Ask the Dems

[Tigermike 3,427]

January 15, 2004

Ask Dems About Social Security

by Michael Tanner

Michael Tanner is director of the Cato Institute Project on social Security Choice.

The nine Democratic presidential contenders have been swarming all over Iowa for the past several weeks, and we can expect to see even more of them between now and the caucuses on January 19. At diners and county fairs and union halls they will be talking about their views on Iraq, jobs, tax cuts and terrorism. But on one issue of great importance to the people of Iowa -- Social Security -- they are likely to remain curiously quiet.

Social Security is not only the largest U.S. government program, accounting for 23 percent of federal spending, it is the largest government program in the world. The Social Security payroll tax is the largest tax paid by the average American working family. In fact, nearly 80 percent of us pay more in Social Security taxes than we do in federal income taxes. At the same time, millions of the elderly rely on Social Security for much, if not most, of their retirement income.

The 68-year-old program is also in crisis. In just 15 years, Social Security will begin to run a deficit, spending more on benefits than it takes in through taxes. The federal IOUs in the Social Security Trust Fund are an accounting measure, not real assets that can be used to fund the program. Unless the program is drastically changed, taxes will have to be raised or benefits cut. But taxes are already so high that younger workers are receiving low, below-market returns from Social Security. Cutting benefits would be a severe burden to millions of low- and middle-income elderly.

And what do the presidential candidates think should be done to fix this problem? George Bush has made his position clear: He would allow younger workers to invest a portion of their payroll taxes privately through individual accounts. White House sources have spent the last several weeks telling reporters that support for Social Security changes will be a central domestic plank in Bush's reelection bid. Whether you support his proposal or not, at least you know where he stands.

But, so far, whenever the Democrats are asked about their views, their responses have been equal parts pandering and evasion. All of them favor "saving" Social Security. Sometimes they are for "protecting" the program, and occasionally for "preserving" it. And all of them oppose "privatizing" the program -- even Joe Lieberman who dropped his support for individual accounts when he became Al Gore's running mate. With little effort, they can all work themselves into a fury of righteous indignation over the president's "secret plan" that would leave elderly Americans eating dog food.

But what do they actually favor?

Wesley Clark is "still working on" a proposal, along with the rest of his domestic agenda. In a recent debate, his comments on the issue were so vague that even the reporter asking the question pronounced himself "not satisfied" with the answer. Howard Dean used to favor raising the retirement age. Now he doesn't. John Kerry backs means-testing benefits, except that maybe he doesn't. Richard Gephardt wants to "get back to an economy where we have a surplus so we can fix the Social Security problem." Exactly how he would fix it remains unclear. And poor Joe Lieberman, having abandoned individual accounts, has been reduced to clichés. "The first thing to say about Social Security is we've got to keep it strong and not mess around with it," he said, not very helpfully, a short while ago.

Frankly, that isn't good enough. No one should be running for president if he can't stand up and tell the American people what he would honestly try to do about Social Security. This is not a complicated matter. In fact, the Democratic contenders can take a lesson from a party stalwart, former President Bill Clinton. It was Clinton who clicked off the three options for reform: raising taxes, cutting benefits, or getting a higher rate of return within the system through private investment. Since the current crop of Democrats all oppose private investment, they should tell us which taxes they will raise and which benefits they will cut. It's a fair and simple question.

But don't hold your breath waiting for an answer.

http://www.cato.org/dailys/01-15-04-2.html

[Tiger Al 0]

Social security was always something the Dems wanted to work on with the SURPLUS that is no longer there.

[DKW 86 7,727]

Social security was always something the Dems wanted to work on with the SURPLUS that is no longer there.

A surplus that Clinton said could not exist before 2003 under any circumstances.

SS is just a pathetic joke for anyone under 40-45 anyway. We will never a see a copper penny of thwe money we invested anyway. Under the best of conditions we could only expect about 2% return anyway. What a joke.

I will be looking for a new job with the Federal Govt soon, one reason, so I can quit wasting my money in SS. That's right kiddies, Fed govt employees dont have to waste 6.25% of their income on SS because they KNOW what a waste it is.

If we could eliminate SS taxes, everyone could get a 12.5% raise for the rest of their lives.

SS is going broke or is going to be relegated to gas money in the long run anyhow. It will soon be at the point where 3 workers will support one SS recepient. That is just un-acceptable. Someone will just tell us that SS will just not be paid out anymore. I say phase it out over 20-30 years and at least give us a chance to do something productive with the cash.

[Tiger Al 0]

Social security was always something the Dems wanted to work on with the SURPLUS that is no longer there.

A surplus that Clinton said could not exist before 2003 under any circumstances.

SS is just a pathetic joke for anyone under 40-45 anyway. We will never a see a copper penny of thwe money we invested anyway. Under the best of conditions we could only expect about 2% return anyway. What a joke.

I will be looking for a new job with the Federal Govt soon, one reason, so I can quit wasting my money in SS. That's right kiddies, Fed govt employees dont have to waste 6.25% of their income on SS because they KNOW what a waste it is.

If we could eliminate SS taxes, everyone could get a 12.5% raise for the rest of their lives.

SS is going broke or is going to be relegated to gas money in the long run anyhow. It will soon be at the point where 3 workers will support one SS recepient. That is just un-acceptable. Someone will just tell us that SS will just not be paid out anymore. I say phase it out over 20-30 years and at least give us a chance to do something productive with the cash.

Isn't that the kind of thinking that necessitated social security in the first place?

[DKW 86 7,727]

Social security was always something the Dems wanted to work on with the SURPLUS that is no longer there.

A surplus that Clinton said could not exist before 2003 under any circumstances.

SS is just a pathetic joke for anyone under 40-45 anyway. We will never a see a copper penny of thwe money we invested anyway. Under the best of conditions we could only expect about 2% return anyway. What a joke.

I will be looking for a new job with the Federal Govt soon, one reason, so I can quit wasting my money in SS. That's right kiddies, Fed govt employees dont have to waste 6.25% of their income on SS because they KNOW what a waste it is.

If we could eliminate SS taxes, everyone could get a 12.5% raise for the rest of their lives.

SS is going broke or is going to be relegated to gas money in the long run anyhow. It will soon be at the point where 3 workers will support one SS recepient. That is just un-acceptable. Someone will just tell us that SS will just not be paid out anymore. I say phase it out over 20-30 years and at least give us a chance to do something productive with the cash.

Isn't that the kind of thinking that necessitated social security in the first place?

Nope. FDR said it best: "Spend, Spend, Spend. Elect, Elect, Elect!"

[Tiger Al 0]

Nope. FDR said it best: "Spend, Spend, Spend. Elect, Elect, Elect!"

Brrrrr. You lose. Harry Hopkins has been attributed with saying "We shall tax and tax, and spend and spend, and elect and elect." Play again soon.

So, social security was nothing more than a tax and spend program that addressed no particular need?

[TitanTiger 20,708]

It addressed a particular need...it just did a crappy job of it.

[Tiger Al 0]

It addressed a particular need...it just did a crappy job of it.

Why?

[TitanTiger 20,708]

Um, two percent...TWO FRICKIN' PERCENT return on your money. Most money market accounts could double that return with no risk. Not to mention the 10% it could make on the stock market by the time a person would retire.

Unable to keep up with the aging population, so unless more tax dollars are committed to it, it won't be around for people my age. Like just about every other social program instituted by our government, the price tag inevitably ends up being astronomically higher than originally projected.

Doesn't even come close to really taking care of someone's needs in retirement. Show me a person who relies on SS income to make it and I'll show you someone who is most likely in poverty and getting assistance from either family or some other cadre of gov't social programs.

Yeah, SS is doing a bang up job.

[Tiger Al 0]

Um, two percent...TWO FRICKIN' PERCENT return on your money. Most money market accounts could double that return with no risk. Not to mention the 10% it could make on the stock market by the time a person would retire.

Unable to keep up with the aging population, so unless more tax dollars are committed to it, it won't be around for people my age. Like just about every other social program instituted by our government, the price tag inevitably ends up being astronomically higher than originally projected.

Doesn't even come close to really taking care of someone's needs in retirement. Show me a person who relies on SS income to make it and I'll show you someone who is most likely in poverty and getting assistance from either family or some other cadre of gov't social programs.

Yeah, SS is doing a bang up job.

Needs some change, for sure. But, it was never meant to fully subsidize anyone's retirement.

Investing all of your money in the stock market sounds good in theory but that has some sticky problems. What happens if the market turns sour? Somebody (or many bodies) will be withdrawing their money at any given time and if their X dollar portfolio suddenly drops when they begin to withdraw they won't have time for the market to recover before they've lost thousands or even hundreds of thousands. Secondly, the sad, sad fact is that many people already live paycheck to paycheck, some due to the fact that they don't make much to begin with and, yes, others who simply mismanage their money through their own fault, and the extra 10, 20, 50 or 100 dollars they would get in lieu of SSI deductions would never go towards retirement. Remember, you and I are very fortunate to have great paying jobs with fantastic benefits, so it's easy to assume that saving 15-20 percent of our paychecks is a given for everybody because even after that, we can still meet our basic needs and have plenty left over to buy season tickets for AU football or whatever we want. That's not the case for most folks. Another sad fact is that too many people have no idea how or what to invest their money and could/would end up throwing what little money they do have away because they are not as financially savvy as you and I, even in the world of mutual funds. Finally, it is welfare and there are a lot of people who draw social security benefits who probably didn't do much to earn the right to receive them. I don't mind helping them out because I feel it's the right thing to do. I know I should feel like they should be cut off and forced to fend for themselves since that is what they sowed in life, but I just can't seem to get the saying, "But for the grace of God, there go I," out of my head and heart. Maybe that's why I'm called a bleeding heart liberal, and, if so, then I'm guilty as charged.

[TitanTiger 20,708]

Needs some change, for sure. But, it was never meant to fully subsidize anyone's retirement.

Investing all of your money in the stock market sounds good in theory but that has some sticky problems. What happens if the market turns sour? Somebody (or many bodies) will be withdrawing their money at any given time and if their X dollar portfolio suddenly drops when they begin to withdraw they won't have time for the market to recover before they've lost thousands or even hundreds of thousands.

Even if they simply put their money in the lowest risk categories, where it is virtually impossible to lose money, they would still make more than SS would for them.

Secondly, the sad, sad fact is that many people already live paycheck to paycheck, some due to the fact that they don't make much to begin with and, yes, others who simply mismanage their money through their own fault, and the extra 10, 20, 50 or 100 dollars they would get in lieu of SSI deductions would never go towards retirement.

Actually, I'm not advocating that they just get the money back to go spend on lottery tickets. But would some kind of private retirement account where they could go invest the money be too much to ask?

Remember, you and I are very fortunate to have great paying jobs with fantastic benefits, so it's easy to assume that saving 15-20 percent of our paychecks is a given for everybody because even after that, we can still meet our basic needs and have plenty left over to buy season tickets for AU football or whatever we want. That's not the case for most folks.

Well, Al, I'm not THAT well off. I won't be buying season tickets anytime soon. I just try to make it to 2-3 games a year, with free tickets whenever possible.

Another sad fact is that too many people have no idea how or what to invest their money and could/would end up throwing what little money they do have away because they are not as financially savvy as you and I, even in the world of mutual funds.

Do we really need the government being the financial nanny for everyone because some are not smart enough to invest wisely? They could even dumb it down. Have two categories of investment. One could be labeled for those who don't know what they're doing when it come to investing. They would automatically be put in safe, very low risk investments, which would still make double what they would in regular SS. Others could opt for an "advanced users" designation where they could choose a broad mix of mutual funds across all risk categories and make 8-12% on their money and have an actual retirement.

Finally, it is welfare and there are a lot of people who draw social security benefits who probably didn't do much to earn the right to receive them. I don't mind helping them out because I feel it's the right thing to do. I know I should feel like they should be cut off and forced to fend for themselves since that is what they sowed in life, but I just can't seem to get the saying, "But for the grace of God, there go I," out of my head and heart. Maybe that's why I'm called a bleeding heart liberal, and, if so, then I'm guilty as charged.

Well, I'd rather have something in place that requires SOME sort of work or service for the money, for all welfare programs. No able bodied/minded person should be able to just occupy space and receive money from other people's hard work. You can help people in a tough situation without perpetuating the cycle of dependency.