These cites form an excellent strawman starting point to address in a bipartisan manner the question of Social Security Reform as well as the overall Entitlements question. Please chime in....John
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Social Security Finances…How Best to View the Problem
http://www.concordcoalition.org/issues/socsec/issue-briefs/SSBrief4--Measurement.htm
Over-simplified measures of Social Security's long-range financing problems create debates that can be distracting. Regardless of how the program's future deficits are presented, the program's benefits are entitlements that are financed by taxing the nation's economic output. Ultimately, the resources the program requires will have to be drawn from the economy of the future, and it is the dimension of that draw then that best reflects the problem
If the federal government could eliminate its budget deficits and use excess Social Security receipts to buy down the federal debt, then the idea that excess Social Security taxes could be saved would be plausible. But there is nothing in the post World War II period that suggests the government will run budget surpluses for any sustained period of time -- particularly those equaling the size of the Social Security surpluses. And there is nothing to suggest that a commitment by one Congress to set them aside will be binding on the next. As budget developments of the past few years year amply demonstrate, Congress' "lockbox" promises in no way guarantee prudent fiscal behavior.
Looked at this way, it is not the deficits between income and outgo that best reflect the Social Security problem -- it is Social Security's rising costs. If allowed to grow as scheduled, the share of the nation's payrolls that the program requires will grow from 11 percent today to 17 percent over the next 25 years, and to more than 19 percent over the next 75 year. As a share of what the nation produces, it will grow from 4.26 percent of GDP today to 6.14 percent of GDP in 2024 and 6.39 percent in 2024. Either way one looks at those numbers, it means that Social Security's draw from the economy will rise by 50 percent or more over the next few decades… that's the problem.
The bottom line is that, no matter how it is measured, there are just two ways to address Social Security's financing gap without over burdening tomorrow's workers and taxpayers: reduce Social Security's long-term cost and make the remaining cost more affordable by increasing national savings and hence the size of the future economy. A workable reform plan should do both.
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http://www.concordcoalition.org/issues/socsec/doc/050203testimonyexecsummary.htm
Framework of Reform, The Future of Social Security - Robert Bixby, Exec Dir, The Concord Coalition, Testimony at Senate Special Committee on Aging, Feb 3, 2024
Executive Summary
Any Social Security reform plan should be designed to meet three fundamental objectives--ensuring Social Security's long-term fiscal sustainability, raising national savings, and improving the system's generational equity:
• Reform should ensure Social Security's long-term fiscal sustainability. The first goal of reform should be to close Social Security's financing gap over the lifetimes of our children and beyond. The only way to do so without burdening tomorrow's workers and taxpayers is to reduce Social Security's long-term cost.
• Reform should raise national savings. As America ages, the economy will inevitably have to transfer a rising share of real resources from workers to retirees. This burden can be made more bearable by increasing the size of tomorrow's economy. The surest way to do this is to raise national savings, and hence ultimately productivity growth. Without new savings reform is a zero-sum game.
• Reform should improve Social Security's generational equity. As currently structured, Social Security contributions offer each new generation of workers a declining value (“moneysworth”). Reform must not exacerbate--and ideally it should improve--the generational inequity underlying the current system.
Meeting these objectives will require hard choices and trade-offs. There is no free lunch. Policymakers and the public need to ask the following questions to assess whether reforms honestly face up to the Social Security challenge--or merely shift and conceal the cost:
• Does reform rely on trust-fund accounting? Trust-fund accounting obscures the magnitude of Social Security's financing gap by assuming that trust-fund surpluses accumulated in prior years can be drawn down to defray deficits incurred in future years. However, the trust funds are bookkeeping devices, not a mechanism for savings. The special issue U.S. Treasury bonds they contain simply represent a promise from one arm of government (Treasury) to satisfy claims held by another arm of government (Social Security.) They do not indicate how these claims will be satisfied or whether real resources are being set aside to match future obligations. Thus, their existence does not, alone, ease the burden of paying future benefits. The real test of fiscal sustainability is whether reform closes Social Security's long-term annual gap between its outlays and its dedicated tax revenues.
• Does reform rely on hiking FICA taxes? Hiking payroll taxes to meet benefit obligations is neither an economically sound nor a generationally equitable option. The burden will fall most heavily on lower and middle-income workers and on future generations. Younger Americans in particular will be skeptical of any plan that purports to improve their retirement security by increasing their tax burden and by further lowering the return on their contributions.
• Does reform rely on new debt? Paying for promised benefits--or financing the transition to a more funded Social Security system--by issuing new debt defeats a fundamental purpose of reform. To the extent that reform relies on debt financing, it will not boost net savings and may result in a decline. Without new savings, any gain for the Social Security system must come at the expense of the rest of the budget, the economy, and future generations. Resort to borrowing is ultimately a tax increase for our kids.
• Does reform rely on outside financing? Ideally, reform should achieve all necessary fiscal savings within the Social Security system itself. Unrelated tax hikes and spending cuts may never be enacted, or if enacted, may easily be neutralized by other measures, now or in the future. Unless the American public sees a direct link between sacrifice and reward, the sacrifice is unlikely to happen.
• Does reform use prudent assumptions? There must be no fiscal alchemy. The success of reform should not depend upon rosy projections of future economic growth, presumed budget surpluses or lofty rates of return on privately owned accounts. All projections regarding private accounts should be based on realistic assumptions, a prudent mix of equity and debt, and realistic estimates of new administrative costs.
While fixing Social Security's problems, reform must be careful to preserve what works. Social Security now fulfills a number of vital social objectives. Policymakers and the public need to ask the following questions to assess whether reform plans would continue to fulfill them:
• Does reform keep Social Security mandatory? The government has a legitimate interest in seeing that people do not under-save during their working lives and become reliant on the safety net in retirement. Moving toward personal ownership need not and should not mean “privatizing” Social Security. Any new personal accounts should be a mandatory part of the Social Security system. Choice is not important in a compulsory social insurance program whose primary function is to protect people against poor choices.
• Does reform preserve Social Security's full range of insurance protection? Social Security does more than write checks to retirees. It also pays benefits to disabled workers, widows, widowers, and surviving children. A reformed system should continue to provide insurance protection that is at least equal to what the current system offers.
• Does reform maintain Social Security's progressivity? While individual equity (“moneysworth”) is important, so too is social adequacy. Social Security's current benefit formula is designed so that benefits replace a higher share of wages for low-earning workers than for high-earning ones. Under any reform plan, total benefits, including benefits from personal accounts, should remain as progressive as they are today.
• Does reform protect participants against undue risk? Under the current system, workers face the risk that future Congresses will default on today's unfunded pay-as-you-go benefit promises. While reducing this “political risk,” personal account reforms should be careful to minimize other kinds of risk, such as investment risk, inflation risk, and longevity risk--that is, the risk of outliving ones assets.
If we reform Social Security today, the changes can be gradual and give everybody plenty of time to adjust and prepare. If we wait much longer, change will come anyway--but it is more likely to be sudden and arrive in the midst of economic and political crisis.
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Social Security Reform – Hard Choices Ahead
http://www.concordcoalition.org/issues/
As our leaders in Washington consider the best way to remedy Social Security’s long-term funding gap, it is essential for them to confront the hard choices that a meaningful reform plan requires. They should reject both the “do nothing” approach and the “free lunch” plans that rely on substantial long-term borrowing to appear painless. Both offer a false hope. Deficit financing is neither a viable nor a responsible way of avoiding the hard choices that must be made on contribution and benefit levels.
The basic case for reform is a matter of arithmetic, not ideology. Well within the lifetime of America’s baby boomers, the current system faces a growing gap between what it promises in benefits and what we are setting aside to pay for it. Doing nothing to address this problem will eventually result in steep tax hikes, deep spending cuts, or massive borrowing from the public.
Ensuring a more sustainable system will require change, meaning that someone is going to have to give up something either in the form of higher contributions, lower benefits or a combination of both. No Social Security reform will succeed unless this fact is acknowledged up front.
Responsible reform options must make sense within the context of sound fiscal conditions and the need to raise national savings. Moreover, the fiscal challenges facing Social Security, while substantial, are not as great as the long-term fiscal, moral, and technological challenges we face on Medicare reform. If we can’t make the hard choices on Social Security we can never hope to tackle the problems of our health care entitlements. In all the reform ideas we must realize that there are no free lunches. Further borrowing with no new contributions or contemporaneous benefit cuts, raises many concerns. We must ask these questions on any meaningful reform:
Do they add to national savings?
A fundamental goal of reform should be to improve national savings. As America ages, the economy will have to transfer a rising share of resources from workers to retirees. This will be easier in a prosperous growing economy. The best way to ensure this is to raise national savings, and ultimately productivity growth. Social Security reform that relies on deficit financing will not boost net national savings, and may even result in lower savings if households respond to the new personal accounts by saving less in other areas. Without additional savings, any gain for the Social Security system must come at the expense of the rest of the budget, the economy, and future generations.
Could it worsen the already precarious fiscal outlook?
The 10-year cost of roughly $2 trillion would come on top of the $5 trillion deficit that appears likely if current fiscal policies are continued. Yet the greater fiscal danger with most such plans is that they require additional borrowing for decades to come. In the most widely discussed plan produced by the 2024 President’s Commission to Strengthen Social Security, the magnitude of the borrowing equals or exceeds the cost of the new Medicare drug benefit well into the 2024s. Meanwhile, the increased deficits and debt exceed the promised savings until the 2024s. Official projections already indicate that current fiscal policies are unsustainable long before then and the new deficits would only make the problem worse. Savings programmed for the 2024s won’t be enough to prevent us from going over the cliff well before that time.
Could it send a dangerous signal to the markets that we are not taking our fiscal problems seriously?
With our large budget deficit and low domestic savings rate we are borrowing record amounts from abroad. This year’s increase in foreign debt is likely to approach $700 billion. If we “pay for” Social Security reform by running up the debt further, rather than making hard choices, it would signal to increasingly wary financial markets that Washington has no intention of doing what is necessary to get its fiscal house in order. This would increase the risks of a so-called “hard landing” such as a spike in interest rates, rising inflation and a plunging dollar. Promises that all the new debt will be paid back starting in about 50 years are unlikely to satisfy the concerns of those who are watching to see what Washington does now to improve its fiscal position. If markets looked out 50 years, current interest rates would be through the roof. Because the trade-offs that genuine reform requires can appear painful, many leaders try to find excuses for not confronting the hard choices. Yet the truth is clear. Social Security reform involves real resource trade-offs. It’s time to get serious about reform—and face up to the hard choices.
Way to much to wade through.........
I don't see why, to keep SS afloat, the cap isn't raised - and yes, it would impact me. It has been raised in the past - why not?
US Marine vet Vietnam 4/68 - 8/69
Caps raising is one of the things to definitely consider Quick. Thought this Robert Samuelson Op-Ed in the Washington Post today was rather prescient and trenchant on the whole Entitlement debate for all the read:
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/10/AR2007041001311.html
Samuelson states this about this immense Entitlements ends-means disconnect:
"First, a generational backlash is inevitable. It may not come as attacks on sunbathing retirees, but the idea that younger workers will meekly bear the huge tax increases needed to pay all boomers' promised benefits is delusional. The increases are too steep, and too many boomers -- fairly wealthy and healthy -- will seem undeserving."
Social Security and Medicare are an essential part of the social fabric. Millions depend on them. But the vast benefits -- paid too early and too indiscriminately -- have become disconnected from genuine need. Unless the two are reconnected, these successful programs will tear at the social fabric. It is unfair to blame only baby boomers for not acting preemptively to curb the known costs of their retirement. The "greatest generation" bears equal responsibility. Politicians have done nothing, because voters -- present and prospective retirees -- have wanted them to do nothing. Still, boomers deserve special disapproval."
"Baby Boomers," says Buckley's Devine, "made self-indulgence a virtue." [ Cassandra Devine in Chris Buckley's satrical nove "Boomsday] . Sure, that's a stereotype, but for opinion leaders and politicians, it is uncomfortably accurate. Consider Newsweek. It has a regular feature, "The Boomer Files," that celebrates boomer musicians, comedians, sports heroes and TV series. It discusses how boomers are "redefining the 'golden years' " -- but not a peep about the costs for their children."
"I was born in late 1945 and count myself a part of this failure. In our careless self-absorption, we are committing a political and economic crime against our children and perhaps -- when they awaken to their victimization -- even ourselves."
Botton line folks - THIS is a nation-buster issue Second to None!! John
I think the single most irritating thing about Social Security is when you see someone who obviously doesn't need it getting it.
What's with that, is that a real problem or just an abberation? Does anyone have any stats that stratefy general income or equity of those getting Social Security?
You seem to be suggesting that rich people, simply by having an arbitrary amount of money (presumably more that you have), should be denied benefits of a system into which they contributed?
John E. Kaczmarowski
kacz@kaczmarowski.com
www.kaczmarowski.com
Yes. Its a social program, not a government bank I think.
Anyhow, is it much of a problem in real dollars?
To be clear, you think that taking tax money from someone and not providing the expected services in return simply because the someone in question is richer than you, GEA, is a good governmental policy?
We are a country of laws, not a Robin-Hood-steal-from-the-rich Banana Republic. I reject the entire theory on the grounds that you would pit class against class in response to serious problems shared by all. This is not a recipe for Unity, it is a signpost on the path to Disunity.
John E. Kaczmarowski
kacz@kaczmarowski.com
www.kaczmarowski.com
What was the original intent of Social Security then? Wan't it created as a response to the depression when far too many people had no safety net?
Everyone born in 1929 or later needs 40 Social Security credits to be eligible for retirement benefits. You can earn up to four credits per year, so you will need at least 10 years to become eligible for retirement benefits.
This program was created for everyone.
John E. Kaczmarowski
kacz@kaczmarowski.com
www.kaczmarowski.com
We See things differently John. You give me a link to something from today. Clearly the original intent of Social Security was as a safety net for people.
One of the purposes of government is income distribution, people pay taxes and get some services. I may pay more than you, but who cares.
It does no one any good to spout off beliefs unguarded by even the most flimsy facts GEA. So, to your question, I present words from the original Social Security Act of 1935:
Section 202A Every qualified individual (as defined in section 210) shall be entitled to receive, with respect to the period beginning on the date he attains the age of sixty-five, or on January 1, 1942, whichever is the later, and ending on the date of his death, an old-age benefit (payable as nearly as practicable in equal monthly installments)
Section 210 (c) The term qualified individual means any individual with respect to whom it appears to the satisfaction of the Board that- (1) He is at least sixty-five years of age; and (2) The total amount of wages paid to him, with respect to employment after December 31, 1936, and before he attained the age of sixty-five, was not less than $2,000; and (3) Wages were paid to him, with respect to employment on some five days after December 31, 1936, and before he attained the age of sixty-five, each day being in a different calendar year.
John E. Kaczmarowski
kacz@kaczmarowski.com
www.kaczmarowski.com
Well it seems you are in the minority in your belief Kacz given what I am reading here. Quoting bills won't get anyone to believe that the intent of social security was not a safety net for the not well off.
Of course it stands to reason that the well off figured out how to get the money anyhow, via their agents, our elected and appointed officials.
Social security is an insurance. If your car is damaged in an accident
should your insurance not pay if you have enough money to buy anew
car?
It is what it is in the law.
Bill"for what we are together"
And he certainly is not in a minority on this issue for stating them.
The way to save SS is to make it unneccessay by removing the cap on Individual Retirement Account contributions and offering advantaged tax rates on withdrawals then take on adjustments of SS such that everyone has the SS benefit in effect for thier contributory period.
if that lead progressively to changing SS to the type of safety net that protects society from the worst consequences of disabilities and impoverished old age that would be fine with me.
I see no reason to advance the notion that governement or society be obligated to be responsible for those that could and wouldn't be responsible for themselves. Government should intervene to the extent needed to protect the whole of us from the worse consequences of some of us.
Bill"for what we are together"
This is a country of laws. The laws are written on paper so anyone can look at them and use them to settle disputes or answer questions.
The law is quite clear, regardless of what you choose to believe. The Social Security system as initially conceived and as presently implemented is available to all citizens of the United States who have worked in this country for at least a stipulated number of years and have achieved a given age, regardless of income.
One of my favorite aphorisms is this:
"The truth is not dependent upon a believer"
In the cases in which we've disagreed, I am thankful this is still true...
John E. Kaczmarowski
kacz@kaczmarowski.com
www.kaczmarowski.com
Kacz, you are supporting the unsupportable.
1) It's pretty clear that Social Security is not a sound program, pretty much everyone agrees with that.
2) Its not sound because of the laws that create and run it.
3) Standing on those laws now is like saying, "Hey I like the stuff that doesn't work."
Turning the SS trust into debt paper created the mess. If the trust fund was in place. we could easily roll the the SS contributions into a mandatory individual annuities program contracted to insurance management companies with government providing the reinsurance (underwriting). That would cover existing and future beneficiaries on the basis they had contributed into now and later. (I definitely disagree with the Rs plan to allow contributions directly into the equities (stocks) market.)
So I would suggest a bond sale to replenish the trust fund, that is, replace the debt paper in the SS account and leave the treasury the debt to be repaid to bond holders. Retired folks are looking for good bonds anyway so myself and other retirees would be happy to replace some of our muni bonds for SS bonds. We would be defending ourselves and our children with an investment we have to make anyway.
Why? I just retired. If SS could just return the exact amount I have contributed in the last 45 years I could buy an "Immediate Annuity" that would give me a higher monthly income than my SS check with inflation protection for life. But they don't have my money, they have an IOU from the Treasury Department.
Bill"for what we are together"
I have not supported the unsupportable. In fact, I have been relatively silent on what, if anything, can or should be done to "bail out" Social Security.
In fact, I have only challenged your assertion that Social Security was adopted as a safety net for the poor (or, at least not rich). Righting your wrong assertions cannot be construed as support for the present financial plight of Social Security.
Finally, your recent posts all seem to have a single theme, which I have steadfastly argued against since I've seen them. Your theme seems to be "the US should walk away from as much debt and responsibility as suits me, GEA." Your posting on debt printing and your recent assertion that at some arbitrarily assigned net-worth, a citizen of these United States should be stripped of their right to social security benefits for which they have paid each indicate that your desire is to have a government that serves only you or only those who find themselves in your same economic condition.
John E. Kaczmarowski
kacz@kaczmarowski.com
www.kaczmarowski.com
Well that is how you see it Kacz, I see it differently.
I have never once said one word about my economic situation at all. Not one. So I think, at a minimum, you are projecting onto me. Indeed other nodes show the same where you keep attributing things or ideas to me that I didn't say or espouse at all.
Please stop doing that, I am a little concerned regrading being stalked around the site by you.
I have to agree with both of you actually. Soc Sec was meant to be a saftey net andd all (rich or poor) were to be recipients. However the sustaiability of the core program is at risk and we do need to rethink wahat it has developed into. I do think we need to keep everything legitimately on the table when we are tackling such an enormous issue. Thus I think a comprehensive Social security and perhaps an accross the board entitlements means test would be in order. That does not mean that the richer would not get social security but you could stretch it out so they maybe get what they paid in on a longer time frame.
Actuarially the richer would be living longer and could benefit and get their legitimate laeful due over their longer lifetimes. There have ben such proposals from Concord and CBPP and others along those lines. Whether it will solve the soc sec entitlements crisis by itself is doubtful but combined with a CPI minus 1 index for increses to social security rather than inflation and an index in the income cap for FICA, the avenues for legitimate sustainability to Social security annd other entitlemenst is definitely there if there is the requisite political courage and leaership on this to go against the vested interests and cobble out a plan. The soc security Commission a few years ago with Moynihan and Kerrey had some excellent idesa thta sdly went nowhere because of the lack of political courage and the Can-Kicking phiilosophy extant in this town DC.
We need to start to provide a framework of some sort on Entitlements to bolster political courage to take the leap to get this resolved in the next 5 to 10 years.and on a course for intergenreational sustainability. If not our children and grandchildren will be in a real bind and this could be a real nation-buster issue if the can-kicking continues. This should be priority one for a Unity ticket. we can carve out a decent implementable center ground on this issue and hopefully pick a candidate of political courage to deliver a decent and intergenerationally equitable solution.
So BOTH of you are right IMHO!!
John M, What sort of Means Test makes sense in your viewpoint? Does that means test make much difference in the solvency of Social Security? I don't know much about this problem, so I'd like to be educated. Again, all I can say os that those who don't need it shouldnt get it, and those that need it should.
Does a "Needs Test" make better sense than a "Means Test"?
The RICH run this country don't they? So they can give a little while the rest of us give a lot. It's time THEY helped support America with the rest of us!!
Tee
"Lets take care of "U.S." first"
U.S. = United States
The rich do not recieve Social Security in the first place. There is a limit on how much you can make when your on SS to begin with, remember? So if your rich enough to make over 10,000.00 per year, any more and it is taken away from your Social Security. So if you make 30,000.00 in the stock market or just from the intrest in your acount, you can not get Social Security.
Just thought you all should know.
Tee
"Lets take care of "U.S." first"
U.S. = United States
There is a limit on how much you can make BEFORE YOU PAY INCOME TAX on SS. I've been there for two years now. You can earn any amount and still get your SS check.
Bill"for what we are together"
About $20K at best after Medicare deductions and you'll give up another 10-15% if you have a matching income from a retirement income.
It takes about $1 million nest egg to do that and have any chance of keeping up with ever inflating prices and the eventual high cost of failing health and independence. Another inflationary period like 1974-84 and social security would be all many people will have, though GEA might think them "rich" today.
So, if you can define "rich" in a way that doesn't penalize lifetime savers or those that put those saving into enterprise and public works financing you might find a niche that may not "deserve" (that is, need I guess) to recover thier social security investment. Better to talk about an annual cap for retirement income to remain elgible for SS but only when the cap is an income in the top 10% of incomes report and allows tax credit for Medicare premiums. But I also think that will not be much money saved and a waste of "political" capital to achieve compared to other concerns.
Bill"for what we are together"
Sorry, but the SILVER SPOONED BRATS Do not need Social Security. They can pay there own way. My web site tells all about it. And how to take care of those who REALLY need it and make it work for those it screws all the time. Congress has made a joke out of Social Security.
Tee
WWW.Tee4President.US
"Lets take care of "U.S." first"
U.S. = United States
Since you are disagreeing 100%.
Bill"for what we are together"
GEA, The argument for “Means Testing” Social Security and Entitlements as one of the possible moderate bipartisan choices/options Unity08 could offer up in an overarching framework that makes this essential program(s) viable and sustainable to this generation and the next few generations. Means Testing options as all Entitlement Reform options needs to be reframed and properly portrayed as methods to bridge the demographic black hole that will occur when Baby boomers start retiring in droves around 2024. The essential question we all must start to ask is this – Do we want our children and grandchildren to have 30% of their pay checks withheld in FICA so we in our retirement years can get Social security benefits 2 to 7 times in excess of what we and our employers paid (even after inflation adjusted dollars) paid into Social Security with our (Baby Boomers/Greatest Generation) measly on average 6% FICA payments.
The thesis increasing made by for a means test by various groups from Concord to Center for Budget and policy Priorities is that these Soc Security /Medicare Entitlement programs will not be cut per se but the growth in these programs will be less that they would be if nothing was done. No retirees born before say 1968 would be cut off at the knees in all credible means test schemes (despite what the special interest will scare you into believing). In fact the sacrifices will be very minimal if they are done soon and most of the sacrifices will be born by the better off who are more able to adjust and cope. The benefit payments (payouts per retired person) will just not increase as fast as they have in the past.
Here goes on how it could work… the better off Social Security/Medicare recipient would be “means-tested” to calibrate the extent of the per month benefits paid. Retirees earning below say $50,000 per year would not be affected at all. People making between $50,000 and $60,000 would have their monthly entitlement (Medicare/Soc Sec) payouts reduced by say 10% of what it would be. People making between 60,000 and 70,000 in retirement income would get a 20% entitlement payout reduction, and so on til you get to those who make over say $100,000 per year in retirement income – those recipients would be getting just 50% of normal monthly payout. That 50% would/could be the ceiling on the payout reduction. No matter how rich you were your entitlement payout would be reduced by no more than 50%.
These wealthy people would still probably get all they paid into Soc sec and Medicare and then some if they lived to their normal actuarial age (longer for the wealthier). Thus the law covering everyone regardless of income would be upheld – and it should be. Instead of collecting their “payback” in inflation adjusted dollars in 4 to 5 years (which is the norm now for Soc Se and Medicare recipients) what they paid in over their working life, these wealthier recipients will maybe take 8 to 10 years to get their “payin” back in “payouts” back.
If they live to 80, even the richest of the rich would get back in inflation-adjusted dollars at least what they and their employers paid into the entitlement programs and probably more. To me the better off means of the wealthier recipient will enable them to survive this stretched out entitlement payout scheme quite comfortably. The upside of this means testing plan is that for very minimal sacrifice (shared sacrifice by the wealthier and those who made out better in the course of their life) and in conjunction with other ideas such as Consumer Price index minus 1% indexing calculation and a graduated age ceiling to 70 and a graduated indexed FICA/Medicare tax on income, we could go a long ways to ensuring the sustainability of these entitlement programs. It would go a long ways to adjusting the program along the lines of its original founders - as a safety net in case your life circumstances took a turn for the worse. It would also (and should) still be open to all because we all do not know how life’s various sundry circumstances will pan out. So keep the safety net intent and include everyone.
The Kerrey-Danforth Commission in the 90s and the Moynihan Commission in 2024 made some of the very same doable implementable policy suggestions. The special interest forces arrayed in this town DC to beat down these proposals was withering and they went nowhere and the problem is twice as daunting now. They the special interests may tell us we are safer and happier in our serfdom to status quo, but outside it is growing dark and cold for our nations future. Thus we have an ever expanding ends-means disconnect that will do in our nation if not addressed in the next 5 to 10 years. The longer we wait (Can-Kicking), the harder it will be to resolve. The 2 parties have been found wanting in political courage on facing up to this nation-killer issue. That is why I hold out some faint hope that maybe Unity could help steer this country in the direction for resolution and political courage on this issue.
It is the obligation of all involved in the present entitlement and budget debates to honestly educate themselves and the public on the long-term demographical and actuarial entitlement realities impinging on our medium and long-term fiscal health. If not resolved we will not be able to do much in this country regarding ANY of the other pressing issue (domestically and internationally) that we have now or may pop up. If Congress and the President are straight with the American people, they will acknowledge that Social security and Medicare are the Mother of all Unfunded Mandates and the moral equivalent of Generational Highway Robbery.
I urge you all to check out the Concord Coalition website – http://www.concordcoalition.org - as a good bipartisan source and starting point to get familiar with this nation-busting Entitlement issue and the various range of possible solutions and options to consider. But with all solutions and policy options, it takes political leadership and true political courage to bring them about. As history teaches above all, nothing is inevitable until it happens and we need to make a solution to this key issue happen or our kids and grand kids will be spitting on our graves!!
Well a means test and reducing or extending benefits as you call it seem to be pretty smart and reasonable.
Should we also stop using the SS trust fund as a source of funds to borrow and replenish the fund too?
Again, I'd think that these things would get a majority support.
I absolutely agree on locking down tha "Untrust" fund. the pillaging of that account to cover up the political cowardice and cook the books to pretty them up for their electioneering hype would make Al Capone and the Enron accountants blush. So that definitely should be part of the package that we need to hold our elected to account for!!
A means test for Social Security makes so much sense it has to be enacted. If you exceed a certain retirement income, you don't need Social Security. If we are serious about funding the Social Security program, all income should be subject to taxes. What's the current income theshold, around 90K then you don't pay. Individuals who claim they deserve benefits because they paid taxes doesn't make sense. I pay my share of taxes and Social Security most likely won't be there when I actually need it.
I also agree we should stop using the SS trust fund a source of funds to borrow and pay back the IOU's.
You said it six! A means test of some sort must be part of the Comprehensive entitlement mix. see post:
http://unity08.com/node/1128#comment-18285
EVERYTHING must be on the table in resolving this real true nation-buster issue and we need to do it in the nxt 5 to 10 years or we will be unable to to zero in this country and in the world for the balance of the 21st century! Concord Coalition ( http://www.concordcoalition.org ) has some great ideas on how to approach this as well as the GAO and the Center for Budget and Policy Priorities. Unity08 needs to start tapping into these excellent bipartisan centrist groups for their ideas and proposals to bridge the tremendous ends-means disconnects in the whole entitlement arena.
Means testing is something that needs to be on the table as pay-outs of Entitlement benefits to those who do not need (or could be defrred) are contributing to the present and growing ($39 triilion at last count) ends-means actuarial disconnect of those while Entitlement unfunded mandate. The time for can-kicking on this issue is OVER if we hope to add a century or 2 to the life of this blessed Republic!
http://milligansstew.blogspot.com
Just grows the size of administration. Rather than means test just honor all current entitlements then for future retirees cancel the payout side altogether and collect a smaller fixed tax from income generators. Retirees then get a (at todays rates) a $20000 tax deduction. If thier income is less than $20000 they get the difference made up as an income grant funded from that tax. Those numbers could be higher to allow for include medicare.
Bill"for what we are together"
Challenge to our candidates...this IS priority Numero Uno folks!
Hold our Candidates and the other parties can-kickers to account!
http://www.concordcoalition.org/press/2007/0423release-trusteesreport.htm
CONCORD COALITION SAYS THAT SOCIAL SECURITY AND |MEDICARE TRUSTEES REPORT DESERVES ATTENTION ON THE CAMPAIGN TRAIL
With today's release of the annual Social Security and Medicare Trustees' Reports confirming the unsustainable outlook for the federal government's two largest programs, The Concord Coalition urged presidential candidates to make long-term fiscal policy reform one of their top priorities.
"This report should be required reading on the campaign trail. Anyone who is serious about becoming our next President must be prepared to confront the long-term fiscal challenge and be willing to lead a national dialogue on how to deal with it," said Robert L. Bixby, Executive Director of The Concord Coalition.
"It is understandable that Democrats and Republicans will have different perspectives on the specifics of any reform plan. This report demonstrates, however, that the first step is to reject the 'Do Nothing Plan.' The debate should be about realistic options, not about who can promise the most without asking anyone to give anything up. In effect, those who pledge not to consider any benefit reductions or new funding are pledging to stand by and watch as Social Security and Medicare go over a fiscal cliff." Bixby said.
According to the Trustees report, the cost of Social Security and Medicare will roughly double from 7 percent of the economy today to 14 percent by 2024. To put that number in context, if the federal government spent 14 percent of GDP on these two programs today they would consume about 80 percent of all revenues.
Despite the attention focused on when the Social Security and Medicare Part A trust funds become "insolvent," The Concord Coalition again warned that trust fund solvency is a poor indicator of the fiscal outlook for these programs.
"The magnitude of our long-term fiscal challenge should not be minimized by trust-fund accounting. This indicator not only misleads the public about the timing and magnitude of the looming fiscal burden, it says nothing about these programs' impact on national savings and generational equity. Trust fund solvency also says nothing about how society will meet the growing fiscal burden reflected in these projections. Because the trust funds are primarily an accounting device for keeping track of the programs' claims on general revenues, their existence does not ease the burden of paying future benefits," said Bixby.
"These programs must not be viewed in isolation, either from each other or from the overall federal budget. What matters fiscally and economically is their combined total cost. Reform efforts will need to either reduce costs or raise revenues to pay for them. Those are the choices that must be confronted," Bixby said.
http://milligansstew.blogspot.com
Bond issuance, in my opinion is a very temporary solution. That would be borrowing from Peter to later pay Peter. In reality this is our the taxpayers money not some government entities money.
To cement the future of Social Security it first must be removed entirely from the general fund and placed in its own fund untouchable for any reason but for social security fund outlays. Congress has dipped into social security funds every single year to pay for programs they approved with zero plans on how they will be financed. Fiscal responsibility has been shouted from the rooftops by politicians for decades with little or no actual responsibility shown.
I only wish someone could compile all the data and show exactly how much money has been taken from the general fund in the past 40 years. The numbers would astonish the most hardened soul.
The mother of ALL Ends-Means Disconnects...a Post article Article/sites to seriously ponder - 'Stumping for Attention To Deficit Disorder' -
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/20/AR2007062002342.html
Excerpts:
"The numbers make Joseph Farrell's head swim. Billions and trillions of dollars, numbers too immense to comprehend. But the central message, delivered by a band of Washington budget experts traveling the country to raise an alarm about the nation's financial picture, hits him like a whack on the head.
"I knew there was a problem, but I didn't realize it was this bad,"
So far, no candidate in either party has offered a plan to alter the budget-busting trajectory of Medicare, Medicaid and Social Security spending. Leading Democrats have shied from promises to balance the budget even in the short term, a comparatively easy task. And leading Republicans are vowing never to raise taxes, a pledge that, if honored, would make closing the budget gap difficult or impossible.
But the Wake-Up troupe is undeterred. Its members say that the primaries are all about party politics and easy answers, and that the serious debate will start next year when the field dwindles to two.
"It's critically important that this becomes one of the major issues in the general election campaign," said Walker, the nation's comptroller general.
All told, the cost of the three programs exceeds projected revenue by more than $50 trillion over the next 75 years, by the GAO's latest estimate. "That's 95 percent of the net worth of every American," Walker told a hushed crowd in Tampa. "And these numbers are going up every second of every minute of every day."
Walker was followed by Jason Furman, a Brookings fellow who explained the risks of deficit spending, and Alison A. Fraser, director of Heritage economic policy, who bored directly into common misconceptions about the federal budget.
Using a computer model that let her subtract individual items, Fraser demonstrated that neither foreign aid nor pork-barrel allocations nor the war in Iraq are driving the nation's money problems. The projected cost of entitlements is so enormous that eliminating the entire Defense Department would barely make a dent.
"What we're saying is the numbers don't add up," Robert L. Bixby, the Concord Coalition's executive director, told the crowd of more than 200, a mixture of students, retirees, advocates for the elderly and activists with connections to Sen. Mel Martinez (R-Fla.), the event's sponsor.
"The current fiscal policy over the long term is unsustainable," Bixby said. "There aren't quick-fix solutions to this like cutting waste, fraud and abuse or relying on robust economic growth to do all the heavy lifting. . . . We all agree that finding solutions is going to require bipartisan cooperation and a willingness to consider all options."
What are the options? Tour members have some thoughts: Balance the budget soon, while it is still relatively easy to do. Overhaul the tax system. Raise the retirement age. Rein in overall health-care costs. And trim Social Security and Medicare benefits for the wealthy, or charge them more to participate.
"We need to rethink the concept of social insurance regardless of need," Fraser said. "I would like to reserve our resources and target them to those who need them the most."
The Wake-Up folks don't like to see candidates take any potential solution off the table, saying that makes a compromise more difficult to broker. But they soldier on. They've adopted Paul Revere, the Revolutionary War hero who raised a timely alarm, as a sort of mascot.
"We are issuing a warning," Bixby said. "And we have full faith that the American people and their elected officials, if apprised of the fact and the consequences to future generations, can suspend partisanship and self-interest long enough to engage in a dialogue about meaningful solutions."
http://www.facingup.org/
http://www.concordcoalition.org/events/fiscal-wake-up/
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
Check out a project Concord Coalition participating in along with Public Agenda and other members of the Fiscal Wake Up Tour entitled "Facing Up to the Nation's Finances." As part of the project, Concord will distribute a regular newsletter, the first issue of which you may find at -
http://www.concordcoalition.org/events/fiscal-wake-up/publicagenda/070619-newsletter-1.pdf .
You can also find out more information on the project's website, http://www.facingup.org/
Inside they summarize several recent reports by Public Agenda, as well as listing recent and upcoming events on both the Fiscal Wake Up Tour and Facing Up's Choice Dialogues.
If there's any part of the It's Time to Pay Our Bills report released today that deserves to be printed out and stuck on a politician's refrigerator, it's the six steps leaders can take to build public support for budget reform. Sure, there are politicians out there that "get it" when it comes to the long-term fiscal challenge we're facing. But many in politics have no faith in the public's ability to understand, care or make tough choices on the budget. In fact, the research shows there's a real opening to build public support on this issue, if political leaders are willing to take it. True, the national debt and the aging of the baby boomers isn't the first concern of most people, but research shows people grasp the problem quickly once it's explained. They're willing to listen and waiting for someone to step up and lead.
It's worth reading the full report (it's only 18 pages) but the six points are:
• Start speaking more frankly. People are actually relieved to hear frank discussions on this.
• Stop compartmentalizing the discussion. People respond when a discussion ties spending to revenues, tax cuts to spending and everything else is linked to our enormous debt.
• Prove you're serious about making fair decisions for the national good. Shoring up public confidence in how decisions are made is critical.
• Prove to the public that you understand how hard people work for their money and that their taxes are well spent. To people in Washington, earmarks and pork-barrel spending may not be the problem, but Americans want these cleaned up before they reach into their own pockets.
• Don't expect people to become budget experts. The research shows people can grasp the essentials with just a few budget facts. Waiting until people know all the details of fiscal policy is just an excuse for inaction.
• Bipartisan and fair-minded leaders, step forward. The Facing Up research asked people to consider a range of options for solving the problem, including conservative, liberal and middle-of-the-road alternatives. People really want constructive dialogue on this -- and they can handle it.
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
I read the information and agree on a couple of things. People do want honesty. They do want to find out how to solve the problem.
But we are deluged with information and problems. It is such that it is almost depressing. While all of the issues are important and need to be addressed, we can be frozen with fear and without solution. I know that you have been very vocal with issues and we need to address them. But we need to give a method of solution. Each issue is often related. Health insurance solutions can affect the budget. Reducing the war effort and the relationship with other countries can affect the budget. Line item veto can affect the budget. Reducing government in Washington can affect the budget. We need to circle the wagons, list the issues, and address the process of change and not necessarily the solution.
These links esp with Concord and all the other centist type groups do provide the "ends" and the "means". But it ultimately falls to the political process (i.e. us) to get the politicians to sync up those ends and means. The last 30 years has esp found the politicians AND us wanting (we ARE complicit). My hope is that Unity can help turn that trend around and quick esp on the Entitlements/Finance side as a well as Grand Strategy and soon!
http://unity08.com/node/1016
DC - 3rd ward - milligansstew08@yahoo.com
http://milligansstew.blogspot.com
In a period of prosperity and personally financed retirement, do we need a program that writes everyone a check once they turn 67? We all paid into a system, but we've been aware for more than a decade that the system was flawed and payouts were hardly certain. It seems that those who have more assets should spend first from there assets, then come to the government. Those spending lavishly from there own savings are hardly in need of a social net.
There are two schools of thinking on social security:
1) Retirement plan/social promise: We paid into a system and we deserve the full amount paid:
2) Social insurance: Government will help me out when I'm older or disabled and cannot provide for myself.
Thoughts in response to (1).
- In many ways you have already benefited from what you paid into social security. That money was spent elsewhere in your lifetime on programs your elected officials decide to vote for.
- If social security is a retirement plan, we've got hosed. Your money would have been better spent almost anywhere else. Social security will never be a great retirement plan, so treating it as such doesn't make much sense. If you want to create an excellent retirement system, you should promote a privatized system similar to Chile.
- No one will be suprised if a means test is impliment, it has been talked about for at least a decade. Breaking the promise of social security with the wealthy hardly blindsides anyone.
Thoughts on (2)
- Viewed as a social program, the priorities of social security can be much clearer.
- The concept of social insurance is a well established principle of economics and I don't think people will object to paying into social insurance, because assets are risky so another layer of security is appealing to all but the super wealthy. Those who do have larger incomes will still benefit ad ante because they are protecting against the risks of losing there wealth to: medical bills, divorce, market uncertainty, etc.
-My one concern is implimentation: how do you keep people from hiding wealth/income.
It is my opinion that means testing must be central to any social security reform. This should be an easy one for Unity08.
The basic premise of social security is to have a saftey net for the elderly. The government will not allow any money to sit in a so called "lock box". The system does not invest any of the payroll taxes collected for this system. Even a modest return of 5% would have made money coming out of your ears over the forty year expected working career.
What is needed is a forced pension plan similar to the federal pension plan. There are five index funds to choose from and over the last 10 years the program has averaged almost 10% per year. Bush tried this approach and it was defeated by Democrats because it would take their power base away. The professional victims would not need to rely on handouts from the government and the special interests would be out of business.