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Entitlement Programs Need Reform

Discussion in 'Political Discussion' started by State, Jan 2, 2011.

  1. State

    State Rookie

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    #70 Jersey

    Robert Samuelson is right. Social Security, Medicare have to be pared down | The Columbus Dispatch
    Some people here savings can come mainly from defense spending. But they don't know what they're talking about. While we may or may not spend too much on defense, we will definitely be paying too much for middle class entitlement programs.

    Why should I be required at the point of a gun to be my brother's keeper?
  2. PatsFanInVa

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    In the interest of accuracy, State, you are "forced" "at the point of a gun" [sic] to be your mother and father's keeper first, and your brother's keeper later. Meanwhile your brothers and sisters and children are keeping you.

    However, you're absolutely right. We do need a reform. We need it a great deal more now that we've passed the recent tax deal that makes OASDI withholding 4.2% instead of 6.2%.

    Oh right, it's just temporary.

    Really?

    You're complaining about these systems' solvency, I take it? If so, it just got way worse. And to compound that, you have to look at the specter down the road of letting the "temporary" OASDI cut expire... what politician is going to let THAT happen? So, we'll hurdle faster, not slower, toward insolvency for Social Security.

    I take it from your wind-up question that you like the idea of insolvency for Social Security, Medicare, and Medicaid. I do not.

    I prefer the idea of a society without increasingly large throngs of the indigent poor filling our cities and towns.

    Now, you are correct in that these programs need reform.

    One obvious reform is to means-test Social Security. In other words, if you already have high retirement income, your Social Security "payout" can be reduced.

    Better yet, your initial benefit could be the same as currently laid out, but it could be increased by a flat amount per year equal to what a poor recipient gets as a "raise" that year. If the poor guy gets a Social Security "raise" of $100 that year, so do you. Such a solution is appealing to me because all you are actually doing is eliminating the amount by which you ADD to the disparity every year.

    We all know there is a demographic issue facing us regarding entitlements. The recent debt commission addressed this, as well as budgetary issues. We all stroked our chins for 15 minutes and talked about what would be good about this, what would be bad about it, etc. ... and then said "Nahhhhh screw that, people vote for tax cuts."

    I'm on the fence about which would be worse: anti-stimulative measures ("austerity") when the economic recovery is still fragile, or the somewhat insane form the giveaways took. But that's the world we're in right now: no good choices, until and unless unemployment is appreciably reduced.

    Now that said - what will be our position when "good times" return, after learning this colossal lesson in how to tank an economy?

    Specifically, will we pay our bills, or will we continue to insist on denial as public policy?

    A final note: you may want to think about the source of your closing reference in Torah. "Am I my brother's keeper?" is the cry of the fratricide desperately trying to escape his responsibility and divert from his fratricidal actions.

    Taxation, which has existed in one form or another since at the least biblical times, is inevitable. If you insist that taxation constitutes "forcing you at gunpoint" to "be your brother's keeper," your quarrel is with a necessary institution that exists in all complex societies, not with one or another present-day policy.

    PFnV
  3. sdaniels7114

    sdaniels7114 Rookie

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    Not right now they don't. You don't create a big problem today to address a smaller one that's due to arrive tomorrow. Which is exactly what will happen if you take money out of people's pockets. Luckily, in a few days we'll have a split government and it will no longer be politically helpful to Republicans for the recession to linger. Methinks this will get things rolling. Every problem is easier to fix with a strong economy than with a weak one, including the problems we're about to have with entitlement programs.
  4. DarrylS

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    Conversely many of today's problems were less significant in a time of boom.. see the 90's.

    Few Factoids..

    Monthly Statistical Snapshot, November 2010

    The average payout for a retiree is 1,174 per month
    The average payout for a widow is 1,107 per month
    The average payout for a disabled worker is 1,067 per month

    Interesting figures, not exactly making anybody wealthy.. if you were to cut these benefits shudder to think what many older folks would do, particulary those who rely on this for their only income...

    But I do think they need to look at disability payments, and perhaps stop the permanent disability for those able to work and develop a system whereby they need to continue to pursue employment/training.

    Druge addiction and illiteracy can be made better..
  5. PatsFanInVa

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    I'll add that on the Social Security side, if we do nothing, when insolvency comes, that means the trust fund is empty.

    Everybody can just skip over the "it's full of IOUs" meme. We all know the trust fund is invested in treasuries. They are, however, cashed in to pay benefits. So yes they are "IOUs" just like every other financial instrument - they are not gold bullion.

    At any rate, when the trust fund is exhausted (which we took a giant step toward last month), you get benefits at the level of what is put in through payroll taxes.

    Prior to the recent giveaway, that level was slated to be about 75% of your promised benefit, on average. Huge cut.

    If, however, payroll taxes are at their present level -- 2/3 of what wasn't adequate in the first place -- your Social Security check would be cut in half.

    Old Widow Hendricks coping with a cut from $1100 to $800 would be bad. Old Widow Hendricks making do with $550 would be... what's the word...

    Oh yeah, unsustainable.

    PFnV
  6. Mrs.PatsFanInVa

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    #11 Jersey

    That's where the words Death Panel come into play.

    Just ask Arizona.
  7. IcyPatriot

    IcyPatriot ------------- PatsFans.com Supporter

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    #87 Jersey

    Well 2011 is the 1st year of the baby boomers turning 65. I always lose on this issue as I am at the back of the boomer generation ... 1959. Something needs to be done for sure as these people represent like 26% of our population.
    Last edited: Jan 2, 2011
  8. PatsFanInVa

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    1962 here, Icy. I agree, something needs to be done. I'm wary of "generational transfer" being used as a surrogate for regressive policies.

    But that's really the nut of it, isn't it? All our conversations come down to the middle class thinking that a society taking care of its poor (including its aged) is "unsustainable," but being quite willing to take care of its wealthy.

    We're unwilling to look at the models abroad that are addressing similar problems. All we can do is point and scream "Look! They too have a social safety net! They are collapsing!!!" when such societies are weak. When they are strong (vis a vis the U.S.) all we can do is scream, "Look! We are losing against those other societies! Let's cut taxes on the rich again!"

    If the right succeeds in permanently taking progressive taxation off the table, the society will die. There is no other possible conclusion.

    Now then - do we have another whole face to the problem based on our current demographcs? Yes. Must we accomodate the social safety net, through a combination of alterations to those programs, and alterations to our aberrantly low tax policies? Yes.

    Have we just taken a giant step backward with the recent tax deal? You better believe it.

    You & I, Icy, are both looking down the road at how we'll make retirement happen. God forbid either of us ever feels secure enough to stop working when we're in our late 60s, right?

    Welp, that's what the boomers are "entitled" to. Are we really ready to say America used to be able to do that, but now we're much more like a 3rd world nation?

    Or is it time to get serious and shore up these programs?

    PFnV
  9. IcyPatriot

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    #87 Jersey

    I am fully prepared to work to at least 70. I think the present ages will somehow be tweaked. When I get my SSI statement I always look at the what i will get if I retire at 70. Now i know there are some who say retire earlier is the most profitable. But I'm a conspiracy guy as well as an untrusting guy ... I just feel safer planning to work to at least 70 whether that is the most profitable or not.

    Our country needs to make a decision that says we cannot continue to be a super power and also take care of our people's health and retirement. Would it be fascinating to see a candidate run with the theme of paring the military in half so we can have better health care and retirements.
  10. PatsFanInVa

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    I love looking at my SS statement and thinking of how great it would be to get to the "finish line" at the late retirement date. I have a pretty un-strenuous, un-dangerous line of work, so it's conceivable. But when I look around me I know that the "choice" of retirement ages isn't always a choice. I'm not sure you can effectively "plan" on going to 70... I use to tell myself I can just assume I will work until I die. Doesn't sound so logical now that I understand the things that *can* happen to any of us, and the things - within the aging process - that *will* happen to all of us.

    Look at the cognitive breakdown that Harry has suffered... or pretends to have suffered, anyway :D

    This country cracks me up sometimes... 40's the new 30, 60's the 40, death is the new retirement. Yay.

    PFnV
  11. DarrylS

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    I always thought social security should be reversed, you get it until age 35 and then it ends and you enter the work force until you die....

    Youth and good health are wasted on the young...
    Last edited: Jan 3, 2011
  12. State

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    #70 Jersey

    I remember years ago reading some libertarian/conservative writer actually tracking down the so-called trust fund. It was on some 486 computer. Just a bunch of IOUs.

    There is no investment, no trust fund; rather, money taken in the FICA tax is spent on current spending.

    Since we live in the Era of Google, try "cato institute what trust fund?" There are a bunch of sources that refute you premise that there's something in a trust fund.

    File that assumption under Lies My Government Told Me.
  13. State

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    #70 Jersey

    Oh, gosh. I'm ready to go in many different angles here. So you're a gubmit bureaucrat who dresses like Dilbert?

    Just trolling through life has proven dangerous: my father's driving, the desperate lunches of desire by gay men and nubile females--I'm talking criminal assaults, lust-induced grapplings--and my own unfortunate proclivity to be a f--k up, which necessitates my being a queequeg. Without all the tattoos of course.

    You'll see. I hope to meet soon. Will you be in the metro DC area on the fourteenth this month, PFiV? I could show you by just walking around Dupont Circle. Or has that been cleaned up like 42nd Street in NY?
  14. Real World

    Real World Moderator Staff Member

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    We're broke. SS is broke. Too many people collecting. Too many people living beyond the estimated years of payment. Too few people paying in at the level currently required. All of which will only get worse as the biggest wave of collectors begins to draw their checks in the coming years. I do not expect to see a penny of the money I've paid in. I think anyone sub 40, or even sub 50, shouldn't expect to see any too. Plan accordingly.
  15. PATSNUTme

    PATSNUTme Paranoid Homer Moderator Staff Member PatsFans.com Supporter

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    #75 Jersey

    I think of myself as center right. Here is a few reforms that I'd like to see with SS, SSI.

    1. All wages no matter how high be subject to payroll tax. I've felt this way all along.
    2. People on SSI who are drug addicts or alcoholic should be cut off after the 2nd rehab. We should not be feeding their habits. You would be surprised how many would be clean and sober if the $ stopped.
    3. Those getting more than $1800 per month in SS do not get a COLA unless inflation is more than 4%, then they get 2%.
    4. Any one person getting pensions and or income totaling $60,000 per year or more should not get SS. Money from savings or IRA's would not count toward the $50,000
  16. PatsFanInVa

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    "Some libertarian/conservative writer" can say what he wants.

    The "it's all IOUs" meme got started because the Trust Fund was "on-budget" between 1969 and 1990. Prior to 1990, it became popular to say that the accounting convention of listing the Trust Fund on-budget, combined with the government issuance of debt instruments, constituted "just a bunch of IOUs." Since the OASDI fund was on-budget, this made it popular to assume the money was being "spend on something else" because you can see the fund decrease on the same budget where you see something increase. The reality is the rules governing the trust funds have to change for there to be a difference in money being spent from the trust fund or going into the trust fund. The trust funds are "full of IOUs" in the same sense that your 401K or brokerage account is "full of IOUs," with one important difference: Neither of the latter are backed by the full faith and credit of the U.S. government. Defaulting on Social Security by saying "sorry, we're not paying," would be a default. The obvious alternative -- to pass a law changing the rules -- would not qualify as a default.

    Since 1990, the investments have not been "on-budget" -- that is, the accounting was done altogether separately from all budget accounting.

    I have no doubt "some libertarian/conservative writer" found a bunch of information on a 486 computer at some point, and claimed that was the trust fund.

    Last year, Social Security took in less money than it wrote benefit checks for. The checks were not reduced. Rather, SSA cashed in some treasuries, and paid the benefits.

    I can google Cato, you can google Huffington Post, we can go 'round and 'round. The most likely outcome of the arrangement is that the US will come to a conclusion of which math to use, and alter one or another aspect of current Social Security law. Of course, if this latest silliness becomes permanent, the trust fund gets spend down way faster, and some idiot will claim that old people won't be destitute if we just cut some rich guy's taxes. They will be, of course.

    PFnV
  17. reflexblue

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    #91 Jersey

    Sounds pretty good to me.
  18. PatsFanInVa

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    See, this is a good example of how if you're center right or center left, you can have some common ground.

    1. - I agree

    2. - I know I know I'm a bleeding heart. I don't agree. But I won't go into a big spiel about it.

    3. - I proposed something akin to this (take a lowish COLA as a flat amount, and apply it up the line from that point. If the 4% COLA, for instance, is $X per check at a certain level, let it be $X up from that point.)

    My problem w/#3 and #4 is that I'd like smooth phase-ins for each of them. You've got people getting a COLA at $1,799 per month (let's call it 2%, for low inflation.) So that guy is getting another $36 per month. The guy getting $1,800 gets $1,800, because the magic 4% threshhold isn't met. So a guy who put more into the system will actually drop behind the guy who put less in. I just like the idea of not leapfrogging when you implement these fixes, but it's a minor nit. We have the same basic idea - those who really need COLAs because their modest income needs to keep pace get them. Those who are already well-off can make do with a less lucrative COLA.

    4. - I agree in spirit, but I'd similarly phase in means testing. A single income offset number would be darn hard to police, and people would be going nuts to avoid their required distribution from savings plans. "No Social Security for anyone drawing $60,000!" - even if the 60K is indexed to 2010 dollars (which I'm assuming is part of this proposal) - may not be necessary. Instead, you could graduate the percentage of SS people get. For example, you could let them collect Social Security to the full benefit amount until total retirement income reached $50,000 (for example,) let them draw 90% of SS until they reached $60,000, and so on. But my quibble is with implementation, not the main point of your idea.

    At least in broad outlines we agree on 3 out of 4 of the ideas you've brought up.

    PFnV
  19. PatsFanInVa

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    BTW, State, I'll decline your bizarre invitation, thanks all the same.
  20. PatsFanInVa

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    I like to think the majority of people are somewhere in this middle-ish ground on SS (see above.) You can run numbers using whichever combination of approach you like, and there are ways to correct SS. A buck ninety-two for every 100 dollars earned (according to a Globe column I saw today) does it as well. Of course, that 1.92% would have to be added to the 6.2 percent you were already paying until recently, not the 4.2 percent you pay now.

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