----- Original Message ----- From: "Erik Reuter" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <brin-l@mccmedia.com> Sent: Wednesday, January 19, 2005 5:31 PM Subject: Re: Kotlikoff's PSS plan
> * Dan Minette ([EMAIL PROTECTED]) wrote: > > > Those folks got a lot more than they paid in....as a fraction of GDP. > > But, since they weathered the Great Depression and WWII, and built a > > United States where I could prosper, I don't begrudge them that. The > > fact that the baby boomers will do a bit better than Generation X (but > > not nearly the difference between my father's generation and mine) > > and Generation X will do a bit better than my 3 kid's generation, is > > not a matter of great guilt for me. My kid's generation should be, > > on the whole, wealthier and longer living than my generation. A ~10% > > difference in return ratios doesn't bother me; neither does the almost > > factor of 2 difference between my folks generation (born in '16 and > > '20) and mine. > > So long as each generation gets more of GDP, and more than they paid > in, you are setting up an unsustainable progression. If SS as a % of GDP keeps on growing, that is an unsustainable progression, sure. But, let's see what it would take to reach sustainability with the present setup. If nothing was done to change the plan, there would be a 25% disconnect in, roughly, 40 years. If the retirement age was nudged up so that the number of years receiving SS were about the same as now, then there would be a 10% disconnect. >Worse, as each generation reaches near-retirement, they will tend to support higher > benefits for themselves and higher taxes for the next generation. But, my generation supported higher taxes on itself to partially pay for our own generation. Right now, our taxes have put 3.3 trillion into the trust fund for our own retirement. It should near 5 trillion by 2010 (or about 40% of GDP). The change in taxes in the early '80s were the cause of that (the reserve was only .2 trillion in '80. >And the politicians will give it to them, since spending now and leaving > the bill for the next elected official is good politics. That didn't happen when I was close to your age. >The system is broken and needs to be fixed now. >From my perspective, the system is a bit off course and now would be a great time for a mid-course correction. But, since I lived and paid through a much bigger correction than the one that is needed now, and I didn't consider it a crisis then, I don't consider it a crisis now. If we wait 30 years, it will be a crisis. A small nudge now should be enough. For the same lifetime benefits as a % of one year's GDP from social security, we're only talking about, on average, reducing the increase in total retirement benefits from 1.5%/year to 1.25%/year. Whichever combination of techniques is used, that's about what we need. Indeed, that's not even including the savings from the transition period...that's just sustainable in '45....and it doesn't include the added savings that could be found by continuing on that path later. So, if we make that change, we should be able to cut SS taxes by '45. Dan M. > -- > Erik Reuter http://www.erikreuter.net/ > _______________________________________________ > http://www.mccmedia.com/mailman/listinfo/brin-l > _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
