Vilsack will come to regret touching this topic while running for the Democratic nomination, but he deserves kudos for courage.

The whole fiasco demonstrates the folly of handing over retirement income to the government. At any time, bureaucrats in Washington can decide to 'cut' your benefits, and there's effectively nothing you can do about it. You should be able to opt out of social security, waive your right to benefits, and save the money yourself. I remain fairly confident I won't cut my own benefits in old age.

I consider the money I'm coerced to pay into social security as money down a rathole-- yet another wasteful tax caused by our nanny state. I've written it off, knowing I'll never see it again-- or if I do, it'll be at a far lesser rate of return than I could have accomplished with an index fund and certificates of deposit.

Who wants to join with me in opt-out? You don't pay in, but you waive your right to benefits. Seems egalitarian to me. Of course, I doubt there would be many takers if it was voluntary, so the coercive power of the state may be needed to force people in.

"
I consider the money I'm coerced to pay into social security as money down a rathole-- yet another wasteful tax caused by our nanny state. I've written it off, knowing I'll never see it again-- or if I do, it'll be at a far lesser rate of return than I could have accomplished with an index fund and certificates of deposit.
"

God what an idiot.

I would note that Clinton balanced the budget and brought in huge surpluses that were going to pay off the national debut. We're fucked now, but it is good to remember then...

At the Democratic debate yesterday, Tom Vilsack..

Who?

American Hawk,

You must just wait all day long trying to be the first to post a comment. Or do you have some sort of notification mechanism? LOL!

Unfortunately some people in the future would be wanting the government to do something to help the American Hawks lying in the gutter that they have to step over on their way to work, when those American Hawks turn out to be less wise in their investments, or less financially savvy, or simply less lucky than they expected. Some of those starving American Hawks might even themselves be clamoring for government action, abandoning their belief in social Darwinism when it doesn't benefit them anymore.

Adjusting the CPI downward is in the same ballpark as changing the indexing scheme

Not really; the wage index applies between the time contributions are made and retirement; the CPI is relevant to SS after retirement.

Changing the CPI formula has no effect on initial benefits, and subsequently has effects that grow each year of retirement. Because it reduces post-retirement benefit increases, it increases the incentive to delay retirement; changing from a wage index to a price index to determine initial benefits affects all retirees, and, because it reduces the marginal benefit of delaying retirement, discourages (compared to the status quo policy) delaying retirement to or beyond "full" retirement age.

and until recently proposals like this were pretty standard fare from centrist Social Security wonks.

Well, I think this relies on the false conflation you've made between price indexing and CPI adjustment as being in the same "ballpark", when really they are rather substantively different. I've never seen price indexing suggested by anyone not on the right until now; yes, adjusting the CPI formula has been suggested, not only for Social Security reasons but because the CPI formula has been attacked for overstating inflation (whether this is true or not really depends on a question that few people ever ask, "overstating for whom?": the use of hedonic adjustments, etc., which tend to reduce the CPI may currently be inadequate in the role of assessing price to maintain a constant living standard for a typical middle-class wage earner; OTOH, they probably overcompensate and thus understate inflation for those in poverty that does admit for much beyond basic needs. But, amid all the different CPIs calculated, none capture that distinction among consumer groups.) Though I don't think its a good idea in the Social Security context, adjusting CPI downward does have a sensible and coherent rationale behind it that goes beyond Social Security, and is in a completely different ballpark from switching to price indexing for indexing from contributions to benefits.

Vilsack will come to regret touching this topic while running for the Democratic nomination, but he deserves kudos for courage.

Promoting ideas that are unpopular because they are stupid, mean-spirited, and unnecessary is not courage.

"I'd say that Vilsack has long believed this is a good idea, and hasn't quite figured out that the ground shifted after the 2005 Social Security debacle and this stuff no longer flies. Betcha he figures it out now, though."

I hope this is true. Even the most obviously beaten ideas have a way of finding resurrection. Witness the results of the Scope's Trial.

Agree, KC. Too bad nobody remembers the Great Depression any more, and lots of people just assume that they'll always be employed and the value of their investments will always go up. It's partly also the continuing phenomenon of people being born on third base and thinking they hit a triple. They somehow see their own situation as justification for refusing to help others.

I support Ohio Rep. Dennis Kucinich for the Democratic presidential nomination in 2008. Here is his statement on Social Security:

My platform is centered upon a non-negotiable commitment to preserve Social Security against all assaults. I stand to return full Social Security benefits to senior citizens at age 65 -- a rollback from the present age of 67. In addition, I staunchly oppose all efforts to privatize Social Security, thus diverting payroll tax dollars into individual accounts. I am against raising the retirement age, against raising the cap on taxable wages, and against means-testing for benefits.

There is no question that America can afford to uphold its social compact with its senior citizens. The finances of the Social Security system are more secure now than ever. America is wealthier than at any previous point in Social Security's history, and the fund is solid through 2042 with no changes whatsoever. I believe the interest rate on the Social Security trust fund is too low. It is much less than the average interest rate for U.S. Treasury-backed securities. If Congress changed the law to credit the trust fund with the average interest rate, we could reduce long-term financing problems by 30%.

Vilsack proposed this because he believes it's a good idea.

Gov. Vilsack believes it's a good idea because it pleases his DLC corporate benefactors.

Vilsack will come to regret touching this topic while running for the Democratic nomination, but he deserves kudos for courage.
Posted by: Lucifer

I frequently encounter sentiments like this and it makes zero sense to me. Stupid ideas are stupid ideas. Ideas born of ignorance aren't worthy of any sort of admiration; ignorant peoples' convictions are still ignorant.

There's this subset of americans who seem to think that some sort of action, ANY action, even batshit stupid (see "invading Iraq") are demonstrative of an admirable decisiveness and courage. It's incredibly juvenile.

Why admire ignorance?

If I had to guess, I'd say that Vilsack has long believed this is a good idea, and hasn't quite figured out that the ground shifted after the 2005 Social Security debacle and this stuff no longer flies. Betcha he figures it out now, though.

It's not exactly a credit to Vilsack's intelligence and political instincts that he hadn't figured it out by this point though, is it?

Stop the Feds from (borrowing) SS funds.Problem solved.

> his politics are fundamentally DLC centrist

At their most left-leaning I would call the DLC's domestic politics Traditional Republican. I realize that the Might Wurlitzer has convinced the traditional media and elite pundits that this is "centrist", but both by historical standards and by what the polls indicate it is really pretty far to the right of center.

Cranky

Brojo,
This proves that Vilsack is still connected to is DLC masters. I was kind of shocked when he got all anti-war a few weeks ago. That isn't like the idiot DLC'ers. In retrospect, it seems that he forgot to take his stupid pill that day. Comments like his on SS yesterday just prove he never got off the DLC bandwagon. What ever super slim chance he had of winning was just flushed down the toilet.

Tom Vislack also shows why a third way centrist politcal appraoch is a loser in American political system where so much compromise is necessary to get legislation passed.

If you are going to have to negotiate your position to achieve results why start by giving away half your margin? It's weak and it's ineffective. Start from a position of strength and bend in return for bending from the other guy. That's the way the world works. I don't know why Al From doesn't get this. My hunch is that he is still thinking like it is 1975. In 1975 the USA was still very liberal with liberal thinking on policy questions, so ending up 3/4 of the way towards a conservative position was platable to the majority. Unfortuanately for AL and the DLC, today we are in a conservative policy environment so that if you move 3/4 of the way towards a conservative policy position, you are going to be endorsing something very conservative and very radical.

I don't know when this will sink in.
Soner is better.

Stop the Feds from (borrowing) SS funds.Problem solved.

Why? Should the SS trust fund just sit in an account, uninvested? Or should it be invested in riskier instruments?

Kevin, I understand that you think this was a political mistake by Vilsack, but you never said whether you agreed or disagreed with him as a policy matter.

Even if it just sat there, It would be better then the feds stealing it to pay for tax cuts for the rich, Which is all it is being used for now.This was one of Reagans great follies.

I'm with cmdicely. You gotta admit that switching from wage indexing to the CPI is extreme, even for the Pain Caucus.

What continues to amaze me about Democrats is how little they wish to give their base, while Republicans continue to pander to theirs.

Take social issues: Republicans have no problem calling on outlawing gay marriage, outlawing abortion, pushing school prayer, etc.

Democrats, on the other hand, do the opposite. Rather than throwing benefits to their constituency, they cut them.

We shouldn't be moving the age of retirement up, we should be moving it back. We shouldn't be reducing benefits for retirees, we should be expanding them (based on a need basis, of course).

This costs money right? So what. It is all a matter of choices.

With Republicans it is never a matter of paying for their programs -- they will do them even if it means increasing the deficit.

Democrats, on the other hand, don't mind throwing out people out in the street if it makes them appear more "moderate".

Seems both parties are out to get the middle class.

If that extra SS monies where put into a fund like Alaska Permanent Fund,People would be able to retire and have enough money to enjoy there twilight years.If not the feds shoild only take what is needed to fund the SS payout.Of course the very welloff would see a tax increase but oh well it is there turn.

If I had to guess, I'd say that Vilsack has long believed this is a good idea, and hasn't quite figured out that the ground shifted after the 2005 Social Security debacle and this stuff no longer flies.

I generally don't get the larger cluelessness of virtually all of the Democratic politicians and their advisors -- and, for that matter, of most Democratic activists.

How hard is it to see that the country is simply desperate for a major change of direction? Conversely, how hard is it to see that the country was NOT in such a mood during, say, the Clinton administration, or the Bush administration?

Democratic politicians and the inside the beltway crowd can't seem to see the impetus for real change these days. Democratic activists can't seem to grasp that this was NOT so until recently -- whence there childish complaints that "triangulation" was a terrible thing during the Clinton years. Who but someone with a complete tin ear for politics would imagine that the country, in those years, could miraculously be motivated to take a major step to the left?

In my view, both sides are simply mindless, repeating the CW amongst themselves as if it came from on high.

Look, different times require different strategies; it's as true in politics as it is in just about every other human endeavor.

Today, people are, rightly and finally, disgusted with conservatism as a governing set of principles. They are as ripe for a new approach as they are likely to be in our lifetimes.

Any Democratic politician who fails to grasp this and exploit the opportunity should find another line of work.

CMDicely,

"Mean-spirited" in what way? They may not be the ideal methods for dealing with the problem (though you seem to think there is no problem to address). Once again we have you assigning a completely nonobvious, and unsubstantiated motive for some's plan to balance the financial/demographic problems of Social Security that many, many experts claim to clearly see (Greenspan and Bernanke, to name two; but the problems are quite obvious to anyone who understands how the system actually pays benefits).

So you don't like price indexing or CPI adjustments; neither do I. However, it isn't proposed by people that are mean-spirited. Framing it the way you do, as you did yesterday on another topic, is very lazy intellectually, and could even be described as "mean-spirited".

230 million dollars a year that the Fed takes would go well beyond fixing any problem SS has.

> If that extra SS monies where put into a
> fund like Alaska Permanent Fund,People
> would be able to retire and have enough
> money to enjoy there twilight years.

It simply isn't frickin' numerically possible for _everyone_ in the United States to put their retirement money in a Vanguard Total Stock Index Fund and expect to get historical returns and a fat happy payout at the end. The result would be a 10 year stock boom followed by a bust that would make 1929 look like a church picnic.

Cranky

Isn't that what they want to do with the (private accounts).Or is it one of those (The insiders make money off the people that don't understand investment) schemes.And we are not talking about all SS money only the money the Feds steal and refuse to pay back about 230 million dollars a year.

AH"At any time, bureaucrats in Washington can decide to 'cut' your benefits, and there's effectively nothing you can do about it."

Wimps. Doesn't anyone remember the Bonus Army?

Of course, the Patman Bonus Bill was blocked by . . . wait for it . . .Republicans! Some things . . .

"You should be able to opt out of social security, waive your right to benefits, and save the money yourself."

Do you get why car insurance is mandatory? Let's start there.

" I've written it off, knowing I'll never see it again"

1) You're right. You won't - because it's not for your bloody retirement, you Nearctic member of the Accipitridae!! You're helping some nice little old men and women to have a decent retirement, rather than having to worry about what brand of cat food is going to go on sale this week! (As the current crop of little ones probably will do for you - in fact, depending on our ages, I might be helping pay for your non-catfood-featuring golden years). You also are helping some kids who had a parent die and are receiving survivors' benefits, disabled people (including some severely disabled children), etc.

Opt out of Social Security (especially if you can convince a lot of people to do it with you) and unless you can arrange some alternative source of funding, you've just done your part to screw 'em over.

" I've written it off, knowing I'll never see it again"
2) Ironically, your political positions and support (as far as they can be assumed) could make this a self-fulfilling prophecy. You'll do best if your views are mocked and ignored, and your candidates lose. Funny, eh?

"followed by a bust that would make 1929 look like a church picnic."

. . . lots of folks getting food poisoning from undercooked chicken and warmed-over mayonnaise? Yech.

Lucifer to cmdicely: Framing it the way you do, as you did yesterday on another topic, is very lazy intellectually, and could even be described as "mean-spirited".

Speaking of intellectually lazy and mean-spirited, Mr. Lucifer, did you even bother to read the articles that I linked to and excerpted on the "Next Attack" thread yesterday, regarding the Iraq Oil Law?

You know, after you screamed at me that I was a conspiracy nut and the "intellectual dregs of society" for daring to suggest that Dick Cheney's motivation for invading and occupying Iraq was to seize control of that country's oil reserves?

If Will Marshall favors it, it must be wrong.

You know, after you screamed at me that I was a conspiracy nut and the "intellectual dregs of society" for daring to suggest that Dick Cheney's motivation for invading and occupying Iraq was to seize control of that country's oil reserves?

I saw that and I kept looking for a response, but none was forthcoming. Go Figure...

"Vilsack will come to regret touching this topic while running for the Democratic nomination, but he deserves kudos for courage."

Similarly, Custer at Little Big Horn came to regret his tactical blunders in pursuit of a morally reprehensible end, but I suppose he gets kudos for courage, too.

"Mean-spirited" in what way?

"Mean spirited" in that it rather obviously hurts the most those who can afford it the least.

They may not be the ideal methods for dealing with the problem

Assuming, arguendo, that there is a problem, its not even a reasonable method of addressing it, much less an ideal one.

(though you seem to think there is no problem to address).

What I think is that the evidence of there being a problem at all is rather mixed.

Once again we have you assigning a completely nonobvious, and unsubstantiated motive

You don't have it now, and even if you did, “again” would be unjustified since you haven't established that it occurred before, either.

Talk about “unsubstantiated”.

for some's plan to balance the financial/demographic problems of Social Security

If there was a fundamental balance problem, this plan could not be rationally expected to address it, though it might defer a crisis somewhat.

If there was a transitory, short-term balance problem that could be addressed by a short-term tweak, this plan would be about the stupidest way imaginable to address it.

Either way, it makes no sense.

that many, many experts claim to clearly see

The most reliable, historically, projection models show Social Security as solvent to infinity. Though historically overly pessimistic alternative projections show a potential problem in Social Security funding.

The “clear ” problem, if there is one, is with the federal government's general fund budget imbalance, since the practical solvency of Social Security relies on the federal government paying back what it has borrowed from Social Security tax money to fund general fund programs.

Its unsurprising that devoted servants of the capitalist class (like Greenspan, a prime architect of the reliance on increased Social Security taxes and increased borrowing from those funds to fund general fund programs to keep income taxes low) see a crisis that calls for cutting spending in Social Security so that the same people—the rich who are burdened more by income tax than payroll tax who's interests were served by the payroll tax hike will also not be burdened by the policy taken to address the imbalance created by the irresponsible general fund policies since then. Its essentially the approach of, instead of borrowing from the payroll-tax-funded programs for the general fund, permanently shifting the burden of general fund programs to the payroll tax base from the income tax base.

But the problem has nothing to do with Social Security, whatsoever, it is entirely the result of irresponsible policies—profligate spending without supporting taxes—on the general fund side.

So you don't like price indexing or CPI adjustments; neither do I.

Maybe you do have a functioning brain-cell or two.

However, it isn't proposed by people that are mean-spirited.

You are welcome to provide a reason to believe that no proponent of price indexing can fairly be described as “mean-spirited”, if you are going to attack strawmen, I'll ask you at least to make a good attack. However, I didn't claim, you will note, that any proponent of the idea was mean-spirited, I said the idea itself was a mean-spirited idea, and that embracing an idea whose lack of popularity stems from its stupid and mean-spiritedness is no indicator of courage, in response to your claim that Vilsack should be commended for courage for putting forth the idea.

Since you seem to admit that it is not merely not a popular idea but also not a good one, I don't see what you've got left except arguing that advocating ideas that are both unpopular and substantively undesirable is, somehow, commendable.

Framing it the way you do, as you did yesterday on another topic, is very lazy intellectually, and could even be described as "mean-spirited".

Lying about how I've framed it to engage in an extended diversion to distract from how it demolishes your suggestion that Vilsack's action is somehow commendable, a position for which you seem to have no defense, is certainly both “very lazy intellectually&rdquo.

maybe Vilsack is moving right to make himself more attractive as Veep candidate. that's what he's running for isn't it?

Kucinich of course has the right position. He's also got good rhetoric for it, as SecualrAnimist posted above. Now if only we oculd get someone in the media (pro, blogs, whatever) to notice this!

But you got people making 20 30 40 million dollrs that might have to pay a million in taxes (boo hoo )that would not be right.someone making 20-30 thousand a year can afford to pay more in taxes then the ultra rich(Who only got that way because of Reagan and his stupid policies)and does anyone really need 30 million dollars.

URK wrote: "Kucinich of course has the right position. He's also got good rhetoric for it ... Now if only we oculd get someone in the media (pro, blogs, whatever) to notice this!"

The problem is not that the mainstream media doesn't notice Kucinich's positions on Social Security, the war in Iraq, etc., or his eloquence in expressing them (which won him standing ovations at all the Democratic candidate forums in the 2004 primaries, while the same Democratic primary voters struggled to stay awake through John Kerry's vapid and incoherent speeches).

The problem is that the mainstream media, which is entirely owned and controlled by America's ultra-rich corporate ruling class, does notice what Kucinich has to say, and how well he says it. And that is the reason that he is subjected to a media blackout.

Don't you understand? If you're poor than you were stoopid and you deserve poverty.

If you don't have any money when your old it's because you were stoopid when you were young and deserve to be poor or die now.

The poor only deserve our contempt. I've learned this from my conservative relatives.

Switching to price indexing is a good idea, because it will mean benefits will rise with inflation and not faster than inflation. It means retirees will be as wealthy tomorrow as they are today in terms of real spending power, not wealthier. F.D.R once stated that Social Security was a helping hand, not a way to an easy life. Price indexing is possibly one of the best common sense solutions out there for our broken welfare state.

The poor only deserve our contempt. I've learned this from my conservative relatives.

And I bet they are Christians, too, aren't they? Warmin' a pew each and every Sunday and claiming to live a Christian life while disdaining everything that dirty hippie Jesus preached. And practiced.

And I bet they are Christians, too, aren't they? Warmin' a pew each and every Sunday and claiming to live a Christian life while disdaining everything that dirty hippie Jesus preached. And practiced. Posted by: Blue Girl, Red State (aka Global Citizen)

Yes they are, and yes they do.

They also own a business that exclusively sells audio/visual equipment to fundamentalist churches.

They haven't been doing too well since 2000 (funny that), but they blame their woes on "9/11" and not Bush's/Republican Congress' economic policies.

Why can't we just borrow are way out of the problem.As Cheney says, Deficits don't matter.

Vilsack was on Leno the other day and Jim Carrey was rolling his eyes and making wackjob noises. I kinda felt bad for him...not so much now.

Why can't we just borrow are way out of the problem.

<GOP Talking Point>

It is morally wrong to borrow to help the undeserving poor. The government should only borrow to make the rich richer. God wants the rich to be richer and the poor to die. Ignore all teachings of Jesus that say otherwise.

</ GOP Talking Point>

Bless Rep. Kucinich's heart, but until he proposes a funding mechanism for a 65 retirement, I cannot support it. I would support a later retirement for Social Security: 70 now (which would affect me) and as much as 72 within 30 years (which would not). If we do raise the retirement age for full benefit for social security, we need to look at a way to soften the rules about disabilities for those over 60. Still, I would think that many companies would be much more willing to hire those with minor disabilities and other problems if we had a single-payer universal health plan.

freelunch wrote: "Bless Rep. Kucinich's heart, but until he proposes a funding mechanism for a 65 retirement, I cannot support it."

I'll propose one: eliminate the ceiling on wages subject to Social Security Tax, which is currently $97,500.

The only reason supporters of the status quo prefer wage indexing to CPI indexing is that inflation is currently low. Wait until our next bout with stagflation (when the inflation rate takes over the rate at which wages increase), and they'll be singing a different tune.

I'll propose one: eliminate the ceiling on wages subject to Social Security Tax, which is currently $97,500.

And means-test it, for gawd's sake.

cmdicely that was an impressive post.I'm in agreement. But I'll bet my right one that hawk and al are screaming voodoo if they read that.

SecularAnimist quoted Representative Kusinich as stating:

"I believe the interest rate on the Social Security trust fund is too low. It is much less than the average interest rate for U.S. Treasury-backed securities. If Congress changed the law to credit the trust fund with the average interest rate, we could reduce long-term financing problems by 30%."
________________

Regardless of what the interest rate is on the SS trust fund, isn't that going to result in the government simply transferring funds in order to pay the recipients? Eventually, the annual payments are going to exceed the annual SS revenue, at which point that "trust fund" will need to be paid back from the general funds, somewhere around the late 20-teens. At which point, Congress is going to be faced with progressively less money for discretionary spending. Then, Congress will either raise taxes or cut benefits. If they don't act earlier, that is.

Social Security is a solemn promise that must be kept. However, one doesn't have to believe that SS is a government waste to worry that it is in trouble. I'll gladly pay my SS taxes, but I, too, do not believe I'll receive what I could have realized by saving the money in another way. Almost any investment pays more in the long run.

Screw raising the retirement age to 70. There are too many of us now who become too disabled for full time work & not eligible for SSD. I retired at 62 because of this, & looking for part time work I am still able to do. The "huge" amount of $830/month I currently draw sure looks good after a couple of months with no income at all.

As far as indexing so the amount of SS paid out is slightly less every year sounds like a good idea. The only other options now are to raise the tax cap on incomes, raise the tax for all, or watch it go broke sooner. Face it. SS will go broke eventually. At least this way, workers have the time to adjust.

AH: Many of us paid big bucks into retirement plans which either were embezzled or the pension plans went broke. Others saw theirs cut in half over divorce settlements. So much for your Social Darwinism. It would serve you right if your investments lost big bucks just before you retire. I bet you will be the first to scream to the govt. to do something if that happens.

I think means testing sounds good, as well. Of course, my idea of means testing would penalize folks like my own Mother and her second husband who have two places in Florida, along with the family home in Ohio.

I wonder if those who established SS considered snowbirding as an essential minimum for a dignified retirement?

And means-test it, for gawd's sake.

No, for gawd's sakes don't. One of the pillars upholding Social Security has been that it's available to everyone, both rich and poor and middle-class, thereby giving every group a stake in its survival. Once you means-test you move Social Security down the path of being seen as a welfare program, and once that happens it's a short step to benefit cuts since, as we know, the poor have no real representation in Congress.

Means-testing, in short, would turn Social Security from a univeral insurance system, one bouyed by the sense that we're all in this together, to a welfare system, and is advocated by conservatives precisely because it would undermine popular support for social insurance.

(Not to mention, of course, the added costs and layers of intrusive bureacracy that would be required to implement and maintain a means-testing system).

I'll gladly pay my SS taxes, but I, too, do not believe I'll receive what I could have realized by saving the money in another way. Almost any investment pays more in the long run.

See, that's your problem right there -- your belief that Social Security is an "investment." It's not. It's a universal insurance payment.

Instead of paying your car and health insurance, you could also presumably take that money and invest it instead -- but then once you get into an accident or fall sick, you'd better hope that you've made a hell of a lot of money in the market, because that insurance won't be there to cover you. Similarly with S.S. -- it's designed as a safety net partly in case your private investment efforts fail.

Well, any other "insurance" policy only pays off when you need it, it does not pay off to all, simply because they took out insurance. SS is part of the agreed social safety net for the unlucky, hopeless, sick, and stupid. It certainly wasn't intended for the rich.

The only other options now are to raise the tax cap on incomes, raise the tax for all, or watch it go broke sooner. Face it. SS will go broke eventually.

No, it won't. Not even close. The most realistic future projections by the Social Security trustees foresee the system being solvent into infinity. Even more pessimistic analyses predict that the program will be able to pay full scheduled benefits until 35 to 45 years into the future with no changes whatsoever, which is a far better forecast than Social Security had for most of its history.

Remember, in 1994 the trustees predicted that Social Security would become insolvent in 35 years, meaning 2029. In 1999 they were still predicting that insolvency was 35 years away -- now by 2034. In 2004 they predicted that insolvency was 38 years away, in 2042. Doomsday always seems to get pushed over the horizon....

Well, any other "insurance" policy only pays off when you need it, it does not pay off to all, simply because they took out insurance.

No, it pays off when you hit an agreed-upon event -- in the case of car insurance, it's having an accident. In the case of Social Security, it's reaching old age.

SS is part of the agreed social safety net for the unlucky, hopeless, sick, and stupid. It certainly wasn't intended for the rich.

No, it was intended for everyone, from the rich to the poor. The rich may not "need" car insurance either, as they can afford to pay damages out of their own pocket, but we still don't allow them to opt out of mandated car insurance by waving their bank statement around.

You can buy something very much like social security from insurance companies, though you would probably have to buy two or three policies: one for old age, one for survivors, and one for disability. For the folks who are telling us how bad a deal Social Security is, could they actually provide data to show that I could buy a better program in the private sector?

Keep in mind, too, that to produce their worst-case forecasts that the Social Security trustees have used very conservative assumptions about future rates of economic and productivity growth, pegging long-term economic growth at just 1.7 percent. In fact, however, we've had well over 3 percent growth, resulting in the fund constantly beating estimates of its demise.

Meanwhile, the Bush regime assumes that individual privatized portfolios will appreciate at 6 to 7 percent a year. But if the economy is only growing at 1.7 percent a year, there's just no way the market will produce that kind of gain and allow privatized accounts to make up for the loss of Social Security.

SS is part of the agreed social safety net for the unlucky, hopeless, sick, and stupid.

Well, let's hope none of us never falls into any of those categories....unless, of course, you're willing to bet your retirement that you'll never be sick or unlucky.

Stefan wrote about the eventual insolvency of SS:

"No, it won't. Not even close. The most realistic future projections by the Social Security trustees foresee the system being solvent into infinity. Even more pessimistic analyses predict that the program will be able to pay full scheduled benefits until 35 to 45 years into the future with no changes whatsoever...."
____________________

Only if they count the SS trust fund, Stefan. There ain't no vault with SS money sitting in it. As soon as payouts exceed revenue, SS will be increasingly reliant upon funds other than those collected from the workers' paychecks. That day will come sometime well before 2020 unless something is done.

That's the timeframe we better deal with. Because that's the one that will begin to hamstring Congress.

Stefan wrote:

"(Quoting me) 'SS is part of the agreed social safety net for the unlucky, hopeless, sick, and stupid.'

Well, let's hope none of us never falls into any of those categories....unless, of course, you're willing to bet your retirement that you'll never be sick or unlucky."
_______________________

Don't forget stupid, Stefan. ::grin::

I'm quite capable of being as stupid as the next guy. Somedays moreso. Then I'm gonna want that check, by gum. It still doesn't make it the best bet going.

Only if they count the SS trust fund, Stefan. There ain't no vault with SS money sitting in it.

There ain't no vault with any money to pay for any government programs sitting in it, including funding of our military. We operate on a pay as you go sytem, generally.

As soon as payouts exceed revenue, SS will be increasingly reliant upon funds other than those collected from the workers' paychecks. That day will come sometime well before 2020 unless something is done.
To get more specific about it, however, the 2004 trustee's report projected that Social Security would take in more than it will pay out until 2018. Between 2018 and 2028, interest income earned on the trust fund assets will make up the difference between income and expenditures. After 2028, we'll draw on the trust funds to pay for expenditures re not covered by income. After that point, in 2042, the trust fund surplus is expected to be depleted, and annual revenue into the program is projected to be less than expenditures. However, even then Social Security will still be able to pay between two thirds and three-quarters of its promised benefits from 2043 to 2080, the farthest date they project.

All of these assumptions, meanwhile, are the worst case scenarios which assume (i) a lower than actual rate of economic growth and (ii) that no fixes to the system will be made at any point in the future. There are however many relatively painless ways to pay for any shortfall, including tax increases, debt issues, or benefit cuts. (For one example, a less than 2 percent increase in the payroll tax implemented now would allow Social Security to pay all its promised benefits for at least the next 75 years).

Dennis Kucinich: My platform is centered upon a non-negotiable commitment to preserve Social Security against all assaults.

Another dangerous radical, in the mold of Comrades Truman and Eisenhower.

Stefan: it was intended for everyone, from the rich to the poor

Damn, now even the Wall Street lawyers are joining the Dictatorship of the Proletariat. I agree with Gen. Ripper - it's the fluoridation that's done it.

What the Right wants is Antisocial Security.

If you think wages are going to keep even with prices, indexing to wages is okay. But if you think prices are going to outpace wages, you want to index to prices. And of course, if you think wage increases are going to outpace price increases, index to wages. Index to the one that is going to rise faster.

"One of the chief casualties of the Republican drive to impeach President Clinton may be any hope of "saving Social Security" in 1999." - The DLC 1999

There's a problem with Social Security?

"The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem.

But it's a problem of modest size." - NYT 2004

So is there a problem or not? Or does it depend who is in the WH?

The latest projections from the Congressional Budget Office show that the program can pay all scheduled benefits until 2046 with no changes whatsoever. This would not fit most people’s definition of a crisis. This means that if you want to use “financially distressed” “fiscally threatened” or some equivalent adjectival phrase to refer to Social Security, talk to your editor about getting an opinion piece. Such phrases do not belong in a news story. - Dean Baker

The 'crisis' is that government is making no provision whatsoever to begin liquidating the trillions in Treasuries held in the Trust Fund from the General Fund and continues to use regressive payroll taxes to hide the full extent of government deficits.

http://www.prospect.org/deanbaker/
The Social Security Trust Fund
Since the “entitlement” cutters seem to be on the warpath again, it might be time
for another sermon on the Social Security trust fund. This one really should not
be hard, but I am afraid that that there are many powerful people with a vested
interest in creating confusion, and they have succeeded.
In 1983, Congress (following the recommendation of the Greenspan commission)
deliberately raised the Social Security tax far above the level needed to pay
current Social Security benefits. This led to a large surplus. Under the law, this
surplus must be used to buy U.S. government bonds. Also, under the law, the
bonds held by Social Security are liabilities of the federal government, just like
any other bonds. When the program needs the money from the bonds to pay
benefits, it can rely on the interest and eventually the principle from these bonds,
just like any private pension or individual.
Note, that there was never any rule that any Social Security only gets government
bonds if the government runs a surplus. In other words, from the standpoint of
Social Security, it matters not an iota that the government has mostly run deficits
for the last quarter century. This may have been bad policy, but it doesn’t affect
the size of the trust fund.
The most recent projections from the non-partisan Congressional Budget Office
show that Social Security will have enough money between projected taxes and the
bonds in the trust fund to pay all benefits through the year 2046, with no
changes whatsoever.
This is very important to understand when someone like Federal Reserve Board
Chairman Ben Bernanke proposes cuts to Social Security. Workers have already
paid for these benefits. The Social Security tax is very regressive. Its regressivity
can be justified by the progressive payback structure of the program. However, if
the benefits are cut, at appoint when the program can still easily afford the
benefits (e.g. 10-20 years), then the government has effectively stolen from the
people who paid Social Security taxes.
There are many people who want to do this – effectively default on the
government bonds held by the Social Security trust fund. If this default is now on
the national agenda, then it certainly seems reasonable for the workers who are
losing their benefits to raise the prospect of defaulting on government bonds more
generally. After all, what can possibly be the rationale of only defaulting on the
government bonds held by workers through the Social Security trust fund, but not
defaulting on the government bonds held by the wealthy people who think this is
such a good idea?
--Dean Baker
"Looming Insolvency of Social Security" What Do they Smoke at AP?
Yes, an AP story tells us that President Bush wants to address the "looming
insolvency of Social Security." Since the non-partisan Congressional Budget
Office projects that Social Security can pay all future benefits for the next 39
years, with no changes whatsoever, this definitely gives new meaning to the word
"looming" or perhaps "insolvency."
The real headline for this article should have been that Fed Chairman Ben
Bernanke is apparently suggesting that the federal government default on some of
the government bonds held by the Social Security trust fund. That would seem to
be the implication of his suggestion that we restructure Social Security and
presumably not pay the full benefits mandated under current law.
Perhaps Mr. Bernanke is following in the foodsteps of President Kirchner in
Argentina. Argentina has seen four and a half years of very impressive growth
following the partial default on its debt. In fact, Rafael Correa, Ecuador's new
president, was sufficiently impressed that he is now considering a similar step.
Of course, if Mr. Bernanke wants to go in the direction of defaulting on U.S.
government debt, the default should not just be on the government bonds held by
the country's workers through the Social Security trust fund. Any default should
also hit the bonds held by wealthy people, large corporations, and central banks.
Personally, I don't think that default is a good strategy for the United States at this
time, but the fact that Mr. Bernanke appears to advocate it is certainly
newsworthy.
--Dean Baker

Here is a scale variable for you .... Social Security's assets increased more than the
combined assets of Saudi Arabia and Russia in 2006
Brad Setser | Jan 22, 2007

In 2006, the increase in the assets of the Social Security system ($185b) will almost certainly exceed the combined increase in the assets of the Russian Central Bank ($107.5b) and the Saudi Arabian Monetary Agency (on track for around
$70b). The Social Security payroll tax (roughly $600b, counting the "disability portion" of Social Security) also raised more money than Saudi Arabia and Russia got from exporting their oil and gas (around $500b), even back when oil was at
$65b.

And for that matter, the Social Security system's reserves (the Trust Fund)are twice as large as the reserves of China. The Trust Fund ($1,994b) is
about equal in size to the combined reserves of China and Japan.

The Social Security system's Treasuries are just paper assets, you say. They aren't "real assets" It is certainly true that US Treasuries are nothing more (or less) than a promise to pay. They aren't secured by anything more (or
less) than the full faith and credit of the United States. They are ultimately backed by the capacity of the US government to generate the necessary tax
revenues to pay its obligations, or, should the US government opt to, its ability to borrow the needed funds in the markets.

Then again, Saudi Arabia and Russia also hold a lot of paper assets. Not necessarily the same kind of paper -- Russia tends to shy away from US Treasuries for some reason. But it still holds paper of various kinds. Some of that paper is
backed by mortgage payment streams – but nothing guarantees foreign government’s future ability to convert domestic US payments steams into external
purchasing power.

And in a lot of ways, the domestic tax revenue streams that assure the ability of
the US government to pay back its domestic debts look a lot stronger than the external revenues streams that ultimately guarantee the ability of the (US) the country to repay its external debts. Even after the Bush Administration's tax cuts,
the gap between what the non-social security government takes in and what it spends is a lot smaller than the gap between what the US exports and what it imports. You can throw income from US investment abroad (relative to interest
and dividends on foreign lending/ investment in the US) into the mix if you want -- it doesn't change the basic equation.

Somehow, I think the debate over Social Security would be different if every statement on Social Security started with something like "Social Security, which ran a $185b surplus last year, is expected to continue to build up its assets until
roughly 2020, when it will need to dip into its accumulated assets to pay currently promised benefits." Social Security will -- per the CBO -- first need to draw on the interest income on its assets in 2019, but the overall assets will rise for a few years after that. I wasn't able to find the precise estimate for when Social Security
will need to start to draw on its actual assets, not just the interest on its assets.
In my view, the real issue here is how will the rest of the government manage when it cannot finance itself by borrowing from the Social Security Trust Fund. I disagree with my colleague Felix Salmon. Felix suggests that the overall fiscal position of the US government is a good reason to cut social security benefits.
Ultimately, Social Security benefits and other government entitlements might
have to be cut in order to bring US fiscal policy into line
I think Felix has it backwards. US fiscal policy needs to be bought into line so
that the rest of the government can repay the money it borrowed from Social
Security, allowing Social Security to pay its promised benefits.
That, after all, was the point of the trust fund. The fact that other taxes were
cut and the government ran a deficit rather than paying down its assets over
the past few years doesn't in any way reduce the (non-Social Security)
government's obligation to make good on its financial obligation to repay the
Social Security trust.
I am open to the idea that promised future Social Security benefits might need to
be adjusted in some way so that the Social Security's accumulated assets are drawn
down a bit more slowly than currently projected. Cutting benefits promised to
those expected to retire between 2030 and 2045 is one way for the Social Security
system to pay additional benefits after 2045 without any increase in the payroll tax
(raising the payroll tax after 2045 is another way). I am also open to injecting
additional revenues into the system.
But the point is to make sure that Social Security is well positioned to pay
future benefits -- not to reduce the burden of REPAYING Social Security out
of general revenues. I think that is basically what Delong is saying as well; he
just expresses it a bit more formally.
Cutting Social Security benefits while raising payroll tax revenues is certainly one
way of improving the overall long-term solvency of the federal government. Social Security would be able to finance the rest of the government for an even longer period of time. But it also effectively shifts more of the financing of
the overall government towards the regressive tax on wage income -- the payroll tax.

That is the wrong thing to do - especially when globalization is already putting
pressure on wage income and adding to concerns about economic insecurity. Instead we ought to be shifting more of the burden of funding the overall
government back to the income tax -- or perhaps to an energy tax. And, to the best of my knowledge, that is exactly what repaying the Social Security
trust fund out of general revenues rather than financing the rest of the government out of the payroll tax will do.

Damn, now even the Wall Street lawyers are joining the Dictatorship of the Proletariat. I agree with Gen. Ripper - it's the fluoridation that's done it.

It's us Wall Street lawyers who can see up close and personal the dangers in putting too much trust in the market. Remember what happened to those poor sods who had all their investments in Enron....

Viva la revolucion!

American Hawk wrote: The whole fiasco demonstrates the folly of handing over retirement income to the government. At any time, bureaucrats in Washington can decide to 'cut' your benefits, and there's effectively nothing you can do about it.

Companies can decide to 'cut' anything they like whether benefits, jobs, or shut down whole factories and there is nothing you do about it. All those people who worked for Enron got NOTHING for their hard work and their retirement went pffft.

So long as the rich keep getting tax cuts (welfare) on the backs of workers along with monstrous loopholes to divert money away from the public interest (oil company royalties not being paid because of the language of the contract signed during Bill Clinton's administration) and a whole host of other Scrooge-like policies, even you, American Hawk, are at risk of being thrown out like yesterday's trash.

Someday your life is going to depend on the kindness of someone else. Gee, I can think of no worse hell for you.

Well, any other "insurance" policy only pays off when you need it, it does not pay off to all, simply because they took out insurance.

Um, wrong. "Need" is not the criteria. Any insurance system (and SS is no exception) pays specified benefits in specified conditions. In SS some of the conditions in which benefits may be paid out include reaching a certain age and deciding to take retirement; it is not the case, however, that everyone who pays into SS experiences an event qualifying them for that particular kind of pay-out. Probably, everyone who pays into SS qualifies for some pay out, if only the rather miniscule death benefit, from SS, however, most people who buy health insurance or car insurance for their whole life will at some point be eligible to make some claim against the insurance, too.

Your attempt, here, to contrive a difference between SS and other insurance by claiming that SS always pays out while other insurance systems do not is patently false; first, because SS, like all insurance systems, has defined benefits with defined qualifying conditions, and second because there are other insurance systems that are at least as likely to pay out something over a lifetime as SS is.

Switching to price indexing is a good idea, because it will mean benefits will rise with inflation and not faster than inflation. It means retirees will be as wealthy tomorrow as they are today in terms of real spending power, not wealthier.

Well, that would be true if, say, SS retirement benefits were equal to average income earned in the best 10 years prior to retirement, all adjusted by the price index; they aren't.

Alternatively, its true if by "today" you mean when they first start drawing benefits, but then, that's true now since benefits are indexed by the price index from the point of retirement; the wage index is part of the formula applied to wages during the contributing period to calculate initial retirement benefits.

F.D.R once stated that Social Security was a helping hand, not a way to an easy life.

And that's true of Social Security now as its structured now, with wage indexing applied pre-retirement and price indexing applied post-retirement.

Price indexing is possibly one of the best common sense solutions out there for our broken welfare state.

You have provided no evidence in support of this assertion, and you don't seem to even understand how Social Security works, much less how to fix it.

Only if they count the SS trust fund, Stefan. There ain't no vault with SS money sitting in it.

The Social Security Trust Fund is US treasury obligations backed only by the the full faith and credit of the US government, but without any particular intrinsic value.

Which may sound risky and insecure, but certainly is not in comparison to a "vault with SS money sitting in it" since US currency itself is nothing but treasury obligations backed only by the full faith and credit of the US government.

The "money" in the Social Security Trust Fund is as much "real money" as what gets spit out by ATM machines.

Vilsack never had a chance because he's opposed by some of the most powerful people in politics today. But he gave it a shot.

Meanwhile, as pension ideas go, there was nothing wrong with his. He based his Social Security index on pricing -- INFLATION -- otherwise known as the Cost of Living Allowance, or COLA.

Unfortunately, what sends tingles down the spines of union wage-earners doesn't always do the same for the general population. Therefore, it's pretty easy to conclude he shouldn't have touched this third-rail issue. Though he was well intentioned, he was politically electrocuted.

Ah well. But he's not the first to drop. Joe Biden holds that distinction. However, Biden's too dense to know his campaign is already over. Maybe after a few weeks of rallies attracting no one but his staff, he'll figure it out.