worlds Military spending. SOcial Security needs to be reformed, but we need to save money to do this and our foriegn policy would be a great place to start.
mcatty| 10.15.10 @ 11:27AM
Close our bases in Japan, S. Korea, Germany, etc. Reduce the Agriculture Department to 1914 levels. Abolish the Depatment of Education. Sell the Post Office.
MoeBlotz| 10.15.10 @ 10:00AM
"That said". Who is That? Space filler I should think. Obnoxious cliche Mr.Klein,and it does nothing to make your point.
JShizzle| 10.15.10 @ 10:18AM
The real problem is us. How many times have you heard our fellow Americans say the following: "I paid my money into it, I deserve to get my money back!"
Until we can educate our fellow peeps that SS is just one big Ponzi scheme and get rid of that attitude, we'll be hard pressed to win the argument with the party of Demagoguery...and that's assuming that we can elect some pols with the cajones to tackle this important task.
JP| 10.15.10 @ 11:49AM
Actually, SS was always a pay-as-you system. Unfortunately, the SS bureaucrats created the impression that one is "owed" a certain amount when one retires. When SS was first instituted in 1937 there were 40 works per retiree. Today there is less than 3; and in a decade it will be 2 to 1. And it didn't help when ALGORE talked incessently about "lockboxes" when he ran for President. There was never any lockboxes. There was surpluses, which were created in part by a quadrupling of the SS payroll tax (it went from 4% to 12-14%), and an influx of Boomers hitting thier peak earning years. But the Boomers are now retiring at a rate of 10,000 per week. And Congress spent the surplus many moons ago.
Mike Gabel| 10.15.10 @ 10:29AM
As a CPA who at a very young age understood that sending my hard earned wage to something named FICA was wasteful, Mr. Ryan has my complete support.
Longplay| 10.15.10 @ 10:30AM
For the last 15 years of my now 30 years of work, I've told people that I'd forego all rights to ANY SS payments if the government would just stop taking my payments from then on and let me invest the funds myself. It's been know for decades that the system ws unsustainable and that there was no "trust fund" other than promisory notes that amount to huge taxes on our children. Republicans should have acted like adults on this issue long ago and put the facts before the electorate in a straightforward fashion, explaining that though the market has its ups and downs, the federal government as an investment vehicle has only downs. Heck, Chile weaned itself off SS years ago. If they can do it, we can.
JP| 10.15.10 @ 11:42AM
We have an inverted demographic pyramid concerning entitlement funding. There simply are not enough workers out there now or in the future to support so many future retirees. The Boomer and thier progeny should have had more children. But, that would have required each and every female to bear 4 or more children (as opposed to less than 2). Abortion also snuffed out 50 million children since 1972.
But, all of that is too late. The retirement age will have to be moved up to 72-75; means testing will have to be implemented, and the benefits will have to be scaled back. There just isn't that much wealth in this nation to support such huge unfunded liabilities.
Senor Mick| 10.15.10 @ 12:55PM
Grandma-hating, murderous, nasty wicked evil conservative! Boo on you, I say! Boo on all of you!!! How much is the cat food lobby paying you?!
Neanderthal| 10.15.10 @ 3:49PM
Good one, Senor Mick!
Don| 10.15.10 @ 1:01PM
The solution is simple, for SS and Medicare, heck, and for Public Pensions as well :
1: Wait Longer
2: Pay More
3: Receive Less
Nice? no, Convenient? No, Fair No.
However , as some writers previouslt stated we Americans need to start looking at this realistically and as ADULTS.
This is reality. We need to get used to it and save ourselves from ourselves..
geronl | 10.17.10 @ 10:58PM
I heard that NJ teachers pay $62,000 into their retirement system during their career and get $1.4 million in benefits. Taxpayers cover the difference.
Perusha| 10.15.10 @ 2:19PM
Remember Robin whatshisname, who thrilled us all in his British accent, when he hosted that “old” TV show, “Lifestyles of the Rich and Famous”?
Well, contrast this memory with the lifestyles of average Americans in retirement, back in, say, the sixties. Also, what about those living out their last days, NOW?
But, of course, a la Heidegger’s insight that we always focus on the future, now---politicians and living Americans MUST try to influence actions that are to come.
Welfare State Itis lives, despite welfare reform. The latter was just a minor blip on the inexorable growth of the American dependence on “others”.
What IS, is what IS, otherwise it would be different!
Just so in the shapeable future with respect to social security, and the dire predictions about it. Somehow, society will arrange to take care of the elderly, but I certainly don’t expect ANY radical changes unless and until existentially threatening events arise.
However, DESPITE the permeating conventional wisdom tripping about as arguments on all sides of the “social security” debate, the timeless TRUE wisdom encapsulated in one of those “little” books from back in the day just arose into my consciousness.
Back in the Depression, many how-to books by successful people were published to try and get the nation moving again. You know---“Think and Grow Rich”, “How to Influence People etc”, and all the others, like “Dress for Success”.
For those with a rugged self-image, eager to escape the whole social security trap, I recommend reading “The Richest Man in Babylon”. This “used” book found me in 1991, and its lesson has ever since served my own economic freedom.
It is so simple.
Despite one’s income, as long as one can survive on it, anyone can become “rich”, except, of course, those souls who are born with inadequate physical and/or mental abilities. However, the average person, not just the exceptional one, merely needs to follow the habits that can be adapted as eloquently portrayed in this book.
First, of course, one must WORK! In whatever job one begins with, though, the FIRST choice to make is to---PAY YOURSELF.
“Live within your means” must be enhanced by this tweak! So, say you take home X dollars, even if the state takes out 25% or more for whatever. Just EXPECT that deduction to be the cost of doing business as a lucky FREE member of America!
Then, “save” 5 or 10 percent of X, and budget the remainder to cover survival expenses. Take it from me, there are MANY ways to cut all expenses, including housing. (When in a spiritual community, in the 70’s, we donated ALL our take-home pay to the community, and got by on $6 of WAM---walk around money—per month)
So, just ALWAYS pay yourself, thusly, payday to payday, and invest this “gravy” in the safest ways---even be sure to diversify, as your take grows.
And, we all know that the power of compound interest will always make this nest egg grow over time, especially faster as one continues to gain experience and earn more money per hour.
Now, there are many other ways to safely invest this net equity as time goes on---and, probably the other key be-safe-not-sorry demand is to NOT be a debtor.
Anyhow, any fool can get it that by following this “mature” regimen from as early an age as necessary MUST result in the accumulation of “riches”. Doubtless, most of us are NOT very mature when young!
However, in the still fabulously wealthy country of America, my bet is that if one even just reaches the age of 40 broke and debt free, they still have time to use this strategy to easily create a nice cushion of wealth to then be able to be free of the need for any “gifts” from other people, known as social security and all of its ilks.
Want to bet that in the future, enough Americans will be thus “mature”?
I didn’t think so!
So, expect more “education” for the vast brainwashed swath of Americans who have been taught to use OPM---other people’s money.
Thom| 10.15.10 @ 6:25PM
The complexities of SS are beyond most politicians’ lexicon. These numbers and the intransigent math behind them show why neither political Party can fix the current system. In round numbers.
The current average annual payout is less than the current government mandated minimum wage (gross). It slightly higher than that with the minimum wage after tax net. The average wage depending on what average is used is in the mid 40s to mid 50,000 a year. The net after tax wage average is about 3 times what SS will pay you at the end of your life when you have reached a far higher average wage for that age group. Put simply SS pays a poverty existence.
A full one third of those receiving SS payments have no other income in retirement. This has pretty much always been the case thus it has always been the only retirement program for a full one third of those that receive it and they live in poverty because of this. For more than a third now, SS is half or more of their retirement income. For the upper third, of which only about 10% get beyond the income capture threshold (currently over 100,000 a year) most couldn’t even keep their homes if they had to get by on what they get from SS alone. Like the Marx progressive income tax, SS is regressive in that the more you paid into the system the less you will get out hence the lower third get to maintain or improve their life style under SS and will get what they paid into the system out of it pretty early while the middle third won’t generally live long enough to get their regressed payout and the upper third will have to live longer than George Burns to get their highly regressed payout. As a rule, the higher up the latter you go the more of your SS benefit is regressed and more likely your SS will be taxed away if you have income nominally equal to or more than what SS pays. Put simply, if Warren Buffet gave way everything but a paid for doublewide on his current lot he would get a little more than I per month from SS and lose his trailer and land to property taxes within the year. This is why the system is called a ponzi scheme or inverted pyramid scheme. Those who pay the least get the most from the system and aren’t limited to what they actually paid in thus everyone above the lower third subsidize the lower third’s lifestyle choices over their entire life.
To make matters worse half of those that retire take the early option of 62.5 years and compound the problem because they also stop paying into SS at that point. The reduced payout does not compensate for this. The entry requirements are currently ridiculous but have been far worse in the past. To get that minimum wage payout from age 62.5 on all one has to do is prove you worked 10 years making no more than $40,000 total or $4,000 a year. In round numbers the SS system will pay you around $10,000 a year for a statistical average of 18-22 years while you only paid into the system $4960.00 total. The first person to receive a SS check paid in about two years and drew checks for 35. She received several times what she paid into the system and had a lot of brothers and sisters doing the same from day on one.
The bottom line is the unfunded liability of SS was front loaded from the beginning and this Nation has been running an off the books deficit for 7 decades because of this. The current SS rate is twice the stated maximum by the FDR administration. The income capture threshold is 7 times over the stated maximum inflation adjusted. Medicare and Medicaid are in fact targeted extensions of the SS system. The government could have accomplished the same thing by just increasing SS tax rate to 15.3% and letting people spend their money as they choose in the free market but doing that removes the control the government has over the Health Care industry and the distortion that has caused to prices. The so called “surpluses” have never been surpluses under any actuarial. Those “surpluses” have been required by law for a real long time to be paid into the general fund to be spent and an IOU placed in its place.
If the SS system had ever been a “Trust Fund” this would not have happened. If it had ever been a supplemental income program we would have a full one third receiving a minimum wage existence and no other retirement income. We wouldn’t have people receiving a minimum wage existence for two decades after having only worked 10 years and making the less than one year’s average annual income either. If SS had ever been what it was sold as we wouldn’t be having this conversation.
For reference, my numbers. By age 66 I will have paid in about $285,000 to SS. That represents about 45 years of full time work and payment into this system. Adjusted for inflation that represents about $600,000. At age 66 I’d have to live to be 88 years old to get what I’ve paid into the system assuming no compound interest growth from age 66 on. What SS promises is about 30% of my current AGI or less than half my net after tax income. The 50 year before tax ROI of the market is about 11%. The compound interest rate, pre tax amount would equate to $2.8 million vs. that $600,000 inflation neutral amount. For the lower one third of SS payments, the SS system is a great reward for sloth. For everyone above that it is just theft and when 78,000 million Baby Boomers start to drag the system and the Nation under water all you have to remember is that those that promoted this ponzi scheme did it on the certain knowledge that they would be long gone by the time the reckoning arrived 7-8 decades down the road.
With SS tax rate (12.4%) being larger than the average Federal Income tax percent paid now, mine is 14.7% of my AGI and the current combined SS and Medicare/Medicaid rate being 15.3+%, it won’t be long before the weight of this legalized theft system starts to divide this Nation again not just on who pays taxes and who benefits from them but generationally between parents and children and grand children and as of yet no one has had the nerve to speak the political truth about these systems because the truth is a very ugly thing. Soon ugly is going to make its own appearance because all the simplistic solutions being batted around simply ignore the actuarial math and assume you can rob some more rich, reduce payments for the middle and upper thirds and still be the only income for the lower third that gets a pass. As long as this system rewards non work, pay more to an individual than they paid in it will bring this nation down and no one knows how to prevent that or has the political nerve to cut off the sloths after having promised paradise for 8 decades without regard to what individuals paid in. There are no silver bullets here but the ultimate solution is likely to arrive without any politician making any decision at all. The SS system is Karl Marx’s backside tax on the middle and upper classes while the Income tax is the front side tax on the same. They work hand and glove toward the same goal. We all know what the goal is but many just don’t want to accept the truth about this and keep wanting to save the "system". I would ask who are you saving it for in practice?
CJohnson| 10.15.10 @ 7:09PM
In an article in 1936ish Fortune magazine (Grandma saved them), The anti-SS sectors pin-pointed SS would fail to provide a dime for the grandchildren of the first generation who would pay into it for their entire working life.
Aboslutely spot on with time line-I lose!
Thom| 10.15.10 @ 8:43PM
It has always been about the math and the math does not lie. In 1936, it took a pencil and a lot of paper to work the numbers and put that on a graph. Today you just drop the numbers into a spreadsheet with the correct compound math, variables and assumptions and out comes a graph of our fiscal ruin. This has been known for decades.
Tim*| 10.16.10 @ 7:55AM
Social Security & Medicare are The Elephant in The Middle of The Room .
Ya can't keep kickin' this Timebomb down the road .
Time To Man Up and Address This Economic Crisis.
jstwndring| 10.16.10 @ 1:32PM
My generation was told that social security will not be there for us. I've just always accepted that. Fine. Then let's gut it. I'm not for taking baby steps. In fact, I want the Republicans to slash and burn the federal budget completely. I know they won't. They'll have a million and one excuses as to why they can't. I don't want to hear it. If these jackasses can't do our bidding, believe me, we can replace them. They're the hired help. You morons in the party think you're special? You are not. You're just a tool that can and will be replaced via the Tea Party. It's time we put the federal dog back on leash and taught it to heal.
GavInTucson| 10.17.10 @ 1:34AM
Even the most conservative private retirement investment runs circles around Social Security.
For example, I make a whopping $56K per year. If I would be allowed to take my SSI "contributions" and invest them in Treasuries, at 65 I could retire drawing $48K per year and, assuming I live to age 85, I'd still have nearly a quarter of a million dollars that I could pass onto my children. If I did an IRA, the numbers go even higher (which, by the way, I do).
Social Security is a ponzi scheme. No sane person would willingly invest in a retirement scheme where, for every dollar you put in, you'd only be legally entitled to 70 cents back.
wodiej| 10.18.10 @ 5:51PM
When Republicans reformed welfare in 1995, what happened? All those poor people went out and got jobs, more education, used birth control and in all other ways began taking some responsibility for themselves. All these programs are doing is breeding waste, fraud and laziness. If people knew there was no security blanket, they would be saving some of their money in a 401k, IRA etc.
Lord Karth| 10.19.10 @ 11:26PM
Eradicate SocSec. And Medicare. And Medicaid.
Taxes, spending and all.
NOW.
Period.
If the beneficiary classes don't like it----they can go buy a bag of cat food every month for all I care.
There is NO REASON WHATSOEVER that my children should have food taken out of their mouths so that some morally bankrupt Boomer or Silent can have their Leisure World lifestyle subsidized.
Your servant,
Lord Karth