Struggling 20-Somethings Shouldn't Support The Rich Elderly
Kaus remembered Paul Kirk's proposition from a while back of "means-testing" Social Security benefits -- scaling them back for people who don't need them.
I've been for that for a long time. My maternal grandma, who wasn't super-rich, but was very well off by the time she got old, shouldn't have been subsidized by working people in their 20s.
Did I mention that I'm not for Social Security to begin with? In other words, I'm against yanking my earnings away without my consent -- supposedly with the notion that I'll get benefits when I'm an old bag. (Uh, with what money?)
Anyway, Kirk, who's just been named to Mary-Jo Kopechne's killer's seat, of course, disappoints. Kaus blogs:
Kirk's subsequent s**t-eating recantation was comically, almost self-defeatingly, transparent. By bedtime on the same day, he put out a statement declaring: "I was wrong. Our party ... is unalterably opposed to any cuts in Social Security benefits. I should not have mentioned the subject of a means test. I plan to undergo electroshock therapy to insure that this idea never again appears within my cerebral cortex without producing immediate nausea and revulsion." [E.A.]OK, he didn't say that last sentence. But he said the one before it. ...
The incident is reported in a 1985 L.A. Times story. ...
***-- A fine sentiment, until you go broke. ...
More from Mickey on this here. (Scroll all the way down.)
A friend of mine who is a diehard fan of Rushbo (so I have a few stupid friends; who doesn't?) has often opined that the Social Security System wasn't designed to give you income in your retirement years, but as a way to track your earnings.
Patrick at September 25, 2009 2:15 AM
"I was wrong. Our party ... is unalterably opposed to any cuts in Social Security benefits. I should not have mentioned the subject of a means test."
Translation: I'm really really sorry I offended the Senior lobby. Please don't hurt me. I didn't mean to touch the third rail. Honest. It won't happen again.
Pathetic.
Nick S at September 25, 2009 2:59 AM
Wouldn't the IRS be sufficient to track your earnings?
NicoleK at September 25, 2009 5:25 AM
I was under the impression that Social Security I ncome was put in place to provide additional support after one retires, or if one becomes incapacitated, for some reason, from being able to work a full time job; you know, a supplemnt to whatever pension or retirement one receives from past employmen, or as a means of being able to survive after a debilitating injury or disease. I think it probably started out as a good idea, until the Democrats decided it was okay to raid it and make it a part of the government's general fund. Way to go.
Flynne at September 25, 2009 5:31 AM
Totally offtopic/
Amy,
Re: pricing of your Live Advice Goddess plan.
I'll stick this here before I forget.
I just now got an email update for this service, which is suddenly back online after a break. It offers experts' answers to wide ranging questions - and the punters select how much they're prepared to pay. For some reason, this odd pitch chimed with me when I wanted a fresh take on some legal advice I didn't like some months ago. It's the only time I've risked my own cash on an online expert - because I am a typically leery consumer. In my case, the advice was SO smart, I even paid extra for supplementary questions. (The experts provide detailed credentials but not their full names) So fwiw: http://www.justanswer.com/
There are more links inside.
Ends
Jody Tresidder at September 25, 2009 6:41 AM
Social Security was less bad when the age of retirement was higher than the average lifespan. I'm willing to compromise on things that I oppose philosophically when their impact is minimal. At this time, of course, the impact of Social Security is not minimal.
Pseudonym at September 25, 2009 6:42 AM
Social Security has always had two problems. The first one is that, despite all of the fine words that were pronounced when FDR signed it into law, is that it has never in any way acted as an investment program. The original concept/sham was that the money paid in would be invested in Treasury bills and bonds. Had that actually been done, the program would be somewhat better off but still not great, because T-bills are among the lowest-yielding of all investment paper. They are secure, but younger people need rate of return a lot more than they need that last 1% of investment security. Over the long term, your investments have to at least keep up with inflation, because when you retire, the dollars you collect will be worth a lot less than the dollars you paid in. I've seen some things recently where economists estimate the conventional discount rate at 5% per year, and historically, T-bills and bonds have paid less than that more often than not. You can't achieve 5% a year without taking some investment risk. So an SS fund invested solely in Treasuries was never going to be able to keep up with inflation.
Of course, none of this never actually happened; raiding the account started right away. The money paid in was "invested" not in T-bills, but in IOUs from Congress. And when interest was paid, it was paid in more IOUs, until Congress got tired of maintaining the sham and just stopped bothering. And that brings up the second problem: the program got loaded up with a bunch of additional benefits programs, beyond the retirement benefits it was supposedly set up for. The result was that the program had to start paying out benefits on the first day, a pattern which continued because the account never had any principal. Since there was never any actual money in the fund, those benefits had to be paid out from current income.
That, my friends, is the classic definition of a pyramid scheme, and it established the way the program would work from there on out. I don't know enough to say for sure whether this is what FDR and the program's supporters intended, but the program has always relied on exponential growth of the paying-in class to support the paying-out class. Of course, exponential growth can't continue forever; the population's only so big.
So SS never, ever had a real financial foundation. It is and always has been a transfer program, the only requirement for eligibility being the reaching of a certain age. It will go bust; the end is inevitable, and it will happen in my lifetime. I did the numbers on this a long time ago, when I was in college, and based on that I resolved to always assume that I will never see a dime from SS. And I've always done my retirement planning accordingly.
Cousin Dave at September 25, 2009 6:56 AM
Patrick - Way to insult me without even trying. You just can't help yourself, can you?
Dave - Pseudonym hit it on the head. SS was never intended to pay out. You were expected (actuarially speaking) to die before you ever collected. In order to keep the program solvent, they'd have had to push the retirement age up as medical technology progressed. At this point, it would have to be 79 or so. Oh, and for the program to work, all those people who were just a year away from collecting would have to be told "oh, wait - you're not old enough yet, we just changed the age".
Social Security is really just another 13.3% income tax from the first dollar.
brian at September 25, 2009 7:10 AM
If you pay in you should be paid, well-off or not.
kishke at September 25, 2009 7:49 AM
Well-off people have paid a lot of money into it, and I believe they should get their money back out. They get screwed enough already, via the income tax system. I don't believe in the forced transfer of wealth from young people to old, but I don't believe in transferring wealth from rich to poor, either.
Yet, on the other hand, I know one old couple (in their late 60's) who get $24K a year in Social Security payments. They have heaps of money in savings, but they only have to take $10K out of that every year. Yes, they paid a lot into SSI, and yes, they should get their money back. But their contributions have already been spent! The money they get is coming from the payments *I* make. So why is it suddenly so important for THEM to get their money back, but not me? If these people had to support their own retirement, if they had to take the full $34K out of their own savings every year, they would still be working right now, and they are quite healthy, so there is no reason they couldn't be. I will be working until I'm 80, however - because I've been stuck paying for THEIR retirements.
There's just no point in having this kind of discussion about a program that SHOULD NOT EXIST IN THE FIRST PLACE. For crying out loud, whatever happened to the notion of people actually taking care of themselves? If you want to spend the last thirty years of your life not working, start saving. If you want to trim that back to ten years, then you work longer but live better. Do whatever you want! But leave MY paycheck out of it!
Pseudonym and Brian have mentioned this already, but the average life expectancy was 63 for men and 64 for women when SSI was put in place with its payout age of 65. It worked like old-age insurance - most people never expected to get it, and paid very little into the program. But should you be, er, "unfortunate" enough to live past the age of 65, this program would keep you from living on cat food. (Of course there are annuities that guarantee you won't outlive your income, but I digress.)
The program might not have turned into such a major suckfest, if the payout age had been steadily adjusted upward based on actuarial tables of life expectancy. It's too bad they didn't write it into the original legislation, but now it's become a political issue. No politician wants to commit career suicide by suggesting that the age be raised. People have now come to feel entitled to retirement at age 65 and are appalled at the idea of working past that age, even though most are perfectly capable of doing so. Working? At age 70? It's like saying you failed at life, or something.
Pirate Jo at September 25, 2009 8:21 AM
Cousin Dave, I've always found it interesting/annoying that the government does not recognize its unfunded liabilities for entitlement programs as part of the national debt. Then I thought about it some more. It's because the government does not acknowledge that it HAS liabilities for these programs. They'll keep paying money out as long as enough is still coming in. But in 2016, when it turns upside down, and they have to start paying out more than is coming in? I agree with you - I think the well is simply going to run dry.
Pirate Jo at September 25, 2009 8:26 AM
I am sure DH and I will never see a penny of social security. We are simply paying for boomers, who were irresponsible and never planned for their retirement (as a whole, exceptions noted) to live the way they want. So we're shelling out that money on top of our own private retirement contributions. Great. Socialism at work, gotta love it.
There should be a program for the government to keep elderly from starving in the streets. Group housing, nutritious but simple food, basic healthcare. Period. People who want more should pay for it themselves. We have no responsibility to keep you in your own home.
momof4 at September 25, 2009 8:41 AM
Momof4, So refund the $200,000 I have already paid into the system, relieve me of future SS taxes, and we're cool.
Otherwise, we have a problem.
This is exactly like the moronic argument "people who are against x shouldn't collect it." Nobody ever adds the "and shouldn't have to pay for it either."
MarkD at September 25, 2009 10:21 AM
The whole system needs to be tossed. I'd be more willing to give up what I've already put in as of today and keep my money going forward than not getting my own money back just because I worked hard to have a lot more than others in the end.
When I am old (if SS is still even there) and able to collect I'm gonna do it, regardless of how much money I have. Even if it's just to give to charities or homeless people out on the street. That's my own decision.
I am not going to accommodate or enable a broken system - because if I do, it will only continue.
No thanks, I'll take my money.
Feebie at September 25, 2009 10:35 AM
"So refund the $200,000 I have already paid into the system, relieve me of future SS taxes, and we're cool."
Well, then, you have a problem. Your money's already been spent.
Pirate Jo at September 25, 2009 10:35 AM
Didn't see MarkD's post before I posted. I think we said the same thing.
Feebie at September 25, 2009 10:36 AM
The left believes we live in one huge village, and so the young should have no problem subsidizing the old. After all we all live in a village right?
Crusader at September 25, 2009 11:42 AM
Well you're out of luck, you will never get your money back. Not today, and not when you retire (unless you're retiring real quick or already have). The best you can hope for is to not continue to toss good money after bad.
momof4 at September 25, 2009 2:39 PM
what pisses me off is that they have raised the age for my partaking in SS 3 times in the last 10 years. Total bullshit smoke and mirrors
ron at September 25, 2009 2:45 PM
waa-waa-waa. It is what it is. I just wish we could have Euro-style health insurance.
Jeez, there is more more whining and ugly peevishness on the right-wing than ever. Really the topic is SS but, btw T Kennedy is a "killer."?
RU guys serious? Well, not more than me,
But good news! The R-Party ticker for 2012 is going to be Sarah Palin and...Terri Schiavo!
It is going to be a great election.
i-holier-than-thou at September 25, 2009 3:36 PM
U R yourself serious? Because your bullshit grammar, punctuation and inane asshattery indicate that you're not, not really. Oh and let's not forget your total dumbfuckery.
Flynne at September 25, 2009 6:20 PM
Perhaps a little background is in order.
When FDR started Social Security in the mid-30s, grinding poverty for the elderly -- particularly widows -- was a real threat. Unfortunately, there was no way to support the elderly from the outset without transferring income from workers to the retired. In essence, Social Security being a pay-as-you-go (not Ponzi) scheme was almost inevitable, because it was envisioned as a means of income replacement, rather than as a form of insurance.
At the time, it made sense. Average life spans were around 60, and the population was growing. No one in 1937 could possibly envision a time when people would routinely live twenty years longer, and when women predominantly had two or fewer children.
Like MarkD (and probably everyone else here, proportionate to age), I have paid well over $200,000 in FICA taxes that I could otherwise invested on my own behalf. Unfortunately, demographics are relentless.
So the question is, how do we get away from the now unsustainable pay-as-you-go financing, and to where would we be getting?
IMHO, Social Security should become a true insurance program: it would pay out only to the extent one's income in retirement fell below some level. That would mean FICA taxes would plummet because SS would become a dice roll like any other true insurance: individuals betting their retirement income will be below a certain amount, and a bet by the government that it won't.
It would also mean that a great many people, like MarkD and I, are going to take a bath.
I sure wish there was some alternative, but there isn't one I can think of.
Hey Skipper at September 25, 2009 7:37 PM
It's true that you cannot get back taxes paid in the past that have already been spent, anymore than I can get back spilt milk or resources that have already been consumed. This is what economists would call a "sunk cost". (Unless Mark wants to pursue legal action against the existing retirees who spent the money or the members of Congress responsible for mismanaging it).
It's a bit like losing your money to a scam artist and then asking an innocent third party to make good your losses.
Everyone cannot get their money back. One can only shift the costs onto someone else. I'm sorry you invested your money in that Ponzi scheme Mark. Life's a bitch huh. But it's not my responsibility to make good your losses.
Nick S at September 26, 2009 5:59 AM
You know what? I'm OK with that. I'd be willing to call it even right now if the government would stop taking 15.3% of my income and let me just give the money directly to my grandfather and my parents.
It would be more efficient.
brian at September 26, 2009 6:11 AM
There is a good argument to be made that a certain amount of the cost of supporting the elderly should be picked up by others, simply because every generation has to devote a certain amount of time and resources to raising the next generation, and so it is not unreasonable to return some help at the other end of the life cycle.
I'm sure you are correct Brian, that a lot of people would hardly begrudge subsidizing their elderly parents or grandparents (especially if they have loved you and helped you during your life). Then again, considering that my mother is an abusive dysfunctional bitch I do resent the future cost of supporting her. And ultimately you and I are forced to support such people through socialist programs, whether we would like to or not.
The biggest problem is that if you have an aging population and lower birthrates (as virtually all developed countries do) it ultimately means that subsequent generations bear a greater cost of supporting more old people (even though older generations largely created the problem). This is not equitable over the life cycle.
The bottom line is that many people who are now retired or close to it really haven't paid their way. That is, they haven't contributed enough to the long-term economic or social sustainability of these things to justify the cost of looking after them in their old age or keeping them in the manner they have become accustomed to. This is the unpalatable truth. It is simply not polite to acknowledge it. But failure to do so means economic ruin.
Nick S at September 26, 2009 6:06 PM
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