Friday-Sunday, April 22-24, 2005
More On Social Security
All arguments regarding the percentage rate that the
Social Security Trust Fund charges the federal
government (1.9%) are moot. George W. Bush's
economy relies on the federal government "borrowing" this money. There is
absolutely no reason that the Social Security
Administration couldn't, and shouldn't invest this money, or a
portion of it, themselves, for US, the
American people. President George W.
Bush points to a pile of
IOU's that represent the
Social Security "Lock Box", which he promised not to touch. He ought
to check signature on those IOU cards. They all say "George W.
Bush, President of the
Social Security is a sustainable program provided the money is handled responsibly. If the government didn't use the money for other purposes, we would have no issue at all. This is one approach for Social Security:
1. Slowly raise the salary cap.
2. Pay back the bonds in the trust fund.
3. Establish a lock box for the money.
Concerning unsustainable spending trends, let's examine the ever growing military budget that was raised by 4.8% for fiscal year 2006 while everything else was cut. The tax cuts and military spending account for 80% of the consumption of Clinton's budget surplus according to the Economic Policy Institute. The military budget will be in the trillions by 2015; much of the money sustains over 700 foreign bases.
We need to get realistic about spending. The first priority is the needs of the American people - health care, social security, job training and education. For defense spending, homeland security must be prioritized over further expansion of bases and weapon systems such as Star Wars, bunker busting nuclear bombs.
The key narrative for social security privatization supporters is a demographic argument about the ratio of workers to retirees. They claim there will not be enough workers to support the baby boomers in retirement.
An independent group called the "The Century Foundation" has debunked this premise. The social security actuaries have not been factoring in data from the census bureau. In fact, there has been more than enough legal immigration since the 1950's to support the baby boomers. See this URL for the study: http://www.socsec.org/commentary.asp?opedid=493
To Madman and his writers:
What Should Bush Have Done?
For the attack on Pearl Harbor, FDR declared war on the Japanese government, and killed Japanese soldiers and civilians more or less indiscriminately. Hitler declared war on the US and FDR responded in kind. Both sides killed soldiers and civilians more or less indiscriminately, but with somewhat less mutual savagery than in the Japanese conflict. In each instance what should FDR have done instead or at all?
For the attack on New York and Washington, Bush declared war on all terrorists and those, including governments and people, who harbored and aided the terrorists, and exercised considerably more selectivity than FDR in killing soldiers and civilians, partly because he had the technology to be somewhat selective. But what should Bush have done by way of retaliation instead or at all?
For my money, Bush’s domestic policies suck unbearably, but I find it difficult to construct a logic or policy that should have been followed in lieu of what actually took place. Certainly Bush’s killings have been conducted with much fewer losses of our people and of civilians and opposing soldiers than anything that I knew of in WW-II. But tell me, what do you know that I don’t?
President Bush, in my view, did the exact right thing by invading Afghanistan after the 911 attacks. After that, it was mistake after mistake after mistake. Job one was to finish in Afghanistan, Today, they are back to being one of the largest drug producing nation in the world and their economy relies upon their poppy seed production (now, I like bagels, but this is ridiculous).
As a Jew, I say good riddance to Sadaam Hussein. But is anyone thinks the situation there is better today, they ought to look again. If you want to see my views, go to http://www.nationalview.org/Iraq_Terrorism.htm. Also check out the thoughts of the first Iraqi Administrator, General Jay Garner, whose view was to:
"My preference was to put the Iraqis in charge as soon as we can and do it with some form of elections. Now by saying that I don't criticise what we're doing right now, what we're doing right now has a more orderly approach than to what I was espousing at that time, I just thought it was necessary to rapidly get the Iraqis in charge of their destiny with our firm hand over them, guiding them and helping them and that type of thing."
-General Jay Garner
"I just think that you... again, that we're better by establishing Government and re-establishing basic services and getting things picked up and letting that Government, and through their own electoral process, decide what's good for their country."
-General Jay Garner
"I'm a believer that you don't want to end the day with more enemies than you started with."
-General Jay Garner
Jay Garner is a very smart man who was fired for his foresight. One has to ask oneself what was to be gained by a long, drawn-out occupation. There is one word that comes to mind - Oil.
Finally, here is what I know that you might not know. President Bush listens to the wrong people at the wrong time. He had the right man on the ground, and wile others told him so, he listened to the small group of advisors that keep on giving him the wrong advise. Never admitting you are wrong is very dangerous for the leader of the free world.
When one is on a wrong course, one doesn't increase the speed to get there faster. One changes course and proceeds cautiously. Especially when lives are at stake
The Doctor and the Madman
Social security was never intended to be anyone's sole retirement plan. I feel badly for anyone who placed all their retirement dreams at the mercy of SS. It was designed as a safety net or supplement for poor elderly. My God everybody should know by now that they need to save outside of SS...that's why we have IRA's, 401K's, 403(b) etc...! I'm 53 and have known for 30 years that SS was not going to be sustainable. All of my future financial planning assumes no SS $ whatsoever. My grandmother is 98 and alive and well. She made 10 cents an hour as an immigrant and still managed to save and invest (she bought GM, GE, Chrysler, Ford and Westinghouse stock in 1930...guess what she's worth today!!!!) She uses her SS $ to invest for her great grandchildren.
Those at the upper end are already carrying the load (>60% of all tax revenue is paid by <10% of earners). As combined tax rates rise above 43 - 46% tax revenue actually falls! Most of those folks own their own businesses so they pay business income tax, then they pay personal income tax, then they pay the death tax...that's triple taxation on the same income...pretty fair, eh? One of the reasons I left private practice was double taxation.
I am not advocating trashing the system. The fix is to understand the "population wave" and adjust expectations accordingly. We need to get better yields than 1.9% and to be more realistic with retirement age. 65 is middle age anymore. Why any retired multimillionaire collects SS is beyond me anyway.
Finally, as for "single payer" why would you want to put all that power in the hands of one insurance company? Under the single payer proposal...all claims would be outsourced by the feds to one company, either Aetna or Cigna or some other giant for profit publically held investor owned company? I'd rather have payers compete.
That’s not true. According to Ridge Multop, the AARP’s top expert on Social Security, it certainly was designed to be just that, a retirement plan.
Your grandmother (God bless her at the age of 98) sounds like a smart woman. But today…along with the same expenses she had, we have: giant mortgages; giant car payments; and out of control fuel costs. My mother, at the age of 83, was able to put away enough money to keep living in a relatively comfortable fashion. She worked from the time my father died (at the age of 54 in 1975) until she had to retire due to a cancer that was found in her kidney at the age of 75 (she is in great health, thanks to Dr. Cummings and the Cancer Institute of New Jersey). At the age of 79, we thought she had dimensia. It turned out to be a menengioma the size of a grapefruit. She is making a Passover Sedar this weekend
George W. Bush said in his 1978 failed congressional campaign that Social security wouldn’t make it to 1988. he was wrong.
You neglected to say that many of those folk (the rich ones) inherited their money. I don’t care about that. You neglected to say that a person who earns $1 million per year pays only ½ of one percent of his salary to the SSA. You neglected to say that someone who earns his money off stocks pays only 15% in taxes while a working man or woman pays more than twice that much. Maybe 60% is paid by the top 10% of earners, but they control much more than 60% of the money that is out there. For the first time in the recorded economic history of the US, under President Reagan, 50% of the economy was controlled by 10% of the top wage earners. Today, that record has been broken.
The Death Tax” is a tax that only effects those whose combined earning is over $1.3 million dollars. 98% of Americans won’t pay an inheritance tax. But I will trade you the revocation of the inheritance tax if you agree that the capital gains tax should be the same as regular taxes paid on earnings.
Finally, the Single Payer System… If it could be run with the kind of overhead (less than 0.2%) and efficiency that the SSA has been run with, I wouldn’t have a problem with that, In lieu of that, a system that combines my idea of charging people 10% of their income (up to $80,000) for your plan of minimal health coverage would be just dandy.
one more thing. i have never heard of the fellow at AARP and would take what they say with a grain of salt. i would never join AARP and regulary discard their mailings. AARP is a front for a partisan political organization that is interested in advocacy...the last thing we need as a country is more advocacy. we need systemic solutions not special interest groups aguing for their own peculiar interests.
Just because you never heard of him doesn't make him less important. And I disagree with you on the AARP, but we are all entitled to our opinions.
If one has a giant mortgage and car payment...that is THEIR choice. No one needs to have those things. If so doing causes one to underfund their retirement...that is not society's problem. Personal accountability for one's own spending is still operative.
As for your mom, I'm glad she lived to a grand old age. But, just as an FYI, a large meningioma should have produced focal neurological findings, which are not inherently seen in dementia. A well conducted neuro exam shouild have suggested an alternative diagnosis, i.e, a structural lesion.
I think we should all go back and read the language about the original intent of SS. I am quite certain it was not intended to be anyone' sole means of support. Just like every other publicly funded welfare program, it is meant to provide a minimum level of subsistence. If anyone out there is under the misguided impression that te government can or will ever be able to provide everything you need in life....well that is sheer lunacy!
How do you know that wealthy folks all inherited their money? Show me the data. I'm pretty well off and never inherited a dime. Everyone I know with dough got it by working very, very hard. No 8 hour days. No 40 hour weeks. When you own your own business a 40 hour week is a part time job. Similarly, I can't understand why anyone would even want to retire, especially at such a young age as 65.
The US went from a colonial outpost to the world's largest economy between 1800 and 1900 stunning old Europe because the founding father's understood John Locke's writings and based our nation upon them. No other nation has ever been so successful. Stick with what works.
FYI, I have 3 children. Two under the age of 11. They PAY INCOME TAXES at my rate! When you add it all up, my tax rate is over 50%. As we know...tax yield falls when combined rates exceed 43 - 46 %. There is an "optimum" tax rate / tax yield relationship and we are to the right of that curve. People like me carry this country on our backs...thank you very much.
Finally, the estate tax is not based on earning $1.3 M. It is based on an estate worth more than $1.3M. Many millions of Americans have estate tax liability. The low figure you quote is just spin. Throw in a house, a car, life insurance, some furniture, some retirement money and guess what, lots of folks are in that territory. Remember, those folks already paid taxes on that money...twice in some cases. Do you think it is fair to take 55% of it again? Guess what most folks do...they have to have mechanisms to reduce ther estates. What is wrong with leaving something for your children? When the government takes it all away...no one works...why should they? Everyone becomes poor if no one is allowed to accumulate wealth. Anyone in this country can become a millionaire, anyone.
My point about the giant mortgage is that it didn't start that way. First, a person with a $1000 mortgage and tax payment per month in 1985 (the year I bought my home) translates translates to over $4000 per month today (property taxes near major cities have increased 4 fold since 1985 in many suburban towns in nad around NJ and housing prices have increased at least that amount). Second, do you really think it's possible for a 2 person working family today to not have at least 1 car payment? And what kind of car can you get that is safe enough to drive that is less than $17,000? Personal accountability is important, but there comes a time when auto and health insurance companies are taking advantage of us all because they provide a mandatory service (health insurance, in my view is mandatory and auto insurance in most states is, as well) and are, for the most part, unregulated (yes, I know most states regulate theor insurance companies, but until politicians take no money from them, the "regulations" are, for the most part, written by them, for them).
Thank you for the kind words about my mother. She didn't have dementia, we, as laymen, thought she did. The MRI showed the tumor.
Social Security might never have been meant to be the "sole means of support", but, according to Mr. Multop, it was meant to be a minimal means of support. Many retirees have other means to support themselves, and some support themselves very well. But we need a way to give thr elderly that minimal support mechanism, and Social Security is just that.
You know full well I never said "that wealthy folks all inherited their money." The exact quote was:
"You neglected to say that many of those folk (the rich ones) inherited their money. I don’t care about that. You neglected to say that a person who earns $1 million per year pays only ½ of one percent of his salary to the SSA. You neglected to say that someone who earns his money off stocks pays only 15% in taxes while a working man or woman pays more than twice that much. Maybe 60% is paid by the top 10% of earners, but they control much more than 60% of the money that is out there. For the first time in the recorded economic history of the US, under President Reagan, 50% of the economy was controlled by 10% of the top wage earners. Today, that record has been broken."
Don't be disingenuous just to make your point. I never am.
I started my business in 1990 with 2 of my 3 brother on a minimal investment. 40 hours a week was a joke. I spent the first few years out of town almost as much as I was in town. if your argument is to raise the retirement age, make the argument. I haven't researched that enough to claim any expertise in the matter. And i never claim to be an expert on something I haven't done my homework on. What would you do and why?
You also wrote":
"The US went from a colonial outpost to the world's largest economy between 1800 and 1900 stunning old Europe because the founding father's understood John Locke's writings and based our nation upon them. No other nation has ever been so successful. Stick with what works."
I am sticking with what works... Social security. It is, by far, the best program ever created in this country, and with the support of the 80% of the people who now support it in the US, it will stay that way.
I probably don't make as much as you (well, there's no probably about it). I have 2 children and, figuring in ALL of my taxes, as you apparently are, I pay upwards of 50% myself. But you and I both know that GW Bush, Dick Cheney and John Kerry all paid a mere fraction of what we paid. If you ever want to swap tax returns for comparison sakes, let me know.
I did say "combined earnings" regarding the estate tax. Either you misread it or I didn't make it clear enough. Either way, the quote is there. I know some wealthy people and they would like to do away with the estate tax. Come up with a fair alternative and I'll listen. If we want to be fair, then make capital gains taxable at the same rate that my income is taxed. Then, you can have your estate tax. I'll make that trade.
As for NJ...I know the situation well...lived there much of my life. Auto insurance rates are driven by density and the legions of fender bender lawyers in the state. Did you know that most accidents in the garden state result in litigation? Also auto theft. Newark leads the nation in per capita auto theft. It is one of the largest industries in that city. My car was stolen in NJ about 15 years ago. I could not get the police interested in the case...their response...why don't you just file a claim and get a new one???? Eventually I placed ads in the newspapers announcing a reward (the Star Ledger refused to carry my paid ad for fear someone would be wrongly accused...again...protecting criminals not victims). The reward lead to the arrest and conviction and break up of an experienced car theft ring. They were sentenced to 15 years and were released within 6 months. They're stealing cars again, FYI.
Health insurance in NJ....you have an oversupply of some specialists and too many hospitals. In health care capacity drives utilization. If you build it they will come. The rate of malpractice suits there is ridiculous. Something like 1 in 3 docs is sued every year in NJ. I was sued twice there. Once by a guy who choked on a turkey sandwich, the other time by the spouse of a 4 pack a day smoker who died of lung cancer (big surprise there, eh?). I won both times but it took 7 years of litigation and hundreds of thousands of dollars to defend....all of those costs gets passed on to you. NJ has more lawyers per capita than any other state. No wonder you have so much litigation. Again, capacity drives utilization. Litigation raises costs for all.
Social Security was a success story, back when there 11 workers for every retiree. That ratio will soon go down to 1 to 1. What then? Obviously, not sustainable as is.
FYI. Kerry made way more than GWB, yet, as I recall as they're returns were published, GWB paid more in taxes (I think he wrote a check for $250,000) and made more charitable contributions. Go figure. So last year I made $265K and I paid $100 K in taxes (fed, state, prop, SS, Medicare, WC)...is that enough or should I have paid even more? I have 3 kids too and they will never qualify for any student financial aid because I make too much...
As for regulation of health plans...I now work for one...you should see the regulatory oversight...we have very little leeway in deciding what to pay for...we have to pay for many things that are worthless...mandated by law....
I agree only in part in regard to NJ auto insurance. The greed of New Jersey's auto insurers is a major reason why rates are ridiculous here. Here is an example: My insurance rates went up considerably this year. No tickets. No at-fault accidents. Two drivers with perfect records. Someone made a U-Turn in my driveway a little too fact and created $2,100 worth of damage. My insurance company raised my "tier rating" because they paid out more than $1,000, even though this resulted in no insurance points. This is greed. I have paid faithfully for almost 8 years without filing a single claim.
Most accident in NJ no longer result on litigation because of the No-Threshold option which doesn't allow people to sue frivolously. Auto theft is an issue, mainly in urban areas. So why is President Bush looking to stop the COPS program that keeps police on the streets? I'd love to know the names of the car-theft ring for research purposes (and you know I can do research).
Whatever the reason for high health care costs in NJ, they are not unique to NJ. Health care is a national issue, not a state issue. A national health care plan will fix it. I would also love to see where you got the figure of 1 in 3 doctors are sued every year in NJ. The National View tort reform plan (http://www.nationalview.org/tort_reform.htm) will take care of frivolous lawsuits.
Social Security will not hit the one-to-one mark for quite some time (at least 2024, according to the SSA's memo I received and published on the February 9, 2005 Note From a Madman). There are many ways (most have been discussed here) to fix it without trashing it. All will save US from having to borrow trillions of dollars at the US taxpayer expense. President Bush's plan (which still hasn't been revealed) will cause US to borrow that money (by his own admission).
Percentage-wise, both John Kerry and President Bush paid similar amounts in taxes. You should be pleased by someone taking advantage of every tax break one can get. Do you pay more than your fair share? Maybe making rich people pay more of a fair share is the answer. It appears we agree on that. Also, you told me you paid more than 50% in taxes in a previous letter. My math may be spotty, but $1ook is not half of $265k. Maybe you should get a new accountant?
I have no problem with health care providers, but I do have a problem with greed. Greed is NOT good... humanity is.
response to the Doctor's, "My personal
retirement investments have yielded an average annual return of 12% over the
past 30 years and long ago left my SS 'account' in the dust,"
Robert Scardapane writes:
You can have a higher yielding account - it's called an IRA or 401K. I am dubious that us mere mortals can earn an annual 12% in any safe investment. But, I am fascinated, please tell us more about these 12% investments...
The statement that social security is unsustainable is simply untrue. Given gradual hikes in the salary cap, there will be more than enough money to cover retirees. In fact, when immigration is properly factored in using actual census data, the Century Foundation already proven that there is no issue with the ratio of workers to retirees.
So, do we now have a quarrel with FDR's second Bill of Rights? Are the people posting to this newsletter Democrats/Progressives or do we not have Republican contributors?
I think both, Robert, -NG
"According to current estimates, it is highly unlikely that the president will actually understand this plan any time before the year 2029."
-Scott McClellan, White House Press Secretary
That George Bush is a real comedian. On April 19, he admitted that he no longer understands his own proposal for privatization. His speech was suppose to be a pep rally for his plan. Well, good golly. I guess even he couldn't get excited about his plan.
I wonder if Bush & Company will work on even one item that helps ordinary Americans. Thus far, they have done wonders for those who don't need help.
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