Social Security

Government's Broken Promises

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Since I disagreed with Ezra Klein earlier today, and since I don't often get the opportunity to agree with him, I should note that I'm basically with him on one of the biggest problems with deferred compensation in the public sector: "Workers think their pension is a fact when it's really just a promise—and promises can be broken." That's especially true when you bring the vagaries, rivalries, and petty disputes that drive most of our country's politics into the equation.

I'd add, however, that the broken promises of politicians are also something more people should think about when it comes to another realm of domestic policy: entitlements, especially Social Security. As Cato's Michael Tanner pointed out last year, one of the problems with the current Social Security system is that "workers have no ownership of their benefits. This means that they are left totally dependent on the goodwill of 535 politicians to determine what they'll receive in retirement." In other words, when the government makes promises about what it will do in the future but subjects those promises to the political process, it's usually a good idea to be wary.

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  1. “Oww my balls!”

    1. That’s funny every time!

  2. I should note that I’m basically with him on one of the biggest problems with deferred compensation in the public sector: “Workers think their pension is a fact when it’s really just a promise ? and promises can be broken.”

    Especially when those promises are contingent to what the taxpayers are WILLING to pay, which means: Those promises could NOT be kept even if the government wanted to.

    1. if the government thought of taxpayers as “customers” rather than “servants”, it’d realize customers have to be happy with what their buying and not deemed worthy of generosity. I’m merely disgruntled at my taxes right now. Don’t push us too far or else you’ll find us downright rebellious and refusing the products you’re offering.

    2. “Workers think their pension is a fact when it’s really just a promise ? and promises can be broken.”

      Part of the problem is that these promises can be broken essentially with impunity. If congresscreatures were required to, say, have their estates docked in order to (partially) compensate for the luckless/incompetent/evil non-panning-out of their “promises”, perhaps fewer would be “made”.

    3. I’m am sure the gubermint will pay what it promised. You will get the nominal amount. In real terms you will get enough to eat fancy feast (WalMart fancy feast – I hope you didn’t think I was talking about the expensive fancy feast) for breakfast, lunch, and dinner…you will dine like a king…King of the cats! Meow!!!

  3. I’ve already written off all contributions to social security as essentially an income tax, returned to me only in the vaguest of notions that atleast I live in a stable nation. And public pensions, like private pensions before, were a good idea when everyone thought that the future could only get better, but I think the last 50 years has revealed that to be an utter farce. I’ll take my money now thank you very much.

    1. Fifty years ago, everyone thought that the future of capitalism was a bunch of permanently entrenched factory monopolies where the proletariat would labor at the same machine tools for their entire lives, producing the exact same products in perpetuity.

      If we actually lived in that world, pension plans might make sense.

      In hindsight, the whole idea of counting on any employers to survive 40 years until the time comes to pay you a pension is ludicrous.

    2. Actually, pensions made sense in the days when most people didn’t collect them – defined-benefit pensions have always been “get it or lose it”. The problem is the world _did_ get better, in the sense of increased life expectancy, so pensions no longer work actuarially. Also, increased competition means you’ll outlive pretty much every company you work for (and possibly the government too).

  4. “one of the biggest problems with deferred compensation in the public sector: “Workers think their pension is a fact when it’s really just a promise?and promises can be broken.”

    Benefit promises can be broken in the private sector as well so that problem isn’t exclusive to government employees.

    1. People’s poor planning is the main problem. There are alot of stupid people in the world that think they are immune to getting screwed over. Everyone needs a healthy dose of morning cynicism to accept that fact.

  5. the government makes promises about what it will do in the future but subjects those promises to the political process

    SNAFU

    1. No, FUBAR.

      I had a discussion recently with someone who is convinced that if the current Congress passes a law that says we’re going to do something forever, no future Congress can change it. I had to agree to disagree.

      1. When you see them next time, offer them a drink, then withhold it based on a Constitutional amendment.

  6. I thought my SS contributions were in a little tin box somewhere in Washington.

    1. Inconveniently, it has been covered forever by the melting icecaps.

      1. Safety Net?? LULZ
        Global Warming ?? LULZ

        I think I’m mature enough to post on Reason now.

    2. Actually, it’s in the warehouse next to the Lost Ark of the Covenant.

  7. I’d believe the promises of Slick Sam Switch’em the Used Car Salesman before I’d believe the promises of any politician.

  8. The mind of a Statist:

    Re: Tony,

    Ownership is not a concept that exists in the structure of nature. It has to be defined legally for it to mean anything but whatever is kept and held by force.

    Defined “legally”? And that’s not circular thinking because….?

    Therefore, if government (whose law defines ownership) taxes you, those taxes are taken legitimately and not by theft[.]

    Because, you see, the same government that defined what’s yours said it is not theft!

    Ha ha ha ha!!!!

    http://www.youtube.com/watch?v…..r_embedded

  9. One my reason pensions should be defined contribution and not defined benefit. Then there is no promise to be broken.

  10. I bet you both also agree that the earth is in fact round.

  11. OK, OK, we all agree that the United States is “broke,” right? And that receiving “entitlements” is akin to being a “parasite,” right? Stay with me here. OK, so, when it comes time this year for you to cash your income tax refund from your government that is “broke,” what are you going to do? Be a parasite? Or accept a refund of the cash that was stolen from you? (Just like Medicare and SS recipients accept a partial refund each year of the cash that was stolen from them over a lifetime.) I anticipate hilarious responses. I’m easily amused. Please don’t disappoint me. Thanks!

  12. “Workers think their pension is a fact when it’s really just a promise?and promises can be broken.”

    Take, for example, every time a politician votes for the interests of the public employee unions and against the interests of their constituents.

    Our government in California promised to represent the interests of its constituents–and instead gave the public employee unions $500 billion in unfunded pension liabilites.

    Why isn’t that an excellent example of government breaking its promises?

    Legitimacy is predicated on working in the best interests of the people–everything that goes against that isn’t a “promise”. It’s fraud.

  13. Part of the reason few politicians want to allow people to opt out of SocSec is because a bunch of people between my age and 40 (and some even older, I’m sure) would stop paying into it immediately.

    1. Pyramid schemes only work when its someone that’s not you left holding the bag

  14. Is this statement legally correct? Isn’t there a more of a contractual obligation for a defined benefit pension than for an entitlement program? Can states and localities simply cut pension benefits the way congress could cut social security?

    1. General Motors had a defined benefit pension plan. Contracts get voided when you go into bankruptcy court.

      1. Sure. But so far states can’t go bankrupt. I’m just asking about current law. My (seriously uneducated) understanding is that there are a lot more protections built in for pensions than entitlements, and I was asking if that is correct.

  15. on all public-retiree benefits. 20% over $40K, 30% over $80K, and 50% over 100K tax on ALL public-employee annual pension payments. No more COLA.

  16. This is one of the reasns why people on the left who think 401(k) plans are inferior to defined benefit pension plans are fucking retarded.

    You own your 401(k) money. You don’t own the pension fund.

    Of course, leftists are pretty retarded about the virtues of property rights, anyhow. They don’t realize that rights protect the weak. The powerful don’t need rights, they have power.

    1. “You own your 401(k) money.”

      There are some leftists who are agitatiting to change that too.

      They want to confiscate everybody’s 401 K money and turn it into a govt run pension plan.

  17. “They don’t realize that rights protect the weak. The powerful don’t need rights, they have power.”

    Rights are supposed to protect the minority in a democracy.

    …unless they get in the way of public union employees gorging themselves on our paychecks.

    In Wisconsin? Things are different. In Wisconsin, they won’t even let democracy get in the way of public employee unions feeding on our paychecks.

  18. “Workers think their pension is a fact when it’s really just a promise?and promises can be broken”

    Is it a fact, promise or a contract? Contracts are legally binding and it is reasonable to assume a legal contract will be fufilled.

  19. I’d like to see it made illegal for government to offer defined benefit pensions. If a private company wants to offer it and a worker wants to gamble on the continuing existence of the company, fine. But it should not be legal for a government official to commit future taxpayers to an open ended obligation. With defined contribution pensions, current taxpayers pay the full cost of current services.

  20. I realize this might take a constitutional amendment to do this on a national basis. If we end up telling California and New York to go piss up a rope when they go belly up, it may not be necessary.

  21. Again and again and again, the lesson is clear: a government powerful enough to give you everything you want, is powerful enough to take everything you’ve got. “I have altered our bargain. Pray I don’t alter it further”.

  22. Promises are made to be broken.

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