Social Security Crisis?

[haggis]

Selma,
Here’s another, more recent article on the declining birth rates. When I read it I thought that Shos should be please as he has been one of the most vocal advocate of birth control, voluntary and involuntary on B.com's boards.

” In the so-called "New Europe", the situation is even gloomier. According to UN projections, Latvia will lose 44 percent of its population by 2050 as a result of demographic trends. In Estonia, the population is expected to shrink by 52 percent, in Bulgaria 36 percent, in Ukraine 35 percent, and in Russia 30 percent. In comparison with these figures, the projected population decline in Italy (22 percent), the Czech Republic (17 percent), Poland (15 percent) or Slovakia (8 percent) looks like a small decrease. France and Germany will lose relatively little population, and the population of the United Kingdom will even see a slight growth -- thanks to immigrants.”

This author goes on to make the argument, convincingly in my opinion that high taxes contribute to the declining birth rates in Europe, if not the rest of the world.

” State pensions systems eliminated the natural economic incentive to have children. At the same time, the welfare state is an enormously costly luxury that has to be financed from taxes. High payroll-tax and social security contributions reduce the earning capacity of people in fertile age. Thus, they push down birth rates as well.”

Whadda think Shos? Should we start encouraging more births???

[shostakovich]

No, no!!! We need to put the case for population control into the public school system. Presently, it's the responsible people on the economic margin as well as the responsible people who wish to avert responsibility of a child (who would interfere with a desired life style) that are opting for not procreating. It's the baby factories that need convincing, coersion, or incentive to practice birth control. There's no point in discussing methods before the need is acknowledged.

Since our economy is (unfortunately) based on population growth (Keep churning out them consumers), there will be a period of hardship. But that hardship will magnify as the delay (in promoting the necessity of birth control) continues. Of course no politician will touch it.

There could be a musical solution to the problem. Promote, create, adapt music that features sopranos. When the demand for sopranos exceeds the number of women available, --------
Well, you get the idea.
Shos

[Selma in Sandy Eggo]

Shos, are you a ZPG or a NPG preacher?

I don't think demand for lots of sopranos will help.

Also, I have a personal problem with the "responsible people" / "baby factories" dichotomy. My own position is that a couple should have only as many children as they're willing to raise properly. I do know families with six or eight well-raised children. I also know families with one extremely poorly raised brat.

There's more than one way to do things right.

[OperaTenor]

I was the youngest of seven.

Need I say more?!!

[Selma in Sandy Eggo]

Originally posted by OperaTenor:
I was the youngest of seven.

[b] Need I say more?!! [/b]

And we can just imagine what you'da been like without six elder sibs to minimize that tenor ego, um, attitude, um, personality! Yeah, that's it, personality!

<small>[ 01-27-2005, 07:25 PM: Message edited by: Selma in Sandy Eggo ]</small>

[shostakovich]

From Selma: "Shos, are you a ZPG or a NPG preacher?

I don't think demand for lots of sopranos will help.

Also, I have a personal problem with the "responsible people" / "baby factories" dichotomy. My own position is that a couple should have only as many children as they're willing to raise properly. I do know families with six or eight well-raised children. I also know families with one extremely poorly raised brat.

There's more than one way to do things right."

--------------------

Hi Selma. ZPG would be a good start. Leave NPG for future generations who have time to examine the effects of ZPG.

I think your position of having only as many children as can be well raised is a good one. That would certainly reduce or eliminate the "baby factories". It should reduce crime, starvation, war, and general human ignorance. It might also achieve ZPG or NPG. Count me on your team.
Shos

PS: My push to ZPG starts with acknowledgement of the need. THEN to the methods, which need not set individual family limits on number. Far be it from me to want to give OT a guilt trip (as if it were possible )

[OperaTenor]

:guilt:

Okay, fine! We'll send her back!

[GreatCarouser]

" A Social Security proposal that the White House is considering, which is often referred to as replacing wage indexing with price indexing, would lead to large reductions over time in the percentage of workers’ pre-retirement wages that Social Security benefits replace. The proposal would constitute an across-the-board reduction in benefits that would affect all beneficiaries, including people with disabilities and survivors.

This proposal is not readily understood by the public and is complicated to explain. That may be one of its attractions to those who support it. It can be presented in a manner that sounds highly technical and does not make apparent the magnitude of the benefit reductions that will occur if the proposal is adopted. Yet enactment of this proposal would represent a very large change. The public should understand what the proposal entails and that there are alternatives to restoring Social Security solvency that do not require reductions of this magnitude in Social Security benefits."

The above is from an analysis by the non-patisan Center on Budget and Policy Priorities

[Shapley]

GC,

The proposal is not that hard to explain. Currently, Social Security benefits are tied to wages, not to prices. This means that benefit increases, or "Cost of Living Allowances", are rising faster than the actual cost of living, which is accurately reflected by prices. Wages increase faster than prices, which is why our standard of living goes up.

Tying benefit increases to prices does not cut any present benefits, it only cuts the rate at which benefits would grow if the current system remained unaltered. "Cuts" of future adjustments are not truly cuts, since they purely and simply do not yet exist.

Once again, the author assumes that those who support changes to the system are ignorant of the facts. Many of us have done our homework, and like changes.

V/R
Shapley

[Shapley]

BTW, since it's popular to "out" the boards of the various sources we use to support conservative measures, here is the board of directors for the "Center on Budget and Priority Policies":

http://www.cbpp.org/board.html

V/R
Shapley

[mmichaelson]

I agree totally. There are some people out there not fit to be parents. . .and yet for some strange reason, they keep having children. Why??

[GreatCarouser]

Originally posted by Shapley:
GC,

The proposal is not that hard to explain. Currently, Social Security benefits are tied to wages, not to prices. This means that benefit increases, or "Cost of Living Allowances", are rising faster than the actual cost of living, which is accurately reflected by prices. Wages increase faster than prices, which is why our standard of living goes up.

Tying benefit increases to prices does not cut any present benefits, it only cuts the rate at which benefits would grow if the current system remained unaltered. "Cuts" of future adjustments are not truly cuts, since they purely and simply do not yet exist.

Once again, the author assumes that those who support changes to the system are ignorant of the facts. Many of us have done our homework, and like changes.

V/R
Shapley

I'll reply by simply quoting from the report and allowing the reader to decide who's grasp of the facts is better. Many do homework...very little homework is error-free. There may well be errors in this report but I'll take my chances with its analysis:
" This proposal is sometimes referred to, in shorthand, as a proposal to change the Social Security benefit structure from “wage indexing” to “price indexing.” In reality, the proposal would maintain wage indexing, but would change the Social Security benefit formula by lowering the program’s “replacement rates” by the difference between wage growth and price growth. (The proposed change is explained on pages 4-5.)

This proposal is now in the news. In comments shortly after the election, President Bush said the plans that his Social Security Commission produced, the principal one of which includes this proposal, are a good place to start the debate.[1] On December 2, the chairman of the President’s Council of Economic Advisers, N. Gregory Mankiw, criticized “wage indexing” — the shorthand term used to describe the current approach — in a speech, while stating that “the Commission’s proposals [of which the proposal to lower replacement rates is a prominent part] are consistent with the President’s principles for reform.”[2] Most recently, White House Director of Strategic Initiatives, Peter Wehner, explicitly endorsed shifting to price indexing in a memo to Administration supporters that leaked in early January.[3] It also may be noted that a Social Security bill introduced last year by Senator Lindsey Graham (R-S.C.), which essentially turns the principal Commission plan into legislation, includes this proposal; the Graham plan reportedly was developed with the help of White House staff. These developments strongly suggest that the proposal to change the Social Security benefit formula by lowering the replacement rates is receiving serious White House consideration.

The Effect on Social Security Benefits

Advocates of this proposal have sometimes sought to portray it as not representing a benefit reduction and as simply curbing excessive growth in Social Security benefits. But the change would, in fact, represent a substantial reduction in benefits, as compared to the benefits payable under the current benefit structure. According to estimates from the Social Security Administration’s Office of the Chief Actuary:[4]

*

Under the proposal, a worker born in 1977 who earned average wages throughout his or her career and retired at age 65 in 2042 would receive monthly Social Security benefits 26 percent lower than under the current benefit structure. Instead of this worker’s annual benefit being $19,423, the benefit would be $14,432, a $4,992 reduction. (These figures are in 2004 dollars)

* An individual who works at average wages throughout his career and retires in 2075 would receive monthly Social Security benefits 46 percent lower than under the current structure.

* This reduction would apply to all Social Security beneficiaries, not just those who elected to forego a portion of their Social Security benefits in return for an individual account.

* The benefit reduction apparently also would apply to people with serious disabilities who receive Social Security disability benefits and to orphans, widows, and anyone else who receives Social Security survivors’ benefits.

The President’s Social Security Commission may have adopted this proposal in part because certain other Social Security benefit reductions are strongly opposed by large majorities of the population, such as increases in the age at which workers can retire and draw full Social Security benefits and reductions in the annual cost-of-living adjustment. During the Commission’s deliberations in 2001, some Commission members reportedly were attracted to the idea of “replacing wage indexing with price indexing” because this change would reduce Social Security benefit expenditures so substantially that other, better-understood, unpopular benefit cuts would not be needed"
Those interested in charts, links and footnotes may visit the link in my last or go to the link in Shap's last and click the link for research reports on the left of the page then find the link to the report dated 1/27/05.

Btw, since you seem uncomfortable with this type of mathematical crystal-ball gazing I'm sure you'll share my outrage over the following rule(s) this Administration is proposing:

"The Administration’s forthcoming budget is likely to propose a new budget rule that would affect Social Security, Medicare, veterans’ disability compensation, the Supplemental Security Income program for the elderly and disabled poor, health and retirement programs for federal civilian and military personnel, and ultimately Medicaid and some other entitlements. The new rule was proposed in the Administration’s budget last year but was not considered by Congress. It is expected to be proposed again this year and may receive significant Congressional consideration this time around.

Under the new rule, OMB would issue a 75-year cost estimate for any legislation that would increase the cost of any program covered by the rule (except for Social Security, which would be treated somewhat differently, as described below). Estimated cost increases over 75 years would have to be offset by cuts in the same program or another of the programs covered by this rule, except Social Security. Offsetting cuts in programs not subject to this rule — as well as offsetting measures that would raise more general revenues, such as measures to close abusive tax shelters or wasteful tax loopholes — would not be allowed. Legislation that did not meet this test would be subject to a point of order in the House and Senate and require 60 votes to pass on the Senate floor.

For Social Security, the rule would be even more stringent. Cost increases would be projected not over 75 years but into eternity,(emphasis added, GC) and they would have to be offset into eternity by reductions in Social Security benefits or increases in taxes dedicated to Social Security. No other offsets would be permitted. Legislation not meeting this test, as well, would require 60 votes to pass in the Senate."

Here's a link to the report containing the above quote.

<small>[ 02-01-2005, 07:40 PM: Message edited by: Great Carouser ]</small>

[Shapley]

GC,

RE:Under the proposal, a worker born in 1977 who earned average wages throughout his or her career and retired at age 65 in 2042 would receive monthly Social Security benefits 26 percent lower than under the current benefit structure. Instead of this worker’s annual benefit being $19,423, the benefit would be $14,432, a $4,992 reduction. (These figures are in 2004 dollars)

* An individual who works at average wages throughout his career and retires in 2075 would receive monthly Social Security benefits 46 percent lower than under the current structure.

Again, I have to point out that these "cuts" do not cut benefits currently received, they reduce the rate of growth of the program. The question you need to ask is: Will the new rate of growth match the rate of inflation?

I say that, because it is tied to prices, it will.

The point is that social security, and other entitlements, are growing at exponential rates, and stripping the availability of funding from other programs. The social security "lock box" is borrowed from annually to pay for other programs. Once Social Security begins to rely on these "Lock Box" funds, those funds will not be available to lend to other programs, which will need to be cut, or taxes raised, to maintain them.

The proposal you cite at the end of your message is an attempt to maintain programs within available funding. Social Security, in particular, must be maintained viable within the funding mechanism created for it. If it is allowed to siphon funding from other sources, it will deplete those sources in short order, to the detriment of the programs those sources are designed to fund.

It's all designed to keep us within budget, not only now, but in the long term. That's a type of responsibility not seen in Washington in a long time. While it's refreshing, it scares the hell out of many career politicians, who don't like to think beyond the next election cycle.

Incidentally, The rule will only be binding on this Congress, and then only so long as they don't vote to overturn it. It's really not so ominous as you make it out to be.

I'm beginning to think you don't like this administration!

V/R
Shapley

<small>[ 02-02-2005, 09:44 AM: Message edited by: Shapley ]</small>

[Trumpetmaster]

Shapley,
Thanks for explaining that.
I now have a better understanding.
tks,
Howard

[Shapley]

TM,

No problem.

GC,

It's really very simple. If I plan on sending $250 to Tsunami Relief, but I realize, after balancing my checkbook, that I can only send $200, that's still $200 dollars more than I sent last year.

If I lived in Washington, however, the headlines would read: Shapley Cuts Tsunami Relief funding!

V/R
Shapley

[deathstalker82]

On the issue of SS. I like to look at it from my point of view. I scanned through the topic because I don't have time to read before all of them before physics lab. Being a twenty-two year old full-time college student and employee of WM, I pay a good bit of every paycheck that I could use for better things, like bills, food, gas, books, beer, whiskey, etc. Personally I don't think I shuld have to pay for something that I will never get or probably ever need. You will be hard pressed to find somewhere that doesn't have a halfway decent retirenment set-up for their employees. I will stop here for now as I need to go back to school.

[GreatCarouser]

Posted by Shapley

"Again, I have to point out that these "cuts" do not cut benefits currently received, they reduce the rate of growth of the program."

I'll quote from the report:
"Some proponents of this approach have sought to present this change as providing a full inflation adjustment and therefore not constituting a benefit reduction. The Commission’s co-chairman presented this proposal as one that would merely “slow the rate of growth in future benefits,[5] and Commission reports contained a similar presentation. The Commission’s reports failed to explain that under this proposal, Social Security benefits would replace significantly less of pre-retirement earnings than they do today and that large reductions in benefits would result relative to the benefits that would be paid under the benefit formula now in law."(emphasis added. GC).

Shap, the administration can dress this pig up in Armani and sprinkle it with perfume but underneath the fancy rhetoric it's still gonna be pork. The genius of it from Bush's pov is 'no new taxes' and the only ones to 'suffer' will be those who collect SS 'off in the future'(many of us, our kids, and their kids etc.) when most of them (politicians) don't have to worry about re-election or legacy building anymore.

Also those most directly affected will be elderly retirees, widows, orphans, and folks on disability. The reason I say 'most directly affected' is because the burden of support SS was designed to cushion will be most often picked up by the extended families of these folks.

Let me be among the first to thank all these folks for their sacrifice in freeing the Iraqi people, providing them with health care, enriching Haliburton shareholders and possibly allowing the administration to say we 'fixed SS'. Fixed it to be a 'no new taxes' trough for government 'projects' that should be funded from new revenue sources or failing that, abandoned.

How about if this Congress/administration wants to fund its initiatives it faces the reality of paying for them without stealing from the folks who advance you the funds to pay for them? If that means 'tax' then place that prospect openly before your constituency and then see if it will fly.

This deal is nothing more than a 'tax' on those least able to afford it. There are many alternative fixes proposed for SS that don't affect the benefit structure in such an egregious fashion. See the article for more detail on some of those.

[barfle]

Originally posted by deathstalker82:
You will be hard pressed to find somewhere that doesn't have a halfway decent retirenment set-up for their employees.

Most of the companies I've worked for in recent years had 401k accounts set up for their employees. These are basically pre-tax savings accounts intended to provide money for retirement. They may or may not have additional funds put into them by the company, and participation in them is completely voluntary.

The company I quit to take the job I have now put in $200 per year. I put in about 20 times that much. I'm not saying they needed to put in anything, but that won't make very much difference in my retirement. Another figured they were doing enough by providing the account in the first place.

My dad, OTOH, worked for a company that provided him with a pension.

[Trumpetmaster]

A company I used to work for a few years ago changed their traditional pension plan to a "Cash Balance" Account.

[GreatCarouser]

It may just be my perception of some of the posts but I get the feeling there's a fundamental misunderstanding of the issue here.
Whether or not SS is your primary, secondary, tertiary retirement benefit source etc. is irrelevant.

The point is you've made an investment in the system; a forced investment and you are currently entitled by the same laws that forced your rate of investment to a return on that investment based upon certain formulae.

Our government often 'borrows ' from this pool of funds to fund projects. This Congress isn't the first to do so by any means but they are attempting seriously to alter the 'payback' of those funds by changing the benefit formulae so that future benefits will be reduced. It seems like a Ponzi scheme. We get a $300 'tax refund' up front and most of us and our kids get to pay for it with interest on the back end when we can least afford to do so. It doesn't matter one whit to me that they may be getting 'only a small percentage' of my retirement package(s) in this fashion. It matters to me that their hand is in my pocket at all, that they are blaming their fiscal woes and mismanagement on SS and that it has become time to pay the piper.

Shap's other post talks about "...a type of responsibility not seen in Washington in a long time."Correct me if I'm wrong but didn't we have both a balanced budget as well as a budget surplus when Bush took over in 2000? And part of the beauty of that was it was done by a Democratic administration working with a hostile Republican Congress. The checks and balances do sometimes work when they're allowed to do so.

So this thread is all about whether I/you want to allow the current Congress/administration to pay for what I perceive as their schemes by defaulting on promised benefits that I/you have already paid into. Whether I have any use for these monies, if I have any need for them or the urgency of that need isn't and shouldn't be in issue.