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good research, Steve. Thanks. Did you read those reports, or just paste
the links? I can't make heads or tails of the SSA stuff. CBO was much
clearer. <br>
<br>
I read: <a class="moz-txt-link-freetext" href="http://www.cbo.gov/showdoc.cfm?index=6068&sequence=0">http://www.cbo.gov/showdoc.cfm?index=6068&sequence=0</a> <br>
CBO testimony:<br>
Quote: If current spending and tax policies do not change, the aging of
the
baby-boom generation, combined with rising health care costs, will
cause a historic shift in the United States' fiscal situation.
Consistently large annual budget deficits would probably lead to an
ever-growing burden of federal debt held by the public. As the
government claimed an increasing share of national savings, the private
sector would have less to invest in creating new business equipment,
factories, technology, and other capital. That "crowding out" would
have a corrosive and potentially contractionary effect on the economy.
Although placing federal fiscal policy on a sustainable path will not
be easy, the sooner that policymakers act to do so, the less difficult
it will be to make economic and budgetary adjustments.<br>
End quote<br>
<br>
Well, sounds like a problem to me! Shows in Figure 1 the shift into the
red around 2018. They say 2020. <br>
Quote:To pay full benefits, the Social Security system will rely on
interest
on, and ultimately the redemption of, government bonds held in its
trust funds. At that point, the Treasury will have to find the money to
cover those obligations. Policymakers can provide that money in three
ways: by cutting back other spending in the budget, by raising taxes,
or by increasing government borrowing.
<br>
End quote<br>
You see, Steve, CBO says we have to redeem the IOUs. Where do we get
the money? (Republcans and Democrats greedily spent the surplus money.
Left and Right are equally short-sighted.) <br>
<br>
By 2050 we HAVE to cut benefits severely. What do we say to our
children? (See Figure 1 and testimony)<br>
<br>
Quote: <br>
<p>In the absence of other changes, the redemption of bonds can
continue until the trust funds are exhausted. In the Social Security
trustees' projections, that happens in 2042; in CBO's projections, it
occurs about a decade later, largely because CBO projects higher real
(inflation-adjusted) interest rates and slightly lower benefits for men
than the trustees do. Once the trust funds are exhausted, the program
will no longer have the legal authority to pay full benefits. As a
result, it will have to reduce payments to beneficiaries to match the
amount of revenue coming into the system each year. Although there is
some uncertainty about the size of that reduction, benefits would
probably have to be cut by 20 percent to 30 percent to match the
system's available revenue. </p>
<p>The key message is that some form of the program is, in fact,
sustainable indefinitely. With benefits reduced annually to match
available revenue (as they will be under current law when the trust
funds run out), the program can be continued forever. Of course, many
people may not consider a sudden cut in benefits of 20 percent to 30
percent to be a desirable policy. In addition, the budgetary demands of
filling the gap between benefits and dedicated revenues in the years
before the cut may prove onerous. But the program is sustainable from a
financing perspective. </p>
What is not sustainable is continuing to provide the present
level of scheduled benefits (those based on the benefit formulas that
exist today) given the present financing. Under current formulas,
outlays for scheduled benefits are projected to exceed available
revenues indefinitely after about 2020 (<i>see</i> <a
href="http://www.cbo.gov/showdoc.cfm?index=6068&sequence=0#figure2"><i>Figure
2</i></a>). That gap cannot be sustained without continual--and
substantial--injections of funds from the rest of the budget.
<br>
End quote <br>
<br>
We have a serious problem. Where is the solution? One is private
accounts. What other model will actually work? <br>
<br>
Steve Hovland wrote:<br>
<blockquote type="cite"
cite="mid01C521AD.B03688F0.shovland@mindspring.com">
<pre wrap="">If you're going to rely on authority, why
not listen to the people who are really
knowledgeable about this:
Social Security Trustees: <a class="moz-txt-link-freetext" href="http://www.ssa.gov/OACT/TR/TR04/index.html">http://www.ssa.gov/OACT/TR/TR04/index.html</a>
CBO: <a class="moz-txt-link-freetext" href="http://www.cbo.gov/SocialSecurity.cfm">http://www.cbo.gov/SocialSecurity.cfm</a>
Steve Hovland
<a class="moz-txt-link-abbreviated" href="http://www.stevehovland.net">www.stevehovland.net</a>
-----Original Message-----
From: Lynn D. Johnson, Ph.D. [<a class="moz-txt-link-abbreviated" href="mailto:SMTP:ljohnson@solution-consulting.com">SMTP:ljohnson@solution-consulting.com</a>]
Sent: Saturday, March 05, 2005 5:14 PM
To: The new improved paleopsych list
Subject: [Paleopsych] Exposing Steve's rhetoric re: Social Security Privatization
Steve, I will try to address your points. Let's not get angry and lose
IQ points.
Steve Hovland wrote:
</pre>
<blockquote type="cite">
<pre wrap="">You are forgetting that the Bushies concede that their
proposal does not solve the actuarial problem.
</pre>
</blockquote>
<pre wrap=""><!---->Cite a source, please. "Bushies" suggests a unified effort, smacks of a
conspiracy. There are many POVs on the SS issue. There is NO "Proposal"
but rather a variety of ideas being floated and debated. Bush himself
says he welcomes proposals. Bush never lies. (I know blood will shoot
from your eyes when you read that, but it seems to be more and more
apparent. He says what he means and he means what he says. I have been
re-evaluating my views on him lately.)
Quote:
<a class="moz-txt-link-freetext" href="http://www.teamncpa.org/fastfacts/20050217ff2.htm">http://www.teamncpa.org/fastfacts/20050217ff2.htm</a>
Alan Greenspan: If you're going to move to private accounts, which I
approve of, I think you have to do it in a cautious, gradual way. All in
all, I'm glad that if we are going to move in that direction, we're
going to move slowly and test the waters because I think it's a good
thing to do over the longer run. And eventually because the
pay-as-you-go system in my judgment is going to be very difficult to
manage, we are going to need an alternative."
"I would be very careful about very large increases in debt. But I do
believe that relatively small increases are not something that would
concern me. ... I would say over a trillion is large."
First it is important to remember that Social Security faces an $11
trillion debt if reforms are not made. However, the up-front
expenditures required to start personal accounts has been estimated at
about $2 trillion over the next several decades. How to fund the
transition is a central area of debate that has yet to be determined.
While borrowing the full amount would constitute a "very large" increase
in the debt and would be a concern, as Chairman Greenspan has noted,
there are other alternatives. For example:
* Sen. Lindsay Graham (R-S.C.) has recommended increasing the
payroll tax cap from $90,000 to about $150,000, essentially
financing the transition with higher payments from wealthier workers.
* The NCPA has suggested asking participating workers to invest an
extra percent to a percent-and-a-half of their income to help
finance the personal accounts. This approach, which would reduce
the amount diverted from the payroll tax, is similar to the
financing provisions of "Model 3" of the President's 2001
Commission to Strengthen Social Security.
* Congressman Paul Ryan (R-Wis.) and others would cut back other
government spending to free-up money to fund the accounts.
End Quote
</pre>
<blockquote type="cite">
<pre wrap="">What is your source for saying that in 2018 SS
goes into the red? I don't think the trustees are
saying that.
</pre>
</blockquote>
<pre wrap=""><!---->Senator Rick Santorum:
When President Roosevelt created Social Security, our nation's
demographics were considerably different. Life expectancy was much
shorter--it was lower than the retirement age at which benefits would
begin to be paid. Thus, workers greatly outnumbered Social Security
recipients. In 1945, there were 42 workers for every one retiree. In
1950, the ratio was 17 to 1, today it is 3 to 1, and when today's
workers retire there will be 2 workers supporting each retiree. Social
Security is heading for insolvency--the longer we wait to fix the
system, the more it will cost. Every year we wait costs an additional
$600 billion.
Last year's annual, bipartisan Social Security Trustees report further
highlighted the future insolvency of the current Social Security
program: they project that if no changes are made, in just thirteen
years the system will begin paying out more in benefits than it is
taking in as revenue. We owe it to our children and grandchildren to
provide for their retirement security as they have provided for current
and previous generations.
<a class="moz-txt-link-freetext" href="http://www.freedomworks.org/informed/issues_template.php?issue_id=2194">http://www.freedomworks.org/informed/issues_template.php?issue_id=2194</a>
Steve, note: 13 years, 5 plus 13 = 2018. In the red. And again, there is
NOTHING in the trust fund except IOUs. Nothing. That means to redeem the
IOUs we have to either raise taxes or cut government spending, both,
and/ or raise the retirement age and cut benefits. All very hard
choices. Each year the problems get worse.
</pre>
<blockquote type="cite">
<pre wrap="">The Laffer curve is a joke. It acts as if money taken
in taxes is shipped into space. It is spent, thus
increasing the size of the economy by increasing
the velocity of money.
</pre>
</blockquote>
<pre wrap=""><!---->"I don't think that word means what you think it means."
-- The Princess Bride
You might want to investigate this a little more thoroughly. The Laffer
curve is base on the pragmatic fact that government efforts to increase
prosperity are by in large a failure. That is because the real sources
of prosperity is private business, subject to competition. Taxes are -
always - a drain on the economy. The higher they are, the lower the
activity in the private sector. Rhetoric won't change that fact.
See: <a class="moz-txt-link-freetext" href="http://www.pbs.org/wgbh/commandingheights/hitest.html">http://www.pbs.org/wgbh/commandingheights/hitest.html</a>
Huge site, takes a while. You can get the book from your library and
study it out for yourself. Look at where Britain was before Maggie
Thatcher downsized government. Economists predicted at the time that by
2000, Britain's GDP would be lower than Albania's. That is where
government attempts to create prosperity get you. If you have a good
counter example, I am interested to see it. Note also the current
unemployment rates in welfare-state EEU.
For an overall review of the social secutiry problem from a partisan
view, see
<a class="moz-txt-link-freetext" href="http://www.heritage.org/Research/SocialSecurity/bg1827.cfm">http://www.heritage.org/Research/SocialSecurity/bg1827.cfm</a>
Please note that all the main points are referenced. That means I can
look up the supporting data and see if the author has been fair in the
citations. That is vital.
I'd like to see something from you, Steve, in the way of research, and
less in the way of unsupported statements. I enjoy dialog, but there
needs to be some facts behind it. Again, if I am wrong, I certainly want
to know about it.
At this point, I am more and more impressed with George Bush. The war is
working out much better than I would have thought. Three years ago I
said the war was about spreading democracy. I was fearful it wouldn't
happen. I was wrong.
His idea about social security shows vision and commitment to
leadership, and that means leading people not following them via focus
groups. I still am very unhappy with his first term domestically. We
will see.
Lynn
</pre>
<blockquote type="cite">
<pre wrap="">Steve Hovland
<a class="moz-txt-link-abbreviated" href="http://www.stevehovland.net">www.stevehovland.net</a>
-----Original Message-----
From: Lynn D. Johnson, Ph.D. [<a class="moz-txt-link-abbreviated" href="mailto:SMTP:ljohnson@solution-consulting.com">SMTP:ljohnson@solution-consulting.com</a>]
Sent: Wednesday, March 02, 2005 7:26 PM
To: The new improved paleopsych list
Subject: Re: [Paleopsych] Exposing the Echo Chamber Behind Social Security Privatization
Michael,
This is kind of an odd piece. I don't really understand the level of
animus on the topic. It is written in a rather ugly, hateful style, with
no genuine content and lots of logical falacies. There is lots of
guilt-by-association stuff, which is irrelevant to any logical analysis.
There is name-calling and labeling, which are classic cognitive errors.
Us-versus-them, and we are righteous and they are evil. All heat, no
light. What is your intention in publishing it?
I actually don't see that there is any reasonable alternative to
privitizing, if we get beyond the logical errors. The facts are known.
By 2018 the system goes into the red. There will be three workers
supporting each retired drone (I being one of them, presumably).
Usual alternatives:
1. Raise taxes: bad for the economy; the Laffer curve is not a joke
(hah! I made that up). Three workers cannot support one drone, even
someone like me who is so very deserving. Medicare and SS will consume
almost all of the federal budget.
2. Raise the retirement age: the most reasonable alternative, but
least palatable to the public. In Europe the trend is to retire in the
50s. That means crushing taxes, which is why the European economy is in
such trouble. Look at the unemployment figures.
3. Inflate the currency - unacceptable.
4. Import more and more foreign workers to compensate for the
plunging population rates. The only countries in the world that are
above shrinkage are third world. We see what has happened in Europe when
we import workers who don't have our best interests at heart.
5. Michael's solution????
Facts: There is NO MONEY in the trust account, just IOUs. To pay off the
so-called trust fund, we must raid other government programs and or
raise taxes and cripple the economy. This has been known since the late
1980s and Republicans as well as Democrats conspired to spend the money
and put IOUs into the treasury. What should have happened? Well, I
suppose buying commodities like gold, silver, copper, and so on would
have at least preserved the principal. But instead the money is gone,
spent on pork in both Red and Blue states.
The baby boomers hit retirement age in 3 years and following.
The country cannot support social programs, defense, and drones all
at the same time. What will be done? Europe cut its defense, and at this
point, European military is oxymoronic. The taxes are a huge drain, and
anti-capitalist laws make it suicide to try to start a company.
Social Security is not an insurance company. That was established at
the beginning, in a supreme court decision. Congress can change it at
any time, in any way.
Only by allowing people to OWN their retirement, only by creating an
ownership society where if I die at 64, I can pass my money on to my
children, can we get out of the corner we are in.
I'd like to see a coherent, data-based analysis that leads to any
other solution.
Lynn
Michael Christopher wrote:
</pre>
<blockquote type="cite">
<pre wrap="">Exposing the Echo Chamber Behind Social Security
Privatization
The Bush administration ventriloquists are out in full
force these days, breathlessly hyping "Personal
Retirement Accounts" as a way to save Social Security
by destroying it. For the average voter, getting a
handle on what the Bush administration is proposing to
do to Social Security is quite a challenge. The dozens
of bobbing heads and clicking fingers, holding forth
on cable news programming and the Internet is enough
to make anyone's head spin. Is that spokesman from the
Alliance for Worker Retirement Security speaking as an
independent economics expert, a civic-minded
individual or as a paid shill from a corporate-funded
front group?
If you're having trouble keeping track of all the
players, our very own SourceWatch can help. It will
tell you that the Alliance is sponsored by the
National Association of Manufacturers, the U.S.
Chamber of Commerce, and the Business Roundtable,
among other pro-business groups. It shares its
executive director Derrick Max and a number of its
members with the Coalition for the Modernization and
Protection of America's Social Security (COMPASS). In
fact, the Alliance and COMPASS both count as members
of the United Seniors Association, a corporate-funded
lobbying group that recently changed its name to
USANext.
The New York Times reported Monday that USANext is
launching a campaign "to spend as much as $10 million
on commercials and other tactics assailing AARP, the
powerhouse lobby opposing [Social Security] private
investment accounts." To oversee the operation,
USANext hired Chris LaCivita, recently of the 527
groups Swift Boat Veterans for Truth and Progress for
America and an employee of the DCI Group, a firm
specializing in astroturf with close ties to the Bush
White House. True to its word USANext, ran an ad on
the American Spectator that equates the AARP to the
"spit-on-the-troops/gay marriage lobby," as
TalkingPointsMemo blogger Josh Marshall has been
following.
Progress for America, after raising $38 million last
year to support Bush's reelection, has also jumped in
to the Social Security privatization game. PFA "has
estimated it will spend $20 million promoting private
accounts. It has run a series of ads on cable
television, including a spot that invokes the legacy
of Democratic President Franklin Roosevelt, who signed
the legislation creating the retirement system," the
Houston Chronicle reported.
PFA told the Chronicle it will be asking past donors
for money to fund their new campaign. The head of the
prominent investment firm Charles Schwab contributed
$50,000 to the group's political arm in 2004. Schwab
gave $75,000 more to the Club for Growth, which is
also lobbying for Social Security privatization and
expects to spend $10 million lobbying to promote
private accounts. Peter J. Ferrara, an alumnus of the
Cato Institute, Heritage Foundation and National
Center for Policy Analysis, is heading the Club's
Social Security Project.
"The emergence of the center-right phalanx backing the
Social Security proposal is a major victory for the
Cato Institute, a prominent libertarian group," The
Washington Post's Thomas Edsall wrote recently. "In
the late 1970s and early 1980s, Cato was almost alone
in its willingness to challenge the legitimacy of the
existing Social Security system, a politically
sacrosanct retirement program. Recognizing the
wariness of other conservatives to tackle Social
Security, Cato in 1983 published an article calling
for privatization of the system. The article argued
that companies that stand to profit from privatization
- 'the banks, insurance companies and other
institutions that will gain' - had to be brought into
alliance. Second, the article called for initiation of
'guerrilla warfare against both the current Social
Security system and the coalition that supports it.'"
Clearly, the "guerrilla warfare" has begun. And while
it may seem like we're playing a GOP version of Six
Degrees of Kevin Bacon, the stakes are high. The
foundations of the U.S. system to ensure that average
workers and their families are not left penniless, out
in the cold is under serious attack. At SourceWatch
we're tracking these innocent-enough sounding groups
and what they are doing. And the best part is, you can
help. SourceWatch is open to online citizens to add or
edit any article in our collaborative database of
people, groups and ideas shaping the public agenda.
The uncovering of the GOP plant Jeff Gannon (aka James
Guckert) in the White House press room was the work of
online citizen journalists, using their web research
skills to expose the fake reporter and the White
House's failure to explain truthfully how he got to
ask the President a question. We do the same thing at
SourceWatch, documenting the hidden connections
between corporate trade associations, astroturf
groups, and the White House.
Want to cover the newly minted website Generations
Together? Or find out what impact Women for a Social
Security Choice is having? How would you like to dig
in and discover the common elements shared by Alliance
for Retirement Prosperity and FreedomWorks?
So far, we've catalogued over two dozen articles on
individuals and groups that are promoting Bush's
Social Security privatization plan. There's plenty of
groups and people to go around. To get involved, visit
SourceWatch's "Welcome newcomers" page. On it you'll
find tips for using a Wiki (SourceWatch runs on Wiki
software), guidelines for writing SourceWatch articles
and for research using the Web, plus advise from
experienced SourceWatchers on how to research front
group.
<a class="moz-txt-link-freetext" href="http://www.prwatch.org/node/3310">http://www.prwatch.org/node/3310</a>
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</pre>
</blockquote>
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