Government failure

Obama Demagogues Private Enterprise

The president's misguided attacks on privatization

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Last weekend, President Obama pandered for votes by trashing Social Security privatization.

"I'd have thought that debate would've been put to rest once and for all by the financial crisis we've just experienced," Obama said. "(N)o one would want to place bets with Social Security on Wall Street."

Such demagoguery sells. It's probably been poll-tested. Many Americans fear privatizing anything they've come to view as government work. They object to privately managed roads, independent charter schools, private prisons, etc., despite private companies' repeated success at providing better service while lowering costs.

Private retirement accounts seem particularly threatening. Rep. Paul Ryan includes a version in his budget-reform package (http://tinyurl.com/2u6jaw7). But as The Washington Post said, "(F)ew GOP lawmakers today support the idea…."

What a shame.

Social Security is popular but unsustainable. Its commitments over the next 75 years exceed its expected revenue by $5.3 trillion. Politicians know this, but pander anyway.

Senate Majority Leader Harry Reid accused Sharron Angle, who's challenging Reid's re-election bid in Nevada, of "raiding" the Social Security trust fund because Angle has talked about phasing out Social Security. There are two problems with that statement—as Reid must know: First, there never has been a trust fund! Your FICA tax payments were not saved or invested. Social Security transferred them to current retirees. Second, in return for IOUs, Congress raided Social Security's budget surplus every year and spent like any other tax revenue.

Now the days of surplus are over. Unless benefits are cut and the retirement age is raised, the deficits will only grow. When Social Security passed in 1935, most Americans died before age 65. There were many workers and few retirees. Ten years later, there were still almost 42 workers for each retiree. Five years afterward, the ratio slipped to about 17 to 1. Now it's 3.4 to 1. Thirty years from now, the ratio is projected to be 2 to 1.

That won't work. Workers cannot afford to give up half their earnings to pay others' retirement benefits.

It would be far better to begin partial privatization now.

But what about Obama's point that President George W. Bush's privatization plan would have been a disaster because the market crashed?

Obama is just wrong. For one thing, under the privatization plans backed by the Cato Institute and others, retirees and near-retirees wouldn't have been affected by the 2008 stock-market decline. Only younger workers would have diverted some of their money from government to capital markets. They would have had time to recover (unless government continued to screw up and cripple the private sector).

Second, even with the 2008 decline, the picture is not nearly as bad as Obama implies. Andrew Biggs of the American Enterprise Institute ran the numbers for a hypothetical worker who retired in 2008, right after the market crash, after a career under a partially privatized Social Security program.

"A typical retiree in 2008 would be entitled to a traditional Social Security benefit of around $15,700 per year," Biggs writes. "For workers who chose personal accounts, this traditional benefit would be reduced by around $7,800. However, the worker's personal account balance of $161,500 would pay an annual annuity benefit of around $10,100. This $2,300 net benefit increase would raise total Social Security benefits by around 15 percent."

Biggs adds: "While today's retiree would have faced the subprime crisis and the tech bubble earlier in the decade, he also would have benefited from the bull markets of the 1980s and 1990s. The average return on his account—4.9 percent above inflation—would more than compensate for a reduced traditional benefit."

No can say the future will be like the past, but we know what the future of the government's scheme holds: postponed retirement and/or reduced benefits and/or crushing taxes and (most likely, I think) a near-worthless dollar because politicians will print money to "keep" their deceitful pension promises.

Privatization is better. Everything that works well—everything that brings innovation and prosperity—comes from the private sector. Obama is irresponsible to campaign against that.

There's no ideal fix. But our best hope is separation of economy and government.

John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at johnstossel.com.

COPYRIGHT 2010 BY JFS PRODUCTIONS, INC.
DISTRIBUTED BY CREATORS.COM

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  1. New Stossel two-nite on FoxBiz! I am so all over that (even though the NHL channel is showing Game 7 of the 2009 SCF).

    1. Hockey is awful and you know it. The fights are the only good parts.

      1. I went to a rumble and a hockey game broke out.

        1. I’m on a drinking team that has a hockey problem.

    2. Max Talbot. Superstar.

      1. I thought you were a Caps fan with your handle…unless you were being sarcastic.

        1. Nope. My family is from Pittsburgh. We moved around a lot and end up in the DC area. I guess I picked this name b/c I play in NoVA.

          1. I always wondered if you meant “Norther Virginia Hockey” or “No Virginia Hockey.” Figured the former was more likely, but the latter was funnier.

    3. That reminds me of a time when Fleury wasn’t letting in momentum killing soft goals. Ah, good times.

      1. And we had a shut-down D that didn’t leave him so exposed.

        I am looking forward to how king Shero’s acquisitions work out next year(hopefully better than Poni).

        1. It’s all about the D; Fleury was never that good. Unless your goalie is named “Miller” or “Brodeur” you’re paying too much for him (especially if his name is “Luongo”), which is why the Hawks were smart to let Niemi walk and bring in Turco. Other GM’s are finally starting to figure out what the Red Wings knew ten years ago.

          1. I’m optimistic that the Paul Martin and Zbynek Michalek signings will improve Fleury’s game.

    4. What’s this “SCF” thing of which you speak?

      1. It’s like high fructose corn syrup, but much sweeter, and good for you.
        It is only available in the US.

        1. It is only available in the US.

          Ouch.

      2. Being from Toronto, of course you wouldn’t know.

    5. Do we really want to see Sid the Twit win the Cup?

      1. He was not on the ice at the horn, if that helps. And it’s Cindy Criesby, or – if you’re from Philadephlia – Gaysby.

        Go Pens.

        1. People from Detroit were calling him Rosby…’cause he doesn’t deserve the “C”.

          Then Sid pointed out that he was gainfully employed…they cried, and burned down some houses.

          1. My friends went to Game Uno of the 2008 SCF in Detroit. Pens hadn’t scored, and yet my friend was giving the fans shite. They yelled to him, “We have three goals! What do you have?!?” His reply? “Jobs!”

  2. Scoring cheap, political points at the expense of our economy and our future. You go, girl!

  3. SS privatization is an idea that SHOULD be trashed, for any number of reasons. The biggest is the simple fact that normal people are not good investors, and are getting slaughtered in the markets.

    http://www.slaughter401k.com/w…..he-market/

    The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.

    In any case, the money available for SS will increase with future wage growth. The money available from the stock market will increase with corporate profits. Unless you honestly believe that the latter is going to grow faster than the former, there is no reason to expect better returns from one or the other. And if you DO think corporations will keep an ever larger share of the pie…well, thanks for admitting that there is a big problem!

    1. The government’s done a fantastic job investing the money. By spending it like drunken sailors.

      Is there anything you think you can do better than the government, Chad?

    2. Yeah, and the person who can’t compute compund interest can’t even hold their own against the government, which has already robbed the so-called “trust fund” dry.

      What makes you think that the state is ultimately more caring than Wall Street. At least when you own stock, the corporations officers work to make profits for you. By contrast, by the time you get to retirement, the government already blown the pension money buying votes and elects to devalue the currency.

      The reality is that Social Security is beyond your control and the state does not really have your interests at heart. Government are just as impulsive and short-sighted as individuals. But at least the individual can have some choice and control in the matter if he has his own savings.

      1. The trust fund is worse than “already robbed dry”. If you are between 40 and 55 (like me) you really, really got reamed. First, they jacked up the social security tax to put money away in a trust fund for the baby boomers. Then they spent that money as we went along (this began under Reagan/O’Neil). So we’ve been paying for the “trust fund” for our whole working lives. Next we get to pay back all those T-Bills!

        The Trust Fund exists because payroll taxes won’t cover retirees once the boomers start withdrawing. Without the trust fund we were warned that we’d have to pay a 70% payroll tax to cover the boomers at retirement. So they invested the trust fund in US Treasuries. This conveniently allowed the government to go ahead and spend that money at the time.

        When Social Security needs the trust fund money, they’ll just cash in those Treasuries. But the government already spent the cash, so they’ll have to raise the money to pay back the T-bills from current tax revenues. So they’ll have to raise taxes on people who are still working – remember that 70% payroll tax they worried about? Well, thankfully they won’t have to raise the payroll tax because of the trust fund. Instead they’ll raise income taxes by the same amount…. That feels much better!

        So, because of our lucky moment in history, my generation gets to pay to fill up the trust fund along with the Baby Boomers, and then we get to pay back those T-Bills along with everyone behind us. You heard right… those of us unlucky enough to be in the demographic trough get to pay the Social Security boomer deficit TWICE! I really feel great about that. A special thanks to Tip and the Gipper for setting that up for me. ‘Cause I didn’t want to take care of my own family or my own retirement or anything. I am much happier taking care of your pork projects and your socialized retirement fund instead.

        1. Nah, not Tip and Gip. It was set up by our parents (the “Greatest Generation”) who laughed at Barry Goldwater when he suggested this be put on a sound financial footing back in 1964.

          1. He was a dangerous radical!!

      2. When Wall Street defrauds investors, they can sue for damages. And, quite often, the recovered damages are quite significant if proven.

        On the other hand, when the federal government defrauds citizens with something like the Federal “Insurance” “Contributions” Act, the citizen has no recourse against the sovereign.

      3. What makes you think that the state is ultimately more caring than Wall Street.

        Well it was the government who gave 100s of billions of tax payer money to Wall Street. So at least we know the government cares about Wall Street more then it does about taxpayers.

        Wall Street probably cares more for itself then tax payers….but at least Wall Street can’t tax us…..for now. I am pretty sure Barney Frank is working on a way to fix that though

    3. So you think SS privatization means everyone must become a day trader? All that’s necessary is to add a few reasonable restrictions (similar to requiring borrowers to put up a down payment before getting a loan). The retirement program we have at work is fairly common. We choose which of several pre-selected mutual funds to allocate our money to. It’s pretty simple (and provides another subject of conversation). Of course, only part of SS was to have been ‘privatized’.

      1. “like requiring borrowers to put up a down payment before getting a loan”?!? That’s just crazy talk.

      2. Not at all, DLM. If you had read the link I keep posting, you would have noticed it was about mutual fund investors, not day traders.

    4. SS privatization is an idea that SHOULD be trashed, for any number of reasons.

      I’m very glad to see that the pro-choice movement of the left fails to count you as one of its advocates.

      1. havent you leanred already? The only choice the human mind is capable of making is whether to have an abortion or not. Humans by there very nature are uncable of chosing anything else, hence why we need people like Tony to force us into suboptimal rate of returns on our money.

    5. This is dated but good. I came accross the current data recently and the same trend holds: As a % of GDP corporate profits are taking a larger share compared to private sector labour.

      1. As a % of GDP corporate profits are taking a larger share compared to private sector labour.

        Productivity growth, which I *think* is often what happens in a recession. Businesses are forced to restructure and become more efficient, which unfortunately often means getting rid of non-productive employees. The graph shows the same kind of spike in other places.

      2. Maybe I can’t read graphs, but it seems to show the opposite. It shows that profit as a share of GDI is generally down since the 1940’s, apparently moving from an era where it oscillated around 10% to an era where it is oscillating around 8%. It also appears that the annual number varies wildly – from 5% to 13% over the period, with the big number coming in about 1950 and the little number coming around 1981 and 2001. The current “scary big number” is about the average for the period of 1950-1970.

      3. Here is data for 2009. Total corporate profits were 1.48 trillion, vs a 14.2 trillion GDP.

        http://www.gpo.gov/fdsys/pkg/E…..able91.pdf

        My point, however, was that if wage growth and profit growth stay in the same proportion, money coming into SS and stock market growth should be similar.

        Expecting one to do poorly and the other to do well is simply nonsense.

        1. Chad|8.19.10 @ 6:43PM|#
          “My point, however, was that if wage growth and profit growth stay in the same proportion, money coming into SS and stock market growth should be similar.
          Expecting one to do poorly and the other to do well is simply nonsense.”

          Uh, no. Your presumption is baseless.

    6. It is right and just that stupid people are punished for doing stupid things.

      1. But why am I being punished for stupid people who elect people like Obama, Reid, Frank, Dodd……

    7. “The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.”

      Maybe bright, elites like you can help out the small people, Chad.

      1. Oh noes!! The ‘insiders’!!

        What drivel. If your private plan is stolen, you have insurance. The Social Security coffers are EMPTY, and who is held to account?

        Nobody. Who is insured? Nobody, and 2 workers forking their income over to pay each retiree isn’t going to cut it – I will personally quit if that situation comes about.

        Chad – it’s stateaholics like you that keep the entire sickening machinery working.

        1. I personally love how it’s widely known fact in 32 years the plan becomes insolvent when I turn 60. Do I have a choice in paying money for this investment plan which as drafted will fuck me over guaranteed? Social Security is an unsustainable welfare program that funds itself through regressive taxation. Most of Gen Y is making under 90k, meaning they get taxed the hardest for an insolvent program. How the hell Democrats can support this program is astounding… Where is the Democratic party’s push to make an actual welfare program for the elderly? How the hell does it make any sense to take 12.4% of all income from someone below the poverty line? I mean it’s one thing to take $1,350 a year from someone making $11,000 a year so that they can “retire”. But this program actually is taking the money from these people and it’s not capable of paying them back. If that’s not evil, I don’t know what is. Stealing from the poor is a-ok when the government does it right? At least with a private plan these people stand a chance of getting their money back. Never mind that saving for retirement is probably not in the best interest of these people…

          1. Paul, your “widely know fact” is idiotic hyperbole. Even with no change, all that happens in “32 years” is that we make modest cuts and/or tax increases to close the gap. A gap, mind you, which actually gets SMALLER after that, not bigger.

            1. Because the 12.4% tax on low incomes isn’t enough? Democrats are currently looking to increase the social security tax, while the retirement age is be pushed up to 67:

              http://online.wsj.com/article/…..55372.html

              All of this doesn’t change the raw fact that it’s an absolutely horrible retirement plan. I guess this means we’ll get a modest 3% tax increase and less benefits. It will probably all be written as a “payroll” tax, so we can pretend like taxes weren’t increased on low income earners.

              In a normal retirement plan, the government doesn’t “borrow” the surplus funds to spend on whatever day-to-day programs it feels like. A normal retirement plan invests that money.

              1. Why do conservatives always babble the 12.4% number, which includes disability insurance? Only 10.6% goes to OASI.

                We can easily solve this problem by tax adjustments (raising the cap or the OASI tax) or by cutting benefits (raising the retirement age, means testing, or flat reductions). It is a completely solvable problem. I know this pisses you off, but the facts are the facts.

                1. Oh right, my bad, we actually make low income earners pay 15.3% before they can take out deductions when you add in medicaid (aren’t we increasing that?).
                  Did I say anything remotely conservative? We’ve got a retirement program fucking people making under 50k the hardest, and a new health insurance program fucking people making 20-50k the hardest. Way to go anti-progressive Democrats! Bend over little people! Lets start another war!

                  1. Again, Paul, you are proving yourself clueless. You have no idea how SS benefits are calculated, do you? None at all.

                    Because if you did, you would know that the poorer you are, the HIGHER PORTION of your income you are returned. The poor get AWESOME returns on their investment, better than anything the market has ever offered. It is precisely the upper-middle class, those paying at or near the cap, that get very mundane bond-like returns.

                    Go study up on the idea of bend-points, and when you get what’s going on, let me know.

                2. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

                  1. Obviously, the lower class doesn’t need that money now… Sure, this means more layoffs if we increase the payroll tax, but they’re to stupid to figure that out. If we let them keep their money they’ll have an opportunity to spend it on stupid things, like an education. We absolutely can’t let them deduct that! They might actually learn something and wean themselves from our less than mediocre tit.

                  2. Welll, some people can’t or won’t put away money for their own retirement, much like some people cannot or should not operate cars, so everybody must ride on the government bus.

                  3. Welll, some people can’t or won’t put away money for their own retirement, much like some people cannot or should not operate cars, so everybody must ride on the government bus.

            2. oh and how about this for a fact?
              Is the wall street journal just making this up?
              Social Security officials project that beginning in 2014, the program will routinely pay out more in benefits than it collects in taxes, requiring it to draw on reserves that have been funding the rest of the government. By 2037, the reserves would be depleted and the program would only be able to pay about 75% of promised benefits.

              1. Paul, I have addressed your facts repeatedly throughout this thread. It is a completely solvable problem.

    8. Chad|8.19.10 @ 12:04PM|#
      “SS privatization is an idea that SHOULD be trashed, for any number of reasons. The biggest is the simple fact that normal people are not good investors, and are getting slaughtered in the markets.
      http://www.slaughter401k.com/w…..he-market/”

      Look there! Chad cites a advertisement done by an outfit selling their services, which advertisement cites a “study” done by an outfit which sells their services to the outfit advertising.
      Why, you might conclude Chad is an ignoramus willing to drag up anything to support his ignorant opinions!
      Wouldn’t you….

      1. Doesn’t that make him a “corporate shill”? 🙂

        1. Naaah.
          Just a hypocrite.

    9. Hell yes. The last thing we want is people deciding what to do with their own money.

    10. Maybe they should save their money instead of putting it on the roulette table that is the stock market.

      1. Right on DesigNate! I’m all for addressing the bankruptcy of Social Security as it exists now, but I want to be able to invest however I want. Forcing everyone to stick their retirement into a handful of IRA’s is only slightly better than hoping the federal government will manage it for you.

        1. SS isn’t, nor can ever be, “bankrupt”, unless you believe some plague will wipe out all the workers someday. It can bring in less than we want, at which point we either raise the taxes or cut the benefits. At no point will any such tweaks be large or unliviable.

          1. At no point will any such tweaks be large or unliviable.

            Citation needed.

            1. How about you start with the SS trustee’s report. You clearly have never read it.

              1. How ’bout you cite it so we can all get a laugh.

              2. Translation: “I am full of shit.”

                The trustees project that the annual cost of Social Security benefits will increase from 4.8% of GDP in 2009 to 6.1% of GDP by 2035, then recede back to 5.9% of GDP by 2050 and thereafter remain roughly stable.

                1% of GDP is hundreds of billions of dollars.

                That’s a shitload of money, you asshole, that’s going to be squeezed out of people one way or another. Who the fuck are you — a statist cretin who’s proudly ignorant of what those policy adjustments will actually mean in a real sense — to declare that they’re no big deal?

                1. Actually, 1.4% of GDP is 142 billion….but apparently that is enough to qualify as “hundreds” when you need it to be.

                  Yes, come 2040 or so, we are either going to have to trim benefits by a quarter, raise taxes by a third (from 10.6 to about 14%, or by raising the cap), or some combination thereof. Painful? Yes. But not that painful.

                  And note the key thing that even you seem to be admitting…SS’s finances do not get worse over time. Ergo, it is not a “Ponzi scheme”, and anyone who says so IS full of shit. Thanks for admiting it. Now, why don’t you go argue with them instead of me?

                  1. Why don’t you trim your income by 25% by sending it to me and then tell me how not that painful it is?

                  2. The fact that SS’s finances don’t get worse over time doesn’t preclude it from being a Ponzi scheme. The defining characteristic of a Ponzi scheme is that funds from subsequent investors are used to pay returns to prior investors. What prevents SS from collapsing is that the fedgov dragoons every taxpayer into the system, and U.S. population demographics are approximately stable. That’s all.

          2. I suppose all this news about “Greece” and its economic crisis has been made up by Republican shills to undermine social security because social security is infallible like the pope?

          3. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

      2. DesigNate|8.19.10 @ 12:42PM|#
        “Maybe they should save their money instead of putting it on the roulette table that is the stock market.”

        Great idea! Found anyplace that pays more’n, oh, 0.0001%? Or, the coffee can buried in the back yard is always good.

        1. Actually, my credit union pays 0.4% (still craptastic).

      3. The stock market is only a roulette table if you make it so. If you have a well thought value investment strategy and actually do some homework, you can do quite well, even if a recession hits. It sure as hell beats relying on some politico who will sell you down the river the minute he thinks there’s a bigger constituency to be bribed.

        1. Wrong.

          http://www.slaughter401k.com/w…..he-market/‘

          Typical mutual fund investors are getting hammered. Additionally, the correlation between asset prices has been rising steadily since the 60s. Diversification doesn’t really help you any more.

          1. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

          2. Jesus Christ, you moron, the site you linked specifically stated “Dalbar and others have found that investors who tend to hop from one hot mutual fund to another not only fail to enhance their performance over industry benchmarks, but have been shown to actually end up earning a far smaller return because of their periodic switching among funds.” Which is, as Contrarian P stated, the investors making it so.

            So he was “right” not “wrong.” Your own damned link proved his point, not yours.

          3. Can you think of anything else that has been rising rapidly since the 60’s that might correlate with things like the ratio of CEO’s salaries to worker’s salaries and the trend toward asset classes behaving in a similar way as bubbles in this are followed by bubbles in that??

            Hint: think government spending, regulations and red tape, govt. meddling in all areas of the economy, and an increasingly complex tax code trying to divert money into this industry and that industry and favor this asset class and the housing market, etc.

        2. I understand this, but your average American thinks you have to be some kind of magical flying spaghetti monster to play the stock market. The best solution is to diversify the shit out of your investments for maximum effect.

          1. I understand this, but your average American thinks you have to be some kind of magical flying spaghetti monster to play the stock market.

            I think that is an understatement. The “average” American doesn’t know what the stock market is, how it works, what it’s for, why it matters, or what to do with it.

            During my years of brainwashing education in public schools (before the Intertubes existed as they do now!), I was never, ever taught anything about economics, finance, or business. When I got to college I took a couple of classes in those subjects just for the hell of it and could not fucking believe that none of those subjects were offered to us in school.

            1. I agree. It’s a bizarre assertion that most Americans CANNOT figure out investing when there is no effort on the part of public schools or the lousy community outreach efforts to educate people. And yet most people can figure out driving, grinding tax forms and any number of abstract, complicated games. True, math is not a natural human capability, but pattern recognition IS, and we have Excel for all the computations. I bet if there was an educational effort, we could get 70% of the population investment-competent. Just look at people’s new interest and ability to grasp complex medical information. A generation ago, non-doctors didn’t even try to figure it out. Now with some basic biology, web resources and an informed mentor, you could figure out anything medical. The government prefers a populace that is ignorant, fearful and in need of care-taking.
              Sadly our elected reps are no better educated than the population. Plus, their motives are highly suspect.

    11. In any case, the money available for SS will increase with future wage growth.

      Cite?

      In any case, SS could be saved in it’s present form if it was means tested and the earnings cap was removed. This, of course, would transform SS from a savings plan (a lie of course, but a lie that the majority believes) to a welfare plan for old people. Welfare for the elderly is not politically viable.

      1. “In any case, SS could be saved in it’s present form if it was means tested and the earnings cap was removed. This, of course, would transform SS from a savings plan (a lie of course, but a lie that the majority believes) to a welfare plan for old people.”

        Not all old people, just the poor ones.

        1. “The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.”

          Chad does have a bit of a point here. The game on Wall St is to play retail investors for suckers, and charge them fees and commissions for the privilege.

          The biggest suckers the folks who pay a broker at a Wall St. firm to manage their investments based on the ‘cutting-edge’ research churned out by the team of analysts who couldn’t get better jobs after business school. Sell-side research isn’t worth the time spent reading it. It exists to generate demand for securities that the firm wants to offload. I have no sympathy at all for ‘brokerage clients’. They get what they deserve.

          The next biggest suckers are the ones who think they can day-trade their way to riches with their discount brokerage account. These folks would be just as well off if they unplugged CNBC and spent their time in a casino, but I don’t have much sympathy for them either. There’s a saying about fools and their money.

          Sadly, the largest population of suckers, and the one’s I’m more sympathetic to, are the folks who park their savings in mutual funds, paying a manager sometimes more than 2% of their assets annually, to routinely underperform the market. Unfortunately, most people I know fall into this category, with their 401k’s, IRAs, etc… Mutual fund companies are primarily dedicated to gathering assets under management… not on delivering returns on investment.

          Fortunately, there are literally hundreds of ETFs out there, which allow average, unsophisticated individual investors to assemble broadly diversified portfolios at trivial costs.

          So, individuals don’t have to try to beat the Wall Street professionals. They can simply make boring, unsexy index investments (and stand aside while the assholes at prop desks and hedge funds blow their brains out).

          Do most people have the discipline to do this? If not, that’s they’re problem.

          1. I’d argue that people why rely on the government are just as big suckers.

            Fact of the matter is that over the 75+ years of it’s history, the government has not saved a penny going into the “trust fund”. All of it has been used to pay for the government’s operating expenses. Now, we find ourselves in a situation where a large number of people are retiring and suddenly the government has this huge debt that it has no way of paying without massively raising taxes or cutting benefits.

            Now, if you look at the people who bought into this system, who supported it and advocated it, who counted on it being there when they retired, who has been the bigger sucker?

            1. Quite so. Wall Street has delivered actual income and assets pretty unerringly. The Government has spent every penny they have got their hands on, and then much more besides.

              If existing Social Security was a private operation, the bosses would be in prison.

            2. Agree with you entirely, Hazel.

              Social Security is worse than a Ponzi scheme. Ponzi’s victims always had a choice to opt out.

              At least when investing your own money, you can choose to not be suckered.

              1. It isn’t a Ponzi scheme at all. Anyone who can do math should be able to figure it out.

                It simply transfers a certain fraction of current workers’ earnings to current retirees. We can obviously do this forever. Of course, that fraction can change over time, depending on the priorities of the people living at that time. Currently it is just under 5% of GDP. If we want benefits to continue to increase with wage growth (rather than inflation), it will eventually increase to about 6% of GDP, and stabilize there. Or we could make some cuts, and keep it at 5%, or some intermediate point.

                1. Taking from the bottom wrung of investors to give to the top wrung of investors (the first people in) is the definition of a Pyramid scheme. You need an ever expanding base in order to provide returns to the top. The very essence of this is deemed so immoral that people like Bernie Madoff are sent to jail for doing it.

                2. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

          2. Actually, Torontonian, the biggest problem for small investors appears to be switching from stock funds to bond funds (and vice versa) at the wrong time. Unfortunately, this behavior isn’t necessarily irrational. If you had just lost half your nest-egg, and now were in a position such that your basic retirement security would be in jeopardy if you suffered any further losses, you are all but forced to remove your money from the markets. However, this is actually the best time to buy…and that is precisely what the insiders do, with borrowed money, of course.

            The big dogs double-down after the crashes and win, the little guys run for their lives, and lose. And the cycle repeats.

      2. MP, how the hell do you think SS gets its money. From WAGES. Ergo, if wages grow, so does SS’s income.

        That’s a “well, duh”.

        1. Chad, do you know what else “wage growth” can be called? Inflation.

          Now, can you guess what happens to social security benefits when inflation “wage growth” occurs?

          1. WTB, I am not an idiot. I am talking about inflation adjusted numbers.

            Apparently, you missed the obvious fact that SS adjustes for wage growth (which is greater than inflation in almost all cases).

        2. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

          1. PPH, I think Chad has stuck his fingers in his ears and is repeating “BlahblahblahIcan’thearyoublahblahblah”.

    12. Why do you try to convince people to remain wards of the state? You’re using force/fraud to keep everyone in the system. Slaves don’t need to be persuaded to remain slaves.

    13. The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.

      My mother and aunt were over last night trading stories about how they have to be careful and game the system because they may “make too much money” to collect their SS retirement benefits, by working after retiring to supplement their income.

      Funny that. My 401K plan won’t give a shit how much I work or how much money I make in retirement. Oh, and my kids get to inherit what I don’t spend.

      Oh, the immorality of choice.

      1. but what if someone doesn’t save enough for retirement? privatizing it would prevent us from making sure that someone is taken care of. How can we make sure your 401k isn’t selfishly hoarded but spread around to ensure everyone has a fair chance at retirement?

        I get that the government wastes money, but social security is a pillar of society. Without it, we are neglected the civic duty to each other.

        1. Yeah. Because ponzi schemes that insure people don’t have to be responsible for their own retirement have been around fo-eva. We couldn’t have gotten where we are as a people without ripping off younger generations to support older ones.

          1. you’re so selfish! you say ripping off!? it’s more like a monetized version of respecting your elders. they’ve lived longer than you and deserve their cut! Is this Civic duty simply lost on you?

            1. Their cut?
              I’m sorry, but the wonderful government has already spent their cut. They spent it on “stimulus” and “investment”. Otherwsie known as “vote buying”.

              Now you’re saying that because the government (which they voted for) blew their “cut” that other generations should have to pay it back.

              Effectively, giving the government your money, then voting for the government to spend it anyway, then expecting to still have your retirement is a bit like blowing your personal retirement savings on a BMW and expecting society to pay for your retirement anyway.

            2. they’ve lived longer than you and deserve their cut!

              Interesting that you seem to apply the sort of language common amongst mafiosi to the recipients of government largesse.

            3. You sound old. You should have learned this by now. Everybody is entitled to consume whatever the hell they have created with their own labor. If you can’t work cuz you’re old, and you don’t have any savings, the govt shouldn’t take a 25 yr old’s money to give it to you. Because you didn’t earn it. Why should you get something someone else worked for?

        2. Truth is that the only people who really care about you ARE your friends and family, and most especially yourself.

          Expecting “society” to look out for your interests is a fool’s errand. “Society” is an abstract entity made up mostly of people who have no idea who you are, and don’t care.

          Reality is that the vast majority of those people are going to vote their own interests, not yours. Which means they are going to vote for benefit cuts when you need them, or tax increases when you don’t.

          And the fact is that over the history of the social security system, the government has NOT effectively looked after the interests of workers. it has spent their contributions and left them with a gaping debt. It has looked after the immediate interests of politicians seeking reelection, not after the long-term interests of society. That’s why Social Security funds have been treated as revenue and spent.

    14. Sure Chad. Reminds me of a conversation I had with a lib here at work. “Big Oil is ripping us off, making huge profits, conspiring with our representatives, CEO John Whatever sits on the Board of the Business Roundtable which is allied with Sen. Blahblah, Haliburton da da da.” “So,” I said, “If you are convinced of that, why not buy some shares in a good energy mutual fund so, at least, your
      financial status won’t be harmed as the stock and dividends soar due to all this ripping off?”
      Answer; “I don’t know anything about investing.” Me: ‘But you have time and energy to pursue conspiracy theories about Big Oil?”

      In other words, those concerned about investing for the future can easily learn what they need to do. Especially if honorable people like you, the folks from Acorn, Kennedy’s group and etc. go into the advisory business.

      1. How did the rest of the conversation go?

        1. Something to the effect that “Well, I’m just not good with numbers.”
          (Except for the time in 2000 when he was waving around some Florida county vote totals that “proved” Gore had won.

      2. So you pretty much told him: “Yes you’re right – why don’t you get a small share of the loot instead of complaining about right or wrong”

    15. I was reading this article and thought to myself, “I fairly certain Chad will make an apoplectic comment about how most people are too stupid to be trusted and should instead rely on the loving arms of government.”

      SCORE!

      1. No points. That one is as easy to predict as “Congress will pass a stupid law this year.”

        1. Only one stupid law?

          1. You think Chad will make only one stupid statist comment?

    16. I’m pro-choice. I find that people who are uncomfortable around firearms typically don’t own any. People who can’t swim tend to avoid the deep water. People who don’t understand investing aren’t going to opt in for the DIY route. Not that it’s any of our business what other adults choose to do with their money. They can stuff it up their nose for all I care.

      1. After doing an analysis of your “stuff it up your nose” investment strategy v.s. investing in a mix of common stocks and real estate over the last decade, the up your nose strategy substantially outperforms the market. I would be interested in hearing more about your orifice stuffing strategies; would you happen to have a newsletter?

    17. “SS privatization is an idea that SHOULD be trashed, for any number of reasons. The biggest is the simple fact that normal people are not good investors, and are getting slaughtered in the markets.”

      “The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.”

      Congratulations dumbass, these 2 comments might be the most ignant phrases you’ve ever typed here at H&R.

    18. In California most state employees have a retirement program that invest entirely in the Stock Market, the only thing the state has done right. Many teacher’s Unions and other Unions invest there monies in the stock market. So it’s typical of our governments we can but can’t. we can have private health insurance but you can’t(soon), we can send our kids to private school but you can’t, we can invest our retirement in the stock market but you can’t. We definately are a society of two classes, those who work for the government and those who don’t.

      1. In California most state employees have a retirement program that invest entirely in the Stock Market, the only thing the state has done right.

        It’s called… CalPERS. And it’s in financial trouble, too.

      2. Oh! Is this the one that Reason just did a piece on whose directors took bribes and kickbacks from corporations for special favors?

        I guess those poor little billionaires were just forced by the cruel system to become corrupt, eh?

    19. Oh my. It appears our friend Chad is again making the mistake in believing that committees in Washington, DC can better evaluate how all 300 million people in America want to spend their money than each individual in the private market.

      Chad, if my understanding of history isn’t too fuzzy, wasn’t the gist of fascism basically, “People are too stupid to know how to run their own lives; we need a group of elite bureaucrats (Putting The Right People In Charge?) to decide everything for the poor, ignorant proletariat”?

    20. People are too stupid to run their lives.

      Private enterprise is just code for racism and class warfare on the poor.

    21. “the money available for SS will increase with future wage growth”
      What makes you think that future wage growth will grow appropriately? What makes you think that the ratio of future wage earners to future SS recipients won’t continue to decline? Where are you getting your numbers to support such a stupid and simplistic statement?
      You should have a great future in government.

    22. Are you this idiotic? I was an investor for 10 years and lemme tell ya, people ain’t as stupid as you paint them. Compound interest is very easy to teach.

      1. Idiotic is too strong a word. Condescending is better. Sorry, Chad.

  4. What do we think of Australia’s Super Funds – where there is compulsory savings, but those savings aren’t pooled (what you put in you get out).

    1. There are only certain types of investments you can put this money in also – they’re kind of like compulsory 401ks.

      1. Sounds great from a social policy point of view. Mandatory 401k investment + insurance + welfare for the poor pretty much covers everything. No need for a ponzi scheme. Not pure libertarian, but certainly more libertarian and absolutely more logical than the nonsense we have now.

        1. Singapores retiree medical system works in a similar way. Youa re required to save money, but it is yours to spend as you please in retirment. Then there is a subsidy for the actual poor.

          1. Along with a nationalized catastrophic insurance plan.

      2. There are only certain types of investments you can put this money in also – they’re kind of like compulsory 401ks.

        I thought this was indeed what Bush’s SS privatization plan was, too. No?

        1. It was. This “people will screw up their investments” argument is just bullshit to cover up what the Chad’s of the world are really worried about – that people who work their entire lives, even the ones who didn’t particularly excel, will have a bunch of money that they earned, and they saved, to use how they want after they retire, instead of being beholden to the government for their living. Money that they can leave to their children, and grandchildren, the way many with middle class backgrounds do now. That scares the ever loving bejesus out of the Chad’s of the world – and it should.

          1. “people will screw up their investments”

            Unlike the government.

          2. Again with the “fear” argument? And it’s completely wrong but hey don’t let me stop you from using it – I don’t mind if you look like a paranoid idiot making you point.

            We don’t fear the honest man you just described. We don’t fear the honest billionaire either (and yes, I think there are some). We fear those who would use their money and power to hold down everyone else.

            As far as SS goes, I say either scrap it entirely or just tweak is as best as it can be tweaked. Using the CaliPERS debacle as an example we can see who would really benefit from privatization of the system.

  5. Stossel turns to my favorite rant – the Federal government Ponzi Scheme that is Social Security. Rather than go off on my usual rant here, I’ll lead you to some water: Start here for some great background as to a better way. Too bad we waited too long to get this done.

    The greatest failure of the Bush administration was having this issue in their grasp and getting bullied off of it. This needed fixing 20 years ago, and the data proving that it would work spectacularly was available then, but fixing it 8 years ago would have been better than nothing. If I had been able to put 13% of my earnings into my own investment account instead of Social Security, I’d be very close to retirement already. As it stands, I’m not.

    1. The problem is, if you got to keep that 13%, the government wouldn’t have been able to spend it, which is the whole point. SS isn’t primarily about providing for old and disabled people, it’s about putting more control and money into the hands of the fed gov.

      1. Restated: It is tough to buy votes if you can’t steal the money to do it with…

      2. If you got to keep the 13%, there would be no money to pay current beneficiaries.

        Which would make the deficit even bigger.

  6. The difficulty is that current payments into social security are used to pay for current benefits. There is no trust fund to speak of. There is a stack of treasury bonds that the treasury will have to raise money to pay back, that is all.

    So if you take money going into the SS system and put it into private accounts, you will dramatically raise the amount of borrowing the government has to do to cover current retirees benefits.

    Basically, we’re fucked.

    1. There is no trust fund to speak of.
      And there never will be. If the money exists, pols will *always* find some way to spend it.

      1. Right. It’s just a huge misconception that government are able to take the “long view”. Their view extends to the next election cycle, and that is all. They’re no less tempted to spend a big pile of savings than a middle-class worker who wants a bigger house or a nicer car. They’re tempted to spend it on teachers or more cops or road-building projects, or fuck all.
        Any money spent NOW enhances their election chances. Especially with morons believing that UI benefits stimulate the economy running around.

          1. Quenches Fierce Thirst?

        1. Kinda makes me wonder how different our SS system would look were term limits put in place sometime around 30 years ago.

    2. Just so, Hazel.

      I don’t think there’s any getting around the fact that sooner or later, a or two generation is going to get fucked: its going to have pay taxes into Social Security, and pay for its own retirement. In fact those generations are paying SocSec taxes right now.

      That’s been the case since day one, really.

      1. That is already starting.
        The people within 20-30 years of retirement are going to start getting fucked right now.

        That is because right now is the point when the social security system starts sucking up more money than it is bringing in. Which means the government can no longer use SS income as a source of ready cash. Instead, they have to raise taxes (or cut spending) to pay for current retiree’s benefits. Which means that current workers are going to be paying for current retirees benefits AND paying down the national debt AND not adding any new money to any imaginary “trust fund”. Effectively, their cash is going to pay back promises to current retirees, and will NOT be in any way contributing towards their own.

  7. There were as many live births in the US last year as there were at the peak of the baby boom. In 18 years, the kids born last year will be entering the workforce. So isn’t the solvency problem just temporary?

    1. So isn’t the solvency problem just temporary?

      And you’re willing to bet the next generation’s money on it? (BTW, the total population was a bit smaller back then.)

    2. Pip|8.19.10 @ 12:25PM|#
      “There were as many live births in the US last year as there were at the peak of the baby boom. In 18 years, the kids born last year will be entering the workforce. So isn’t the solvency problem just temporary?”

      Sure, so long as we get ‘other people’ to pay for it. No problem.

    3. So isn’t the solvency problem just temporary?

      Nope. The growth in the number of people who will draw SocSec continues to outpace the growth in the number of people who will pay SocSec taxes.

    4. Pip:

      SS currently brings in and spends about 4.8% of GDP. The spending will gradually rise with the retirement of the boomers, peaking at around 6% of GDP near 2040. Then it will stabilize or slightly decline. The “trust fund” full of treasury bonds that the SS system owns can cover any shortfalls until about 2037, at which time we either have to raise taxes to cover the shortfall, or cut benefits, or some combination.

      1. treasury bonds are debt, they ‘cover’ nothing.

      2. If 1.4% = 142b that means 4.8% = 600b (roughly). That is a ridiculous amount of money every year.

  8. Let’s all go to the lobby…

    1. “Swing your partner, doe-see-doe,
      Fuck her up the butt, then let her go.”

      1. Don’t be shy let the whole crowd watch.
        Bury your face in your partner’s crotch.

        (why is my brain cluttered with shit like that?)

    2. “To smoke ourselves some crack!”

  9. Social Security’s solvency problem stems from its being a defined-benefit plan, rather than a defined-contribution plan.

    This article completely and utterly misses the point.

    1. It would be great if we could get that into a Constitutional amendment of some kind.

    2. Excellent point – defined benefit plans have proven to be completely unworkable in a number of places. Auto workers in the US, public employee pensions…

  10. “No can say the future will be like the past”

    Was Stossel speaking Hawaiian pidgin here?

    No can predik da fyootchah brah! Try wait eh!

    1. But enough about that. Pastor Cody will now begin his sermon.
      Are you paying attention choir??

  11. I certainly agree that Obama is a demagogue and an economic ignoramous. However, people have a good reason to fear the “privatization” schemes which are typically touted by conservatives (and, unfortuantely, by many libertarians).

    Republican-style “privatization” typically means privatizing profits and socializing risk. Republican-style “privatization” means Blackwater, Halliburton, KBR, etc.

    Bush’s Social Security “privatization” plan was really little more than a plan to socialize the stock market. Using the coercive power of the government to force people to invest in the stock market is not much of an improvement over using the coercive power of the government to force people to put their money in a government Ponzi scheme. It may provide a higher rate of return, but it certainly does nothing to increase human freedom.

    I wish libertarians would stop falling for the pseudo-free market rhetoric used by conservatives when they tout their corporatist/fascist economic policies.

    1. That strawman is reeling! Punch it hard for a KO!

    2. Using the coercive power of the government to force people to invest in the stock market

      I don’t recall any privatization plan that prohibited investment in bonds, money market funds, or other non-equity investments.

      1. Your point is well taken, but I don’t think that really addresses the substance of what I said. The problem is government coercion. People should be able to do whatever they want with their money. They should be able to invest it in stocks and bonds, hide it under their mattresses, or spend it all on booze.

        I am sure that forced investment in stocks, bonds, money market funds, etc. would provide most people with a higher rate of return. But that does not matter. Under such a scheme, the government is still placing restrictions on what people can do with their money.

        I don’t think libertarians are well served by latching on to Republican-style corporatist policies. It only furthers the absurd notion that libertarians are just Republicans who want to smoke pot.

        1. People should be able to do whatever they want with their money.

          Full stop.

        2. Cody, it comes down to whether you think there is any possibility, at all, that we will simply close down SocSec, lock stock and barrel, and not provide any government support, at all, to anyone, after they retire.

          Because that’s what letting people do whatever they want with their money really means.

          If you think that’s unlikely, then you need to think about some kind of program that works better than SocSec to get people enough to live on in retirement. I think a forced savings plan is probably the way to go. I haven’t heard any better ideas.

          1. Don’t get a social security number. It’s worked for us.

            1. What are you doing online???

              1. He’s using a horse-powered computer, moron.

        3. Agreed, but baby steps.

          Perhaps the biggest problem with libertarians is our inability to take what we can now, and continue to work on it. To see changing our political landscape as a writing project that will use multiple drafts rather than a project that must change everything at once from not libertarian to by-the-book libertarianism.

          If one can’t agree that the Bush plan is a much better platform from which to lauch a more libertarian form of retirement savings, and that it itself is a far more libertarian form of retirement savings then we, as libertarians are fucked.

        4. Politics is the art of the possible. It’s maybe, just maybe, possible to replace SS with something more libertarian in nature without total collapse of the system first, and everything that entails. Fighting that is just stupid.

      2. Using the coercive power of the government to force people to invest in the stock market buy health insurance.

    3. How bout it’s nobody’s damn business what I do with my money? Is that libertarian enough?

    4. I wish libertarians would stop falling for the pseudo-free market rhetoric used by conservatives when they tout their corporatist/fascist economic policies.

      It’s not corporatism unless businesses are run by a committee made up of labor, capital, and customers, industries are organized into groups called corporations that are governed by representatives from labor, capital, and customers of that industry, and the government is made up of representatives of labor, capital, and customers from those corporations.

  12. The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.

    You shouldn’t talk that way about poor little Timmay Geithner.

  13. “Only younger workers would have diverted some of their money from government to capital markets. They would have had time to recover (unless government continued to screw up and cripple the private sector).”

    Well, yes, but that’s the issue. The government is continuing to cripple the private sector, and other nations are pulling ahead, perhaps irreversibly.

    We’ve got to have controls so that an administration cannot get in and adopt policies that cripple the private sector. How do we do this? Media, themselves private sector players who benefit from every election, much like a broker benefits from your fees whether or not you lose money (or a lawyer), seem to ally themselves with “exciting” candidates who don’t believe in our way of life, especially the conditions necessary to grow the private sector.

    No amount of moving bureaucratic accounts around, privatizing accounts or what not can address this fundamental problem, which is no longer hypothetical.

  14. “(N)o one would want to place bets with Social Security on Wall Street.”

    But should we place bets on Obama? Obviously not.

  15. I am not going to endorse privatization as a panacea. Obviously, some people are going to be lousy money managers and will lose their money.

    TBS, it is impossible to endorse SS and some sort of reform is absolutely necessary. Obama’s comments are nothing but a disingenuous diverstion from that fact.

    1. I see it this way: We can allow people to keep more money to save, invest, or spend as they like, or we can given the government money to do something other than save or invest it. Or spend it on the person who the government took the money from in the first place.

      1. Give the government–sorry.

      2. Agree completely, PL.

        But “social security” is purposely designed on the premise that people are irresponsible (and should be encouraged to be so).

        But, what is worse, SS was based on numerous fallacies, including the notion that life expectancy would not increase and that the ratio of beneficiaries to workers would remain constant.

        Worse still is the fact that SS revenues have been counted as part of general revenues and the ‘trust fund’ is purely notional. If it had been set up on the basis of a true investment fund, with a mix of long and short term investments, then it would not be in crisis now. (This would have required ‘funding up’ over the time it took to reach actuarial equilibrium, however.)

        1. Well, okay then!

          I think a plan to allow people to opt out–from paying and collecting–would make some sense. The reality is, the payments come out of the general revenues, anyway, so why not just accept that fact?

          1. The Bush plan had the opt out too. Nobody was going to be forced into privatization. In fact, it was the other way around – people would be able to opt out of the current system, which would be especially appealing to younger people, who are increasingly skeptical that SS will still be viable when they retire anyway.

          2. The only problem with this is that the people over 50 have no incentive to opt out, and people under 30 have no incentive to opt-in. Oops. You have lots of people receiving payments and nobody to pay for it.

            I guess you are suggesting a one-time suck it up moment where general revenues fund everyone who didn’t opt out for a while. Then when the percentage of opt-out is big enough, you just drop opt-in as an option altogether. Kinda like what happened here. Same thing except in their case they didn’t have to pick up the tab for those who didn’t opt out.

            1. Pull the fucking bandaid off. Like we should’ve done with the housing market collapse. And the partial collapse of the automaker industry. And government pensions. And so on.

            2. The proposed plan featured a partial opt out, which would require you to continue to pay in to the system to cover the costs of taking care of current retirees, but at a reduced rate. The difference would be yours to invest. Ideally, the share to be used to invest would increase as fewer people would opt to be part of the government program. Of course, I doubt that would ever take place, but even a small share I could invest would give me much better returns than what I get with Social Security.

        2. They want you to sell them candy and while telling them its healthy gruel that will also “save the planet.”

          Yes. Becuase unlike the American people, the US government is a paragon of fiscal responsibility!

          1. Oops, I MEANT to quote ““social security” is purposely designed on the premise that people are irresponsible

    2. Actually, Aresen, MOST people are lousy money managers. Typical small investors have barely matched inflation the last twenty years, despite 8% “market” returns.

      http://www.slaughter401k.com/w…..he-market/

      The idea that average Joe’s who can barely compute compound interest are going to hold their own against hyper-trading Wall-Street insiders is patently absurd.

      1. Nevermind the fact that it wasn’t the original intention that every single last person in America should retire at the age of 65. There are plenty of 65+ people that can still work and contribute their productivity.

    3. Actually, Aresen, MOST people are lousy money managers. Typical small investors have barely matched inflation the last twenty years, despite 8% “market” returns.

      http://www.slaughter401k.com/w…..he-market/

      The idea that average Joe’s who can barely compute compound interest are going to hold their own against hyper-trading Wall-Street insiders is patently absurd.

  16. I don’t think libertarians are well served by latching on to Republican-style corporatist policies.

    It’s what we do.

    1. I don’t think libertarians are well served by latching on to Republican-style corporatist policies.

      Why not?

      Obama seemed to think it was such good idea. He bailed out wall street, GM and handed over the health care system to the insurance industry.

  17. “Why the transfer of decisions from those with personal experience and a stake in the outcome to those with neither can be expected to lead to better decisions is a question seldom asked, much less answered.”

    –Thomas Sowell

    1. You can always count on Sowell to cut the gordian knot of statist bullshit.

    2. Funny, I was pondering this exact conundrum as I listened to the Coast Guard official announce his intention to give further study to the issue before approving the completion of the relief well for the leaking well in the Gulf of Mexico. He assured us that he would take all options into account before deciding the appropriate course of action, and that no action would be taken without his approval. It gave me a real comfort level that we have the right people in charge.

  18. “The idea that someone who can’t even compute compound interest is somehow supposed to hold their own against Wall Street insiders is just laughably silly.”

    Quick poll: How many people here think your typical senator or congressman can compute compound interest? On paper? In their head? While doing their aide?

    1. Roughly 99.8% per cent of people are able to compute compound interest if they really need to. The remaining 0.2% are oligophrens.

      However, many people hate doing that, mostly because they don’t want to risk eventual mistake. That’s the way government intervention is sold – “you won’t have to compute and take risks”.

      1. Congress does not make up 0.2% of the population.

      2. Lol….you have never taught a math class, have you Predicator? I have, and trust me, the majority of college students can’t compute compound interest without help, let alone people on the street.

        1. What does computing compound interest or relative returns got to do with the fact that I should be free to spend the money I earned?
          Talked about the MacGuffin.
          Chad, you’ve got your head so far up the state’s proverbial @ss that you don’t even get the point, despite posting, what, a hundred comments to this piece?
          You are the kind of guy the Hitlers and Stalins of the world love. Nothing shakes you faith in the powers that be.

  19. We’d be better off if individuals planned their own retirement, and the government provided welfare for the most needy old people, instead of transferring wealth from the young to the old via a Ponzi scheme.

    1. It’s not a Ponzi scheme if the president does it.

  20. I don’t know about you guys, but my beanie baby collection is gonna get me through my golden years.

    1. You’re planning to eat the beans, right?

      1. they’re made of polyethelene, no dice

  21. Let’s all go to the local Socialist Security office and ask to be let out of their system. Give back our socialist security numbers. Let them keep what they’ve defrauded us out of, and let us handle our own retirements. Then we’ll find out how really free we are.

    1. Kinda funny, it seems perfectly reasonable to me. It’s in how Social Security is described as a “benefit” when it’s really just a tax. It seems like I should be able to decline a benefit. Since I cannot, it probably isn’t a benefit after all.

      1. You can decline the benefit part, just not the tax part. It works just like the other benefits – farm subsidies, welfare, unemployment insurance, medicare… you can decline to receive benefits, but you can’t decline to pay for them.

        1. The tax part can be declined, just by not getting a Social Security Number in the first place. And how in the hell are we bound by a contract that most of us signed before we turned 18? But once in, there’s no way out. Kinda like the Mafia.

    2. You can only do this as an employee of certain local governments. Unfortunately you only end up retiring on 150% to 350% of the amount you would receive under social security, so it isn’t that attractive an option (see attached graphs for details). Instead you should be a public employee in California and get one of those huge defined benefit packages that let you retire at 50 on 95% of your last year’s wages (with COLA and healthcare).

  22. I don’t know why Obama is balking at this idea.

    I’m sure that the government could find a way to control where the money is invested and use that power to reward political favorites.

    Anything can be abused if you’re clever enough.

  23. It’s always 4:20!|8.19.10 @ 1:18PM|#
    “Anything can be abused if you’re *clever enough*.”
    Might be a problem right there.

    1. I can’t think of many problems in this world that could not be blamed on clever lawyers.

  24. Here is a modest proposal. Let’s cut the crap, and recognize that Social Security has always been a pay-as-you-go system with Congress stealing the excess contributions to fund other spending. From now on, just have the chief actary for SS set a benefit level to match what the tax brought in last year less administatrive expenses. If they want to raise benefts, Congress will have to raise the tax. There would be no unfunded liabilities because the funding is from the prior year’s tax receipts. Savings will be encouraged because everyone will understand that the SS benefit level is not a defined benefit.
    We can then cancel all of the debt in the so-called trust fund (except for an amount equal to last years SS receipts to fund this year’s benefits). Obama can even take credit for reducing the National Debt.

    Once we are open about SS being nothing more than generational theft, privatization might become politically feasible–of course I am dreaming here, but isn’t that and ridiculing Chad what the blogsphere is all about.

    1. This means that taxes will have to go up every time there is an increase in the ratio of retirees to workers. Or else benefits will have to shrink if you happen to be in a big generation.

      Which means that some generations get fucked and others have it easy. Fundamentally unfair.

      1. And it’s a big jump. If the change is from 17-1 to 3-1, that means the retirees in the 3-1 generation will either be receibing 1/5th of the benfit, or workers will be paying 5x as much to pay the benefits.

        One way or another, someone gets screwed over. With population curves leveling out, this generally means that younger people get increasingly fucked over.

        1. We’re al going to get fucked over with the current system anyways.

          1. Yay for institutionalized generational ass-fuckings.

      2. Except after the passage of the boomers, Hazel, the ratio of workers to retirees won’t be changing very much. It’s a non-issue.

        1. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

  25. I want to run an add featuring my mother-in-law. She’s a nurse who paid her entire working life. Unfortunately, she died at age 55. Social Security paid no benefit. Her 401k, however, while down, was enough for a house downpayment for one daughter and graduate school and a nest egg for the other.

  26. when moses came down from the mountain, eyes fervently aglow, stone carver’s dust on his thick hairy forearms and broad chest …..

    he beheld the golden calf yahoos yahooing ….

    and he said to himself “oy”. (hint: he wasn’t a libertoonian.)

    western civilization hasn’t changed much since.

    1. I thought Moses said “The lord gives you these 15…” {crash} “10, count-’em, 10 commandments..”

      Or am I not getting my biblical history from the right sources?

      1. Of the ones that he missed recopying from the broken tablets, the only one that is known is “Thou shalt not get caught.”

      2. Nah, it was “Guys, I got the list down to ten. Unfortunately, adultery and coveting your neighbor’s wife are still on there.”

  27. “No can say the future will be like the past, but we know what the future of the government’s scheme holds: postponed retirement and/or reduced benefits and/or crushing taxes and (most likely, I think) a near-worthless dollar because politicians will print money to “keep” their deceitful pension promises.”

    What it will also bring is implementation of means testing that turns SS into a full blown welfare program.

    People who have managed to be succesfull in their lives will be punished by having their benefits eliminated despite having paid into the system their whole lives.

  28. Social Security is popular but unsustainable. Its commitments over the next 75 years exceed its expected revenue by $5.3 trillion. Politicians know this, but pander anyway

    What a misleading summary of SS’s finances. SS is indefinitely sustainable at a moderately lower benefit payout or under moderately higher taxes. Whichever portion of benefit cuts or tax increases we choose, the system can be sustained at those levels indefinitely.

    Remember, in the end, SS simply transfers a portion of current workers earnings to current retirees. There is no reason you can’t do this forever.

    1. And by the way, John, the implication that workers would have to give up “half their earnings” to cover SS is so far from the truth, it clearly wins a Pants-On-Fire Award. You should be ashamed of yourself.

      SS currently withdraws about 4.8% of GDP, similar to what it sends out. Expenditures will peak around 2040 at 6% of GDP and then actually slightly decline. The last time I checked, 6%

    2. What a misleading summary of SS’s finances.

      How is this misleading?

      If a business had a model that spent more then it took in it would be unsustainable. That business would have to change or die.

      Social Security has to change. It is, as it functions today under the law in which it is enforced and executed, unsustainable.

      How is that in anyway misleading?

      Using your own argument i could say that the claim that “Logging at 1910 levels is unsustainable” is misleading because we can slow down how much is cut.

      It is even more idiotic because strossel did write (and if fact you quoted him “Politicians know this, but pander anyway” this is exactly what his claim that it was unsustainable was targeted at.

      politicians have refused to address the problem that if social security is not changed it will bankrupt the whole fucking county. In another word UNSUSTAINABLE!

      CHAD YOU ARE A FUCKING IDIOT!

      1. In Chad’s world, up is down, left is right, government jobs aren’t a drain on the private sector, and social security makes economic sense.

      2. Social Security has to change. It is, as it functions today under the law in which it is enforced and executed, unsustainable

        You are right. We can do one of two things to make SS solvent indefinitely: modest tax increases, or modest benefit cuts. No big deal.

        Anyone who actually understands SS’s finances knows this.

        Now Medicare….THAT is a much tougher problem.

        1. “modest tax increases, or modest benefit cuts. No big deal.”

          You know, this sort of “fix” for SS has been tried before, repeatedly. It has yet to make it solvent indefinitely.

          So lets say they do raise it a percent or two next year. Well, just like almost every year for the past 45 years or so, every single dollar collected in excess of official SS benefit payments will be earmarked for new spending intended to buy more votes(You wouldn’t actually believe they’d use it for deficit reduction do you…if you actually believe that you are truly naive)

          And then in five, ten, or fifteen years when official SS benefit payments once again equal the official collection total, someone much like yourself will be talking about how yet another round of “modest” tax increases will make it solvent indefinitely.

          Rinse and repeat.

        2. A large tax increase of 2% of GDP, an amount equal to nearly half of defense spending, is politically untenable. The best reform for social security is to return it to its original intent of providing a moderate retirement for seniors who could not afford one otherwise.

          Also, most people are not the astute investors you desire because practical education in personal finance is almost nonexistent. A high school administrator friend of mine always criticizes the decision by the school district to cut the personal finance classes. Not to deride learning about 15th century humanities that is oh so important in the 21st century, but perhaps we can strike a balance in preparing kids for life in modern times.

        3. Chad, let me ask a simple question that requires no links to other’s material and opinions…what right does the government have to forcibly take your money and “hold” it for you, to be doled out to you when it sees fit????

  29. http://www.dollarsandsense.org…..iller.html

    Lifting the Cap is a far more sensible alternative then risking your retirement on the stock market. Consider for a momment most people who would be affected would have no idea what they were doing let alone have the capacity to wisely invest thier money and the effects it would have on the government if you had no money and were to enfeebled to work.

  30. Money Rocks!

    I just finished watching Vice’s Guide to Liberia…so tonight my nom de liveblog will be General Butt Naked.

  31. See^

  32. Btw, just for fun, I calculated my personal rate of return on Social Security. Remember, I make a pretty good salary and will probably catch up to the cap within the next decade, so I am pretty close to the “worst case” scenario. SS is designed to provide much higher returns to people with low incomes. All numbers were adjusted for inflation.

    Using my past income data, along with plausible income increases that I expect to make, and using the official SS benefit calculator and the annuity calculator at tsp.gov, I find that my SS benefit will be about $2400/month, and that to purchase such an annunity (with spousal benefit) would cost $667000 at age 67. If my entire OASI tax portion (10.6%) were to be invested instead, I would have to earn 2% real interest rate (above inflation). If SS were cut 25% in order to balance it in 2037, I would then be getting a 0% real return.

    That’s it, folks. The worst case, for a high earner, is that I get my money back adjusted for inflation. Cry me a bleeping river. In more plausible cases, I get a return similar to bonds. I can easily factor this into my investing strategy, and be more aggressive with my privately invested money.

    1. Die tomorrow and you don’t get shit, Chad. There’s your worse case scenario.

    2. You are forgetting something.

      If the 12.4% tax was taken out of the picture people could invest more, save more, and give more.

      1. It is not 12.4%, but 10.6% You are mistakenly including the disability insurance.

        And as I noted above, normal investors are getting ZERO PERCENT real return on their 401k’s, which is a wash with my worst-case SS scenario. Most people do much better with SS.

        1. I can bequeath my 401(k). Can I do that with my projected SS benefits?

    3. Why should you get anything back other than what you put in, adjusted for inflation?
      Make the promise to those who’ve paid, with the possibility of a one-time payout if requested, then shut ‘er down.
      Give me back my money.
      It’s about freedom, not rates of return.

  33. And Now..The Men Who Sweep Up Shards of Conventional Wisdom Ans Arrange Them Into Pornographic Mosaics.
    Fist and LLLLLLLLLLLLLLLLL!

    1. YOU KNOW, NOTHING PREV-

      Oops, caps lock… You know, nothing prevents you from jumping in here. Well, not here, but a new one.

      1. Things prevent usually. I shall overcome!

  34. Shit, we already did this one.

    1. WHO ARE YOU? WHAT HAVE YOU DONE WITH CAPITOL L?

      1. I ate his internal organs for the power they posses…and I was hungry.

  35. Is this a repeat? It smells like a repeat.

    A very sexy repeat.

  36. Looks like my nom de liveblog turned out to be quite fitting.

  37. This dude got sooo screwed for screwing.

  38. Wow, just thought that anyone reading this will be mightily confused…fuck ’em if they can’t take a joke.

    1. What’s a pederast Walter?

  39. And Now The Man Who Goes On Vacation And Publishes Articles To Mislead Fans Into Believing There Will Be A New Episode Tonight….

    JOHN RERUUUUNNNN!!!

  40. Oooh a sex crimes prosecutor…castration! double CASTRATION!!!

  41. The purpose of the laws is to treat every case the same under our iron fisted zero tolerance to, um, uhhh protect the chilluns.

  42. Oh, it’s Wendy. You sexy, sexy idiot.

  43. Can I vote for you to be impeached?

    1. Standard statist response, we have heard it around here enough to spot it…”Hey, if you don’t like the oppressive, stifling, anti-human laws just vote in a different guy”, if only.

  44. Age of consent—>18

    She actually said that her father should of been prosecuted…

    Dude, don’t kill her, please don’t add to your troubles.

    Please don’t hang around “used to rely on her looks hag that now is a meddling busybody”

  45. In case you’re wondering, if you’re being maliciously prosecuted, simply vote the guy who’s doing that to you out of office. Simple as that. Duh.

    1. Mandela: “Fuck! That’s all you gotta do?!?!”

  46. BALKO!

    Do it.

  47. I propose that Balko be give the name “Dome of Freedom”.

    Because with collectivization comes the end of the recognition of the individual.

    1. They can take our lives but they can’t take our FREEDOME!!!

  48. Balko lives in the remote woods. I just know it.

  49. Horrible thing happens…We need a fucking law. And yet shit still happens.

    1. I know. Somebody should pass a law to make laws effective.

  50. What!?

  51. This just in: The Pens are up by two, but Bing is out.

    In other news, listening to Pierre McGuire is worse than listening to Wendy.

    1. Can’t remember, but does Pierre work in some adulation for Mike Richards in there somewhere.

      1. The only thing good about NBC’s coverage of NHL is Emrick (and Edzo is okay when he’s not all pissy about the Pens). Everything else is atrocious. And they shut down the big screen at Mellon! Total douches.

  52. Wooo! PA age of consent 16…just sayin, I’m not sayin.

  53. Apparently Ricky didn’t have an attorney.

    1. It’s unfair because in order for Ricky to have a jury of peers, he would need twelve people who look like they definitely kill people all the time.

  54. Oh, please. Ronald McDonald is the biggest pedo ever.

    1. Romand McPolanskdald?

  55. Ricky should of told the McDonald’s manager that he misheard and was actually a registered fryer operator, he’d be on the fast track to asst mgr…and all the underage poontang he could stand.

  56. ^Totally wrote the same thing the first time this show aired.

  57. I am going to send my customized capitol l gold chain to Steve Wilkos to get some caaaaash!

  58. Yeah, but there was that one show where desi dped lucy with himself and that garden gnome.

    Fucking awesome!

    1. I shouldn’t admit this but it’s been years since I’ve been dped by a gnome.

  59. Oh, what the fuck happens to attractive women when they get older…Jeezus Herald Fucking Handjob!

    I’m the public, and I want to see some sick shit.

  60. I forget, does John get Wendy and Penny to make out at the end of the show?

  61. F.C.C needs to step in. She keeps making “his was this big” hand gestures.

  62. I am a public of one and demand cannibalism porn, on network tv, and during prime time’

    General Butt Naked has thusly spoken.

  63. Titties!

  64. ^ see what I did there, anyone who reads that will be irrevocably harmed and destined to sadistic pedophelia.

    1. How did I wind up at Chucky Cheese’s feelin up none-tagenerians? Ban Titties!!!!

  65. NBC wouldn’t show the Godaddy spot because the higher ratings you get from showing titties isn’t enough to offset the low ratings you get by showing anything that resembles the United States Congress.

  66. Gearshift. Awesome.

  67. Bitch the fucking constitution decides that you have no fucking authority to tell me what I can watch/air/produce/ whatever.

    1. BItch: “but it’s OUR constitution, we can take out the offensive part to protect the innocence of our kids.”

      1. Seems like that was the whole of her argument. Nice sum up.

  68. People used to want to see you naked now nobody does so now you’re opposed to nudity.

  69. I think we all know that fewer teen pregnancies is due to low sperm counts in teen boys (which is obviously caused by violent video games).

    1. low sperm counts in teen boys (which is obviously caused by violent video games).

      And the pot.

  70. If it’s all for the children, why not just turn this country into a giant chucky cheese and sanitize any humanity or sexuality left in our burnt out shells

    Fuck these people make me mad

    Fuck you tipper, wendy, penny, and fuck the peter pan name you fucking rode in on you nazi(godwin, field of dreams) cows.

    You to, chad.

  71. MILKMAN!

  72. Freely want to consume breast milk

  73. Well you didn’t have to face Mz. Buchanan, that fucking shark would of gotten you 30 years, Stag.

    And yes, her heart is in it.

  74. I think Marty is getting a hummer below frame there.

  75. “Prurient Interests” would be a good porno name

  76. These fucking prosecutors are like Roberto Duran, sure they’ll give up now, but will be chasing the Big Case till they get hit by a car.

    1. No Mazda!

      1. He didn’t say that, it was

        “I don’t want to fight this clown, are you kidding me. Leonard is making a mockery out of the sacred sport of boxing”

        Which totally sounds like;

        No mas

  77. Teh Gays!

  78. I wish I had a good porn name.

    1. Fist’ll do.

  79. Do you guys get the same commercials I do?

    Magnetic wrist bands, and Steve Wilkos asking for GOLD!?

  80. I thought gays were good for unit cohesion. Teehee

  81. Dude that is so gay.

  82. Said it before, will say it again:

    can’t handle being around a gay dude=not ready for combat

  83. What is it with Arabic translators, and being gay?

    I know an arabic translator that works with the “government”…super masculine, but I wonder.

  84. I think MAF is going to post a shu-

    Dammit.

  85. You don’t have to be straight, you just have to be able to shoot straight.

    Barry Goldwater

    1. That was that pretty little wife of his, later on, that put all of those liberal ideas in his head.

  86. General Combover totally gets F’d in the A by Major Gay. Sweet.

    1. That is what I thought the first go ’round…Go gay dude, pwn this biatch.

      1. He’s the drill sgt from Brain Candy.

        1. You go over there and fuck those guy in ass, private! We’ll stay back and watch

          YESSSIRRR!

          1. You got that?!? Respect grows!!!!

  87. THE GOAT CHEESE RAID HAS NOTHING TO DO WITH SEX, JOHN.

    Total non sequitur.

    1. Although I suppose the guns are a tad phallic.

  88. ‘Stache should fill the remaining time with very gratuitous sex scenes.

  89. I always said that cops were goat fuckers.

  90. Shoot them! They’re endangering themselves!!!

    1. Teh Children!

      Or something…um yeah.

  91. Nothing in the constitution about sex…John you didn’t get all the way to the end did you? Shit gets nasty.

  92. Not when I do it in the public square.

      1. (If I didn’t make that joke last time, I would be surprised.)

  93. I can think of another Hayek that would be more appropriate for a sex-themed episode.

    1. Yeah, yeah. Selma. We remember.

  94. Okay kiddies, for all of you that tuned in I hope you remebered your 3-D glasses for this very special live blog.

    The html colors will spell out a secret message, write it down and mail it in to WIN A PRIZE!

    Oh wait, we can’t use html colors…well then go to bed you little masochistic sex crazed freaks.

  95. ONE MINUTE REMAINING IN THE PERIOD! ONE MINUTE!

  96. Wings lose. New Futurama. Third live blogger.

    Seacrest out.

  97. Generation X is so screwed when it comes to Social Security. Obama just continues to lie to our face. http://www.ilovegenerationx.com

  98. Privatization doesn’t solve the demographics problem.

    It raises the retirement age as surely as SS will have to – they have to find workers to sell their stocks to, so there have to be enough workers, which will only happen if there are more workers and fewer retirees selling stock, ie the retirement age goes up.

    SS itself has the advantage that it’s inflation indexed, which means you won’t outlive your income.

    You can save for an average lifetime, but not for an extreme one.

  99. Murray Rothbard wrote n 1974:

    “In this century, the human race faces, once again, the virulent reign of the State ? of the State now armed with the fruits of man’s creative powers, confiscated and perverted to its own aims. The last few centuries were times when men tried to place constitutional and other limits on the State, only to find that such limits, as with all other attempts, have failed. Of all the numerous forms that governments have taken over the centuries, of all the concepts and institutions that have been tried, none has succeeded in keeping the State in check. The problem of the State is evidently as far from solution as ever. Perhaps new paths of inquiry must be explored, if the successful, final solution of the State question is ever to be attained.”

    The non-violent path, methinks, must be more than of elections, because the bureaucracy is outside the legislature and the executive. WE must fight it with nullification, offshore transactions in an underground economy, and unfortunately, subversion of bureaucracies by bribery and corruption. This is the only non violent path.

  100. POTUS don’t do math.

  101. Hockey is awful and you know it. The fights are the only good parts.

  102. You can export whatever you used it in, but you must manufacture it in China.

  103. Currently i do not think future laws are what is causing the lion’s share of the uncertainty among employers.

  104. Hey taxpayers, Here’s a real life example showing the differences between big government/big healthcare corp -vs- private doctor owned surgery centers. At a doctor owned/controlled surgery center I can do 2x the surgery per time unit, at a lower cost and less risk than at a major hospital/corp. And Barry say doctors are evil?

  105. TO THE WEAK-KNEED REPUBLICANS AND DEMOCRAT—-Wake up america!!!! This goverment is the most corrupt we have had in years. The good old boy network is very much in charge.Mr. obama and pelosi are the puppet masters.How many of their good friends benefited by the agreement ” what a farce. All of the u.sSenators voted for this. I am ashamed to say I voted for the these corupted self serving politicians.With good reason they picked an out of towner to be president.All u.s departments need an overhaul. We need to rid ourselves of the puppet masters and the dept heads that bow down to obama and pelosi.I am sick of the lip service I have been getting from these dummies over violations, their friends are getting away with.in the goverment . Barack Hussein Obama , threatens friends and bows TO Mmslim.
    INPEACH OBAMA ,GOD OPEN YOUR EYES.///For us there are only two possiblities: either we remain american or we come under the thumb of the communist Mmslim Barack Hussein OBAMA. This latter must not occur.THE COMMANDER.REPOST THIS

  106. John Stossel’s perpetual regurgitation of the parasitical financial oligarchy’s hyper-mendacious party line is a sight nauseating to behold. I propose John Stossel for the Dr. Josef Goebbels Prize for Snobjectivity and Posterior Osculation.

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