Of Course They Want Free Pie and Chips

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Social Security reform has fallen far, far off the political radar. Gay people are trying to become monogamous, and Kim Jong Il is going to blow up America anyways, so who wants to waste time debating the future of entitlement spending? Fortunately like Patrick Swayze and C. Thomas Howell fighting on against the invading Cubans, there are some reformers who refuse to give in.

S4, the leading force behind today's push for Social Security reform, has a sweet idea to communicate the essence of what is our great social net: free Snickers.

Students were drawn into the game by the prospect of winning a full-sized Snickers bar, but once they got to the front of the line and played an easy "drop the ball in the bucket" game, all they would get was a teeny-tiny mini Snickers bar. By the same time they registered their outrage, a deadpan epiphany hit: "We're getting screwed."

Affirmative Action bakesales may be high profile, but this bit of theatre actually makes a point.

NEXT: Double Your Pleasure

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  1. They should have given the option of any one of three sizes of Snickers bars, just like the high/middle/low SS estimates.

  2. They should have been lured by what looked like a Baby Ruth bar, only later to be handed a steaming piece of……..

  3. “Social Security reform has fallen far, far off the political radar. Gay people are trying to become monogamous…”

    Federal DOMA makes gay couples ineligible for the Social Security spousal benefit.

    See — some of us libertarian gays can indeed walk and chew gum at the same time.

    By the way, we’re trying to become MARRIED, not “monogamous.” Most of us already are that…

  4. Yeah, but the Greatest Generation rigged it so that they would get a truckload of Snickers bars
    while the grandkids got actual snickers.

  5. I think I missed the point. We’re talking about all those people who can’t retire because of the tech bust, right? They thought their IRAs were golden, then they got the mini snickers? Or maybe we’re talking about the Enron workers? Yeah, I know Social Security sucks. I guess the question is whether you would rather take a predictable screwing or roll the dice. I’d roll the dice, but maybe I wouldn’t if I were poor. (Perhaps the biggest problem with putting SocSec money into the market is that George W. Bush was the spokesman).

  6. Yeah, I actually think the Affirmative Action bakesales make a better point.

  7. Meanwhile, the other side wastes its time with boring stuff like tax policy, actuarial tables, and historical research.

  8. So where’s the story? The link I thought would bring me to the story sent me to the GEICO commercial, instead. I feel cheated!

  9. From Paul Samuelson (nobel prize winner and probably the greatest neo-keynesian economist of the last 50 years.)

    “The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in — exceed his payments by more than ten times (or five times counting employer payments)!

    How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population.

    More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.

    Social Security is squarely based on what has been called the eight wonder of the world — compound interest. A growing nation is the greatest Ponzi game ever contrived.”

    What a terrific social program.

  10. The demonstration looks valid to me. The government forces you to put in 15% of your income up to a certain level in the “Social Security Trust Fund” and they promise to provide for your retirement.

    Only there isn’t any trust fund, “your” retirement isn’t enough to live on without a second income, and if you earn any appreciable extra income they take “your” retirement dollars back.

  11. We’re talking about all those people who can’t retire because of the tech bust, right? They thought their IRAs were golden, then they got the mini snickers?

    Just to explain how the wheel works for the millionth time, unless your saving-for-retirement time frame began around 1998 and ended in the neighborhood of 2001, you didn’t lose your retirement savings. In fact, you didn’t even lose a big portion of your retirement savings. In fact your retirement savings are worth far more than whatever social security will be paying you for the same investment. If you’ve been following any regular investment plan for 20 years, you’re getting a better return than you will get from your investment in social security-and responsible people have a much longer retirement-savings window than 20 years. Even if the tech bust had brought the DJIA back down to 5,000, you’d still be getting better-than-SS returns.

  12. Fortunately like Patrick Swayze and C. Thomas Howell fighting on against the invading Cubans, there are some reformers who refuse to give in.

    There were some Nicaraguans in there as well.

  13. I would play this game where you were promised to get served by black man with 11 inch penis but when you get to front of line you are only served by tiny Asian man. That’s why I oppose Social Security.

  14. Last try…

    I was reading an interesting article in the Wilson Quarterly about how retirement is largely an illusion for the working poor and the lower middle class. It examined the costs of retirement and the average savings based on income bracket to show why many people cannot retire. I was curious about the solutions the author was going to propose, and surprise, surprise, more wealth redistribution is the answer! I stopped reading at that point.

  15. I’m familiar with long-term investments, I have several. However, there is the Enron pickle, which is a hard nut to crack because most of the people who got screwed out of their pensions were basically blameless. Also, what if your “saving for retirement time frame” started in 1900 and ended in 1935? There’s a good chance you would have had ZERO. I’m not trying to change anyone’s mind, I’m trying to get people to see that the world is too damn complicated to say a program or policy shift will cure all our ills. We need something to create confidence in the market, not just faith. We all know that Social Security is stealing from us, but many of us think we’ll at least see pennies on the dollar for sure. With the market (especially with GWB selling it), we don’t have the 100% confidence that we’ll see anything.

  16. There can’t be a trust fund. The government has to return all money collected to circulation immediately, or the economy starves for money. The government can’t save.

    The “contributions” are a tax, and an excellent one : it’s a flat tax with no deductions or exclusions and everybody (earning wages) pays it. It would be even better if it extended to all income, the rate was raised to (oh) 20%, and the income tax was dropped.

    To say you could do better saving privately doesn’t understand what’s happening. You could do better saving your income tax too, but what does that have to do with running government? That’s what the taxes are for, both income tax and social security.

    Now, not only can’t the government save for your retirement (a minor paradox, that the government can’t save), neither can the whole population, a major paradox! If everybody saves for their retirement, and you have the demographics of today, then everybody will be buying today, and selling at age 65 – driving up prices today, and driving down prices at age 65. Guess what? You can’t retire at 65 because your nest egg disappears in an adverse price move.

    The invariant is that the workers support the retirees, and if there’s too few workers, it won’t work.

    In the case of SS, simply raise the retirement age until you get the balance you need (without cutting benefits). In the case of private savings, you have to work longer before you can retire, so that more time is spend buying and less selling, the same balance.

    Demographics drives the retirement age the same way either way.

  17. Incidentally, Social Security is better than a private annuity, since it’s inflation protected. A private annuity can’t do that, and over 30 years it matters a great deal.

    So comparing the annuity you could buy with your savings with the annuity that Social Security provides is not a simple dollar comparison.

    Some fairly significant adjustment for inflation protection is necessary.

  18. It’s not that private annuities CAN’T be inflation adjusted. There are annuties with inflation adjustment features in the private market now, but the initial loads are higher, early draw-down penalties are more severe, and annuitized benefits are lower. No free lunch, my boy.

    Of course, the ideal for most people is that you have some mix of a guaranteed income stream with the potential for future upside that only comes from market risk. That’s why you’d generally go with a variable annuity that includes some minimum benefit guarantees and that’s purchased some time BEFORE retirement, or more and more, some form of indexed annuity.

  19. umm, we were told there would be punch and pie…

  20. This is an outrage! How dare you even suggest that America’s senior citizens should settle for anything less than the 110% of the Social Security to which they are entitled! Dammit, WE’RE OLD, AND THE WORLD OWES US A LIVING!!!!!

  21. Are you telling me that, when I go to pick up my pony, it’s just going to be some scroungy little dog with a saddle on it?

  22. We live in a society of welfare queens and wannabe welfare queens–all of whom are getting ripped off.

  23. P Brooks, get your own saddle. Or use a blanket. Or go bareback. Herrick can help you.

  24. Isn’t it odd that the Left seems to be crazy about ALL European Social Programs EXCEPT
    the Swedish Private Account Retirement System that Bush advocated? 😉

  25. Sage-

    I ride the pony. The pony, who is (or would be, if there were an actual pony in this story) a girl pony, does not ride me. Bareback is fine.

  26. Kip, I don’t know whether you are claiming that the majority of gays are monogamous, or just the majority of gay libertarians, but I’d be interested in any evidence you can provide for either claim. If you can’t provide the evidence, you should refrain from lobbing such insults at the gay (or gay/lib) community.

  27. Meanwhile, the other side wastes its time with boring stuff like tax policy, actuarial tables, and historical research.

    Don’t forget the ads with SS reformers pushing Granny off a cliff in her wheelchair.

  28. It is an especially cute trick, claiming that inflation-indexing makes SS superior to private investments.

    Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.., – Milton Friedman, The Counter-Revolution in Monetary Theory

    So, who churns out all those greenbacks faster than growth in output requires? The good ol’ Federal Reserve Bank, that’s who. SS has to be indexed to avoid the ill effects of the actions of the rest of the government.

    That theory has all the morality of a protection racket. “Nice nest-egg ya got there. It’d be a shame if anything were to happen to its purchasing power, wouldn’t ya say?”

    Kevin

  29. A better demonstration would’ve been to have a large cake and selling it at 25-cents a slice. As the line moves along, the slices get smaller and smaller…

  30. Tim Cavanaugh,

    My GF’s mother did everything right, supposedly. Worked for the same company for 30 years. Invested in the 401k plan there, even though they had a pension fund.

    Problem? The law allowed the company to invest the 401k and pension funds as they would. The company went bankrupt. What she got? $7,000.

    Oh, I can see the belief that the government that governs not at all governs best. But…I’m glad in her case that there was an insurance program in effect. She now has vascular dementia. If it wasn’t for SS we would now not only be housing her, but paying all of our potential savings into nursing care during the hours we work (preventing us from saving for our own retirement).

    Of course than we could just go roman, take her to the woods and leave her there.

    While I loathe defending the “government”, I also ask…how do you really expect people to give up this insurance? Doesn’t you arguement work for all kinds of insurance? After all, if your savings are healthy, why bother wasting money on insurance?

    Once again, I’m not arguing against reform. I’m just asking, what argument would you use in a conversation with my GF, after she has seen her mother try to do everything right, but suffered because the law, the government, gave her corporation less personal responsibility than she was expected to have? They were practically encouraged to take risks with the contractual obligations to their employees.

    In the long run, at the present time, many Americans BELIEVE, right or wrong, that SS reform will only increase the number of destitute among older americans.

    It’s important to note here that I do believe in SS reform, however, I also believe that the only reason the Republicans do, is that they like the fear that this inspires in the populace. It will make them better workers.

    And the fact that I believe that is the conservative motivation, rather than personal responisibilty (a republican canard), makes me move with extreme Skepticism.

    Of course this falls under one of the many reasons I went from considering Libertarians lovers of liberty, to considering them yippies for capitalism.

    Also why I consider libertarians merely pawns on the republican chess table. To be used as cover.

  31. I’m just asking, what argument would you use in a conversation with my GF, after she has seen her mother try to do everything right, but suffered because the law, the government, gave her corporation less personal responsibility than she was expected to have?

    I doubt there’s any argument I can make that will convince somebody that was the beneficiary of a government program. And, invariably somebody will be a beneficiary of every government program, else they wouldn’t be enacted in the first place.

    But that’s besides the point. The real point is, what’s the ratio of people who are benefiting from the program to the people who are getting screwed by it?

    I’ve seen polls indicating as many as 2/3 of Americans would opt out of SS if they had that option. So, that would indicate to me that 2/3 of Americans feel they’re getting screwed by SS.

    So my question to your girlfriend would be, “How many people was it worth screwing to save your mother’s bacon?”

  32. Johnny,

    Your anger is misdirected torwards we “yippies for capitalism” since the law allowing companies to raid workers’ pensions and 401k plans was undoubtedly passed by republicans and democrats. It seems we are often confused as lapdogs of the GOP, but most libbers I know are not corporate apologists.

    Frankly, there’s no argument to be made, now, that would convince your GF that SS is a bad thing. The argument should’ve been made to her mother earlier on not to trust the government or her employer.

  33. Johny,

    I just want to point out that your GF’ mother’s retirment savings were trapped in the 401K plan by the government. If fundmembers were allowed to transfer their money out of those plans when they smelled a whiff of fraud or found a better deal elsewhere without significant penalties, fund managers would behave quite differently.

    The managers were aware that the money was trapped in the fund, and that they could raid it with impunity, and the poor woman paid the price.

    When one thinks of government officials, one must not imagine them as lantern-jawed defenders of society. Usually, they provide perimeter security to the thieves, often they are the thief breaking in to rob your house, sometimes they act merely as the getaway driver. The theft and damage they perpertrate are far more wideranging and injurious that any other gang operating in the U.S.

    Government officials are diseases masquerading as their own cure.

  34. Folks, these are all fine points that can be argued in the context of libertarian ideology.

    However, there are precious few libertarians in America, and believing in at least limited democracy, I was not asking how you would move me. I am moved, I cannot see how these amount to much more than strawmen arguments. Try admitting the possibility that I am sincere.

    Try a brickman argument. If the .gov has corrupted the system so that only SS works, than should not those other reforms be attempted first?

    For instance tarran “Government officials are diseases masquerading as their own cure.’ Fine and good, and I agree with you, yet even I know of no way, at this point in time and history, of getting rid of “government”, I have many ideas about encouraging my fellow Americans away from the dependency, but to eliminate these officials at this time would create a power vacaum that would soon be filled by others seeking power. So I seek to control, rather than eliminate (only at this time…learn to walk, then fly).

    And Pig Mannix “I doubt there’s any argument I can make that will convince somebody that was the beneficiary of a government program.”

    You have just failed debate 101. No one who doesn’t agree with you will listen. You have failed in the most basic human comprimise, the useful use of language, and indicated yourself to be as much part of the problem as those who love the .gov. Even Buckley would slap you. You get the Rush award.

    I am asking a serious question. If you want reform, please, an argument that does not invalidate the rules of logic as an opening gambit.

    Frankly, I don’t think SS scores very high on the reforms we NEED to make, I believe we start at the beginning, not the end, perhaps only jcarver gets this in some small way with “The argument should’ve been made to her mother earlier on not to trust the government or her employer.”

    I live in this way, and frankly, I don’t know that I can acvocate paranoia as a way to satisfy “the pursuit of Happiness”, even though right now it seems the only viable solution.

    Why SS now? When we have a president who belives (but has been unable to make stick) that he can hold any American, for any reason, on his say so, without recourse to the courts.

    Why SS reform, before other reforms. Why this, why now, if you are not Republican lapdogs?

    This is why so many of us cannot, and will not, call ourselves libertarians, it is not that we don’t agree. We just don’t think you are going to accomplish what you say, we think you will only increase the power of government in the future.

  35. Why SS now? When we have a president who belives (but has been unable to make stick) that he can hold any American, for any reason, on his say so, without recourse to the courts.

    I seem to remember a few hundred threads discussing that. Maybe I was imagining them.

  36. Yes crimethink, which is why I am trying to present the argument in a different light.

    Why should America listen? Not just your fellow libertarians.

    The quality of an argument cannot be exclusively be judged by how it excites the troops, but can it influence actual change? Too often, libertarians are awfuly disdainful of the mechanics of democracy.

    Something the founders practiced, dontcha ya know.

    Unless you want to live in a country where all changes are top down, and are centralized in the hands of those who hold the power. Perhaps you do? But I think not, so, the question is, how to convince those who are not in agreement, not those who are.

    I remember something. I live in an amazingly free country, one in which there is an extreme danger of moving away from that freedom, and like the founders, I wish to adhere to a more Socratic format, rather than a Marxist one, which, to at least some degree requires consensus among the citizens. So, arguments for those who disagree, rather the rallying the troops.

    Unless you belive that concensus is not possible? Perhaps the Com/Cap attempts of China are more to this boards liking? I would hope not.

  37. crimethink, I apologize, I should be clearer. I believe that Libertarians are used on the political primarily to advance Republican Big Government plans. I see a base to the libertarian ideals that I love, but in practice, libertarian support can now be used to judge the growth of the government (If libertarians support something, it will be used to cover some other .gov expansion else).

    I believe the fact that because libertarians have been obsessed by republicans promises, they have actually, and actively assisted in drastic expansions of the government. I believe that anyone who studies strategies can see this happening (it actually reminds me of the loyalty of the african-american community to the democrats)

    I assert that focusing on “SS reform first!” plays directly into the hands of those who would end liberty in this land.

    The horses have left the barn, the pursuit of SS reform, not only helps to convey to the public of the republicans “sincere” interest in smaller government, but helps to distract from the fact that SS, while often ridiculous, is not nearly the danger that storm troopers shooting your dogs and stopming through your house.

    I find a direct correlation between alienation of non-libertarian liberty lovers and libertarians.

    I agree about SS reform, just not its primacy, I just don’t know why everyone else doesn’t notice the correlation between the fiddling, and the burning.

  38. Perhaps I would toss all of my reservations, if only libertarians would oppose corporate welfare first. Perhaps it has changed since my days of studying econ with a prof at NWU, but that, I believe still stands as the single largest chunk of the welfare state, bar none.

    That I could use as an argument. But the republicans wouldn’t like it if CATO changed it’s focus, and I bet some of their funding would dry up to. (ha, some, try most.)

    I once worked for a subsidary of a large co., we got back nearly twice twice what we gave to the government. Not unlike the tax dollars of the blue states seem to drain into the red “anti-welfare” states.

  39. Under Rule 8 of the Hit and Run Drinking Game, TM, I suggest the addition of Rule 7.b. to Rule 7, “Real” Libertarians Drink.

    “Rule 7.b. Whenever someone writes, ‘If only libertarians would’ or ‘Most libertarians think’ or ‘Libertarians are unpopular because’ or any permutation thereof.”

    I await the ruling of “Ruthless”.

  40. You know, when I told my aunt back in Turkey about spell-check software she thought I was making an American joke (what some people would call a Polish joke here).

    Apologies for messing up the spellcheck in the previous post, even though I think “Now even the poorest of us has access to communications that are as food if not better than the government officials” is hilarious

  41. Isn’t it odd that the Left seems to be crazy about ALL European Social Programs EXCEPT
    the Swedish Private Account Retirement System that Bush advocated?

    It isn’t odd. Take a look at the penultimate word in your query. That’s why it isn’t odd. It’s the same reason it isn’t odd that the GOP, who controls all three branches of government, didn’t get Bush’s proposal through congress. I have to say, very Sean Hannity of you to blame the “Left” for the shortcomings of the GOP.

  42. My GF’s mother did everything right, supposedly. Worked for the same company for 30 years. Invested in the 401k plan there, even though they had a pension fund.
    Problem? The law allowed the company to invest the 401k and pension funds as they would. The company went bankrupt. What she got? $7,000.
    Oh, I can see the belief that the government that governs not at all governs best. But…I’m glad

    Johnny,
    Yes, your GF’s mother did everything right. Based on the belief the government would protect her. Sadly, she found out what little that was worth. Without that belief, she likely would have followed a more reliable means of investment protection such as diversity, for her own funds. As for the company pension funds, she (and her coworkers) certainly would have taken an active position in monitoring them. But why should they? Weren’t they protecetd by law?

  43. Sorry, all the debate over Social Security is purely academic. Social Security is doomed.

    Social Security was enacted at a time when very few people would live long enough to recieve benifits, and after that it managed to take advantage of a baby boom explosion in population along with a huge technological/economic boom of the 20th century to keep it going a big longer. And maybe using cheap slave labor in China to make stuff for non-working Americans can keep it going a little longer.

    But, “something for nothing” is not a sustainable, viable system. Soon, the people demanding benifits (and ever increasing benifits at that) are going to outnumber the working contributing people in the economy. You are going to have more and more people doing less and less work and demanding more and more benifits. Imagine dividing a pie amoung more and more people taking bigger and bigger slices of the pie. Do the math.

    All money you are “putting into” Social Security, you might as well be burning in your fireplace. Social Security will not be around for much longer. It is going to collapse. Debate over Social Security is like debating elimiating death. You can discuss eliminating death all you want, but it ain’t gonna happen. People can either invest in private investments, or they can plan to move in with their grandchildren or starve on the street. Social Security WILL NOT be there for you when you get old, and more than than FEMA was there for the people of New Orleans.

    Every cent taken from people for Social Security deductions is money that you are stealing from their retirement, because no-one will see any of that money unless they are retiring tommorow.

  44. Debate over Social Security is like debating eliminating death. You can discuss eliminating death all you want, but it ain’t gonna happen.
    This is a bungled metaphor, right?
    You say Social Security is like “getting something for nothing” which is not the case with Social Security at all. The problem with Social Security is that we will all be getting nothing for quite a bit we’ve paid out. It’s like you recognize the problem, but still throw in every GOP talking point from the last 5 years without any real direction. You say that Social Security is doomed. While I object to your use of the present tense (clearly we all still pay in, and many still receive checks), I understand your point to mean that it is past the point of hopeful survival. This is wherer “doing the math” becomes a real bear. Once you’ve taken money from people with the promise that it would count towards a later payoff, you can’t just renege. Something needs to replace it, or it needs to be transitioned out. Nothing is going to replace it without faith in its success. As long as the Great Depression is in memory, people will not go for a privatization system, especially a system touting my a famously dishonest/untruthful President. That could be Bush or Clinton, so don’t get your partisan ire up. I’m tired of arguing whether Social Security has a future or not. It does until something better comes along. Polticians will continue to put band-aids on it, then when that doesn’t work, they’ll put a cast on it, then traction, then surgery, then cryogenics, et cetera. Somebody needs to come up with a non-partisan (not bipartisan, NON-partisan), non-ideological model that gives confidence and returns.

    As an aside, I wonder why nobody has proposed reforming Social Security Disability programs? The people who administer SSD at the ground level are arguably some of the most incompetent individuals I’ve come across. They don’t know what they’re doing, and consequently, the only intelligent determinations come from a judge. Of course, that entails lawyers (How rich ARE the Binder brothers?) and due process, and appeals courts, etc. Then the lawyers get a chunk of money intended for a disabled person. Reform there might be a good practical start to reforming the whole thing.

  45. Applause to the thread for an astounding display of clear thinking and back and forth on an issue…

    Here’s a nice summary of how I see the problem from http://www.socsec.org/publications.asp?pubid=540

    “Ultimately, the ability of the Treasury to keep its promises to pay bondholders what they are owed depends on government’s ability to control its taxation and spending policies, in other words, to keep the entire national debt manageable relative to the size of the economy.

    There is no special obligation or special problem posed by the Social Security trust funds. That debt is part of the national debt. The nation’s ability to honor its commitments to its seniors is part of the larger effort to honor its commitments to all bondholders.

    In historical perspective, the national debt relative to the nation’s ability to pay is lower today than it was in the early 1950s (coming off the Second World War), but it is much higher than it was in the 1970s. Over the past three decades, Republican administrations have issued new debt much faster than the economy has grown. To meet its commitments to all its creditors, including the Social Security trust funds, future U.S. governments will have to control the fiscal policies that have produced such huge deficits-such rapid growth of the national debt. Will they? For the next few years, with the administration repeatedly asking for supplementary appropriations to fund the wars in Iraq and Afghanistan while striving to make the tax cuts permanent, it seems unlikely. Any decline in the national debt/GDP ratio would represent the first such decline under a Republican president since 1974.

    There is no special problem of meeting the Treasury’s obligations to the Social Security trust funds. The fundamental problem is the larger one of servicing the national debt. And the solution lies in controlling federal deficits.”

  46. “Once you’ve taken money from people with the promise that it would count towards a later payoff, you can’t just renege. Something needs to replace it, or it needs to be transitioned out.”

    This, again, brings to mind a suggestion from a letter to the editor of this magazine. The writer wondered why we couldn’t phase it out by raising the retirement age by a set amount (say, 3 months) each year, indefinitely. The people who are already collecting will not see a change at all. The people who are about to collect will see very little change. And the people that have a long time until they reach retirement age will have to bridge the gap between when they want to retire and when they are eligible for SS.

  47. Theres nothing Social or Secure about Social Security.As usual people will wake up when its a crisis

  48. sage,

    So, a person who’s 20 years old at the beginning of that system would be expected to retire at age 80 after paying into Social Security for 60 years?

    Sorry, I really have a problem with a system where each generation screws the next ad infinitum. I’d favor just paying out pro-rated lump sums to people over, say, 50 years old, and ending the system. True, younger people (myself included) would “lose” the money they’ve paid into the system, but chances are they wouldn’t see a dime anyway if the system continues as is.

    Maybe my generation can bore our grandchildren with stories about the sacrifices we made to get rid of the Social Security millstone around the country’s neck, just like the Greatest Generation does with stories about WW2.

  49. Mainstream Man,

    The problem is, Social Security is not ‘sold’ as being part of general revenue. It is sold as a retirement savings plan.

    And, while SS can be kept solvent without cutting benefits, raising taxes, or changing demographic trends, this can only be done via massive infusions of cash from income tax revenue. Thus, other programs currently funded by income tax revenue will have to be cut, or income taxes will have to be raised. Since SS is inflation-adjusted, even printing more money wouldn’t work.

  50. The concept that social security is just part of the larger spending problem, and not special in anyway helps the discussion stay clear headed. – LeftStreamMan

    More nonsense. SS was sold as “social insurance.” Stripped of any “special status”, it plainly becomes a welfare program, which perception would threaten its political underpinnings. The fact that many people who have shorter expected lifespans, including the poor and minorities beloved of redistributionist wonks, get the short end of the actuarial stick makes the fraud inherent in the program even worse.

    One good thing about 401ks and other defined contribution plans is that they are the property of those who pay into them. If some poor schmoe who worked hard all his life for low pay drops dead a month before he’s eligible for SS, what can he leave behind? A reduced benefit for his spouse, which, if she wad earning more than him, she won’t even get. If he’s unmarried, his estate gets nothing but a paltry burial benefit. The FICA, employee contribution included, is likely to be the majority of tax such a person paid all his life. The system is based on lies, and needs to be totally restructured.

    Kevin

  51. Johnny:

    “Problem? The law allowed the company to invest the 401k and pension funds as they would. The company went bankrupt. What she got? $7,000.”

    Uh, what? There are at least two things wrong here.

    1) Under ERISA, 401(k) type retirement assets must be held in a trust for the explicit purpose of providing benefits to retirees. The trust can’t be raided legally.

    2) If you meant that the employer got to direct where all of your money was invested, they are running afoul of something called 404c, which says that, yes, an employer may choose to direct where all investments go IF they want to be on the hook for investment performance for every employee. In practice, almost no employers do this since they could be sued for investment loss by every employee. 404c protection means that your plan allows participants in the plan to choose from a specified diversity of investments, so that THEY endure the investment risk on an individual basis.

  52. “The problem is, Social Security is not ‘sold’ as being part of general revenue. It is sold as a retirement savings plan.”

    “SS was sold as “social insurance.” Stripped of any “special status”, it plainly becomes a welfare program, which perception would threaten its political underpinnings.”

    Hmmm…so ignoring the reality that SS is/was/ will always be a program whereby those currently working provide a “social security net” for those who worked previously is somehow better than discussing the issue as it exists in reality. The fact that many people misunderstand what social security is doesn’t mean there is a special crisis involved in its funding.

    And only those who mistakenly believe that their money is being used for their own retirement claim to be getting ripped off. Your SS money goes to fund benefits for those currently (and soon to be) retired. Those working when you retire will pay for your retirement (in the simplified version of things). Having a large reserve fund can help to mitigate some of the pain involved in demographic shifts. Tweeking the system makes sense to assure that things are not too burdensome on any one group of workers, but don’t hand a load of bullshit about how you are getting ripped off in some special way by this program.

    Yes, at times when the demographics make SS obligations larger, funds will either need to come from another program, taxes increased, or benefits reduced (or shifted towards those with greater need and away from those with more resources). Again, nothing special compared to other programs. Just a choice a society makes about its priorities. I don’t mind putting some of the fruits of my labor towards your grandma’s retirement. I hope your kids don’t mind doing the same for me. If the burden on them is too great, I am sure I would be okay with a benefit change that balances need agaist their burden. Interdependency … its how societies work.

  53. That the reality of SS as a welfare program is not understood by many, and that those many still believe it should act like insurance or a pension because that’s the fraud the politicians perpetrated on them, is still going to cause trouble once that paradigm finally shifts in the heads I’m talking about.

    I don’t mind putting some of the fruits of my labor towards your grandma’s retirement. – CollectivistMan

    Well, that’d be hard to do, as one of my grammas was dead before I was born, and the other died before I was old enough to get my first paper route. The latter wasn’t a part of Social Security, as she was a public school teacher, and they weren’t forced into SS in her day. You may have paid local taxes that went towards her pension, if you lived in her district.

    I hope your kids don’t mind doing the same for me. -CM

    When and if I ever have kids, I’ll try to raise them to mind like hell.

    .. its how societies work. – CM

    We aren’t talking about Society, we are talking about a government program. Conflating Society with Government is a popular fallacy among statists.

    Kevin

  54. Since the beer and fried chicken out later, these two things quickly fire up, people liked.

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