Justin, you could not be more wrong!

I will collect social security and so will you. I have heard this dribble about ss going broke for 35+ years, and guess what? Everyone who is entitled is getting theirs.

I think your outlook on just about everything is based on a black and white way of looking at the word - yes or no, not "we have to be flexible and work out solutions as we go along".

Yes, Social Security is a progressive program. That is not a bad thing. It beats having more homeless people and having seniors be vastly sicker because they don't have decent food and shelter.

However, keep this in mind. When SS was started, the average life span was over at the time you would start collecting! So, if you were around back then, you would be complaining from day one "hey, I won't collect because I will be dead then".

All that is needed to "save" social security are small tweaks which are always phased in slowly as to not hurt existing recipients and folks who are going to collect relatively soon.

As examples:
1. Raising the ages 1-3 years over time
(note: life expectancy has gone up far more than that, even recently, so this is fair).
2. Tax or reduce the benefits for those with very high net worths or incomes (over 100K). This is done to some extent already, but it can be tweaked.
3. Increase the wages subject to social security taxes. Even a small increase would result in a big difference.

Personally, I would probably avoid #3 and work on 1 and 2.

I have heard all these "sky is falling" predictions for 40 years now, and the sky is still up there and bright blue. We have not run out of oil yet (many people predict that), we don't have to take a wheelbarrow full of dollars to buy a loaf of bread nor has social security run out.

If you want to be worried about something with actual consequences, look at Medicare, which is part and parcel of the health care debacle that we have gotten ourselves into. We are closing in on 20% o GDP going to health care corporations. That's real money. If your generation wants to change the world for the better, figure out how we Americans can completely and totally reform health care.

Social Security surpluses have been used to help mask deficit spending since Reagan made it an on budget item.

It is paid back with IOUs.

So who is paying that back?

"It is paid back with IOUs."

That's a talking point. We balanced the yearly budget and had a surplus in 1998-2000. That means we had a sustainable system of some sort.

All money is IOU's these days. But it works for it's intended purpose. That is all that matters.

Money is based largely on the resources of people. America has the most productive workers and businesses in the world, and that is why the entire globe looks to us for financial stability.

IOU's?
Yes, the Iraq and Afghanistan wars are all financed with them, as are most households - who have a mortgage, car payments and credit cards.

The key is that your assets and income have to be able to cover them. As of now, that is still possible. No one can predict what will happen in the future, but the biggest possibility is something close to the status quo (it always is).

Thats not a talking point. They are actually doing that.

They want to change the system as if its broke when in actuality its still contributing to mask the deficit.

The yearly budget would not have had a surplus under Clinton were it not for social security surpluses.

That most productive worker thing is a real myth also.

Labor Department officials acknowledged at a 2004 conference, their statistical methods deem any reduction in the work that goes into creating a specific unit of output, whatever the cause, to be a productivity gain.

This continuing mismeasurement leads economists and all those who rely on them to assume that recorded productivity gains always signify greater efficiency, rather than simple offshoring-generated cost cuts — leaving the rest of us scratching our heads over stagnating wages.

Hear, hear, Stuart. Ever notice these "conservatives" don't say that they expect not to be able to finance any foreign invasions down the line because we're unable to pay for them?

First, let's dispense witht eh "military spending" arguments. There was a time, around 1960 that the military was about 50% of the budget. At that time it masking all sorts of programs. Higways were "military budget", the National Defense Highway Act of 1957 (i.e. the interstate highway system). Student Loans were "military budget", National Defense Student Loan Act, etc., etc.

Presently, the military budget is about 18% of the federal budget. That is a pretty significant cut.

Social Security has been masked in duplicitous language for so long that we no longer know how to think about it. Consider the "Social Security Trust Fund", it simply doesn't exist in any meaningful way. What would you think of a trust fund where the "Trustee" could make himself a loan from the fund anytime he wished?

What SS is is simply a system of "transfer payments", workers pay in, beneficiaries take out. It is simply a welfare system.

People will tell you they deserve it, because they "paid in". True, they "paid in", but it was immediately "paid out". Their money is gone. What they may receive is not the product of what they "paid in". That wording simply promotes the false idea that there is a "fund". This also makes me wonder about the legitimacy of taxing people who have provided for their retirement at a higher rate, that is simply "soak the rich".

Face it, it is a "Ponzi Scheme" and nothing more.

Since the 1960's, the SS tax has more than doubled to 15.6% of wages. On an income of $30,000, that is $4500 a year.

If that sum was truly "invested" at 5%, after 40 years it would be $571,000. Assuming a life expectancy of 80, that would be a yearly payout of $38,000 (ignoring capital growth over the 15 years). We would all be, almost, as well off as federal employees.

If the tax continues to grow at current rates, by 2050 we will be paying 32% of our income. This does not take into account the relative "shrink" of the work force as a percent of population. If it had not been for the explosion of women in the workforce during the last 50 years, we would probably already be there.

If it was all immediately paid out there wouldn't be a surplus for the general budget to tap into then would there?

They've been masking the deficit with the SS surplus now since Reagan.

FIrst of all, Warren, you are 100% wrong about the military budget. The expected spending this year for all the stuff related to the military is about a trillion dollars - the real figure is much larger, as you have to add in the debt and deficit which goes to pay for past military.
This is a fairly accurate chart of the simple figures:
http://www.warresisters.org/federalpiechartdetails

If anything it gets worse than that, because many federal agencies, from Homeland Security to the Energy Dept (nukes) to the FBI are heavily involved in the military business - same with NASA, etc.

What blinders some of you wear! The so-called Big Government is caused by the very things you champion (for-profit health care and wars) and yet you say we should ignore the costs!

I'll say it again, Social Security is very solvent. You will get yours if you live that long and I will get mine.

You can throw out all the accounting tricks and conspiracies that you like, but the fact remains that it works.

Now, I know that anytime government works it upsets you, but try to take those blinders off for once and study the facts. That may require turning off your favorite right wing news source or web site and doing some reading.

As to productivity, again, you must not understand life itself. Productivity is the creation of more value with less cost and time. It doesn't matter if you are sweating or pushing a button. In fact, it is better if you are pushing a button.

I really don't know what to make of modern conservatives. Some of them seem to know a little - and they say a little knowledge is worse than none at all - now we know why!

Back to ss - remember Bush wanted to put it all in the hands of Wall Street. Good thing he didn't get the votes to do that.....that money would have evaporated.

You may not trust the faith of the US Government, but most of the rest of the world does and therefore I do. So send me your dollars and I will use them.

Stuart I agree with you re social security but the productivity thing is just wrong. The department of labor admitted their statistics here are wrong.

http://www.nytimes.com/2010/03/06/opinion/06Tonelson.html

FOR a quarter-century, American economic policy has assumed that the keys to durable national prosperity are deregulation, free trade and a swift transition to a post-industrial, services-dominated future.

Such policies, advocates say, drive innovation, which leads to enormous labor productivity and wage gains — more than enough, supposedly, to make up for the labor disruptions that accompany free trade and de-industrialization.

In reality, though, wage gains for the average worker have lagged behind productivity since the early 1980s, a situation that free-traders usually attribute to workers failing to retrain themselves after seeing their jobs outsourced.

But what if wages lag because productivity itself is being grossly overstated, especially in the nation’s manufacturing sector? Then, suddenly, a cornerstone of American economic policy would begin to crumble.

Productivity measures how many worker hours are needed for a given unit of output during a given time period; when hours fall relative to output, labor productivity increases. In 2009, the data show, Americans needed 40 percent fewer hours to produce the same unit of output as in 1980.

But there’s a problem: labor productivity figures, which are calculated by the Labor Department, count only worker hours in America, even though American-owned factories and labs have been steadily transplanted overseas, and foreign workers have contributed significantly to the final products counted in productivity measures.

The result is an apparent drop in the number of worker hours required to produce goods — and thus increased productivity. But actually, the total number of worker hours does not necessarily change.

This oversight is no secret: as Labor Department officials acknowledged at a 2004 conference, their statistical methods deem any reduction in the work that goes into creating a specific unit of output, whatever the cause, to be a productivity gain.

This continuing mismeasurement leads economists and all those who rely on them to assume that recorded productivity gains always signify greater efficiency, rather than simple offshoring-generated cost cuts — leaving the rest of us scratching our heads over stagnating wages.

Of course, just because productivity is mismeasured doesn’t mean that genuine innovations can’t improve living standards. It does mean, however, that Americans are flying blind when it comes to their economy’s strengths and weaknesses, and consequently drawing the wrong policy lessons.

Above all, if offshoring has been driving much of our supposed productivity gains, then the case for complete free trade begins to erode. If often such policies simply increase corporate profits at the expense of American workers, with no gains in true productivity, then they don’t necessarily strengthen the national economy.

In this regard, the case for free trade as a stimulus for innovation weakens, too. Because productivity gains in part reflect job offshoring, not just the benefits of technology or better business practices, then the American economy has been much less innovative than widely assumed.

How can we actually increase innovation and real productivity? Manufacturing, long slighted by free-market extremists, needs to be promoted, not pushed offshore, since it has historically accounted for the bulk of research and development spending and employs the bulk of American science and technology workers — who in turn spur further innovation and real productivity.

Promoting manufacturing will require major changes in tax and trade policies that currently foster offshoring, including implementing provisions to punish currency manipulation by countries like China and help American producers harmed by discriminatory foreign value-added tax systems. It also means revitalizing government and corporate research and development, which has languished since its heyday in the 1960s.

Much of government policy and business strategy rides on false assumptions about innovation, and although the Obama administration acknowledges the problem, it has done nothing to correct it. With the economy still in need of government life support and the future of American manufacturing in doubt, relying on faulty productivity data is a formula for disaster.

Alan Tonelson, a fellow at the United States Business and Industry Council, is the author of “The Race to the Bottom.” Kevin L. Kearns is the president of the council, which is an association of small manufacturers.

dough,

Wages have lagged for one reason and one reason only.

That is that most of the money made from the advanced in productivity have went to shareholders and CEOs. Very simple.

If you own a company and make a profit of one million this year and then 10 million in five years, are you going to pay your workers 10X the bonus or salary? Of course not!

But here we have a much worse situation. This really started long ago, but Reagans administration made it law - that is, downward pressure on wages from outsourcing, illegal labor, union busting and tax breaks.

The result is the chart you can look at which shows that the disparity between the extremely wealthy and the rest of us in this country is not bigger than it has been since the Great Depression. That is not a good statistic. It means the middle class is sunk, and the middle class is what makes the American Dream.

I will agree that the productivity figures does not show everything. All the weapons of war and pills that big pharma makes and sells to us - that all counts in productivity.

However, when all is said and done, tell me where pixar, hollywood, google, HP, apple, microsoft, adobe and the vast numbers of other companies which have innovated the future are located?

The same goes for Bio-Med, the centers of which are right near here in MA.

These groundbreaking industries can create vast value without having a lot of workers.

I think we are having a hard time breaking with the ideas of the past and getting our minds around the future.

Woah Stuart... Are you saying that the 'trust fund' money that never made it into the trust fund (and therefore didn't ride the Dow down to 6,000 and back up to 11,000) is better-off not invested than it is not allocated in the first place?

If a big piece of Social Security payments are supposed to come from gains on investments that were never really made, who's going to pick up the slack? Something will have to give.

I can put $1 into the market and expect to take out $2 in about seven years. I cannot issue a $1 IOU and get $2 in seven years, quite the opposite, in fact.

If 'everyone is going to get what they were told they would' but there are no assets to back the payments, where will the money come from? You'll either have to tax more, spend less, or print money.

Now I don't have an issue with the first two scenarios, as long as we're doing things -responsibly- I couldn't care less what the tax rate is or what the payouts will be. So long as we don't tank the economy or deliver services inefficiently, I would be fine living in a high-tax/high-service environment. My issue is with this idea that 'everything will be fine the way it is' when it's quite clear that it won't be.

The attitude belies a faith that I've seen in my generation, one where kids get to live off their parents into their thirties, where it's OK to take what mom and dad are offering as long as you can. That's the faith our parents' generation had, and we're standing in the financial mess they've made for us. The prescription is not more faith in government spending, but strict stewardship of it.

As for the boss making more while workers just get by... I think the most responsible factor in that is the proliferation of larger and larger businesses. Again, I don't have a problem with that, so long as they don't threaten national, financial, or environmental security. You can bet that a Mom and Pop shop would start paying workers drastically more if they started making 10X the money, but WAL-MART won't. What's behind the larger corporations? It's not union-busting, illegal labor, or the fact that people have invested in it, it's communications technology. Companies that used to get cumbersome when they grew into multi-state and multi-nation entities are now linked by phone, airplane, email, and chat. It's easy to run a multi-national now, it used to be impossible. Also, there are fewer positions at the top than there used to be because of this consolidation in larger corporations. The 'rich' guy used to be the guy on your block who owned more than one laundromat (and had four employees), now it's a much smaller pool of folks who run companies with hundreds of workers and managers.

"tell me where pixar, hollywood, google, HP, apple, microsoft, adobe and the vast numbers of other companies which have innovated the future are located?"

Really? Most of the real innovation I see happening in construction, materials, mechanics, fuel cells, turbines, etc. is happening in Europe. We're not the world's smartest and most creative and able workforce anymore, nor can we rely on that ranking to forever make us immune to economic realities.

What percentage of the federal budget is spent on the military?

That depends on who you ask. The liberal anti-war groups put it at "over 40%." The federal government puts military spending as 17-20% of the budget. Creative accounting practices can skew the numbers to make just about any case one desires.
Most likely, the truth is somewhere in the middle, like it usually is.

Most anti-war groups will include in military spending such things as a percentage of non-military government officials' salaries for time spent discussing military matters, a percentage of interest on our national debt that may have been used to fund previous wars (I've seen as high as 80%), veteran's benefits obligations, and of course portions of reconstruction and foreign aid that might be necessary because of our prior military actions.

I admit I used the Government's figure, perhaps foolish of me.

Stuart: "I'll say it again, Social Security is very solvent. You will get yours if you live that long and I will get mine."

"Solvency" is one of those words. If SS is presently solvent, but the date when it no longer will be solvent is calculable, can it really be called "solvent"?
I think at best, it is "presently solvent".
How about the present situation, with 13% unemployment. 13% of workers are not paying in, how does this effect "solvency"? If this continues for several more years, what result?

How about a major war such as WW1, or WWII? Never thought of, but entirely possible with the expansion of China and India. The competition for resources will become extreme.

"Solvency" will probably be maintained, but only through higher taxes on the productive. The only reason this is not a Ponzi Scheme is that the government runs it and it has bcome an "entitlement". It is similar to gambling having once been a crime. Now that the government gets part of the take "gaming" is a sacrament.

"expansion of the service economy", when I studied Economics this was thought of as "shining each other's shoes". What happens when the shoes wear out? I am surprised by a growth sector in the "service economy". That is the growth of "doggy daycare", it is exploding at a time I would think it would contract. Several failed supermarkets in my area are now Doggy Daycare. My friends with large amounts of commercial property all have at least one such tenant. This also speaks to the low cost of commercial space.

We may not be the best in everything - we can certainly take some hints from Germany and many other countries.

However, need I mention that the combination of Intel, Apple, Google, Microsoft and a few others are responsible for a vast percentage of that communication you are speaking about. In other words, we built a lot of the highway.

It is not just large corporations that are responsible, but irresponsible behavior by those same corporations and their owners. A large company such as google pays their workers very well - same with many of the others. Even Costco is known for decent wages!

But companies like wall mart have destroyed our downtowns, closed many American factories and lobbied the government for policies which benefit themselves.

Just a few short years ago, Wal Mart used to brag that they bought only American made items when possible. Imagine that!

Never the less, SS is not broke and my prediction stands. It will be fine based on the small tweaks they end up making every decade or so.

The real problem is health care costs.

Warrington:

Quite so. "Solvent with minor tweaks," by the described definition, means the government spends the next century making people work longer for less benefit and with greater reliance on funds taken from the productive economy.

Of course, solvency also requires the government to be able to persuade people to support a particular program, and as I said, I don't expect ever to collect Social Security.

I came across an interesting fact today.

The largest holder of US Treasuries in the world is the Social Security Trust Fund at $2.2 Trillion.

They can dissolve that dent by killing social security which is probably whats behind the endless calls for it to be killed.

Doughboys, you are missing some facts. The calls for killing SocSec have nothing to do with writing off $2.2T of federal debt. They have everything to do with it being an unsustainable Ponzi scheme from its very inception. The "Trust Fund" assets, which are not any kind of real asset at all, represent the "funded" portion of SocSec's liability. But the unfunded actuarial liability (the present value of future payouts less the present value of assets), backed by no pretense of assets at all, is much larger - I believe in excess of $18 trillion as of now. The only way to pay out those liabilities in the future is to raise taxes to such a high level that the economy, and possibly (probably) our civil society, would collapse.

One need not be a mathematician, or an economist, to recognize the seeds of destruction in the current SS system.

1. Longevity is increasing, so, "participants" will be collecting much longer;

2. Higher education is becoming more common, so it is longer before those participants begin to "contribute";

3. We are "enrolling" more and more "undocumented workers". under the current system they will contribute little as compared to their "benefits".

The latter group reminds me of the WWII generation that scored so well with SS. They began work when minimum wage was $.25 per hour and the SS tax was 6.2% (perhaps 4%, I don't have a reference at hand). When they began retiring in the 70's and 80's their "benefit" was determined by their earnings in the last years they worked. During most of their working lives, $100 per week was a good income. Inflation greatly elevated their wages and produced a "benefit" not reasonably related to their "contribution". If, as I assume, inflation continues; we will all be in about the same situation.

It has been mentioned that SS is "in surplus" at the moment. I am not certain of that, but know that it has occurred in a few recent years. Unfortunately, this has not been added to the fund, but rather "loaned" to the government. To support the system, the government will have to repay this (with interest) by taxation of the producing individuals. Potential "class warfare" anyone?

We all have our opinions and I have exhausted mine. A final thought, if Social Security is so good, why doesn't the government use it?

I am leaving my social security in and not touching it till I reach 70 when I have to start receiving a check. According to local social security office the interest build up will guarantee a monthly pay check over $2,500.

Seeing how now I currently spend $3,000/mo for living, travel and entertainment expenses with left over in Honolulu that leaves me more to invest or bank!

>>>means the government spends the next century making people work longer for less benefit
---said Justin

Justin, what part of the facts or mortality can't you get your mind around?

First of all, many people do not enter the workforce these days until 25 or after due to college and grad school. Even then, their earning power is generally low.

Secondly, I pointed out that when SS was first started, the average age of death was the same year as benefits started - about 65.

Now the average age is 78 or close, and you can collect at 62 or earlier.

Somehow you look at the facts and come up with an opposite opinion.

And,BTW, you don't have to participate at a high level. Those who work for themselves can often pay a low salary and make the rest of the money in dividends from their little corporation (mom and pop store, etc.) - SS is not due on the dividend part.

I hope to not need my ss, as I have been planning for decades to be financially independent by then. But, what the heck, I'll take the check and maybe use it for charity.

"The calls for killing SocSec have nothing to do with writing off $2.2T of federal debt. They have everything to do with it being an unsustainable Ponzi scheme from its very inception."

Yeah, but Medicare is perfectly fine, right, BobN ...?

IIRC, Medicare is even worse, at something like $34T.

Sorry to burst your hopes, Monique.

And of course, unfunded future payouts are different from actual debt in that their amount rises with inflation. So the typical solution used by irresponsible governments, to devalue outstanding debt by inflating the currency, doesn't work in this case.

But you have to give us this, BobN: the $500 billion that the Democrats' healthcare reform would cut from Medicare is only going to improve it, right ...?

Have another cup of Kool-Aid, Monique. It will help you see the wisdom of The One.