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August 18, 2007


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Its not just Americans that are bad at this sort of fundamental understanding. Over here we want better schools, hospitals and police (all centrally funded) but we don't want higher taxes.

The conventional "fixes" to Social Security are all very regressive. Raising the retirement age might be the most regressive fix, since the working poor die earlier than the rest of us.

I prefer privatizing Social Security so that what you get is directly related to what you pay. plus it is more honest than the current transfer system.

The national debt may be a bit high, but ultimately a prudent usage of debt is logical and healthy.

We will have to do something about social security eventually. The sooner, the better.

What caused this problem?

When the Social Security system was first introduced in this country, the average male born in this country was expected to live to age 62.31 years, and the average woman to 67.29. By 1970, this had improved enough so that men lived to 67.94 and women to age 75.49. In 2000 the numbers had improved again to age 75.00 for men, and age 80.2 for women.

When Social Security payments first began, the taxes necessary to support it were not that significant, because the average male didn’t live to be old enough to collect it, and the average woman lived only slightly past retirement age. That situation has obviously changed substantially over the last 70 years.

One possible solution-Social Security benefits are increased every year by the government’s inflation index. Some economists argue that the government’s figures overstate the amount of inflation that occurs. Others have said that retired people experience lower inflation than the average consumer. So here’s my solution: we should cut back on the inflation increases in benefits, by lowering the inflation increase by one half of a percent for the next 6 years. This would, in my opinion, take care of a large part of the Social Security problem.

It beats raising the taxes, which is the only other alternative to decreasing benefits. It spreads the pain over all recipients. And it sure beats leaving the problem for our grandkids to solve.

Or maybe the obesity epidemic will cut down life expectancy enough that the problem will solve itself!

Pete's comment about obesity? I have thought this for some years now. We're raising the age to receive full SS benefits, but a huge (pun intended) percentage of us will not live to be that age. Look around you!! There are 30-year-old obese people riding the electric carts in Wal-Mart! And the life expectancy tables have just taken a downward turn, because of obesity and related diseases.

However, a whole bunch of us may not live long enough to collect SS retirement, but what about SS disability? THAT may be the system that ends up bankrupted first, if the trends continue.

BTW, I have been quite overweight myself, so I'm not picking on the obese with some kind of weird prejudice. I've kept off 55 pounds for 7.5 years. My secret? STOP EATING SUGAR. I am 53, and this is the only healthy period I've had as an adult. I DO expect to live long enough to draw SS retirement, but I'd be happier if the whole system went away.

SS is a minor problem if that, healthcare is the real problem. Actually the current deficit is being held down due to the SS surplus. Cutting SS and cutting SS taxes would leave us with a bigger deficit. Taxing regressively than repudiating benefits is little different than borrowing heavily and repudiating the debt, only the former hurts the poor and the latter the wealthy. Now that just won't do, will it? Simply eliminating the payroll cap would largely solve SS, but oh no, we can't have a flat tax can we? That would be too many poor not paying their fair share. ;-)

Actually, I think Pete is pretty much on the note. SS was never intended to be an all-covering blanket. It was intended to cover those people that SURVIVED their working years. With people retiring earlier, and the life expectancy level increasing, the amount of time that someone will need money to survive, but will (possibly) be physically unable to earn that money increases. Adding SS disability and SS survivors benefit (et. al.) were addons to cover a worker's family as a default if they had no life insurance. This has also ended up covering more people than ever originally intended.

The idea that you don't work your entire life is relatively new to society, and has some major issues of it's own. (How many of you have heard of so-and-so retiring, and they end up dying 6 months later??) As a species, we're geared to work most of our lives at SOMETHING. That's why I think gradually raising the age of retirement, connected to the average life expectancy, is a necessary thing.

Social Security has become a 'right' of the American people, not a 'benefit'. Everyone feels they are entitled to this no matter what. If they aren't willing to pay for it (through structural changes to the system or increase taxes/decreased benefits) then they don't deserve to receive it.

Personally, I'm not particularly sure I'll ever see any of the money I'm putting into the system, but I'd be willing to put more in, if that's what it takes to help our seniors.

I believe the most important fix to Social Security would be to increase the age at which people start benefits. Having a large proportion of the population retired will put a strain on the economy, no matter how it's financed. This would be true even if everyone financed their retirement solely through personal savings. Unless the remaining population has a dramatic increase in productivity.

The first thing that could be done is to educate people on what the effect of taking Social Security early has on their monthly benefit check. But I think that ultimately we need a change in the law to increase the early retirement age from 62 to 64 keeping in line with the increase of normal retirement age from 65 to 67. Will this solve it. Maybe not, but it would be a good start.

I notice that raising efficiency is not something that is usually considered. Do people just give up trying to raise the efficiency? Is it simply a novel concept with an 'impossible' implementation?

It is difficult to impossible to raise efficiency. The most efficient system discovered/used so far is the free market, but it is not easily adapted to the goals of government. In addition, making things more efficient, usually means cutting jobs, which may or may not be an effective measure for the economy overall.

And I agree that raising the retirement age is probably the only way to go, even though I'm a little bitter that will affect me the most - I'm going to spend my entire working life working to pay for the boomers, and then the system will be too messed up anyway.

I'll second that. Jack Welch for president!

I'm well outside the majority on this issue; I think we need to do both - moderately increase taxes while also reducing spending (by cutting programs). While there are certain programs I'd like to see cut back more than others, I won't be picky. But I want my taxes to eventually go to something other than simply paying interest on our country's debt.

I'm even prepared to take care of my aging mother and/or mother-in-law if their SS benefits aren't enough for them to live on. That's the way it used to be - adult children taking care of their parents.

As a libertarian, I view most government spending as wasteful and would not support a tax increase. Indeed, there have been a myriad of tax increases since 1913 but the federal budget just keeps getting bigger and bigger - $2.8 trillion for fiscal 2007. Roughly 20% of that is for social security. (By comparison, the financial cost of the war in Iraq is tiny.)

In short, I view cutting government spending as the only way the federal government will ever balance its budget over the long haul. Simply suspending automatic cost-of-living adjustments for 2-3 years would likely eliminate the deficit. Of course, these COLAs are written into the law and any attempt to pass legislation to suspend them for a time would be hopelessly demagogued.

This has been bugging me for a long time...
"That's the way it used to be - adult children taking care of their parents."

Lemme see here...if you earn minimum wage - not enough to support a family - you shouldn't have children you cannot adequately support. Fair enough. But if you don't have children, who is going to support you when you can no longer work?

Why are some of my posts disappearing? It's really annoying to go through 10-20 attempts just to get past the "verify your message" obstacle, only to succeed but find your post deleted.

Minimum Wage, in response to your question "Who is going to support you when you can no longer work?," I have my own question: Who do you think should support you when you can no longer work? My answer: you.

MW --

We've been over this -- and you know why some of your comments have been taken down: you continually comment the same thing -- something similar to:

"But how can I do this because I make minimum wage?"

I have 20 or so comments like this already on this blog and I'm allowing no more. You've refused help from me and other readers and prefer to keep your life where it is. That's fine with me -- but don't come around here commenting the same, miserable, woe is me set of comments over and over and expect everyone to 1) like it and 2) allow it.

Are you saying that a disabled person who cannot work should (somehow!) support themselves? What's the difference whether they become disabled at a younger or an older age?

@ Maximum Whine:
"What's the difference whether they become disabled at a younger or an older age?"

The difference is, that if "they" become disabled at an older age, "they" had the capability to save for their older age while young.

That is, they could have if "they" weren't too caught up in self pity to overcome the obstacles of life we all face and do what needed to be done.

Get it now???? No probably not. You'll no doubt have another excuse lined up.

Whine on, "they".

Actually, Americans are pretty smart. Right now, the Federal budget deficit is falling, with no new taxes and -- obviously -- plenty of spending. How can this be? Tax revenues are growing faster than spending.

For the 2007 budget year, which ends on Sept. 30, the Congressional Budget Office is projecting a federal deficit of $177 billion. That would be down 28.7 percent from last year’s imbalance of $248.2 billion, which had been the lowest deficit in four years.

Assuming this continues--big assumption, but not out of the question--those silly Americans will have it their way--no higher taxes and no spending cutbacks.

I guess I'm a socialist. To me one of the marks of a civilised society is that we take care of people who can't take care of themselves. In the same way that good families take care of each other, so do good societies.

Plonkee --

Ahhhh, now the truth comes out!!! ;-)

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