----- Original Message ----- From: "JDG" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <brin-l@mccmedia.com> Sent: Wednesday, January 19, 2005 6:37 AM Subject: Re: Social Security
> At 10:41 PM 1/18/2005 -0600 Dan Minette wrote: > >This is opposed to the very real problem of the money going to investments > >attacking the foundations of what Social Security is. > > Why is that a problem? Or is the pyramid-scheme foundation and the > regressive tax system of Social Security sacrosanct? I'll refer you to Gautam's comments the last time you attacked the idea of Social Security...it saved capitalism (I'd say along with the rest of the New Deal). The demographic buldge of the baby boomers was to come much later. The idea was to attack the main area of hopeless poverty: people too old, too sick, or otherwise too disabled to work. They were generally dependant for their lives on their ability to being a burden to their families who were just struggling to get by themselves. > There is almost no question that the current system benefits stay-at-home > Moms, since stay-at-home Moms receive benefits upon retirement without ever > paying for current benefits during their work-elgible years. (Note, I am > arguing against my own interest here) That's true. It was part of a means of ensuring that the basic family was taken care of. This was also during the time when housework was a lot more work than it is today. > >It should be clear to anyone that looks at the SS formula that it is > >progressive...it benefits low income people relatively more than high > >income folks. Bush's suggestion is simply a return on one's own > >money....so that is removed. The purpose of SS was to provide a floor to > >keep the elderly and disabled out of poverty. For the most part, it has > >done this splendidly. > > I think that splendidly vastly overstates the case. Just since '59, the poverty rate among elderly has dropped from 35% to 10%, according to http://www.census.gov/prod/2002pubs/p60-219.pdf The 18-64 year old group has dropped from about 17.5% to 10% during the same time period. And, back in the '30s, poverty was even worse. >If Social Security > was intended to be a program to benefit the poor, there are a number of > things that I would do much differently. Well, one needs to recall that, during the Great Depression, the overwhelming majority of people were below the poverty line. > >Thus, having a sliding scale between a top that is indexed to > >inflation and a bottom that is indexed to wages makes sense. The sliding > >scale could also be tied to inflation, not wages, so all of SS would > >eventually be tied to just inflation. In the very long run, if wages > >continue to rise, the SS tax would approach zero. > > In the very long run, we're all dead. ;-) John, you specifically made problems in the very long run as issue, I pointed out how this issue is solved, then you dismiss the problem. Let me give the following model of changing from SS being indexed to salary to SS being indexed to inflation. The maxium SS benefit is tied to inflation. The rest of the scale continues to be tied to increases in the mean salary. As salaries increase, a greater and greater fraction of those receiving income from social security will find their income limited by the maximum benefit of about 25300 for a single person (married non-working spouses are assumed to keep benefits of 50% of their spouses while they both live). Given that, we have the following comparison between the present benefits, the unmodified SS benefits, and the fixed benefits: now 2045 as is fixed 2045 10000 7460 9000 9000 20000 10660 14127 14127 30000 13860 17327 17327 40000 17060 20527 20527 50000 19284 23727 23727 60000 20784 26927 25284 70000 22284 30127 25284 80000 23784 33327 25284 90000 25284 34879 25284 100000 25284 36379 25284 110000 25284 37879 25284 120000 25284 39379 25284 130000 25284 40879 25284 140000 25284 42379 25284 150000 25284 43879 25284 160000 25284 45379 25284 > Also, if one just makes Social Security a welfare program, you can just > make the benefits higher at the bottom of the scale, and phase them out > towards the top. And as a welfare program, it will either get gamed or cut. Income and assets will be transferred to children, as it is now with the elderly facing nursing home costs. For 70 years, SS has been an important part of a blended ecconomy. Among other things, it provides a constant that smooths out gyrations due to speculation. > >I find it interesting that this aspect of the program is not brought up. > >My guess is that Democrats don't bring it up a criticism of Bush's plan > >because it wouldn't have any traction with the middle and upper middle > >class voters. I'm guessing focus groups indicate they wouldn't mind if the > >poorer elderly got less....just as long as they didn't. > > I think that it has to do with the fact that Social Security brings out > Democrats' inner-Socialists. The Democratic Party is and has been > *opposed* to making Social Security a simple welfare program for the poor. > That is why the Democrats have done things like *oppose* means-testing > Social Security benefits, and have supported the massive increase in > regressive taxation under Social Security. That was the price to be paid for saving it. The tax is regressive...but the combined tax and benefits are progressive up to 90k/year of income. Sure, it would be reasonable to have general income tax funding it, but the amount of lobbying money >Let's face it, when you support taxing the poor in order to refuse denying benefits to the rich, it > becomes hard to talk about how wonderfully progressive Social Security is > with a straight face It's far more progressive than what I've seen of Bush's plan. > and that's why Democrats become hysterical once > anyone proposes rolling Social Security into the general Federal Budget, as > the change of Social Security from a "Socialist" to a "Social Democratic" > program would undermine their Socialist dreams.. Those Socialist dreams saved capitalism. FDR's genius was what Marx could not anticipate...modified capitalism for the benefit of the workers, not overthrown capitalism. I happen to believe the creation of the middle class (basically from the late '30s to the late '60s) was a very good thing. "Socialist" intervention in the economy was a good part of this. By modifying SS, and making both the taxes and benefits slowly more progressive, we can save what it has done very well for us for the last 70 years while still addressing the problems. By switching to the taxes going for individual retirements, we change the SS formula that we have to a formula: benefits=0.34*(salary). That is far less progressive than the present plan. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
