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This isn't a "new savings program". It's telling people they have to contribute to their 401(k) and insisting that all employers offer them. The problem we have in this country is that people refuse to save. Something like 70% of them are going to hit their 60's and look to the government to bail them out. The proposed "fix" to Social Security reduces benefits. How's that going to help that 70% with no retirement savings and no accrued wealth beyond some equity in their home?
Basic income is a crock. If you just hand money to people, most will pick the path of least resistance and do zero. It's basic human nature.
No truer words were ever written than the words I bolded above. However, color me skeptical about new and additional government mandates being able to save people from themselves. Yes, the 401(k) is an old program, but making it mandatory would be a radical "new" twist to it.
The "old" government mandate for forced savings, Social Security, has worked pretty well for over 75 years now. It is demographics (low birth rates), not some evil intent on the part of government (as NHartphotog seems to believe), which is the main reason SS now needs further modifications to keep it solvent for the long run.
There is nothing wrong with current levels of SS benefits. After all, they were not designed to have every retiree live in luxury. What we do need is to avoid the benefits being reduced to 75% of their current levels in another couple of decades (or less).
Basic income is not likely to happen anytime soon. I only mention it because I am not a fan of having so many different programs. There is a wide study in progress on the west coast right now and we should have better data, but what little we have so far indicates that it has little effect on workplace participation. Those who don't want to work don't have to now; those who want more than low income housing and basic services are willing to put in some effort.
It actually plays back into the thought process of the article TuborgP refers to. Most people won't bother reading the article I linked to. Many (most) of those that do may not find any holes in the logic but will still oppose the idea. Public sentiment is swayed more by passion than logic.
Basic income is not likely to happen anytime soon. I only mention it because I am not a fan of having so many different programs. There is a wide study in progress on the west coast right now and we should have better data, but what little we have so far indicates that it has little effect on workplace participation. Those who don't want to work don't have to now; those who want more than low income housing and basic services are willing to put in some effort.
It actually plays back into the thought process of the article TuborgP refers to. Most people won't bother reading the article I linked to. Many (most) of those that do may not find any holes in the logic but will still oppose the idea. Public sentiment is swayed more by passion than logic.
So your link offers a good read on the equity side of the argument. Now we need a good read on the efficiency side of the question. My link articulates that there are the contrasting views. However which side has the resources to move their agenda forward? The ability to vote and elect officials doesn't equate to the ability to deploy capital.
How to shore up Social Security for 75-plus years - CBS News
A good read on a comprehensive plan to shore up SS. Some good background info and thoughts packaged with a comprehensive plan to reform. Worthy of thought and discussion for and to some. Probably not all but for some. It is presented as a OP without opinion. That may or may not follow.
I have mixed feelings about the plan, but without identifying the causes of Social Security's pending insolvency, the problems won't be solved.
The first problem is that the prior and current generations who've retired on Social Security and Medicare did not set enough money aside to support themselves in their old age. Among other errors, they underestimated their longevity.
The second problem is that as the trust fund was growing, politicians couldn't keep their hands off the money. Accordingly, in addition to providing retirees with a guaranteed basic income, use of the trust fund was expanded to include financial support for the disabled. The resulting drain on the trust fund is enormous!
The current solution to tax our children at the rate of one-seventh of their earnings just to pay for grandpa, grandma, and disabled people's livelihood and medical care is not only unsustainable, it is immoral! Any plan that continues (or increases) this excessive level of taxation is likewise immoral.
More so, an end must come to this shell game of FICA tax, Medicare Tax, and Income Tax that results in middle-class Americans paying ridiculous marginal tax rates. It's another reason why our kids are losing confidence in our government.
Instead, it's time to bring the revenues and expenses of Social Security and Medicare to the general budget. This needs to be done in accord with a structural overhaul of how we tax income.
So your link offers a good read on the equity side of the argument. Now we need a good read on the efficiency side of the question. My link articulates that there are the contrasting views. However which side has the resources to move their agenda forward? The ability to vote and elect officials doesn't equate to the ability to deploy capital.
One issue I had with the test the article referred to is that I don't think they could discern greed from desiring efficiency.
I once worked for a company that was selling computers bundled with their software to a vertical market. The orders were cash up front and the computers and a custom manufactured accessory were on terms of 90 and 60 days respectively. We were growing like crazy; sales were increasing about 20% every month. Turns out we were losing somewhere between 5-10% on every order. When revenues outpace payables like that, you can make a ton of money losing your azz. This was mid 80s and at year end a tax credit that was a huge incentive to our customers ended. Sales fell off a cliff. By Spring, the venture vultures were circling and we all lost our jobs.
During the prior Fall, was that efficient? As long as sales continued to climb forever we didn't have a problem. They had always increased, every month since the company's first product release. However, logic dictates that at some point sales had to quit growing; if you carry the math to it's ridiculous and most unlikely conclusion at some point all the money in the world would not be enough to make quota.
How is the math concerning the concentration of wealth any different? The simple answer is that slowing or even reversing the growth of the concentration would not be catastrophic; there are no payables catching up. But something cannot be efficient if the math doesn't work.
The math doesn't work for SS, either. Making it work for 20 years or 75 years isn't fixing it IMO. The trouble is that no one seems to be concerned with making it work for more than a generation or so.
One issue I had with the test the article referred to is that I don't think they could discern greed from desiring efficiency.
I once worked for a company that was selling computers bundled with their software to a vertical market. The orders were cash up front and the computers and a custom manufactured accessory were on terms of 90 and 60 days respectively. We were growing like crazy; sales were increasing about 20% every month. Turns out we were losing somewhere between 5-10% on every order. When revenues outpace payables like that, you can make a ton of money losing your azz. This was mid 80s and at year end a tax credit that was a huge incentive to our customers ended. Sales fell off a cliff. By Spring, the venture vultures were circling and we all lost our jobs.
During the prior Fall, was that efficient? As long as sales continued to climb forever we didn't have a problem. They had always increased, every month since the company's first product release. However, logic dictates that at some point sales had to quit growing; if you carry the math to it's ridiculous and most unlikely conclusion at some point all the money in the world would not be enough to make quota.
How is the math concerning the concentration of wealth any different? The simple answer is that slowing or even reversing the growth of the concentration would not be catastrophic; there are no payables catching up. But something cannot be efficient if the math doesn't work.
The math doesn't work for SS, either. Making it work for 20 years or 75 years isn't fixing it IMO. The trouble is that no one seems to be concerned with making it work for more than a generation or so.
There are aging issues beyond what we discuss here and what most major publications discuss. I read a great article one day this week that I started to link and start a thread here but didn't. It was about a 80 year old lady in Arizona who fell and seriously bruised herself and was only with time and great effort able to get up. She didn't call anyone even being badly bruised. She didn't tell her neighbors as she said they had their own problems. One was blind etc etc. They were all poor and lived in a low income community. A social worker checking on her found out what had happened. The town had little taxable base and services for the elderly were seriously lacking in quality and availability. In other words folks were living on their meager SS with little support services or help. The next day we visited a very high end CCRC in Cary with it all available for a price or in many cases free. Why free? Because as you know Cary is a very high end community with plenty of services for the elderly including a $4 bus anywhere service. A very nice senior center with tennis courts were close by along with an abundance of medical services on site or close by. The contrast of community support for the elderly was startling. What I have begun to notice is that the newer higher end CCRC's are located in high end communities with other affluent people and a ton of community services and amenities. The contrast in 10-20 years between Boomer lifestyles is going to probably be a topic of considerable inequality debate. Sorta like schools and resources and zip code today. It will be inequality beyond SS and what the federal government can provide. Left to states and locals it will be a wide range of senior supports and life quality. Also the higher end programs tend to have 5 star SNF and no Medicaid beds with entry basically being for those who came up the levels.
How is the math concerning the concentration of wealth any different? The simple answer is that slowing or even reversing the growth of the concentration would not be catastrophic; there are no payables catching up. But something cannot be efficient if the math doesn't work.
Here's a question for you....
What first world country has the largest income stratification measured in pre-tax income?
The Socialist utopia of Sweden.
The US has one of the highest after-tax income stratification since tax rates are so low. Pre-tax, it's about the same as Germany and there are a bunch of European countries with higher pre-tax income stratification.
The social democracies of Europe all have very homogeneous populations. It's a lot easier to support a social democracy when you share the language, culture, race, and ethnicity of all your fellow countrymen.
I get really frustrated with these discussions, because without some basic information, we can't possibly make wise decisions, or even have an intelligent discussion.
The main questions I have are
1) Workforce Demographics. It says that people are having smaller families, implying that smaller families mean fewer people paying into the system. But is that true? What percentage of the working-age population is paying into SS npw? What difference does it make if the birthrate goes up, so the percentage of people paying into the SS system goes from 60% to 45%? In other words, there are already many working-age people who are not paying into the system, more kids won't change the number of jobs, so why do the authors even bring this up?
That immediately makes me suspicious about a possible hidden agenda.
Plus, of course, we have tens of millions of immigrants. When the proposed Trans-Pacific and Trans-Atlantic Partnerships get passed, the number of foreign guest workers (who do not pay into the system) will shoot through the roof, taking even more jobs out of the Social Security system.
I sat through a number of Power-Point presentations in the 90s, when the H1B program was ramping up, and also discussions of Mode 4 of the WTO agreements, pointing out the 20% differentiation between guest workers, who did not pay into Social Secuirty or unemployment, and native employees.
2) Where does the money go?
Why is social security used for SSI? What is the breakdown of payments to which classes of people?
Until we can answer these questions, it seems like a waste of time to discuss responses.
What first world country has the largest income stratification measured in pre-tax income?
The Socialist utopia of Sweden.
The US has one of the highest after-tax income stratification since tax rates are so low. Pre-tax, it's about the same as Germany and there are a bunch of European countries with higher pre-tax income stratification.
The social democracies of Europe all have very homogeneous populations. It's a lot easier to support a social democracy when you share the language, culture, race, and ethnicity of all your fellow countrymen.
Right...because everyone like (collective) you is equally deserving...no pesky "minorities" threatening to overtake the "rightful" majority...no one who doesn't look like you, or talk like you, or act like you. It's just NOT fair that THEY should get the same as YOU. Because we all know that YOU worked for it...and who knows what THEY have squandered all their lives to end up where they are today.
I'm not saying we all have to end up in the same place but there is enough for everyone to live decently in this country. When you look at the obscene corporate amounts leaving the country untaxed and the money spent on privatized prisons and privatized military operations it makes me sick that we squabble over SS.
They are still mostly of Swedish descent, but are about 30% minority make up now.
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Time for an Overhaul
