Friday, February 04, 2005

Social Security and Proctology

I’m glad there are Social Security experts, and I’m glad there are proctologists. We need people to do those kinds of things. I’m just glad I’m not one of them.

It seems that Social Security experts, unlike proctologists, aren’t all examining the same dark abyss. That gives me anxiety, when I hear the President advocating a meat-cleaver approach to fixing the problems of Social Security, whatever they are. I’ve tried to read up on it, but after I’ve read one fairly convincing argument, I find another equally convincing argument that goes in the opposite direction.

Near as I can figure, Social Security has a solvency problem. There’s not enough money coming in, or there’s too much going out, or both. Depends on who’s talking. And depending on the expert, it’s either a crisis that will result in the whole shebang collapsing in 20-something, or it’s not that big a deal until way into 20-something-else and just a few tweaks will fix it.

And it gets worse. Seems most who say it’s a big crisis pretty soon are Republicans, and most who say pshaw!, we just need a few minor fixes are Democrats. Someone more cynical than me might think the experts are analyzing partisan politics rather than numbers, actuarial factors, and all that other boring stuff you’d think they’d be concerned with. To make it even murkier, it appears that over time some folks have changed their opinions from “big crisis” to “little crisis” or vice-versa depending on their political agenda.

I’ve given up on the research. First of all, like I said, it’s boring. Nothing throws me into MEGO* faster than trying to read a detailed analysis involving indecipherable ciphers and multisyllabic words I barely understand. And second, it’s pretty clear you can find some Social Security expert who will support just about any position you like, assuming he can get there before full MEGO sets in.

Now, none of this means that I don’t think Social Security is important. I paid a lot of money into it, and I want as much back as I can get. I also think society needs to ensure that folks aren’t sleeping in the streets and eating garbage after they’re too old to work. Some say that people should take care of themselves, save for their own retirement, and all that other Ayn Rand stuff. Pigs can fly, too, but only if there’s somebody there to throw them out the window.

I doubt the President has given much thought to what my one vote means in his mandate, but for sure I wasn’t voting for him to chop up Social Security when we can’t even agree on what the problem is or how bad it is. I know he talked about it during the campaign, and it worried me a bit then, but that wasn’t enough to convince me to vote for that egg-sucking liberal who was the other choice.

Here’s the bottom line: I don’t understand why we don’t just get some more money into the system. Raise the maximum amount payroll taxes are paid on, add a tax surcharge here or there, whatever. So it’s a little bit of a tax increase. I can live with that. What bothers me is where is the trillion bucks, more or less, going to come from to pay for transitioning to private accounts? What happens to a private retirement account when stocks and bonds crash in a recession just before somebody retires? How much are those parasites on Wall Street going to take off the top, and who’s going to pay that cost?

If ever there was a need for Republicans and Democrats to sit down and work out a reasonable solution to a problem with nothing in mind but the good of the country, this is it. And I think a “conservative” approach is best—don’t change it any more than necessary, and forget this radical business about private accounts.

I’m just glad proctologists aren’t as scatter-brained as Social Security experts.

*MEGO: My Eyes Glaze Over

7 Comments:

Blogger howard said...

One interesting thing about the Bush plan (which I, too, think is a bit overboard) is that private investment accounts are tied to another economic entity: the value of the dollar.

I think personal savings are a great thing, and if I could, I'd convince every single adult in America to save, no matter how poor they are, because I think it's part of being responsible. But investment accounts of any kind are tied to the economy and the value of the currency, which, in the case of our beloved dollar, isn't following a great trend right now, nor for the last few years.

That said, I do think some of the recent tax incentives for individual savings have been a good thing (it'd be nice if more lower income people actually knew about them), but they currently only offer real benefit to the lowest income workers, who tend to know less about them -- maybe there's a reasonable way to extend those incentives to motivate more people to get into saving, before we do lop off the whole social security system like a hopelessly infected limb.

10:46 AM, February 04, 2005  
Blogger NoBonus said...

I might have a viewpoint that helps sort this Social Security thing out a bit. Consider the two options to save Social Security: increase taxes or lower benefits. Bush's plan is to do both in a way. Bush's plan is to first cut benefits. We all get less. Then we are each given the option to if we want to add more money into our own personal plans which is money we will keep and not use for the rest of society. This extra money can be viewed as a metaphorical "tax increase" as it replaces a tax increase to everyone. Instead of taxing everyone, we "tax" ourselves depending on how much we want to use as retirement income. The benefits are like this: 1)You can decide if you want to be "taxed" more (instead of being forced to pay more taxes like you will if the private account reform fails), 2) the extra "taxes" you pay go to you or your beneficiary, not to a large pot-o-cash for the government to mess with, 3) as added bonuses, you get to choose one of a handful of broad-brush investment choices (likely mutual funds) that will bear considerably more interest than the large pool-o-cash AND you get to decide on your Social Security retirement goals.

Do not kid yourself, there is a horrible problem with Social Security that will only get worse as the "baby boomer" generation retires and we can either take Bush's pretty nice Social Security plan with private accounts or we can all cough-up a bunch more money in taxes when Socil Security dies and that money will be pooled, invested in low-return investments, and given to you as the government sees fit. Bush's plan is rooted in capitalism and the alternative is rooted in socialism.

12:31 PM, February 04, 2005  
Blogger Tom Carter said...

NoBonus, I really appreciate your comment, especially because it was relatively MEGO-free. But if I may be so bold, you leave questions:
--Under Bush's plan, I understand that cash payments upon retirement are reduced. But we have the "option" of private savings? I thought savings would be required in the amount by which an individual's payroll tax is reduced. In addition, you can't withdraw any of it along the way, and there are restrictions on how it could be paid out after retirement.
--The "extra money" (the increment of payroll tax that doesn't go to the government, right?) then becomes a "metaphorical tax increase" that we can choose to save and therefore tax ourselves? I guess I understand that, but it seems like a distinction without a difference if the savings are mandatory.
--The extra "taxes" can then be passed on to your heirs when you die...that I understand. Assuming there is any left when you die, and assuming the money survived recessions or market fluctuations.
--You say there is a horrible problem with Social Security. I'm sure you know what you're talking about, but there are a whole lot of people who also seem to know what they're talking about who say it isn't so horrible. Therefore, if they're right, the long-term tax increases, in whatever form, needed to fix the system wouldn't be so burdensome.
--"Bush's plan is rooted in capitalism and the alternative is rooted in socialism" is a pretty stark statement. I'm certainly not for any of that socialism stuff, but I really don't think the contrasts are that severe.

Quite frankly, despite your heroic effort, you're kind of making my point.

By the way, you're not a proctologist who plays the stock market are you? Just kidding. I have a headache.

6:23 PM, February 04, 2005  
Blogger pri said...

Clap, clap. I must say you are the first conservative guy that support universal SS against private insurances and that provides info that prooves that you have take your time to think on the issue.

It might be that Europeans have a socialist interpretation of public services, and therefore of Social Security, but we have assumed that these services must produce deficit and not profit. They should be controlled, of course, but they must not produce money as they are services for us, the citizens, who are paying them with our taxes.

I personally don't mind paying more taxes if that allows me to receive whatever surgery or treatment I need instead of receiving the treatment my insurance covers me to.

8:14 PM, February 04, 2005  
Blogger carla said...

Social Security is solvent until 2052, according to the Congressional Budget Office. Even at that point, the system can still pay out 80% of what it owes. That kind of puts a crimp in the idea of "crisis".

Any sort of privatization account scheme is going to cost trillions of dollars just in start up costs...and that doesn't count the 20-30% that will have to be paid to brokers or money managers for these private accounts. Further, Bush has said the government will limit which investments people can make. So much for the free market.

Chile, Argentina, Mexico and Great Britain have all tried privatization. Chile, Argentina and Mexico are extremely unhappy with theirs. The British are actually looking to revamp their system so that it's more like our own Social Security..because privatization is so expensive to implement. That should say a lot.

Finally, Bush's team has admitted that private accounts alone won't fix the solvency problem:

http://www.boston.com/news/nation/washington/articles/2005/02/03/white_house_notes_plan_lacks_solutions_for_shortfall/

I report, you decide.

9:46 PM, February 04, 2005  
Blogger Kevin said...

Well, I'm with Tom on this one. Generally the critics of Bush's scheme seem more convincing to me. But, I still have a devil of a time reconciling the contradictory claims of each side. Fiscal policy arguments similarly make my eyes glaze over. I can follow to a point and then it ceases to seem rational.

Bush himself is extremely unconvincing to me. But, I think that's largely 'cause he probably only has a surface understanding of the issue. Which concerns me, frankly. It's the armchair quarterbacks supporting his plan that seem to make more sense to me... until I run across the next critic's explanation and then the merry-go-round turns again.

11:49 PM, February 04, 2005  
Blogger Tom Carter said...

pri, thanks for the comment. So, you think I'm a conservative? Well, I don't mind. Like they say down in Texas, "You can call me anything you want to, just don't call me late for dinner!" If you have a spare minute, you might want to read this: Liberal or Conservative?

3:42 AM, February 05, 2005  

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