« Goodbye to "Sister Souljah" | Main | The Harder You Flash, the Harder You Get Flashed On »

July 11, 2008

Comments

I'm not sure it's so much ignorance as it is McCain referencing an old conservative trope about Social Security, namely that it's a "Ponzi scheme".

The idea is that Social Security in some moral sense should be, or has in some sense been sold as, a kind of individual savings or investment plan, under which you pay in all your life and then get that same money out (plus interest) after you retire.

Everybody knows that Social Security is not that, and liberals may even be happy that it's not that out of fairness considerations, but the fact that it's not that is presented by conservatives as a scandal. Analogy is made to Ponzi schemes, in which early investors are paid out from the principal taken from later investors. From there you get the idea that the system must collapse soon, just like a Ponzi scheme, and that the people who came in late have been defrauded and are going to be left with nothing.

Now, we're all policy junkies here; we know that if you actually run the numbers, it's actually nowhere near that dire, and people paying Social Security taxes today are probably not going to be left high and dry unless somebody does something to kill Social Security. But the "Ponzi scheme" narrative is a pretty powerful one, just judging from how many times I've heard it in real-life conversations and on the net, and if you believe it, what McCain said will make perfect sense.

The Founders are often revered as wise and farsighted men, but they got a few things wrong. One of their biggest boners was limiting the qualifications for President to "natural-born citizen, over 35". The Constitution does not even require the President to be literate, let alone informed about basic facts. Foolish, foolish Founders.

-- TP

McCain's clarification of his remarks simply confirms that he is ignorant. "[Young people] are paying so much that they are paying into a system that they won't receive benefits from on its present track that it's on - that's the point." Actually, under current law the Social Security system will continue to pay benefits indefinitely. The law directs the trustees to reduce benefits if sufficient money is not available to pay full benefits, but it is not possible under current law for the system to stop paying benefits altogether.

Matt (in comment number 1) is probably correct to say that McCain is regurgitating the "Ponzi scheme" narrative which is popular in conservative circles. That may explain his ignorance; it doesn't excuse it. Hilzoy points out that McCain has sponsored a bill making changes to Social Security, and he says that if he becomes president he wants to make more changes. It is irresponsible of him to fiddle with a system that he doesn't understand.

You know, I’m sure I’ve taken a position on it on the past. I have to find out what my position was. Brian, would you find out what my position is on contraception

If any Democrat had said something like this, it would be repeated in an endless loop.
Now combine that with a bad pun on Brian/brain ("is that his external Brian?")...
(no need going more lurid about position and contraception or recycling the Son of Cain's use of the c-word)

This isn't flip-flopping, but it's the absolute worst kind of pandering: McCain repeats his oft-told story about telling his POW captors the names of a football team instead of the names of men in his unit, only since he's in PA, he substitutes "Pittsburgh Steelers" for "Green Bay Packers." His campaign calls it "an honest mistake."

and this isn't flip-flopping either, but it's still pretty funny.

McCain: I condemned Iran's army as a terrorist organization! Obama couldn't even bother to vote for the bill!

Obama: You didn't vote for the bill either, doofus.

Cleek, it's only funny if it gets enough coverage that most of the people who heard McCain's original charge also hear the facts. Otherwise it's a decidedly unfunny example of McCain taking advantage of the way a lie can get halfway around the world while the truth is still getting its boots on.

McCain just couldn't remember what his position actually was. (Watch the video: he's completely at a loss.)

Huh--that's not my take at all. Watching the video last night, it looked to me like he was staring into the abyss that is the logical contradiction of his campaign. Does he tack hard right with a dog-whistle about the "culture of life," or does he go "maverick"? That look on his face wasn't ignorance, it was the look Wile E. Coyote gets when he suddenly realizes that he's poised in midair between two cliffs, and the only thing beneath him is a 300-foot free fall, a resounding thud, and a smoky "foof."

But never mind. I'm sure Chris Matthews will explain to us how this was one more moment that proved McCain's regular-Americanness and reminded us all just how slick and smooth and profoundly unsettling the black guy is.

hilzoy: Um: he doesn't know whether condoms prevent HIV transmission?

Um, no: it's a major transgression of religious right dogma to admit that they do.

Actually, it's O.K. with me if Social Security is a Ponzi scheme.

Roughly speaking, everything in America is a Ponzi scheme.

If you own Geveral Electric stock, you'd better hope you weren't the last buyer. You'd better hope the entire infrastructure of American business optimism (Wall Street analysts, brokers, CNBC talking heads) is out there rustling up the next buyer in case you want to sell.

Without bullshit, American comes to a full stop. Every American entity has a sales force. Why? Because, because every product, good and bad, stays on the shelf unless it has a division of bullshitters out there fronting it, pushing it, two-for-oneing-it, buying tax-deductible lunch for the next buyer, and putting together a Super Bowl 30-second spot for it.

So, let's say Social Security is a Ponzi scheme. It works because the U.S. Government has taxing authority and can print money.

There is nothing inherently wrong with that arrangement.

But these people keep effing with the presentation. Every four years, they draw a moustache on the winsome bikinied babe draped over the product on the billboard.

The Republican Party (Democratic Party, too, but I'm not a shill for balance) is full of people who in any other situation and with any other product are willing to be Mark Twain's guy next to the hole in the ground (What's the definition of a gold mine? A hole in the ground with a liar standing next to it).

Republican politicians could be great salesmen and women for Social Security. They, the salesforce, have decided not to do their jobs.

Fire them and get someone in there who will sell the product.

The American people will buy. It's a product the American people can't do without.

The Republican Party, vis a vis Social Security, is a little like the character who tampered with the Tylenol bottles years back or the occasional whacko who slips a dead mouse into the bucket of Kentucky Fried chicken.

Nothing was wrong with the product, and even the perpetrator's mothers and grandmothers and they themselves use Tylenol and can't resist licking the Colonel's fingers, but their pathology every four years is to try and throw a Spaniard in the works and make the saleforce's job (to move product) a little more challenging.


There are some problems with the original post:

...But McCain's comment is very different. It's like if lots of people made fun of one guy's car because it was broken down, ugly, and lacked headlights had one tire that was a little low on air. Then one of the dimmer members of the group, sensing an opportunity to jump in, piped up with, "yeah, four wheels and an engine? What's with that!? When you gonna do something about that!? Hyuk! Hyuk! Hyuk!"

Fixed.

re condoms and McCain.

McCain probably hasn't thought about the fundamental medical practicalities of condom use.

He's a bohunk guy who knows one thing: condoms reduce HIS personal pleasurable sensations.

Case closed.

He's no different than he was in the military all those years ago. I'm sure he was advised to bring condoms with him into port on shore leave, where he was known to lay waste to womankind.

Condoms? C'mon, fellas, let's go get laid. The consequences aren't our problem.

If something happens, the girls can pray their way out if it.

Not our problem.

Phil Gramm:

Odd that a guy whose every utterance since birth has been expressed in a full fingernails-on-the-blackboard wingeing whine would find American whining offensive.

Could there be a more colicky politican than Gramm?

Fix the baby a bottle.

Phil Gramm:

Odd that a guy whose every utterance since birth has been expressed in a full fingernails-on-the-blackboard wingeing whine would find American whining offensive.

Could there be a more colicky politican than Gramm?

Fix the baby a bottle.

Obviously, Gramm requires two bottles.

There was a time when hilzoy's arguments were well though cleverly presented nuggets of discourse that were fun to debate and comment on. After dropping out and then stopping in from time to time to observe I'm convinced now that today's hilzoy is the latest version of Dread Pirate Robert's, a shell of their former selves. More discrace is straw man babble not worthy of even honorable mention of posts of the past. 'Tis a shame really.

More discrace is straw man babble not worthy of even honorable mention of posts of the past.

now you've gone and made my parsing muscles sore.

there will be pie.

blogs:

Hey, we've missed YOU!

Off he goes.

I'm sure McCain is perfectly aware that condoms prevent the spread of STDs. He was undoubtedly looking for time to try to remember what his campaign's position on the subject was supposed to be, given that he has to simultaneously avoid offending the religious right, AND avoid looking like a moron. Unfortunately, in the process, he looked like a bit of a moron.

More about whining .... and then everyone have a nice weekend.

Funny, too, that Gramm complains about American whining to an editorial board (especially THAT one), whose very reason for existence and lifeblood is to whine (have an opinion) about everything under the sun ............ unsolicited.

Stop your whining for a second and listen to our whining, they say Monday thru Friday.

Stop your whining for a second and listen to our whining, they say Monday thru Friday.

They've taken over Saturdays too.

People who complain about governments trying give away free lunches and such have lost faith in Adam Smith and have no business calling themselves either conservatives or classical liberals.

In fact, the entire point of modern industrial (and post-industrial) organization is to create free lunches. Well, not just lunches, but to create free everything, by getting a better return on collective effort than the return would be if everybody worked that hard but in a solitary manner. The division of labor is precisely about getting people to work so that they contribute to a greater result. If a society is not generating free lunches (and everything else) on a regular basis, every day of every week of every year, then it has failed to take advantage of the simple facts of basic economics and sociology.

When they approve of the results, then people hewing to one flavor or another of old-fashioned economics might talk about positive externalities and the like. But these are just free lunches, whether it's a better Internet for you as a side effect of getting a better one for me and the rest of us or enough revenue that we can easily afford to treat our old people to a retirement income that allows for a modicum of dignity and independence. That's what business is supposed to do. It's working as intended. And if people who champion commerce seriously think that there aren't enough free lunches to provide for everyone's general welfare, then what they're really saying is "Our whole philosophy turns out to be a dud and you should do something else anyway, because we can't make collective action work."

Fortunately for society at large, business is better than its champions, and there are plenty of lunches to go around, so long as we don't throw out the government along the way.

"There are criticisms that people make of Social Security, most of them relating to a mismatch between the program's revenue and its future obligations. But McCain's comment is very different. It's like if lots of people made fun of one guy's car because it was broken down, ugly, and lacked headlights. Then one of the dimmer members of the group, sensing an opportunity to jump in, piped up with, "yeah, four wheels and an engine? What's with that!? When you gonna do something about that!?"

That's not analogous. A better analogy is: "When are you going to replace that old car with a new one?"

That's actually a more dangerous comment for McCain, because its a lot more radical that McCain would sensibly want to sound. But the classic Democrat meme for Repulicans is "stupid" (just as a classic Republican meme for Democrats is "weak"). Thus, rather than take his comment at face value, we get tenuous arguments that McCain is stupid and doesn't understand the system.

Analogy is made to Ponzi schemes, in which early investors are paid out from the principal taken from later investors. From there you get the idea that the system must collapse soon, just like a Ponzi scheme, and that the people who came in late have been defrauded and are going to be left with nothing.

Now, we're all policy junkies here; we know that if you actually run the numbers, it's actually nowhere near that dire, and people paying Social Security taxes today are probably not going to be left high and dry unless somebody does something to kill Social Security.

I agree with you that SS is not a Ponzi scheme in any sense of the word, but your second comment misses a key part of the conservative critique (a critique that I find persuasive). It's not that SS will necessarily collapse or that current workers will receive no benefits from the system. The critique is that earlier generations have (and will) do much better under SS than, say, Gen X and the whatever they're calling GenY/Millenials this month. It's not: Gen X, you'll pay and pay and get nothing. It's Gen X, you'll pay more than the Boomers did so that the Boomers can get the current level of benefits, but don't expect to get those same benefits yourself.

Gen X has nothing to fear with regard to Social Security except the machinations of conservatives, classical liberals, and others who'd be happy to see it fail as part of getting people to distrust the government again. Insofar as it is tended by people with a modicum of competence and honesty, and it will be fine. Which is to say that it's at great risk now, along with everything else in the republic, but not because of its own failings, only because of the cruel bungling of fools and their cheering section.

"The idea is that Social Security in some moral sense should be, or has in some sense been sold as, a kind of individual savings or investment plan, under which you pay in all your life and then get that same money out (plus interest) after you retire.

Everybody knows that Social Security is not that, and liberals may even be happy that it's not that out of fairness considerations, but the fact that it's not that is presented by conservatives as a scandal."

I don't think that is true. I think lots of people who aren't policy wonks think of Social Security as a retirement account/pension fund. And it is pretty much sold that way about any time that conservatives aren't trying to analyze it as a pension fund which it really doesn't function that well as. Then what happens is that its anti-poverty side is brought to the fore, and it has to be analyzed as an anti-poverty program. Then if someone mentions that it is kinda wasteful to have an 'anti-poverty' program where 70%+ of the payments go to the middle class and rich people, suddenly we have to analyze it as a pension fund again. And the logical whirlpool can go on like that indefinitely.

I would like to see some evidence for this vast public consensus that Social Security is "really" an individual retirement scheme. I grew up understanding that it's a collective-action thing, same as any old collective-action thing: I pay in some based on my ability to work, and in return when I meet the eligibility conditions, I get what's coming to me out of the common pool. Ever since I first learned about it, I understood that some people would get more than they paid in, others maybe less, depending on their circumstances. And I assert that this is a very common understanding, particularly at that level of non-technical detail. I would like to see indications that I'm wrong beyond the assertions of those who wouldn't approve it if it were a new program and would, by and large, be happy to see it go away, at least as anything that actually is bigger and more significant than individual retirement accounts.

If I'm wrong about this, I'll gladly concede it. But right now I don't know of a reason to believe these assertions about what everybody else thinks about it.

Now, however, I'm off to rest, as part of shifting my sleep cycle around, so it will be a while before I get to any responses.

To me the most interesting thing about the whole social security hysteria is the way it inverts the pyramid of who is seen as free-loading on whom. See, we hear all the time about "seniors" being forced to pay "higher taxes" for schools and the services that young families need. Public education is often presented as the gouging of the child free worker by non working (ugh!) family members and single women. But while its true that there are some people in this society who never had children and never benefitted from public education there are, in fact, very few people in this country without parents who require social security. So the idea that younger workers are being "robbed" when they pay into a pool that actually enables their parental units to maintain independence and dignity rather than coming and living with them seems kind of strange, demographically and morally.

The right wing attacks on social security, like the right wing attacks on anything, always resolve themselves into a series of insults to "free loaders" who "abuse" the system even if five minutes ago in political speak those "free loaders" were actually "tax payers" being "gouged" for the benefit of some other segment of society which, for rhetorical and political reasons has gone from being nobly independent to being whiny losers. One thing the right wing never acknowledges is that in a free society, and a democracy, the voters can actually make up their own minds about how they want to pool their resources over time. I think it makes a lot of sense for society to choose to pool its resources so that we can have safe roads, buildings, food supply, and good education for all our children. And I think it makes excellent sense to pool our resources for national health care and a long term plan for national senior citizen care/retirement. That I pay into the system at one age, and receive from it at another, doesn't make me gouged and then a free loader. It makes me a good citizen, cognizant of life's chances and problems as well as promises. But the republican attitude is always "f you, I've got mine, or I would have if I could pry the gold teeth from this elderly corpses mouth."


aimai

Gen X has nothing to fear with regard to Social Security except the machinations of conservatives, classical liberals, and others who'd be happy to see it fail as part of getting people to distrust the government again. Insofar as it is tended by people with a modicum of competence and honesty, and it will be fine.

"Conservatives, classical liberals, and others" time-traveled to 1948 to encourage the baby boom, and then time traveled to 1970 to encourage the boomers to have fewer children? Cool! We're more powerful than I thought!

Bruce Baugh, you have reasonable arguments to make in response to my points. This ain't one of them.

I don't think that is true. I think lots of people who aren't policy wonks think of Social Security as a retirement account/pension fund.

Actually, it's been presented in comments on this blog expressly as a a "retirement account."

Social security is a generational transfer: young people pay old people. It may be a public good, bad, or best-of-the-options, but calling SS a "retirement account" is as wrong as calling it a Ponzi scheme. It's neither.

I don't think Ezra's analogy is entirely apt.

If Social Security is a car, then it only needs a minor tune-up.

And McCain isn't playing the mechanic, but the used car salesman.

von,

Can you explain this concern you have regarding Gen X? I was under the impression that immigration and productivity enhancements have significantly compensated; is that not true? Are your concerns based on a serious actuarial analysis that includes numbers or is the issue just that there are more baby boomers than Gen-Xers?

To me the most interesting thing about the whole social security hysteria is the way it inverts the pyramid of who is seen as free-loading on whom. See, we hear all the time about "seniors" being forced to pay "higher taxes" for schools and the services that young families need.

I'm willing to overlook this quasi-silliness if your next argument is going to be that schools should not rely primarily on property taxes (which do disproportionately affect older folks, b/c they tend to have more property).

"I would like to see some evidence for this vast public consensus that Social Security is "really" an individual retirement scheme."

I don't really know how to respond to this. Whenever we talk about it HERE, with people who should know better, it invariably gets talked about as a retirement account or pension. It was sold at the time as being like a pension. I'm not sure what you would accept as evidence that isn't already right before your eyes.

Turbulence:

Can you explain this concern you have regarding Gen X? I was under the impression that immigration and productivity enhancements have significantly compensated; is that not true?

As of 2000, they had not:

http://en.wikipedia.org/wiki/Image:Uspop.svg

As of 2000, they had not

von, I don't understand what you're trying to say here. Are you trying to say that immigration has not made the population distribution completely flat, we must assume that Gen Xers get screwed by SS? Is that right?

If so, doesn't that analysis also presume that economic productivity has not significantly changed over the last few decades?

Mr. McCain made numerous ill advised and even dumb statements. He also served the country for many years. Some may think one more important than the other. While he lacks the keen intellectual and rhetorical ability of the other candidate, he does have the wisdom and experience that comes with age. His voting history suggests an individual with moderate views and the ability to work with the other side of the aisle. He seems like a pretty good choice for the challenges to come.

"he does have the wisdom and experience that comes with age. "

How is this manifested?

Liberal: Spinach is good for you. It's full of vitamins and anti-oxidants. It improves the wind and the eyes.

Conservative: That may very well be true. But, I don't like spinach. I like ice cream.

Liberal: (taking the spinach away, spinning around with a flourish, and setting the same spinach down) Ice cream is good for you. It's full of blah blah blah, etc. blah.

Conservative: I say it's spinach and to hell with it. Next you'll be telling me that spinach is chocolate cake.

Liberal: Would you eat it if I called it chocolate cake?

Conservative: Nope.

Liberal: All right then. Shut up and eat your spinach!

Social security is a generational transfer: young people pay old people.

Von, I have heard this wording before--"transfer", as in "wealth transfer", which as I'm sure you know is a buzzword for anti-tax conservatives--and I don't see how framing it this way is accurate. You're not "transferring" wealth from today's workers to today's retirees any more than funding public education is transferring wealth from taxpayers to their children, or paying for insurance is transferring wealth to doctors or mechanics. Maybe in the most tortured or excessively literal sense of the word.

That's really all Social Security is: government-run insurance against poverty in disability or old age. Everybody pays in, and the "risk" is collectively distributed among all American workers in order to help those who live long enough to need it.

To tell the truth, I'm disappointed more conservatives don't take this approach. There's certainly no shortage of people who oppose insurance mandates at taxpayer expense, and it would be considerably more honest than the "transfer" verbiage.

Mr. McCain made numerous ill advised and even dumb statements. He also served the country for many years. Some may think one more important than the other. While he lacks the keen intellectual and rhetorical ability of the other candidate, he does have the wisdom and experience that comes with age. His voting history suggests an individual with moderate views and the ability to work with the other side of the aisle. He seems like a pretty good choice for the challenges to come.

This smells a lot like campaign sockpuppetry. This could've been lifted verbatim from a McCain campaign talking points memo, especially the nauseatingly false bits about how "moderate" John "I voted with Bush 100% of the time in 2008 and 95% of the time in 2007" McCain is.

And if it is from the campaign, that's pretty sad, because I'm not sure this is the message you want to be sending: "McCain: Stupider and older than Obama--but he's such a maverick!"

Then again, given how readily the media regurgitates the maverick/moderate canard, perhaps you've got something there.

This smells a lot like campaign sockpuppetry.

sure does.

or someone trying to earn enough McCain points to get a set of McCain's dimpled white balls. golf balls, that is.

von, I don't understand what you're trying to say here. Are you trying to say that immigration has not made the population distribution completely flat, we must assume that Gen Xers get screwed by SS? Is that right?

Turbulence, you indicated that you thought that immigration may have flattened out the population distribution. I provided data showing that it had not. I am not sure where "Gen Xers get screwed by SS" figures into anything (other than, perhaps, your imagination).

If so, doesn't that analysis also presume that economic productivity has not significantly changed over the last few decades?

No it doesn't. Also, you seem to have a poor understanding of how "productivity" factors into this analysis. As a threshold, real productivity is an unreserved "plus" into the system. One must also subtract standard of living increases, which we hope rise with productivity.

A bigger problem for you is your (unspoken) assumption that increasing productivity benefits workers (payees into SS) over retirees (those who draw from SS). In fact, the opposite is more likely true. A substantial portion of productivity gains are paid to the owners of a business, i.e., stockholders. Stockholders tend to be older and, yes, are more likely to be near to (or actually drawing on) SS. Maybe the productivity benefits realized by SS-payers through salary increases are the same as the benefits realized by SS-receivers through their investments. (I realize that I'm generalizing.) I tend to suspect, however, that SS-receivers actually do better than SS-payers.

AAARGH. Typo:

"You seem to have a poor understanding of how "productivity" factors into this analysis. As a threshold, real productivity is not an unreserved "plus" into the system. One must also subtract standard of living increases, which we hope rise with productivity."

"and this isn't flip-flopping either, but it's still pretty funny."

The link went to the entire blog, but with Cleek's hint, and a bit of searching, I found it here.

Ringing endorsement from Nancy R. here:

Outside her Bel-Air home, Nancy Reagan stood arm in arm with John McCain and offered a significant — but less than exuberant — endorsement.

"Ronnie and I always waited until everything was decided, and then we endorsed," the Republican matriarch said in March. "Well, obviously this is the nominee of the party." They were the only words she would speak during the five-minute photo op.

The conservative base is clearly fired up, and ready to go.

I'm sure they love this, too: New McCain ad: Hispanic immigrants are 'God's children'.

"That's really all Social Security is: government-run insurance against poverty in disability or old age. Everybody pays in, and the "risk" is collectively distributed among all American workers in order to help those who live long enough to need it."

See you're doing it again. Poverty pograms don't pay the large majority of the funds to people who aren't poor. Whatever it is, it isn't mainly an anti-poverty program.

Von, I have heard this wording before--"transfer", as in "wealth transfer", which as I'm sure you know is a buzzword for anti-tax conservatives--and I don't see how framing it this way is accurate. You're not "transferring" wealth from today's workers to today's retirees any more than funding public education is transferring wealth from taxpayers to their children, or paying for insurance is transferring wealth to doctors or mechanics. Maybe in the most tortured or excessively literal sense of the word.

Public education is a generational transfer, just like SS, although its a transfer that is provided as a service (education) rather than as a direct payment (SS check). Insurance, however, is not a transfer: it's usually either an asset or a hedge.*

I do not have a problem with transfers on principle. But that's not the same as saying that I think that all transfers are good ideas, or that some transfers may not be the best of all possible alternatives.

*A hedge might be loosely thought of as a different type of asset, but I don't think it's useful to think of it this way.

Turbulence, you indicated that you thought that immigration may have flattened out the population distribution.

No, I indicated that I thought immigration and productivity enhancements combined may have had some impact. That's why responding with a chart on population didn't make sense to me.

I am not sure where "Gen Xers get screwed by SS" figures into anything (other than, perhaps, your imagination).

Huh? Did you not write that "The critique is that earlier generations have (and will) do much better under SS than, say, Gen X"? Did I imagine that?

One must also subtract standard of living increases, which we hope rise with productivity.

Awesome! So, have you actually seen a real analysis that does this? I guess I'm a little confused as how you can make a quantitative statement that Gen Xers will do much worse than previous generations given that your analysis seems to consist of only qualitative statements. I'm assuming that at some point you actually read an analysis written by some expert that fleshed this out with actual numbers, so -- is that true? If so, can you tell me where you read that analysis?

See you're doing it again. Poverty pograms don't pay the large majority of the funds to people who aren't poor. Whatever it is, it isn't mainly an anti-poverty program.

Sebastian gets at the issue. Older folks tend on average to be wealthier than younger folks. On average implies exceptions -- even large exceptions -- but that's the data. That's one reason I find the current system to be suboptimal: It's transfering money from the (relative) poor to the (relative) rich.

So: SS is not an insurance program. It's not a retirement fund. It's not a pension. And the current ideas being floated to save SS involving taxing payers more rather than restricting payees -- exacerbating the transfer effects. (I don't believe for a second the donut will freeze at 250,000, and, even if it did, inflation will ensure that more and more folks are captured by it.)

I happen to like private accounts as part of the SS mix. But I like means-testing as well. SS should be an insurance program -- a societal pledge that no one spend their twightlight years in poverty.

See you're doing it again. Poverty pograms don't pay the large majority of the funds to people who aren't poor. Whatever it is, it isn't mainly an anti-poverty program.

They do if they don't suck. Given that poor people tend to have a diminished voice in the political process, it seems that they're going to be continually underserved unless antipoverty programs are also connected to more politically significant communities (like say the middle class).

Turbulence, your 1:31 p.m. post is an example of why I find it very tiring to argue with you. You keep on jumping around and playing "I'm willfully ignorant game".

No, I indicated that I thought immigration and productivity enhancements combined may have had some impact. That's why responding with a chart on population didn't make sense to me.

Well, the chart on population allows you to scratch any notion that "immigration" alone proves your point. The baby boom bubble remains huge. You need to rely on increases in productivity.

I am not sure where "Gen Xers get screwed by SS" figures into anything (other than, perhaps, your imagination).

Huh? Did you not write that "The critique is that earlier generations have (and will) do much better under SS than, say, Gen X"? Did I imagine that?

There's a huge difference in degree between what I wrote and your claim that I meant "Gen Xers get screwed by SS". Why don't you try addressing what I write.

Awesome! So, have you actually seen a real analysis that does this? I guess I'm a little confused as how you can make a quantitative statement that Gen Xers will do much worse than previous generations given that your analysis seems to consist of only qualitative statements. I'm assuming that at some point you actually read an analysis written by some expert that fleshed this out with actual numbers, so -- is that true? If so, can you tell me where you read that analysis?

Before you send me off to do research, why don't you land your argument somewhere. If I provide evidence that productivity gains go significantly to asset holders rather than to compensate employees, are you going to agree that, hey, I have a point here? Or are we off to the races on something completely different?

SS should be an insurance program -- a societal pledge that no one spend their twightlight years in poverty.

You're sounding mighty liberal, there, von. Not that there's anything wrong with that.

Unless I've misunderstood, though, the opposition to doing just that is that conservatives will oppose any such changes forcefully. It'd be interesting to see if that were actually true.

Older folks tend on average to be wealthier than younger folks. On average implies exceptions -- even large exceptions -- but that's the data.

It is difficult to evaluate this claim without knowing what you mean by older and younger folks. Do you mean "people who draw from SS" and "people who pay into SS"?

Also, when you say "average", do you mean median or mean? That could be significant in this context.

Finally, what data are you referring to? Are you talking about some very general factoid you saw years ago that demonstrated that people over 65 have many more assets than people under 18? Or what? Can we see this data?

Slart, isn't the fear not that conservatives will oppose any such changes forcefully, but that after such changes are made conservatives will find it much easier to gut the program?

"That's really all Social Security is: government-run insurance against poverty in disability or old age. Everybody pays in, and the 'risk' is collectively distributed among all American workers in order to help those who live long enough to need it."

See you're doing it again. Poverty pograms don't pay the large majority of the funds to people who aren't poor. Whatever it is, it isn't mainly an anti-poverty program.

I notice that no where in the comment you are responding to, Sebastian, does Catsy call Social Security an "anti-poverty program," or a "poverty program." Catsy's second quoted sentence is also a factually correct statement.

Might want to lower that knee, given its extreme tendency to twitch, and set off your buffer spool.

"So: SS is not an insurance program. It's not a retirement fund. It's not a pension."

It's a floor wax and a dessert topping.

"SS should be an insurance program -- a societal pledge that no one spend their twightlight years in poverty."

When conservatives pretty much all sign on to pledge to never lower SS benefits, and pretty much all cease automatically attacking actual anti-poverty programs, and automatically accusing supporters of such programs of merely "wanting to throw money at problems," that might be a productive approach, and not merely a trojan horse.

I'm sure that'll happen Real Soon Now.

"They do if they don't suck. Given that poor people tend to have a diminished voice in the political process, it seems that they're going to be continually underserved unless antipoverty programs are also connected to more politically significant communities (like say the middle class)."

You're being ridiculous. So why don't we pay food stamps money to the middle class and rich people? And the idea that we have to spend 70% of an anti-poverty program on middle class and rich people to bribe them, shows exactly why conservatives think that government is often super-inefficient at its aims.

"I notice that no where in the comment you are responding to, Sebastian, does Catsy call Social Security an "anti-poverty program," or a "poverty program."

Might want to lower that knee, given its extreme tendency to twitch, and set off your buffer spool.

Well, Gray try noticing again.

And hooray, I get rude comments from you again, how exciting.

"That's really all Social Security is: government-run insurance against poverty in disability or old age."

I'm sure you can nit-pick it somehow, but that unfortunately doesn't make you correct in any useful sense. You might be correct in non-useful senses, but that would be, ummm non-useful.

When conservatives pretty much all sign on to pledge to never lower SS benefits, and pretty much all cease automatically attacking actual anti-poverty programs, and automatically accusing supporters of such programs of merely "wanting to throw money at problems," that might be a productive approach, and not merely a trojan horse.

I actually think that's the real barrier to getting a deal done. Doubtless, there are some conservatives who view private accounts and means testing as, well, as means rather than an end. Just as there are some liberals who like Obama's donut hole as the first step toward taxing all income. (I'm certainly wary of mission creep in this area, particularly since Obama's first proposal was to tax all income, not just 250k+.)

But I think that there could be majority supporter private accounts as a primary means to save for retirement, with means-tested payments to make sure that the unlucky and unwise don't live in poverty when they stop working (or can stop working if they want to and still have some reasonable living standard).

I don't want a 67-year old retire plumber thrown out onto the street or required to work at McDonalds. But I also do not want a low- or middle-income family of four with small children forced to make payments to a 67-year old stockbroker with assets out the wazoo. I'd rather that middle-income family put that money in an investment account for themselves that, instead of investing in T-bonds, goes to fund business that build useful things and create jobs for others.

Slart, isn't the fear not that conservatives will oppose any such changes forcefully, but that after such changes are made conservatives will find it much easier to gut the program?

I dunno; it's not my fear. But that's more or less beside the point. Make it gut-proof.

Or, possibly, stalemate, and the presumption that who you're opposing are, collectively, a bunch of automatons, is all for the best.

You're sounding mighty liberal, there, von. Not that there's anything wrong with that.

I'm quite liberal in my goals for society. I'm generally conservative, however, in how to achieve those goals.

You keep on jumping around and playing "I'm willfully ignorant game".

This is one reason why I find arguing with you to be very tiring. You make very broad yet vague claims without even alluding to why they might be true and then you react with hostility when I try to evaluate those claims. I don't even know what to make of your willfully ignorant comment: do you think I'm acting like I don't understand things that I do understand? To what end?

Well, the chart on population allows you to scratch any notion that "immigration" alone proves your point.

Great! I don't think I ever claimed that immigration alone proves anything so I guess you really showed...no one.

There's a huge difference in degree between what I wrote and your claim that I meant "Gen Xers get screwed by SS". Why don't you try addressing what I write.

Huh? von, I honestly don't see the difference between "A does much worse than B" and "A gets screwed". Can you explain? I must be missing something glaringly obvious here because these look like equivalent statements to me...

Before you send me off to do research, why don't you land your argument somewhere. If I provide evidence that productivity gains go significantly to asset holders rather than to compensate employees, are you going to agree that, hey, I have a point here? Or are we off to the races on something completely different?

I tell you what, I'll save you the effort. Instead of substantiating your views, please answer these two questions:

1. Are your views on this subject based primarily on an analysis written by an expert in the field? Note: This is a yes/no question. I'm not asking you where I might find that analysis or who wrote it or what it said.

2. Are your views on this subject based primarily on a set of qualitative assessments you've made as opposed to an analysis you've conducted where you actually apply numbers to various effects and run calculations through a model? Again, yes/no is all I ask.

To answer your question, no, merely showing that asset holders disproportionately benefit from productivity enhancements would not be sufficient. I'd also need, at the very least:

1. quantitative data on how large the productivity benefit we're seeing is and what fraction accrue to owners versus employees

2. data to support and quantify your claim that retirees are disproportionately likely to be stock holders and that the disparity is significant

3. some explanation of what groups you're talking about with respect to young and old (see my previous comment).

I'll be very up front here: I can't imagine a world in which believing that productivity gains disproportionately go to asset holders clinches your argument. It might be an important component of your argument, but it seems that any practical argument would also rely on lots of other data.

I know that, von. I'm being a touch ironic.

Why is SS not a pension? It looks to me exactly like a public pension with a death and disability benefit -- it pays you monthly while you're alive, then a lump sum to your estate; the calculation of the monthly distribution is based on the amount paid in; assets are held in a big pool and invested conservatively.

As to the complaint that the people who pay in are poorer than the recipients, isn't this true of any pension, public or private? When an employee is just starting out, she's much more likely to have fewer assets than the retiree.

And as to the issue of generational transfers, doesn't a private pension appear the same, with young people paying in at the same time that retirees are receiving distributions?

Given that the Dow Industrials today are below 11,000, it seems that many private pensions should probably have invested over the last several years in the exact same financial instrument as the SSA, US Treasuries. They probably would be better off.

Yes, the pension carries legacy debt and therefore has a lower rate of return than a new private pension would expect to have if launched today. Since the people who received distributions disproportionate to their contribution are all dead, we have two choices: (a) suck it up, or (b) have the US Treasury issue new general debt to the SSA that covers that legacy debt and allows SSA to recompute its benefit schedule.

Anybody want to vote for a massive increase in public debt so as to bring SSA into actuarial equivalence with private pensions?


I happen to like private accounts as part of the SS mix. But I like means-testing as well. SS should be an insurance program -- a societal pledge that no one spend their twighlight years in poverty.

I second that. And since private accounts are already part of the mix, all we have to do is work on the means testing part.

Of course, there's a built-in tension here: 'private accounts' are explicitly antithetical to 'means testing'. The whole point of a private account is that you, and not some bureaucrat applying a means test, decide how much to draw from it. Your 401k doesn't get means-tested away if you happen to hit the Lotto jackpot when you're 64.

-- TP


As to the complaint that the people who pay in are poorer than the recipients, isn't this true of any pension, public or private?

Not mine. I don't pay anything into my pension.

Technically, I mean. Sure, I get pension based on my salary, but I don't pay into it. Nor do I get capped. Otherwise, decent point.

You're being ridiculous.

You're right! But I really love these clown shoes and the colorful wig.

So why don't we pay food stamps money to the middle class and rich people?

Don't we already do so in a limited sense? Isn't that one effect of our really crappy agriculture subsidy program? Granted, this is a really really awful way of achieving that policy goal, but it seems like eliminating those subsidies (which I think we should do) would raise costs for both the poor and middle class and while that would suck enough for the middle class to generate some political resentment, it would be worse for the poor but they have far less ability to effect political change. This obviously isn't the only or even primary reason why the subsidies continue, but it is one factor that makes eliminating them harder. People freak out when the price of staples goes up, even if the increase isn't really that significant and even if they're getting more of that money refunded when they do their taxes.

And the idea that we have to spend 70% of an anti-poverty program on middle class and rich people to bribe them, shows exactly why conservatives think that government is often super-inefficient at its aims.

I thought it showed an understanding of human nature and political economy.

Gen X, you'll pay more than the Boomers did so that the Boomers can get the current level of benefits

Not exactly true, or at least, not the whole story.

We boomers for the last 25 years have been paying more into Social Security than was necessary to fund current benefts, to build up a surplus to deal with the demographic fact that there are fewer Xers than boomers. You Republicans spent that surplus on tax cuts for your rich campaign donors. Now you want to blame social security for the fact that you've created a huge deficit in the general fund, and don't want to tax your rich donors to make up for it.
The Xers will not be paying more taxes for Social Security benefits--they'll be paying them to make good all these years of Republican deficit spending. You are not going to bootstrap yourselves into justification for cutting Social Security on the basis that you've busted the general budget--that will not fly.

"Don't we already do so in a limited sense? Isn't that one effect of our really crappy agriculture subsidy program? Granted, this is a really really awful way of achieving that policy goal, but it seems like eliminating those subsidies (which I think we should do) would raise costs for both the poor and middle class and while that would suck enough for the middle class to generate some political resentment, it would be worse for the poor but they have far less ability to effect political change."

I don't understand this chain of logic at all. Eliminating the subsidies would almost certainly not raise costs for the poor and middle class. The subsidies are largely money for NOT growing stuff--which is intended to make prices HIGHER than they should be.

Or sometimes they are subsidies to NOT grow one thing in favor of another--artifically raising the cost of one wanted product (it is wanted or you wouldn't have to pay money to get rid of it) to lower the price of a less wanted product.

Getting rid of the agricultural subsidies would almost certainly not cause prices of staples to rise and in the case of milk it would probably cause the price to drop at least 30%.

"This obviously isn't the only or even primary reason why the subsidies continue, but it is one factor that makes eliminating them harder."

If this is a factor at all, which I seriously doubt, it is an incredbily small factor. As such it doesn't connect well to your claim that an actual anti-poverty program has to pay 70%+ of the money to non-poor people.

Sebastian:

"And the idea that we have to spend 70% of an anti-poverty program on middle class and rich people to BRIBE them shows exactly why conservatives think government is super-inefficient at its aims."

Exactly. ;)

Mr. 70%: Show me the money or I won't show Mrs. 30% the money.

Gummint: Wouldn't it be more efficient for you to show Mrs. 30% the money without us showing you the money?

Mr. 70%: Absolutely. But I'm not showing her the money unless you show me the money.

Gummint: O.K. Here's your money.

Mr. 70%: Thank you. Have I told you recently how inefficient you are?

Gummint: I'm tempted to show you even more money in exchange for you never saying that again, but THAT would be even more inefficient.

Mr 70%: Inefficient, inefficient, inefficient, inefficient, inefficient ......
I like to look at you showing me the money as a gratuity ... not that nasty "b" word. We're all business people, are we not?

Gummint: I'll see what I can do.

Mr. 70%: (taking Gummint's cheek between thumb and forefinger and then applying a playful little slap): It would be too bad about Mrs. 30% if the money didn't come through, now wouldn't it, my inefficient friend? You know where to find me"


"We boomers for the last 25 years have been paying more into Social Security than was necessary to fund current benefts, to build up a surplus to deal with the demographic fact that there are fewer Xers than boomers. You Republicans spent that surplus on tax cuts for your rich campaign donors."

For the most part, the exact same people (boomers of all wealth levels) get the better part of the deal in this analysis. Essentially when Boomers were in their peak earning years, they benefit from a low income tax and a capped Social Security tax. As they retire, younger people get to pay the higher income tax and Social Security tax while the Boomers who are retired and thus earning less pay lower tax rates. Furthermore, Boomers get much larger benefits then they were paying for in their side of the generational transfer. (This last point will almost certainly not happen for post-Boomers).

This would be a large net benefit to the Boomers even if the population numbers were the same between generations. In actual fact, with many fewer workers in the younger generations, this tax benefit is much more in the Boomers favor. Democratic and Republican Boomers get the better part of the deal throughout. Democratic and Republican post-Boomers get the worse part of the deal throughout.

"Mr. 70%: Show me the money or I won't show Mrs. 30% the money."

How large do you think this hypothetical group is that would let grandma die of exposure on the street AND would rather pay $100 to stop it and get $70 back rather than just pay $30? If you assume that NO Democrats are in that group you don't think you could pick up 1 or 2 percent of Republicans to get a majority for "don't let poor grandma starve in the street"?

Slarti: Just because you're not getting the cash doesn't mean it's not part of your total compensation package. Health insurance and employer's side SSA payments are other examples of non-cash compensation.

If you have a pension as part of your terms of employment and your employer isn't making payments into a pension fund, call the US Attorney; they're stealing.

We boomers for the last 25 years have been paying more into Social Security than was necessary to fund current benefts, to build up a surplus to deal with the demographic fact that there are fewer Xers than boomers. You Republicans spent that surplus on tax cuts for your rich campaign donors.

rea, what do you mean when you say that Republicans spent that surplus on tax cuts? I thought that the SS trust fund was separate from the general fund and that while Bush's tax cuts did affect the general fund, they had no bearing on the trust fund. Am I missing something here? Or are you trying to make a more abstract argument that instead of tax cuts, money from the general fund should have been used for general investments like infrastructure or education that would improve the country's economic base in the long term and thereby bolster SS's long term funding?

Now you want to blame social security for the fact that you've created a huge deficit in the general fund, and don't want to tax your rich donors to make up for it.

I thought that conservatives were complaining about SS even when the general fund was in surplus but I might be misremembering.

My God, Turbulence. I asked a simple question and rather than get an answer, I received multiple questions in return demanding evidence to support what should be (largely) noncontroversial points and yet not a single cite from you that either pokes a hole in one of my assumptions or provides support for one of yours.

Let's try this again. Your argument is that productivity growth + immigration will fill the gap in SS. We know from data that I provided that immigration won't fill the gap. Thus, you must think that productivity growth among workers wages will do so.

We know, of course, that workers wages have been very, very flat of late (e.g., http://www.epi.org/content.cfm/bp195, a suitably progressive website). We also have my further assertion that not all growth in productivity will go to workers, but that a significant proportion of it will go to assert holders (e.g., stockholders). This seems to be bourne out by the evidence, general business rules (e.g., the fact that we value businesses at the entity level based on productivity) and common sense. If you have some evidence to the contrary, however, I'd love to hear it.

And, finally, we have my assertion that asset holders tend on average to be older, and thus are more likely to draw on SS now or in the near future. (Given the coming demographic bubble, see evidence above, most are in the "near future" category.) I thought this observation wasn't controversial, but you seem to think that it is. Fine. Having fulfilled multiple of your research tasks, here's one task for you: Give me something -- anything -- that shows my assertion is wrong.

Again, that assertion is: The older you are, the more assets (primarily stocks in these discussions) you are likely to hold.

You can't continue to play this game unless you, too, are willing to provide for your claims when challenged.

Sebastian: See you're doing it again. Poverty pograms don't pay the large majority of the funds to people who aren't poor. Whatever it is, it isn't mainly an anti-poverty program.

Actually, it is. The payments to people regardless of income are political insurance for the program. Powerfully effective political insurance.

For the most part, the exact same people (boomers of all wealth levels) get the better part of the deal in this analysis. Essentially when Boomers were in their peak earning years, they benefit from a low income tax and a capped Social Security tax. As they retire, younger people get to pay the higher income tax and Social Security tax while the Boomers who are retired and thus earning less pay lower tax rates. Furthermore, Boomers get much larger benefits then they were paying for in their side of the generational transfer. (This last point will almost certainly not happen for post-Boomers).

Exactly correct, Sebastian.

In other words, it's spinach that has been converted into chocolate cake.

Democratic and Republican post-Boomers get the worse part of the deal throughout.

One caveat: This really is a Gen-X complaint, because we get socked paying for the boomers during our high earning years. Gen-Y largely avoids that.

BTW, you can pretty much date someone by how annoyed they are with the boomers. From comments on this thread alone, the odds that Sebastian and I were born between 1964 and 1976 are pretty close to 100%.

Now, where did I put my oversized red flanel shirt? Aha, there it is, between my copies of Nirvana's "Bleach" album and the Director's Cut of Reality Bites.

Thanks for the Civil Rights movement. though.)

flanel = flannel

Sebastian:

First, I'm not assuming no Democrats are in that group. Secondly, I'm sure I could pick up more than a few percentage of points of Republicans to create a majority.

Unfortunately, Republican rhetoric (not you, not Von) trotted out every two and four years gives me the impression that 30% is just as big of an affront to their ideological principles as 100% is.

Therefore, my business associates and I have decided, after weighing the odds, that the inefficiency of paying the 70% bribe is a risk we're willing to tolerate as the cost of keeping the entire business going.


To those who make much of the fact that there are fewer GenXers than Boomers:

GenXers can look forward to a larger inheritance, on average, than their Boomer parents had. That's the flip side of the demographics you all keep harping on, isn't it?

-- TP

So, like, should I get an iPhone?

Slarti: Just because you're not getting the cash doesn't mean it's not part of your total compensation package.

I'd thought I'd dropped a big enough hint that I understood that to be the case. Oops.

"GenXers can look forward to a larger inheritance, on average, than their Boomer parents had. That's the flip side of the demographics you all keep harping on, isn't it?"

You think so? I know I won't, but that is anecdotal. I suspect that most Boomers will live much longer than their parents and will spend a very large portion of their wealth. Which frankly doesn't bother me, as I don't subscribe to the "don't spend my inheritance" mode.

"So, like, should I get an iPhone?"

Unless you're immediately in the market for a new phone, I'd wait a couple of months for the price to drop.

Seb: it's already pretty low.... (still debating with myself, obviously.)

Seb, I can't imagine the quick price drop will be the case this time. The original 4GB and 8GB phones were priced at $499 and $599, and dropped to $399 and $499 after a few months.

This time, 8GB and 16GB phones are selling for $199 and $299 respectively; Apple and AT&T are essentially subsidizing the purchase at the cost to the consumer of more expensive calling plans. I've been an early adopter of Apple stuff for quite some time, and it seems to be that $199 is a floor below which the product will not drop, not for the foreseeable future. Heck, you can't even get a full-sized iPod for less than $249, and we're many years into that product cycle.

For all the bad press Microsoft releases get, Apple's track record at rolling out buggy code, flawed hardware and inadequate capacity planning is not a good one--nearly every i-whatever release has had a large chunk of these kinds of stories. I'd never buy one that hadn't been on the market for at least six months, preferably a year.

Oh, and as long as they keep stupidly restricting their iPhones to a specific network, I'm not paying money for one. Which is too bad, because they're actually quite nice little toys.

So, like, should I get an iPhone?

No, get two, and then wear one on each hip like six shooters so if you should bump into Yglesias or Spackerman or some greater DC area blogger (CharleyCarp even), you can put your hands down at your sides, twitching a little, and say "Blog, mister."

Also, hilzoy - you have to remember that the iPhone, like virtually every other Apple product, won't (ever) be discounted much, if at all until/unless it becomes superseded by a newer model. If you want one, I'd suggest going ahead and getting one - they probably aren't going to get "cheap". Good luck!

And there's certainly no lack of demand for the damn things: "Launch Day" here in NYC (today) was a circus: people were literally camping out on the sidewalks overnight to be first in line at the Apple and AT&T stores. Mrs. Jay wants one, ans had me go check out the situation this morning, and when I moseyed up to the local AT&T Store to see, there were about 100-150 people (at least) already lined up - halfway up the block: with a large gentleman in a suit yelling at them to keep order: and discourage (in no pleasant tone either) "walk-up" trade with pronouncements of a multi-hour wait.

When vendors have to hire a bouncer to keep the customers in line, you know there are going to be demand/supply problems!

PS: It didn't help matters that the activation process was slowed/halted by a glitch in Apple's iTunes server: most of the first buyers couldn't activate their service - for hours.

Essentially when Boomers were in their peak earning years, they benefit from a low income tax and a capped Social Security tax. As they retire, younger people get to pay the higher income tax and Social Security tax while the Boomers who are retired and thus earning less pay lower tax rates.

Unless I'm mistaken, boomers are in their peak earning years right now.

The top marginal rate is relatively low in historical terms, I guess, although it kicks in at a lower threshhold than it used to.

Is the marginal rate predicted to jump back up again any time soon?

We do have a FICA cap right now, which may go away, but it seems like you'd have to make a pretty big salary for that to affect you.

So, I kind of see what your saying, but it also seems like the "short end of the stick" isn't that much shorter than the long end. At least to me.

I guess I've always found the GenX freakout about SS kind of weird.

I have been paying much more into SS than I will ever get out of it for basically my entire working life. Partly that's because of the bump in the rate to proactively cover the boomers. Mostly it's because I've done OK, and so what I get back relative to what I've put in will just be less than other folks.

BFD. As far as I can tell, that's what the damned program is for. It's not an investment scheme, it's a plan for making sure that nobody gets left without resources.

If we need to means test to balance the books, fire away. That'll probably mean I will, personally, see even less of what I've put in. So be it. It'll make a noticeable dent in my budget, but I won't starve.

And for the record, I'm sure that as I speak I'm funding the retirement not only of a stockbroker gazillionaire, but also a plumber. C'est la vie.

The whole SS debate gets under my skin. It's a good program. It pays for itself when folks don't screw with it, it's run very efficiently, it helps a lot of people out. Unless you have some ideological aversion to any kind of government involvement in things like this, I don't see the basis for a complaint.

Regarding McCain, I seriously think he understands perfectly well how the program works. I think he's just working the Republican playbook from the last forty years -- find out what people are pissed off and resentful about, and tell them how right they are to be pissed off and resentful.

Working people paying for other folks' retirement? It's an outrage!!

I'm a working person, and it just doesn't bother me.

Thanks -

You think so? I know I won't, but that is anecdotal. I suspect that most Boomers will live much longer than their parents and will spend a very large portion of their wealth. Which frankly doesn't bother me, as I don't subscribe to the "don't spend my inheritance" mode.

I certainly hope my parents spend their money on things that are fun, because I fear that modern medicine will ensure that it gets spent in the end on things that aren't so much fun.

it seems like you'd have to make a pretty big salary for that to affect you

I guess I fall under "pretty big", then. I think I started hitting the SS cap about four years ago.

I'd guess that anyone with at least a four-year engineering degree plus a quarter-century of experience in a relatively high-demand skill-set would be exceeding the SS cap. Provided they were willing to take some responsibility for multiple projects, which is one of the two or three things that keep me out of the front-pager scene, these days.

Of course all of that could go away any old time. Do as BOB says, and invest in canned goods!

I'd guess that anyone with at least a four-year engineering degree plus a quarter-century of experience in a relatively high-demand skill-set would be exceeding the SS cap.

My "big salary" comment was in reference to Obama's proposal to remove the cap for folks making more than $250K. I think the cap you're referring to here is the cap at which you no longer pay FICA. I think that's just north of $100K these days.

If you're making $250K as an engineer you're probably earning every penny.

Thanks -

I think the cap you're referring to here is the cap at which you no longer pay FICA.

Correct. Which cap were you referring to? As in, cap on what? The cap I'm talking about is cap on contributions, which also caps the payout.

Sebastian says: You think so? I know I won't, but that is anecdotal. I suspect that most Boomers will live much longer than their parents and will spend a very large portion of their wealth. Which frankly doesn't bother me, as I don't subscribe to the "don't spend my inheritance" mode.

Von says: I certainly hope my parents spend their money on things that are fun, because I fear that modern medicine will ensure that it gets spent in the end on things that aren't so much fun.

Medicare, not SS, is on the hook for von's parents' modern-medicine costs. As we all know, those are separate programs.

As for the cost of 'things that are fun' eating up the inheritances GenXers can expect from their Boomer parents: most retired people I know have very inexpensive tastes. Granted, that's just anecdotal, too. So leave anecdotes aside, and concentrate on the aggregate picture: a low worker-to-retiree ratio is exactly equivalent to a high legator-to-legatee ratio. The Boomers' net worth (another name for their 'estates', pre-mortem) will be increased by SS transfers from their outnumbered GenX heirs. If Grandma doesn't have to sell her house to eat, thanks to SS, then that means there will be a house for her kids to inherit. If she has fewer kids than her parents did, each kid's inheritance will be a bigger fraction of a house.

My point is simple: inter-generational 'wealth transfer' works two ways, and ignoring that fact leads to one-sided whining about the 'unfairness' of SS.

-- TP

Okay, so there isn't available evidence that most people think of Social Security as some sort of dreadfully ineptly handled individual retirement program, or at least none to hand.

I also note that a guaranteed income that isn't means-tested makes planning much easier, especially for people who'd be anywhere near the means-testing threshold. I've lived with that, and I bet Gary and nearly everyone else who has also done so would agree with me that it makes life bad. It adds enormous stress and uncertainty to one's life, and constantly calls for sacrifices of potential opportunity for fear that they could add up just wrong and cost one something essential. By contrast, the Social Security presence adds a solid rock of confidence to a lot of people's life.

I like living in a society with as little fear as possible. Dread and worry suck. I don't wish them on anyone but my worst enemies. To me, saying that one wishes more people live with avoidable uncertainty is a hallmark of genuine cruelty, or at least of a total failure of a compassion that I regard as basic for civilization. I am proud to stand in support of a program that ably provides a foundation of, well, social security, and that can continue to do so with only very minor adjustments for decades to come. Would that everything in America worked so well.

Bruce, I'd certainly want any means testing introduced to be designed with a phaseout, not a sharp dropoff where you get your full payment if your means is determined to be N and nothing at all at N+1 (or even just a $10 decrease from having $1 more). I assume everyone would agree. It's hard to believe that any systems are designed so innumerately that they actually cause you to get less money when you earn more, but I realize it does happen.

Which cap were you referring to?

As I understand it, Obama has put forward a proposal that SS taxes will be applied up to something like the current cap, then not be applied, then be applied again on earned incomes greater than $250K.

I thought that was what von was talking about when he referred to the cap being removed.

Thanks -

The comments to this entry are closed.

Blog powered by Typepad