“You said it, alright, and you said it again in that paragraph.”

You are arrogant and presumptuous to think that you know my political stance better than I do. I am not and never have been accepting of government waste. I don’t know how I can say it any more clearly. If you choose to ignore this unambiguous declaration, there’s nothing I can do about it. That’s simply your problem.

“I don’t see how you can obsess about a Social Security deficit that BEGINS in 2041, and not consider the national debt TODAY.”

The deficit will not begin in 2041, it will begin 2017. At that point, funds will have to be taken from general revenue to prop up Social Security. The sooner we take steps to fix the problem, the easier it will be. And unlike the selfish baby boomer generation, I don’t believe in indulging myself at the expense of future generations.

If an asteroid were going to strike the Earth in 2041, wouldn’t you start worrying about it now? Or would you just pass that problem off to future generations, too? Sorry kids – it’s not my problem.

Furthermore, I AM concerned about the national debt, today. I have never said otherwise. Again, you’re putting words in my mouth. If I had my way, we would not only balance the budget, we would put in a plan to to start paying off the national debt IMMEDIATELY. Did you go back and read comment 56? Or are you just going to continue ignoring what I’ve written and make up stuff?

“Every dollar we lose TODAY through fraud, waste, and abuse, adds to our deficit TODAY”

That’s true, but it’s not just true of wasteful spending. It’s true of ALL spending beyond the government’s receipts.

“In Social Security spending, we get Social Security benefits, however you feel about them. In abuses by military and homeland security contractors, we get less than nothing”

Social Security benefits go to seniors. You know, people who have had their entire lives to accumulate wealth. People like Warren Buffett, John Kerry and John McCain. Military and homeland security spending goes to defense contractors, who, in turn create jobs. That’s not nothing. You may not believe this is the optimal use of these funds – I don’t necessarily disagree. But do you think that giving government money to millionaires and billionaires IS the optimal use of those funds?

Warren Buffett collects roughly $20K in Social Security benefits each year. From my understanding of your position, you’re OK with that. What if, instead of going to Warren Buffett, that money went to Berkshire Hathaway? Would that be better or worse? Personally, I would MUCH prefer if Buffett’s Social Security checks went to Berkshire Hathaway. At least then, as a shareholder, I’d get a piece of it.

“The GOP’s privatisation vision is a real possibility, and that’s what I thought we were debating.”

I disagree that it’s a real possibility. The President’s privatization idea was DOA. Furthermore, I never supported it. I don’t believe substituting one huge government bureaucracy for another is progress. Did I even once mention the President’s proposal or endorse it? With 100% certainty, I can say the answer is no. You are, once again, putting words in my mouth.

“Phasing out Social Security in favour of privatised Thrift Savings Plans, or something along those lines, is a realistic possibility, but I suspect you’ll be as unhappy with it as I am.”

I would certainly prefer it to the current setup. The TSP has an S&P 500 index fund with a 0.015% expense ratio. If I could buy shares of that fund that had my name on them and belonged solely to me, I would be pretty happy with that. But I still think it would be a far better idea to just let people keep their money.

“No, you couldn’t and no, we wouldn’t. To date, the cost of the Iraq war is roughly $577 billion. ”

Actually, the figure rose to $653 billion while you blinked. But I’ll remind you that this is only the funding with the “Iraq” label on it. Recruitment dropped, worn out equipment needs to be replaced, some veterans are going to need treatment for life, and this, along with State Department funding do not carry the “Iraq” label. Here’s BBC’s breakdown from last May:
http://news.bbc.co.uk/2/hi/business/7304300.stm
Direct costs: $750bn
Future direct costs: c$500bn
Cost of US casualties: $600bn
Losses to economy: $400bn
Added interest: $600bn
Macro-economic impact: $1-$2 trillion

Did you drive in 2003 when we invaded Iraq? If so, then you’ll remember that oil prices started their steep rise at that time, and it took the recession to stop that rise. Gasoline prices rose, heating oil rose, electric utilities raised their prices, and you are ignoring that effect on our economy: Foreclosures, bankruptcies and delinquencies, “stimulus” rebate checks, financial companies collapsing, $700 billion to feed starving hedge-fund managers, accelerated use of unemployment benefits and reduced tax revenue, and who knows what 2009 will bring. Iraq is NOT the SOLE cause of our recession, but the effects on our economy are documented.

By the way what do you think the price of losing Afghanistan to the Taliban while we wasted our military in Iraq will be? http://news.bbc.co.uk/2/hi/south_asia/7770463.stm

“I am NOT accepting of government mismanagement. I have never said anything that indicates I am. That’s you putting words in my mouth. But Social Security and Medicare represent the greatest mismanagement of all.”
You said it, alright, and you said it again in that paragraph. The greatest mismanagement of all, “a $100 trillion problem”, that can’t be solved. Legislation that artificially increases the cost to taxpayers, can’t be changed to benefit taxpayers instead of drug companies. There’s not a thing we can do about it. This mismanagement was carved in stone on the third tablet Moses carried down, praise the Lord.
“It’s clear that you have latched on to this issue of government waste and profiteering. I get that. It’s a problem. But compared to Social Security and Medicare, it’s an insignificant problem. To draw an analogy, you’re worried about a heart attack patient’s genital warts.”
A better analogy would be comparing dieing from a heart attack with dieing from an untreated infection, which happens to a significant number of people without health insurance today. I don’t see how you can obsess about a Social Security deficit that BEGINS in 2041, and not consider the national debt TODAY. Every dollar we lose TODAY through fraud, waste, and abuse, adds to our deficit TODAY, and probably won’t even be paid back by 2041. In Social Security spending, we get Social Security benefits, however you feel about them. In abuses by military and homeland security contractors, we get less than nothing: Our deficit skyrockets TODAY, and these abuses will cost Americans their lives.
“Then cut out the 401k. Easy. Simple.”

Do you really think so? Current retirees planned their retirement with Social Security in mind. There is no way legislation will pass to take it away from them before 2041 if ever. Just stopping Social Security and Medicare simply won’t happen, and Bush’s privatisation “plan”, for lack of a better word, acknowledges this and discusses phasing out the current system.

The GOP’s privatisation vision is a real possibility, and that’s what I thought we were debating. There has been no serious discussion in DC about stopping Social Security and Medicare cold turkey.

Here are a few things Bush has said about his plan: It will be based on the Federal Employee’s Thrift Savings Plan (TSP), which is mostly like a 401k. The TSP is administered by the federal government, and employees contribute through pre-tax payroll deductions. It will avoid investment in the stock market, which leaves your Vanguard out in the cold. Read it and weep: http://www.csss.gov/reports/Final_report.pdf

I have never found any real details of the Bush plan, and can’t even guess at its final form, but I expect it to be consistent with the privatisation of Medicare Part d, which is why I keep bringing that up.

I’ll respect your desire to just throw Social Security and Medicare away, but I don’t believe it’s realistic. Phasing out Social Security in favour of privatised Thrift Savings Plans, or something along those lines, is a realistic possibility, but I suspect you’ll be as unhappy with it as I am.

Half the federal budget IS Social Security and Medicare. And in the future, Social Security and Medicare will become more like 80% of the federal budget. At least then, you won’t have to worry so much about government waste. There won’t be any money to fund it.

“I’d rather not go there, but I COULD blame the entire deficit on the Iraq war, and then we have a stalemate.”

No, you couldn’t and no, we wouldn’t. To date, the cost of the Iraq war is roughly $577 billion. That’s less than we spend on Social Security IN ONE YEAR. And that’s THREE orders of magnitude smaller than the entitlement shortfall.

“I’m curious about your acceptance of government mismanagement.”

I am NOT accepting of government mismanagement. I have never said anything that indicates I am. That’s you putting words in my mouth. But Social Security and Medicare represent the greatest mismanagement of all. It’s simply a matter of magnitude. I’m worried about a $100 trillion problem and you’re worried about a $1 trillion problem.

“Vanguard’s expense ratio is excellent, however when it is managed through a 401k plan, the manager of that plan gets a piece of the action.”

Then cut out the 401k. Easy. Simple.

“THAT is where the financial companies win and you lose by privatizing.”

How would financial companies win? If Social Security and Medicare were ended tomorrow and I were allowed to keep my FICA dollars, how would financial companies win? I would take my money, send it to Vanguard, and that would be it. Easy. Simple.

It’s clear that you have latched on to this issue of government waste and profiteering. I get that. It’s a problem. But compared to Social Security and Medicare, it’s an insignificant problem. To draw an analogy, you’re worried about a heart attack patient’s genital warts. Yes, they’re ugly, disgusting and embarrassing. But they’re not going to matter if the patient dies, are they?

I encourage you to put things in perspective and take emotion out of the equation. You’re upset about your portfolio dropping 40%. I understand that. But that doesn’t mean that Social Security is superior to investing in equities. As I’ve said many times, even with that 40% drop, the S&P 500 has FAR outperformed Social Security. You’re upset about government waste, fraud and abuse. I understand that, too. But that is a mere drop in the bucket compared to the problem presented by entitlement spending.

The public school system may have all but eliminated illiteracy in this country, but it’s clear that innumeracy is still rife.

Dustin, I’m truly sorry. I get a lot of verbal abuse from knee-jerk Republicans, who don’t even know what the issues are, let alone understand them. Yet, here I lump you with them, and treat you like they treat me. I sincerely apologize.

“I don’t know what course of action should take us forward. I do know that looking at history shows the government failing time after time to effectively administrate any sort of long-term program. This leads me to believe that whatever sort of solution for our problems we come up with probably shouldn’t include massive government administration.”

I don’t know what to do either. I really want to believe Obama will make a difference, but I can’t see an unethical government reforming itself. The fraud, waste, and abuse piss me off, but what really gets to me is our lawmakers singing the praise of free markets, while at the same time denying Americans the benefits of competition as they did with Medicare Part D.

I really believe Social Security is a scapegoat, brought to us by lobbyists of investment companies, to justify handing them fund management fees. To me, Medicare Part D amounts to theft of taxpayer money, and that Bush’s push to privatise is more of the same.

History supports your views of government, but there HAVE been times when Americans came together, like World War II, and we accomplished amazing things.

I must be delusional to think it could happen again.

“However, the numbers agree with me. You’re talking about a few billion here and a few billion there, maybe as much as $1 trillion in fraud, waste and abuse. I’m talking about a systemic $100 trillion shortfall due to entitlement spending. My issue is larger than yours by two orders of magnitude.”

You’re numbers are accurate enough in themselves, but they omit the rest of the federal budget. I’d rather not go there, but I COULD blame the entire deficit on the Iraq war, and then we have a stalemate.

I gave you two documents, not the whole picture. The one from the Oversight committee only covers what they have held hearings on, and frankly, even though their figures are accurate, their selection IS based on sour grapes over Bush. There are lots of others that made the news, like the Littoral Combat Ship, and FBI Virtual Case file. Pay attention to the news, and you’ll see a lot more, and let me give you a hint: A cable news station that has to tell you that it is ‘fair and balanced’ is not.

The GAO report I provided on Homeland Security is only one report. They have a monthly summary email list, and this report as well as the budget forecast were both in the email I received yesterday before replying. why don’t you subscribe and let me know what you think.

I’m curious about your acceptance of government mismanagement. I was a Republican back when that meant small, transparent government. Today, I’m a Democrat, but I’ll be independent for the next election. Both parties stink.

But think about that Homeland Security report. That’s YOUR tax dollars that were intended to save YOUR life, and whether deliberately through fraud, or unintentionally through ineptitude they have squandered YOUR protection.

I’m not even going to bring up the subject of Pork.

We are facing a Grand Canyon of debt, but I’ll remind you that the entire Grand Canyon was carved out by a single river over time. Your trillion dollar figure would account for a single year, and that would have turned our pre-bailout deficit of $400+ billion into a surplus of roughly the same size.

“What’s wrong with turning a profit? If you have a problem with turning a profit, perhaps you should work for free for a while. See how not turning a profit works for you. Besides which, I have no problem paying Vanguard a 0.18% expense ratio to manage my investments. It’s a small price to pay for a decent return. By the way, Social Security’s overhead expenses are about 1.2% or receipts.”

If you read what I said above about risks, success and rewards, you know I’m for profit. Vanguard’s expense ratio is excellent, however when it is managed through a 401k plan, the manager of that plan gets a piece of the action. In my company’s 401k plan, the manager receives from 0.08% to 0.48% beyond a particular fund’s fee, and THAT is where financial companies gain. I expect that the financial company fees will be rigged by whatever law privatizes Social Security to screw the taxpayer, just as it was done with Medicare Part D. You’ll be lucky if you only lose 1.2% if a law passes.

THAT is where the financial companies win and you lose by privatizing.

Do you think that we see those problems and DON’T want to fix them? The difference arises when you apply a little rationality to a complex issue.

I’ve had no Koolaid, I didn’t realize you were being facetious in calling the US a superpower but I wasn’t going to address that point at all. The whole idea of a superpower is an ill-defined, stupid meme.

For some reason you seem to think that I’m a fan of the Republican party and social conservatism. I’m not. I think Palin would’ve been a disaster for America. The Republican party has become a joke. You’ll do well to remember that the idea of a left-right spectrum of political viewpoints is a lie propagated by humans’ built-in biases to favor the group they’re a part of.

It seems like to further your agenda you’ve resorted to lumping me in with those you consider the ‘bad guys’. I advise you that this sort of attitude will lead you to a distorted view of reality.

I think the government should do all that is possible to protect babies, provide health care, provide options for retirement. Unlike you, I’m not deluded by the sentiments that “We’ve got to do SOMETHING, think of the children!” All this sort of sentiment will lead to is the same mistakes that you’ve shown the government committing so well in your previous posts. I realize that we’ve got to apply thought and reason to how we regulate our economy. This doesn’t automatically mean handing the reigns over to the government. It also means accepting the possibility that it’s not possible to provide freedom, guaranteed retirement benefits, guaranteed health care, reasonable taxes, and all the other things we’d like to have to everyone. We should strive to do our best, but just because people aren’t getting the things they need doesn’t mean the best isn’t already being done. (I don’t think the best is already being done, but the thought process illustrates the general point.)

I don’t know what course of action should take us forward. I do know that looking at history shows the government failing time after time to effectively administrate any sort of long-term program. This leads me to believe that whatever sort of solution for our problems we come up with probably shouldn’t include massive government administration.

As far as you not believing that people mismanaged their retirement funds: All you said is true, and always has been true. Which is EXACTLY why you don’t keep all your retirement funds in the stock market as you approach retirement age. This is basic financial planning that almost every financial advisor will give you, and which everyone who lost such large chunks of their nest eggs didn’t follow. If there’s a way around the lost savings, and the way around is well known, and you didn’t follow the advice….that is mismanagement, no?

Your whole comment reeks of a strawman. No one here has advocated many of the positions you’re attacking.

Dustin, your theories seem well though out, and consistent, yet they fail the reality test. I’m showing you sample after sample of real problems that I not only acknowledge, I want to fix. I may be delusional in thinking that a government which is bought and sold by lobbyists would ever fix their own ethics, but the problems this causes taxpayers is very real, and they are hurting YOUR standard of living.

“Just because the US is a superpower doesn’t mean that it’s possible to prevent people from dieing from inadequate health coverage.”

First of all, you drank the Koolaid. America is on the brink of true poverty, because Americans are considered some sort of food source for corporations. I was being sarcastic about us being a superpower. We’re leaning over the same cliff that the USSR fell over when it broke apart. In all probability, in 10 years, wealthy countries like Somalia and Yemen will be outsourcing their call centers and manufacturing to us for the cheap labor.

Second of all, superpowers prevent death through education and health care. Abstinence ‘programs’ have lowered abortions, but increased unwanted pregnancies, in people like Sarah Palin’s daughter. Do you really think someone who doesn’t know where babies come from is going keep America’s lead in technology? They’ll be too busy hiding under the bed when God makes thunder and lightening because He’s angry..

Third of all, we keep people from dieing every day. Not enough of them. While Cheney runs around every day to his various undisclosed locations with a team of medics, Americans die from undiagnosed illnesses, diseases that are not treated until they are terminal, and lack of basic medicine every day. Part of that lack of medicine is throwing Capitalism out the window when Americans lost the right to negotiate for medicines in Medicare Part D. This law enriches drug company execs at the cost of American lives, and by the way, in keeping drug prices artificially high, they are stealing YOUR tax money.

On second thought, maybe you’re right… If a baby is stupid enough to be born to a poor family, the chump deserves to die. Here’s a second opinion on this subject. Google the author if you don’t recognize it.

‘Truly I say to you, to the extent that you did it to one of these brothers of Mine, even the least of them, you did it to Me.’

As far as people being at fault for “mismanaging” their funds, I have to disagree. In a Capitalist system, competition in a free marketplace provide an invisible hand that self regulates the Market. This invisible hand was in shackles from corporate abuses. It is this self-regulation that failed, and the market collapsed. It isn’t that the retirees mismanaged their funds, the problem is that the government mismanaged the Market. From the former chairman of the Fed:

“As I wrote last March: those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief. Such counterparty surveillance is a central pillar of our financial markets’ state of balance. If it fails, as occurred this year, market stability is undermined. “
Alan Greenspan, October 23, 2008

I’ll stick with Greenspan. If the Market will not regulate itself, then it needs to be regulated.

However, the numbers agree with me. You’re talking about a few billion here and a few billion there, maybe as much as $1 trillion in fraud, waste and abuse. I’m talking about a systemic $100 trillion shortfall due to entitlement spending. My issue is larger than yours by two orders of magnitude.

“Medicare Part D, which did make the Oversight Committee’s list, enacted as PUBLIC LAW 108–173—DEC. 8, 2003, was deliberately written to prevent negotiation of prescription drug prices.”

So it’s not enough that workers be forced to pay for senior’s prescription drugs, but now you want the drug companies to give them a discount? Perhaps Medicare should pay them less than cost, like primary care physicians. In Texas, only 38% of primary care physicians are accepting new Medicare patients because they lose money on every Medicare patient they see. My mother was visiting my sister in Texas over the summer. She spent a week trying to find a doctor that would accept Medicare. She finally ended up going to a cash-only practice. Yay Medicare.

“In privatising Social Security, we enact into Law the same corporate profits for investment companies that Medicare gave to the drug companies.”

What’s wrong with turning a profit? If you have a problem with turning a profit, perhaps you should work for free for a while. See how not turning a profit works for you. Besides which, I have no problem paying Vanguard a 0.18% expense ratio to manage my investments. It’s a small price to pay for a decent return. By the way, Social Security’s overhead expenses are about 1.2% of receipts.

“How are your portfolios doing?”

My portfolio is beaten up, just like everyone else’s. But let’s keep thing in perspective. The fact is that, even including Monday’s 8% drop, the S&P 500 has yielded a 4.54% annualized, real return over the past 40 years. That’s a whole lot more than any retiree can hope to get from Social Security. If I had retired on Monday, I wouldn’t exactly be happy about the plummet. But what I would be upset about is that I wasn’t able to invest my FICA dollars. If I had, I’d be much better off.

“As far as Medicare goes, it is hideously mismanaged, and the law was WRITTEN to take advantage of taxpayers as I showed above.”

If by “take advantage of taxpayers”, you mean take money from workers and give it to seniors, then yes, I agree that the law was written to take advantage of taxpayers. But then, that’s what seniors want.

“I favour nationalized health care, that would render obsolete the current Medicare/Medicaid system.”

From a strictly mathematical standpoint, a single-payer health care system is the way to go. But you have to ask yourself who is going to be running the system. Oh, that’s right, it’s Congress and, by extension, special interest groups. If their (mis-)management of Medicare is any indication, a single-payer health care system would be a disaster. I’ll pass, thank you.

“No one has mentioned Social Security’s survivor or disability benefits. Are these OK, or did you just not know about them.”

No, I’m not OK with them. Everyone with earned income pays Social Security taxes, even those living in poverty. That’s not OK. Furthermore, I don’t think a disabled billionaire or a billionaire’s widow(er) should collect Social Security. But, hey, if you’re on board with that, everyone’s entitled to an opinion.

“My argument is that it is NOT Social Security that is unaffordable. The financial problems we face are primarily due to government’s terrible mismanagement
…
it is my position that after raising, or eliminating that cap, no further sacrifice is necessary for anyone in a well managed system.”

Again, you’re entitled to your opinion. However, the numbers do not support you. Social Security obligations are expected to hit 6.2% of GDP by 2030. Earned income is about 49% of GDP. Even if the Social Security tax were applied to all earned income, the tax rate would have to be increased to 12.67%. No big deal, right? It’s just 12.4%, today. Not so fast.

First of all, if you extend the Social Security tax to all earned income, you’re giving people more incentive to dodge the tax. Just ask John Edwards about that. Also, are you going to pay higher benefits to those now paying higher taxes? That’s what you said before. The more you work, the more you get, right? You took risks, you succeeded and you deserve the reward, right? Well, that’s going to add to Social Security’s obligations. Or did I misinterpret you? (As an aside, I’d like to hear how the risks you took compare to the risks many a cleaning staffer took by leaving their home country and coming to the United States.)

Furthermore, Social Security is less than half of the story. By 2075, Medicare obligations are expected to 9.6% of GDP. Add that to the 6.2% for Social Security and you have 15.8% of GDP going to Social Security and Medicare. So now we’re talking about increasing payroll taxes to 32.29%. That’s more than double what it is today; almost three times what it was in 1973. Obviously, you have no qualms about leaving such a heavy burden to future generations. But personally, I think it’s a crime of Biblical proportions.

Additionally, if losing money in your retirement saving for 5-10 years (100% of the 10 year periods in the stock market have made money and something along the lines of 80-90% of the 5 year periods) is not acceptable, follow the advice of nearly every financial advisor…don’t leave all your money in the stock market as you near retirement!

I’m also not sure why people think it’s some unalienable right that they have to/get to retire at xx age. If your portfolio has lost more money than you can afford to live off of at your retirement age, then guess what? You’re going to be working a while longer. That’s the way life works. You’ve gambled by leaving your retirement in the stock market, or by waiting too long to start saving, and now you’ve lost the gamble that would allow you to retire at your target age.

The solution to people having grossly mis-managed retirement funds isn’t to turn their management over to the greatest money mismanager in the world. The best way we have to predict the future is to look at history. Well-managed funds with a solid base in the stock market have a 100% success rate at delivering a sufficient retirement nest egg. The US Government has a horrible success rate at managing…anything. Just because many people haven’t managed their retirement well doesn’t mean the solution is to give it over to the government. People seem unable to accept the possibility that the best system will still leave people behind. Unfortunately, there’s nothing that shows us that a system that covers everyone well can exist.

This kind of reminds me of the same thought process that people who used the current financial downturn as “proof” that free markets/capitalism was a bad thing. I wrote a bit about that here:

http://blog.contriving.net/2008/11/08/no-the-economic-downturn-doesnt-prove-you-right/

Frighteningly enough, those waste, fraud, and abuse figures are accurate, and most of them have been in the news over the past few years. The items in this list are only what there have been hearings on. It is in no way complete. Coming from Wexler’s office, I can understand your suspicion of it being sour grapes over Bush. I hope you show that skepticism towards our entire government, and not Just Democrats. You have a world of information at your fingerprints, and you should check out some of the items in the bibliography at the bottom of the oversight committee list.

The Government Accountability Office (www.gao.gov) is an organisation of non-partisan auditors. They do excellent work, and their figures were always accurate to the best of my ability to verify them when I didn’t believe their reports. This report, titled “The Nation’s Long-Term Fiscal Outlook: September 2008 Update”, makes your earlier forecast of our national debt look optimistic in comparison. I agree with you about the dangers of our national debt, it’s the cause of that debt that I disagree with. http://www.gao.gov/products/GAO-09-94R

Please read that report, which validates your earlier posting, and then read this report, published last month, which validates my assertion of waste and abuse, if not fraud. It is titled, “Department of Homeland Security: Billions Invested in Major Programs Lack Appropriate Oversight”. http://www.gao.gov/products/GAO-09-29

Some of it overlaps the Oversight Committee’s summary, but this report was produced this year, for 2007, both years under Democratic House and Senate. This report indicates no partisan favouritism, and I hope you will find the GAO as credible a source as I do.

The real problem is that our government is horribly mismanaged, and if it was a private company, it would be dead broke…. Wait a minute, the United States IS dead broke.

Medicare Part D, which did make the Oversight Committee’s list, enacted as PUBLIC LAW 108–173—DEC. 8, 2003, was deliberately written to prevent negotiation of prescription drug prices. This hurts the taxpayer, and increases the profit to drug companies. The link I posted above was bad, this one works: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s3rs.txt.pdf

In privatising Social Security, we enact into Law the same corporate profits for investment companies that Medicare gave to the drug companies. Well over 100 million working customers along with all of their management fees and charges.

Of course, we the taxpayers are better off because historically, the stock market always goes up over time. This works just fine, unless your part of history falls in 1929 or 2008. I have two employees with less than 3 years to go until they are 65, and both of them have lost 50% of the value of their 401k. How are your portfolios doing?

Tough luck! They should have put their money into safe money market accounts if they are close to retirement, just like these investors in the Reserve Primary Fund, who are now wondering how much of their primary investment they might get back and when they might see it.
http://www.nytimes.com/2008/12/04/business/04reserve.html?

The same hold true these 401k investors who are forced to take money out of their accounts before the market can recover, or just have the penalties taken from them. It’s their fault for not putting their money in savings accounts, and just embracing poverty as their spending power shrinks due to cost of living. When the money runs out, they can start shoplifting, like they do in Japan.
http://www.heraldextra.com/content/view/288762/18/
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/29/AR2008112901913_pf.html

I’m not getting a sense of security in this picture, are you?

As far as Medicare goes, it is hideously mismanaged, and the law was WRITTEN to take advantage of taxpayers as I showed above. Yes, changes have to be made. But look at the health care industry in general, where up to 50% of the $2.3 Trillion spent today is waste. http://www.washingtonpost.com/wp-dyn/content/article/2008/11/29/AR2008112902182.html?nav=rss_politics

One of my friends is being garnished for a medical procedure performed on his wife that his health plan doesn’t want to cover. Another friend’s employer was just absorbed in a merger, with a drastic cut in medical benefits. He can’t afford his medicine at all. Face it: The system we have does not work. I favour nationalized health care, that would render obsolete the current Medicare/Medicaid system. If managed with transparency and oversight, which are lacking in today’s system, I believe this would save taxpayers money and improve American’s standard of living. I’m talking about medical care, not cosmetic stuff. I find it odd that the worlds ONLY remaining Superpower lets its citizens die from neglect.

No one has mentioned Social Security’s survivor or disability benefits. Are these OK, or did you just not know about them.

The average monthly payment for retirement benefits in 2009 is $1,153. That doesn’t even make one month’s payment on my apartment, but for my 83 year old mother, who is living on a fixed income and requires a walker to get around, this is a lot of money. And, yes, I do pay part of her expenses. Her Social Security benefit translates directly to my own finances.

The figure above is an AVERAGE. The actual benefit that is paid is calculated on an individual basis based on a lifetimes payment into the system. In other words, the more I work, the more I get. That’s the way it should be. I think the technical phrase is “quid pro quo.” My retirement benefits will be more than the benefits my building’s entire night cleaning staff combined, and I am alright with that because I took risks, I succeeded, and I deserve the reward.

My argument is that it is NOT Social Security that is unaffordable. The financial problems we face are primarily due to government’s terrible mismanagement , and laws, such as the one that is proposed to replace Social Security with private accounts, which are written to benefit whichever lobbyist pays for them and not the taxpayer.

As I stated in my original comment, I’m already over the cap on Social Security contributions, and it is my position that after raising, or eliminating that cap, no further sacrifice is necessary for anyone in a well managed system.

————————————————–

Right, but those are the very things that help keep freeloaders off of the current system. (Help, not prevent)

You’re trading administrating the question-asking for paying for freeloaders. After all, the same incentive (to work hard to get above the poverty threshold) exists under the current system that you propose will keep people from freeloading under your proposed system. The difference is that, under the current system, a certain percentage of the freeloaders are caught by the subjective question-asking.

I’m not convinced that the other benefits you mention outweigh this downside.

I agree, it is a pretty serious moral hazard. But, as you pointed out, any kind of welfare program induces a moral hazard. In effect, such a program would create a 100% marginal tax rate on income below the poverty line. However, I disagree that there’s absolutely no incentive to work. The incentive is to work hard enough to get above the poverty threshold. Some may believe that’s impossible (and, indeed, they might be right) and so the incentive is eliminated. But that doesn’t mean it’s not there.

That said, I prefer this approach to the status quo for a number of reasons:

1) It’s not subjective. There’s no “you should work harder” or “you’ve been on welfare too long” or “you’re just a bum” or “are you really disabled?” or “well, how disabled are you?” It’s completely objective – no questions asked.

2) It’s cheap. OK, saying that $679 billion is cheap might be a little crass. But it’s cheaper than what we’re currently doing. The United States spent $1.1 trillion on social programs in 2006. Of course, $337 billion of that was recaptured in taxes, so the net amount was only $775 billion.

3) It’s 100% effective. Despite the impressive dollar amount currently spent on social programs, 32 million Americans still live in poverty and 70 million Americans can’t afford health care. Our current anti-poverty programs are only 39% effective and health care programs are only 25% effective.

4) It doesn’t tax people in to poverty. In 2006, social programs helped 34 million people out of poverty and get health care. Unfortunately, we taxed about 11 million people in to poverty. This is not a case of “you win some, you lose some”. That is simply unacceptable.

I’m not saying my proposal is the best possible. But I will argue that it’s a whole lot better than what we’ve got going on right now. And I’m always open to suggestion.

I like the thought behind this whole comment, except this part just won’t work.

Where is the incentive to work? If the government is just going to give me the money, no questions asked…why would the millions of people in this category even get a job?

Granted, this conundrum faces all welfare programs, but this sort of program makes the decision to not work at all, or to work less to keep below the poverty threshold, a simple and obvious decision.

Yes, there was a surplus in FY 2000 (as well as 1998, 1999 and 2001). But don’t write the Vatican to nominate Clinton for sainthood quite yet. Recall there was a Republican Congress at the time. And the national debt still increased by $1.5 trillion (37%) under the Clinton administration. I’ll grant you that’s a lot better than the Bush administration has done. Speaking of President Bush, isn’t he a baby boomer?

“I would sacrifice a lot for my country, and the House Oversight Committee was kind enough to compile a list for me”

This is an excellent start. Assuming 100% of those dollar amounts are waste, fraud and abuse, the total is $1.7 trillion. Now if you could only come up with another $97.5 trillion to cover the unfunded liabilities of Social Security and Medicare. Also, I asked what YOU would sacrifice, not what you would tell others to sacrifice. Would you be willing to take upon yourself the sacrifices that you have forced upon future generations or not?

“Programs to allow Americans to lead a healthy life are quite affordable if we stop this redistribution of wealth.
…
Are you really telling me that you want these people to starve so you can have a few more bucks in your pocket?”

No. And if you go back and read comment #56, you’ll see that’s not my stance at all. I have absolutely no problem with taking from the rich to help the poor. I think it’s great. My problem is with taking from WORKERS (no matter how poor) to give to the SENIORS (no matter how rich). And that’s what Social Security and Medicare are all about.

That is a very responsible budget for a ‘tax and spend’ Democrat., and we were a wealthy nation that could take better care of its people. In April 2004, the same document states a deficit of $477 billion under Bush, and that’s with Republicans controlling both the House and Senate. Whatever administration is in power cooks the books to make it seem painless, http://www.usatoday.com/news/washington/2006-08-02-deficit-usat_x.htm, and I’m not really sure if ANYONE knows the true budget figures, but I’m sure we’ll agree that it’s grown much worse over the last 8 years.

I would sacrifice a lot for my country, and the House Oversight Committee was kind enough to compile a list for me at http://oversight.house.gov/documents/20081003181709.pdf

I won’t repeat the whole list, but these are some of the things I would sacrifice: Waste Identified in Contracting Database, $1.1 trillion; Unaccountable U.S. Spending In Iraq, $15 billion, Waste from Medicare Part D Switch to Private Insurers, $75 billion; Drug Expenses for Dual Eligible Beneficiaries, $3.7 billion; Waste and Mismanagement of Katrina Contracts, $8.75 billion; Wasteful Homeland Security Contracts, $81 billion; Excessive Crop Insurance Subsidies, $11 billion; and just imagine how much waste, fraud, and abuse will be added with the bailout.

If you want to talk about a ‘redistribution of wealth’, let’s start with that list above. Some of the waste above can be attributed to stupidity, as we have seen time and again since Jan 20, 2001, but personally I’d bet that most of this list is a redistribution of Taxpayer wealth into the pockets of crooks. Programs to allow Americans to lead a healthy life are quite affordable if we stop this redistribution of wealth.

And Bill, this is a disaster, just like Katrina. People have lost their homes. In New York, homeless shelters were overcrowded with 2,800 people last month, while the previous record in 2003 was 9,200.

We’re averaging over 500,000 INITIAL jobless claims per week. These INITIAL claims do not include people who are already collecting, or whose benefits have already run out. These are Americans who WANT to work, but can’t find a job. These are taxpayers who are not any problem to society.

30 Million Americans are on food stamps last month, the largest number since Katrina, and local food pantries have been experiencing a 20%-100% increase in visits over the last 6 months. Are you really telling me that you want these people to starve so you can have a few more bucks in your pocket?

@Ian,
You’re half right in stating “people wake up and realize that they can elect people who promise to give the most handouts.” That was true in the past, but I don’t think citizens have much representation any more. Lobbyists, with their ‘campaign contributions’, are writing the legislation. For example, Medicare Part D prohibits the government from negotiating lower prices for Drugs. This clearly benefits the drug companies at the expense of the taxpayer. Here is the bill that attempted to restore bargaining power for lower costs: http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.4:

You are obviously a bright guy with strong opinions. I like that. It doesn’t appear that you are going to move off your position about baby boomers and that’s OK. So I think I will close my part of our dialog by sincerely inviting you to visit my blog now and then to share some more of your views there as well as here. Not only will I benefit but so will my other readers.

Thanks again.

Today, that person gets a standard deduction of $5,450 and a personal exemption of $3,500. So his taxable income is $91,050. Consult the handy tax tables and we see that his income tax is $19,472.25. His income is under the Social Security limit of $102K, so he pays the full 7.65% payroll tax. That’s another $7,650. The grand total is $21,122.25 or 27.12% of his income.

In 1973, the equivalent salary was $20,501.17. The standard deduction was $2K and the personal exemption was $750. So his taxable income was $17,751.17. Computing the income tax is a little laborious because there were so many brackets, but Excel handled it quite nicely. His income tax is $4,425.40. The Social Security base back then was only $10,800, so he only pays the 5.85% tax on that amount. His payroll taxes come out to be $631.80 for a grand total of $5057.20 or 24.67% of income.

Now, it doesn’t take a PhD in math to see that 24.67% is less than 27.12%. The absolute difference is 2.45% but the relative difference is almost 10%. And that doesn’t even take the employer portion of FICA in to account. If you toss that in, the disparity grows to 5.38% (20% relative difference). So I stand by my complaint of higher taxes, lower benefits and massive debt.

“BTW – I’m trying to remember which generation brought us the dotcom bubble. Do you recall?”

Well, let’s see… the dotcom bubble started in the late 90s – call it 1995. The average baby boomer was born in 1955, making them 40 years old in 1995: perfect age for middle management. Surely you don’t mean to pass the buck to Generation X. Generation X was just out of college in 1995. They weren’t in a position to effect anything in 1995, let alone the dotcom bubble.

“Start blaming politicians, not generations. There is plenty of blame to go around.”

“The government you elect is the government you deserve.” It’s a famous quote from a very smart man. Weren’t you the one who said that if Congress started to muck around with Social Security, you’d just give them the boot and vote in politicians more… amenable to the baby boomers’ demands?

BTW – I’m trying to remember which generation brought us the dotcom bubble. Do you recall?

Start blaming politicians, not generations. There is plenty of blame to go around.

The high marginal tax rates are irrelevant for one very important reason. Just like today, no one really paid them. The top marginal rate today is 35%. Yet Warren Buffett’s OVERALL rate is a mere 17.7%. Obviously very little, if any, of his income, is taxed at the top marginal rate. And even if people DID pay those high marginal rates, it doesn’t matter, because the baby boomers STILL ran huge deficits.

What other flaws would you like me to address?

You’re right that we can’t rewrite history. So here’s plan B:

1) Throw out Social Security, Medicare, Medicaid, and all the other public assistance/welfare programs (unemployment, worker’s compensation, EITC, food stamps, school lunches, housing subsidies, etc.)

2) Increase the poverty threshold to include health care. I estimate this will essentially require doubling the threshold.

3) Establish a new anti-poverty/health care program. If your family’s income is below your family’s poverty threshold, the government gives you the difference – no questions asked. How much would it cost? About $679 billion in 2006. Compare that to $878 billion for Social Security and Medicare alone.

4) Cancel the portion of the national debt that is intragovernmental holdings (roughly 2/5 of it). Start paying back the rest. If we amortized it over, say, 20 years at 4.6%, the annual payment would be $360 billion per year – eminently doable.

4) Replace the tax code with a single, flat income tax on incomes above the poverty threshold. Include ALL income and treat it all the same. Wages, salary, rents, royalties, capital gains, gambling winnings, interest, dividends, inheritances, gifts… all income. I estimate the rate would have to be 32%.

5) End all those tax shelters like 401k, 403b, IRA, etc.. Tax any money that hasn’t been taxed, including Roth earnings. That will generate a $4 trillion windfall.

6) Use that windfall to make lump sum payments to everyone who paid Social Security and Medicare taxes. The lump sum is calculated based on how much you paid in, plus as high an interest rate as possible. The interest rate has to be at least 4% to keep up with inflation.

I don’t think the baby boomer generation has “skated through” necessarily but they (politicians) have made things much more difficult for future generations.

So because you’ve been wronged we should all be so?

My mother taught me that “two wrongs do not make a right” and it seems to apply heavily to this situation.

You and others have referred to SS as a “redistribution of wealth” program. I don’t agree with that assessment but even assuming its true, boomers have been redistributing their wealth to the “greatest generation” for many years now. It’s not as if we have been immune to all of the problems you are concerned about.

Sarah, I think that is a great idea. How about we start with the baby boomers? Let’s go back and retroactively increase payroll taxes on the baby boomers. We’ll just make it equal to what it is today. Adjusted for inflation, that would put 1964′s payroll taxes at 15.3% on the first $14,600 of income. Compare that to the actual historical rate of 7.25% on the first $4,800 of income. It’s pretty clear that the baby boomers got a sweet deal on that one.

In addition to raising payroll taxes, we’re also going to have to cut some benefits. According to the latest trustees report, Social Security will only be able to pay 78% of promised benefits come 2041. Coincidentally, I will have just turned 62 in 2041. So if my benefits are going to be cut by 22%, I think it’s only fair if your benefits are also cut 22%. I’m so glad you wanted to work together on this.

While we’re at it, we should also push back the full retirement age to what it is today. Some baby boomers are young enough that they’ve already had their full retirement age pushed back to 67. But if you really want us to “come together in this crisis”, then we’re all going to have to make some sacrifices. So let’s just push everyone’s full retirement age back to 67. That’s fair, isn’t it?

But let’s not stop there. Let’s also talk about the $6.4 trillion national debt the baby boomers ran up. Somebody’s got to pay for that. If the baby boomers had had the wherewithal to actually pay for their spending instead of just running massive deficits, we wouldn’t be stuck paying $320 billion a year in interest (yes, that’s $1000 per man, woman and child in the United States… in interest). So let’s also retroactively raise income taxes to pay off that massive debt. The baby boomers should have a few trillion to spare since they paid so little in taxes for the past few decades.

Yes, coming together is clearly the answer. But, you see, my generation is already making the sacrifices our parents forced upon us. We’re paying higher payroll taxes on more income. We’re going to have our Social Security benefits cut, both in duration and amount. We’re paying higher income taxes, just to cover the INTEREST on the baby boomer’s deficit spending. And I haven’t even touched on Medicare.

What sacrifices are you willing to make, Sarah?

@Mr. ToughMoneyLove, Thank you, but you have more company than you think. I believe in taking care of myself, and would be humiliated to go to a food bank or welfare, but especially in today’s economy, we often don’t have a choice. As Americans, I believe we should come together in this crisis like we did on 9/11 or in the aftermath of Katrina.

I’m not a huge fan of replacing the income tax with a sales tax. I agree that consumption and debt are out of control. I would go so far as to say it’s an epidemic. However, I’m not convinced that switching taxation from income to consumption would necessarily change that. Rampant consumption is, sadly, part of our culture. Is a change in tax policy enough to alter that? I’m not sure. Besides which, taxpayers aren’t even close to maxing out their current tax deferral options (IRA & 401k). Heck, I have hard time convincing my coworkers to contribute 8% to get our full employer match (and they’re mostly MSs and PhDs).

Another reason I don’t favor taxing consumption is Warren Buffett. In an average year, Mr. Buffett might make… $4-5 billion. How much of that is he actually going to spend? Personally, I have no idea, but let’s just say it’s 1% (how one can get by on a mere $45 million per year, I’ll never know…). And let’s assume the sales tax rate is 30%. Mr. Buffett will end up paying $14 million in taxes, which amounts to a whopping 0.3% of his income. I hate using the word ‘fair’ because doing so implies it has an objective meaning, but that’s just not fair.

I don’t have anything against Warren Buffett. I am upset that his overall tax rate is 17.7% while we mortals pay more like 25-30%. But he’s upset about that, too, so I think he’s probably one of the good guys. However, I don’t think the money-making machine that is Warren Buffett should be allowed to make money virtually unfettered. An income tax helps put the breaks on that machine and makes sure that he pays taxes just like the rest of us. A consumption tax, on the other hand, would have essentially no impact on Mr. Buffett.

Tax advantaged plans do make it easier to save for retirement. A 401(k) plan essentially converts an income tax to a consumption tax. You do not pay anything on the income that goes in and then you pay tax only on what you take out, when you take it out, presumably to spend/consume. I am a proponent of consumption taxation as opposed to income taxation. What about you? Don’t you think that debt driven consumer spending and saving habits would improve if we were taxed on what we spend instead of what we earn? Doesn’t a 401(k) encourage that?

Part of the reason that a middle class baby boomer didn’t have a lot of money to invest for retirement is that they were paying payroll taxes. And they had it easy! Back in 1960, payroll taxes were only 5.8%. Today, they’re 14.2% (both numbers fairly account for the employer portion). In addition, the tax base has been increased way beyond inflation. To top it all off, today’s workers have had their benefits reduced by increasing the retirement age. Talk about a triple entente!

Also, tax shelters do not make it easier to invest for retirement. They just allow you to invest more. And even that is debatable. Assuming you’re in the 25% tax bracket, the federal government gives you a 25 cent tax break for every $1 you put in your 401k. In exchange, you promise not to touch that money until you’re 59.5 AND you pay ordinary income taxes on the entire amount. Of course, if you do touch that money before you’re 59.5, Uncle Sam will slap your hand with a 10% penalty.

But of course, that tax break doesn’t grow on trees. The government has to raise the money to cover it. That means they either raise other taxes or they run a deficit. If they raise taxes, you just get to pay for your own tax break now. If they run a deficit, you (and your descendants) will get to pay for your tax break over time (with interest). Aren’t you glad for tax shelters?

Just because you feel an amount of pain due to recent losses in the market does not make Social Security a viable or good program. If you had saved and invested appropriately (i.e. appropriate risk level for your stage in life) you should be fine. If you invested too aggressively then you will be hurting.

I’ve lost quite a bit out of my retirement too but I’m in it for the long haul and at my stage in life a more aggressive strategy is appropriate.

And who forced boomers to pay for their childrens’ educations? How about the kids pay their own way? I did. It’s hard but it’s doable and builds character.

I’m tired of all the excuses. Take care of yourself and your family and let me do the same. Stop trying to take my money to pay for “your” (collective) bad decisions.

Sarah…just because you’ve been paying into the system for over 20 years doesn’t mean YOUR money is still anywhere there. It’s been going to pay for OTHER people. You’ve gotten screwed and are demanding your money at the expensive of myself and others. So then we’ll get screwed…but you’ll be gone so you won’t care. Where does it end?

That is a serious cop out. There was nothing impeding the baby boomers from investing in the stock market to save for their own retirement. True, they didn’t have the tax shelters we have today (401k and IRA), but they also didn’t have crushingly high payroll taxes. And while indexing wasn’t invented until 1975 (praised be John Bogle), mutual funds have been around since 1924.

“BTW – 4.5% return over a 35 year retirement is problematic when you factor in inflation.”

4.54% is the REAL return (i.e. after inflation). The nominal (before inflation) return over the same period was 9.13%. That’s a lot of inflation, but remember, that period includes the the 70s and 80s when we saw double digit inflation.

For the boomers, keep in mind that a lot of us never had pension options where we worked and many of those that did (e.g., auto companies) are in terrible shape because of it. 401(k) plans were not even in the law until 1980. Contribution limits have also historically been low. This has handicapped a lot of us from doing everything that we can for ourselves.

BTW – 4.5% return over a 35 year retirement is problematic when you factor in inflation.

Let’s go with Mr. ToughMoneyLove’s suggestion of someone who retired in November 2007. I’ll assume this person retired at his full retirement age, so he was born in January 1942. And for simplicity, let’s assume he started working in January 1960, at age 18. The real, annualized, dollar cost average return of the S&P 500 from January 1960 to today is 4.54%. And yes, that includes yesterday’s 9% drop.

Now, a 4.54% rate of return won’t make you rich, but it’s enough to retire on. And it’s definitely better than you get with Social Security. Even the most liberal estimates of Social Security’s rate of return only put it in the 2-3% range. What’s worse, today’s younger works are all but guaranteed a NEGATIVE rate of return. Given the choice, I would take the stock market every day of the week and twice on Sunday (except they don’t trade on Sunday).

That said, there’s a much more important question we need to ask ourselves. Do we really want a wealth transfer program that takes money from workers and gives it to seniors? If you’re inclined to say yes, please first consider that the population of workers includes everyone with earned income, no matter how poor; and the population of seniors includes Warren Buffett, the richest man in the world. In other words, workers are not necessarily wealthy and seniors are not necessarily poor.

I have no problem with taking care of the poor. But Social Security goes way beyond that. According to the 2007 Current Population Survey, the total cost to eradicate poverty in the United States is $191 billion. That’s not in addition to current anti-poverty programs, including Social Security – that’s total. Compare that with Social Security’s budget of $549 billion for the year and it makes one start to wonder where all the money is going.

Tax the wealthy to help the poor and leave the middle class alone. If we didn’t tax the living bejesus out of the middle class (and perhaps provided a modicum of education), they could easily afford to provide for their own retirement. There’s just no need for this unwholesome, unethical and unsustainable intergenerational wealth transfer scheme. And the sooner we do away with it, the easier it will be.

The solvency “problem” is easy. Raise or eliminate the cap. I’m all for this, and my salary is already ABOVE the cap.

But I think the point is moot for the next decade at least. My pension has been frozen, and now almost all of my retirement funds will come from my 401k, which has lost 40% value over the past year. Any attempt to replace Social Security with a privatized version won’t happen until these memories fade, and I don’t think any politician will be foolish enough to advocate just getting rid of it.

Furthermore, I consider this current recession to be the result of systematic squeezing of the middle class, by allowing businesses to get away with more, and taking away consumer protections. The sheer volume of foreclosures argues strongly that it goes well beyond a few people who wanted more than they could afford. And no one really mentions that this same problem exists with credit cards and auto loans.

The wealthy at the top of the pyramid allowed their base to crumble, and now have to face the loss of their millions+ dollar bonuses. Any real real RECOVERY of our economy must begin at the base, with the American taxpayers. These bailouts for big businesses don’t address the issue, and at best just eases our collective slide into Poverty.

If you want a healthy economy, take away medical expenses and allow consumers more to spend. Increase Social Security to allow consumers to spend instead of hoard away in a 401k. Increase unemployment benefits so people don’t have to live off credit cards.

This recession is proof that trickle down doesn’t work. It’s time to take care of People, and Social Security is a good place to start.

I did my part – had three kids, two working and one still studying. I’m a small government guy but where is the plan to replace SS? There are workable plans to fix it but haven’t seen a replacement yet, except privatizing it. AARP says “no” which in today’s political environment usually means “no.” Maybe we can all get in the government Thrift Savings Plan? Or how about letting us withdraw our 401(k) funds (now depleted 40%) tax free?

Yes, that’s precisely what we need to do. Because if we don’t, the next generation is going to pay EVEN MORE in to the system and receive EVEN LESS in benefits. It’s a vicious cycle rooted in demographics. So until Congress is willing to legislate that people start having more children, there is really no way out.

The baby boomers hold most of the responsibility for the mess that is Social Security. After failing to have enough children to sustain Social Security, the baby boomer generation either didn’t have the foresight to see the pending demographic disaster or they were too lazy, too stupid or too selfish to do anything about it. And that’s on top of spending the United States in to $6.4 trillion of debt.

It’s time to make a stand and say enough is enough. We can’t keep borrowing against from future generations. Besides being unsustainable, it’s unethical and simply bad economics. I like your idea of the “do over” and I even have an idea of where to come up with the money. But I think expecting a full refund of your Social Security taxes with 6% interest is reaching. Everyone is going to have to make some sacrifices – even the baby bummers.

Just remember that none of us who are contributing in my generation are at the “top” of anything when it comes to SS. We are not on the sidelines pulling strings and taking out money. Also remember that we were at the “bottom” once just like you. Only by aging and paying in over many years, not by siphoning money, have we moved closer to collecting anything.

I have enjoyed exchanging views with you.

“attract investors into investing in little or nothing using promises of outlandish returns”

And how is that different from SS? As far as I see it … a few dollars come out of my paycheck and supposedly are for my benefit in the future. Except that they are being used now. I’ve been “investing” and promised my “returns” in the form of a (as currently calculated) $1,600 check each month when I retire. Seems pretty outlandish to me since I have no faith in seeing that actual check. So where will my benefit come from?

From those who start working in 10, 20, 30 years and start their own contributions to this system? If there are 14 workers for every one of you how many workers will there be for every one of me?

That seems very ponzi-like to me.

If it were a system that allowed me to invest MY money, taken out of my paycheck each month, it would be an actual retirement plan that I could rely on in the future. As it stands now I’m being snookered.

That is why calling SS a Ponzi scheme is over the top rhetoric,

Just as a Ponzi scheme requires more and more people coming in on the bottom to continue and will fail if those incoming ‘investors’ disappear, SS has fewer and fewer contributors as our country ages. Those at the bottom will be left holding an empty promise after paying their dues that went to someone else.

Also…I do think that the AARP has clout but that’s not a good thing IMHO. They are a political lobby … no better than any other lobby doing business to get things from the government on behalf of their clients. Where is the lobby for me? It’s hard to be a lobby of one…not nearly the same clout.

I will also concede that many Democrats opposed privitization of SS for the same reasons as the AARP. Nevertheless, I submit to you that the plan was DOA because the AARP opposed it, threatening Dems and Republicans alike. Whether you like the AARP or not, don’t you agree that it has that kind of clout?

Not technically a question, but do you have any response to this? When you say your biggest political ally was “whining”, how exactly is that “vigorous and uninhibited debate” and not “lack of respect”?

I would be happy to respond to any unanswered questions if I can. Remember, I claim only to have opinions, not all of the answers. There has been a lot of stuff flying back and forth – what questions remain open for me?

@castocreations – Please do not claim to speak for your generation, because you don’t.

No one who is reasonable thinks that 10-12% is going to be earned every year! If you haven’t accounted for this in your retirement planning, shame on you.