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Old 07-23-2011, 11:48 AM   #21
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If we raised the SS cap, the increased revenues will continue to go to the general fund to pay for current spending, just as they have for decades (with a slip of paper in the "trust fund" as a meaningless note of the transfer). These increased funds will not "save social security" or make it solvent in any real sense. It will be clear to everyone that we're just mining another revenue stream to keep the current (general, non-SS) spending rate going while we build up more debt for our kids to pay.
It's more honest just to move to a true "pay-as-you-go" SS system. We make either the payout formula or the SS payroll tax rates constant from year to year and adjust the other (benefit level or SS taxes) to fit every year. Yes, that means adjustments down the road, but that's going to have to happen anyway.

Advantages:
1) We break the unhealthy link between the general fund and SS. Each budget sheet becomes clear and self-supporting. Neither SS nor the general fund will be looked upon as "billpayers" for the other.
2) It makes the intergenerational "contract" of SS explicit. No one will be under the illusion that they are somehow building up an individual account in a lockbox somewhere. When you work you pay so that oldsters can get a modest check. When you are old, new workers will pay so that you'll get a modest check. If you don't trust this system, save money of your own.
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Old 07-23-2011, 11:54 AM   #22
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In relation to coming generational clash over SS, Chicano brings up an excellent point. As thought process for younger ones deepens from the "our generation is getting the shaft", could change to " if drastic cuts are made to SS/Medicare my parents who have no money will become my financial problem". This may in turn cause them to be in favor of more tax increases. Not saying it's right or wrong, it just could change the thinking process as the specifics hit closer to home.
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Old 07-23-2011, 12:08 PM   #23
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Originally Posted by ziggy29 View Post
I'd say it a bit differently: Medicare *is* a problem, but it's a problem for the same reason the rest of the U.S. health care mess is a problem: inability to control runaway costs. That is the primary nut to crack, IMO, and one that would make all the other health care problems **much** easier to address.

Any serious health care reform must start with cost containment. Otherwise any other reforms are doomed to failure.
I think you are agreeing with his position, but saying it differently. The issue is not Medicare, but medical costs. Medical costs throughout our system are out of control, and in some aspects, (administration) Medicare is much cheaper than other insurance schemes. Another thing frequently overlooked by those who wish to gut Medicare is that of course old people and/or people on disability cost more to care for. They're old for Heaven's sake!

Although I am generally a Burkian Conservative, I think the US model of medical payments is insane. Likely no more so than many other aspects of US life, but insane nonetheless.

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Old 07-23-2011, 12:37 PM   #24
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Government has promised too much to seniors for the resources likely available IMJ. As long as I believe that to be true & government doesn't correct it, then I'll feel obligated to pass back some of what government gives me to my descendents to compensate them for this malfeasance - versus hoping to die they day I've spent my last penny.
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Old 07-26-2011, 12:15 PM   #25
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What exactly might happen if we don't save SS? What if it was just phased out I think people would keep more of their earnings to invest over the course of their working years and families would take more responsibility to care for their elderly parents.

I'm not that old; but, I wonder what happened before SS was dreamed up in the 1930's? And, what about all of the places in the world today that don't have a SS system? I just don't recall hearing about older people dying in the streets.
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Old 07-26-2011, 12:37 PM   #26
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What exactly might happen if we don't save SS? What if it was just phased out I think people would keep more of their earnings to invest over the course of their working years and families would take more responsibility to care for their elderly parents.

I'm not that old; but, I wonder what happened before SS was dreamed up in the 1930's? And, what about all of the places in the world today that don't have a SS system? I just don't recall hearing about older people dying in the streets.
The census data coming out today, probably reinforces why there is some need for government to save people from themselves or from us being taxed even more. Household net worth of Hispanics $6 k, Blacks $5k , Whites was more at $120 k, but hardly impressive either. Not making this a race thing, just an example of how many people live hand to mouth and cannot accumulate wealth to live off of whatever the reason may be. Not a big government guy, but in safety net terms of SS, this is proof of the need for it. The people on this forum regardless of race or gender probably have considerable more household wealth than the averages reported in this report. I understand your thought process, but the family unit structure from a hundred years ago is gone. Careers have moved people all over the country, divorce more prevalent, single parent families with no support from missing parent, etc. Not saying what did it or whether it's right or wrong, but it would be pretty difficult to return to that structure now.
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Old 07-26-2011, 12:54 PM   #27
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The census data coming out today, probably reinforces why there is some need for government to save people from themselves or from us being taxed even more. Household net worth of Hispanics $6 k, Blacks $5k , Whites was more at $120 k, but hardly impressive either.
No way I'm accepting this statement without some documentation. You mean to say the average white american family has a net worth nearly 25 times the average black family? I did a quick search, and all I could find was a 2004 report. But the numbers in there are far from what you said. Wealth - 2004 Detailed Tables How about a link to what you were quoting?

Quote:
Not making this a race thing, just an example of how many people live hand to mouth and cannot accumulate wealth to live off of whatever the reason may be. Not a big government guy, but in safety net terms of SS, this is proof of the need for it. The people on this forum regardless of race or gender probably have considerable more household wealth than the averages reported in this report. I understand your thought process, but the family unit structure from a hundred years ago is gone. Careers have moved people all over the country, divorce more prevalent, single parent families with no support from missing parent, etc. Not saying what did it or whether it's right or wrong, but it would be pretty difficult to return to that structure now.
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Old 07-26-2011, 01:01 PM   #28
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In a nutshell the report that came out today suggested that Black and Hispanic wealth dropped mainly due to housing equity being lost. Whites lost housing equity also, but had other assets which were not hit so hard. hence the conclusion from the report that the news media picked up about the wealth gap between races.

The report was not adjusted for income. I suspect that if you compare families of similar income across race, the results would be much closer.

Nonetheless I am sure we will hear this headline grabber for years to come.
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Old 07-26-2011, 01:03 PM   #29
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Originally Posted by harley

No way I'm accepting this statement without some documentation. You mean to say the average white american family has a net worth nearly 25 times the average black family? I did a quick search, and all I could find was a 2004 report. But the numbers in there are far from what you said. Wealth - 2004 Detailed Tables How about a link to what you were quoting?
Harley, I wish I could, but I don't know how to link with my iPad. I got it from yahoo news. Article was called "Wealth Gap widens between whites and minorities". it was an AP release so it should be easily found. MSNBC also had a segment on it this morning on Morning Joe. The info was gleaned from the us census that just was released.
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Old 07-26-2011, 01:46 PM   #30
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Originally Posted by harley View Post
No way I'm accepting this statement without some documentation. You mean to say the average white american family has a net worth nearly 25 times the average black family? I did a quick search, and all I could find was a 2004 report. But the numbers in there are far from what you said. Wealth - 2004 Detailed Tables How about a link to what you were quoting?
It's twenty time Harley if that makes you feel better.
Wealth gap widens for whites over blacks, Hispanics - Pew - Jul. 26, 2011
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Old 07-26-2011, 01:46 PM   #31
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Originally Posted by Mulligan View Post
The census data coming out today, probably reinforces why there is some need for government to save people from themselves or from us being taxed even more. Household net worth of Hispanics $6 k, Blacks $5k , Whites was more at $120 k, but hardly impressive either. Not making this a race thing, just an example of how many people live hand to mouth and cannot accumulate wealth to live off of whatever the reason may be.
Sounds like one of the anomalies of using "averages". The top 100 guys have net worths in the billions (and they probably are all "white") so it skews the average. (Work your way down the chain of net worths and so it goes.)

Honestly, I don't see much real difference between a net worth of $5K or $6K vs. $120K. They both indicate virtually no chance of retiring without a government (or other) subsidy. Still, the % difference between 5 and 120 will make good political fodder when the real story is that Americans depend too much on SS when it was originally intended only as subsistence safety net. Just my opinion, of course. YMMV.
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Old 07-26-2011, 01:57 PM   #32
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It's twenty time Harley if that makes you feel better.
Wealth gap widens for whites over blacks, Hispanics - Pew - Jul. 26, 2011
I tossed that out rather flippantly because I am concerned with the direction wealth disparity is moving but the choice of median rather than average makes a big psychological difference. Several of the news articles actually use "average" when the study intentionally used "Median." Here is Pew's note about the difference (note we are still talking big disparities) - probably explains Harley's surprise:
Medians and Means: Just as the gap in median household wealth among racial and ethnic groups rose from 2005 to 2009, so too did the gap in mean household wealth. However, the mean differences are not as dramatic as the median differences. (A median is the midpoint that separates the upper half from the lower half of a given group; a mean is an average, and, in this case, the average is driven upward by households with high net worth). In 2005, mean white household wealth was 2.3 times that of Hispanics and 3 times that of blacks. By 2009, it was 3.7 times that of both Hispanics and blacks.

Edit: here is the actual Pew link if anyone wants details.
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Old 07-26-2011, 01:57 PM   #33
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Originally Posted by donheff
It's twenty time Harley if that makes you feel better.
Wealth gap widens for whites over blacks, Hispanics - Pew - Jul. 26, 2011
Thanks for bailing me out with a link Donheff! My only point in using the numbers, was IMHO a definite need for SS for many Americans.
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Old 07-26-2011, 02:10 PM   #34
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... but the choice of mean rather than average makes a big psychological difference. Several of the news articles actually use "average" when the study intentionally used "Mean."
"Mean" = "average"
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Old 07-26-2011, 02:16 PM   #35
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"Mean" = "average"
Thanks, even I did it. I meant median - I went back and fixed it so everyone else can be even more confused.
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Old 07-26-2011, 09:34 PM   #36
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Well, thanks for the clarifications, guys. I didn't mean to sound like I was attacking Mulligan or anything, I was just blown away by the numbers. I do think that using median would give a better, if less headline-worthy, report. And I've heard that Hispanics and Blacks were much more effected by the housing situation. I guess if in 2005 you have $100K in equity, then in 2009 you are $50K in the hole, it would seriously effect your net worth. And I do think averaging in Bill Gates and Warren Buffet would tend to throw the numbers off a bit too. Still, shocking numbers in general.

Usually in these threads, when they wander off into partisan bickering over raising taxes/cutting spending, someone will say "feel free to send in some extra of your own money". I just read an interesting article about people who have done just that. Showdown encourages citizens to give gifts to reduce debt - The Washington Post

I don't think this is the way we're going to pay off the debt. It's like giving the guy on the corner money. He'll spend it the way he chooses, and not the way you hope he will. We need to find the equivalent of giving the gov't a cheeseburger instead of cash.
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Old 07-26-2011, 10:02 PM   #37
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Originally Posted by harley
Well, thanks for the clarifications, guys. I didn't mean to sound like I was attacking Mulligan or anything, I was just blown away by the numbers. I do think that using median would give a better, if less headline-worthy, report. And I've heard that Hispanics and Blacks were much more effected by the housing situation. I guess if in 2005 you have $100K in equity, then in 2009 you are $50K in the hole, it would seriously effect your net worth. And I do think averaging in Bill Gates and Warren Buffet would tend to throw the numbers off a bit too. Still, shocking numbers in general.

Usually in these threads, when they wander off into partisan bickering over raising taxes/cutting spending, someone will say "feel free to send in some extra of your own money". I just read an interesting article about people who have done just that. Showdown encourages citizens to give gifts to reduce debt - The Washington Post

I don't think this is the way we're going to pay off the debt. It's like giving the guy on the corner money. He'll spend it the way he chooses, and not the way you hope he will. We need to find the equivalent of giving the gov't a cheeseburger instead of cash.
No offense was taken, and if I was smart enough to know how to attach a link from this iPad, you wouldn't have to had to ask, as the numbers are startling. There are even more studies of groups of Americans that show numbers even worse than this, and we have had a current thread of millions of people who could not come up with $2,000 if they needed to. I just think they all kind of reach same conclusion that the importance of SS for millions of Americans cannot be overstated.
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Old 07-27-2011, 09:54 AM   #38
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In a nutshell the report that came out today suggested that Black and Hispanic wealth dropped mainly due to housing equity being lost. Whites lost housing equity also, but had other assets which were not hit so hard. hence the conclusion from the report that the news media picked up about the wealth gap between races.

The report was not adjusted for income. I suspect that if you compare families of similar income across race, the results would be much closer.

Nonetheless I am sure we will hear this headline grabber for years to come.

One of the problems with a report like this is the huge wealth that a few have.... I remember many years ago when Gates was WAY up there... they compared his net worth with the lowest net worth Americans.... it took 100 million of the poorest people to get the net worth of ONE guy...


That kind of skews the ratio....
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Old 07-27-2011, 08:02 PM   #39
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If we raised the SS cap, the increased revenues will continue to go to the general fund to pay for current spending, just as they have for decades (with a slip of paper in the "trust fund" as a meaningless note of the transfer). These increased funds will not "save social security" or make it solvent in any real sense. It will be clear to everyone that we're just mining another revenue stream to keep the current (general, non-SS) spending rate going while we build up more debt for our kids to pay.
It's more honest just to move to a true "pay-as-you-go" SS system. We make either the payout formula or the SS payroll tax rates constant from year to year and adjust the other (benefit level or SS taxes) to fit every year. Yes, that means adjustments down the road, but that's going to have to happen anyway.

Advantages:
1) We break the unhealthy link between the general fund and SS. Each budget sheet becomes clear and self-supporting. Neither SS nor the general fund will be looked upon as "billpayers" for the other.
2) It makes the intergenerational "contract" of SS explicit. No one will be under the illusion that they are somehow building up an individual account in a lockbox somewhere. When you work you pay so that oldsters can get a modest check. When you are old, new workers will pay so that you'll get a modest check. If you don't trust this system, save money of your own.
Yes.
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Old 07-27-2011, 08:10 PM   #40
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No its not evil but why not manage SS collections as a true pension fund with a conservative allocation of stocks, bonds and cash?
Because SS is primarily a pay-as-you-go system. Over most of its history, most taxes collected have been distributed as benefits in the same year the taxes were collected.

All this discussion of trust fund and IOUs etc. is the result of the 1983 act that increased taxes by more than benefits. I've heard that the players at that time were working with projections that were too conservative and didn't realize that SS would run a surplus for so many years. But those surplus years seem to have ended (sooner than more recent projections had estimated, due to the recession). So there is no surplus cash flow today to invest.
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