bbbamI
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Mmmm...perhaps I was a bit harsh proclaiming fossilism.... Hey, I imagine you and I are both well[-] pickled [/-] preserved....In that case I must be a fossilized fossil.
Mmmm...perhaps I was a bit harsh proclaiming fossilism.... Hey, I imagine you and I are both well[-] pickled [/-] preserved....In that case I must be a fossilized fossil.
-Do we really want the government to become a major a stockholder in more private companies?If Congress changed this law, and allowed a portion of the surplus to be invested in stocks (as is the case with any defined-benefit pension plan, public or private), presumably over 30-40 years the rate of return could be increased and the problem would go away (the magic of compounding).
-Do we really want the government to become a major a stockholder in more private companies?
Also, how are politicians going to continue to tell people that they shouldn't have private SS accounts because the market is simply too risky if they invest the government money in the same markets? It would be a sticky political problem that few have a vested interest in solving.
Fired@51:
In reality, the bond markets will see that unlimited borrowing and indebtedness to fund SS/medicare and other programs will be prohibitivly expensive. Changes and cuts are likely going forward.
ss is an insurance plan, not a pension plan.
As everyone knows, the reason SS has a surplus is because SS has been taking in more from taxes than it pays out in benefits. In about 6-7 years, this will reverse, and the difference will have to be made up by drawing down the surplus. Sometime around 2035-2040 the surplus will be gone, and the then level of benefits will not be able to be paid. At this point SS benefits will have to be cut significantly, or taxes raised significantly.
There is nothing inherently wrong with the current surplus being invested in government securities. We certainly wouldn't want the SS trust fund to simply hold cash and get a 0% (or less in real terms) return. The problem is that the trust fund has only been earning about 2% after inflation on the government securities it holds, not enough to grow the surplus fast enough to offset the coming decline in receipts from SS taxes.
IMO, the least painful way to fix this would be to increase the rate of return that the the trust find earns on the surplus. But current law requires that the surplus only be invested in non-marketable government securities. If Congress changed this law, and allowed a portion of the surplus to be invested in stocks (as is the case with any defined-benefit pension plan, public or private), presumably over 30-40 years the rate of return could be increased and the problem would go away (the magic of compounding). Unfortunately, because the entire surplus has already been lent (invested in government securities), there is no money in the trust fund to be invested in stocks. To come up with the money to invest in stocks, the government would have to stop rolling over the maturing securities and either pay down the deficit or borrow the money elsewhere.
Fire,
Our fiscal ills are a direct result of a tax, spending and deregualtion agenda not seen since the Reagan administration.
We're not going to fix SS without policies that address the aforementioned root causes.
Fine. If your choice is to fix SS by raising taxes and cutting benefits, go for it. I was trying to suggest another "less painful" way.
If you were working for a private company that had a defined-benefit pension plan, and the plan sponsor suggested that the plan only invest in government securities, and by the way, your payroll deductions would be increased and your benefits would be reduced due to lower expected returns, would you applaud that suggestion?
Of course the adviser is going to say don't include SS.... more fees for larger savings.
I'm interested in opinions on what the government might do with benefits already being received by SS recipients. Do you think the folks age going to see their paychecks cut or their COLA cut out or reduced.
Both my parents and the wife's parents rely heavily on SS. They are all 4 very spry and I could see all 4 living into their 90s. I'd hate to see their benefits cut to the point of not being able to live independently.
Any thoughts on whether SS cuts will be fazed in for future folks or is it possible to see the cut like I mention above?
do newspapers run articles with young workers talking about how hard it is to make ends meet? or do you get the article with a white haired old lady who acts sweet and talks about how she can't put food on the table. no sympathy here, sorry.
my solution is highly unpopular. i think we should follow the french and raise the retirement age on anyone younger than 62. and get payments in check.
and no, i don't believe the job market is zero sum.
Both my parents and the wife's parents rely heavily on SS. They are all 4 very spry and I could see all 4 living into their 90s. I'd hate to see their benefits cut to the point of not being able to live independently.
Any thoughts on whether SS cuts will be fazed in for future folks or is it possible to see the cut like I mention above?
The 4 folks that I am talking about are all in their 80s...
The 4 folks that I am talking about are all in their 80s and none of them have a snowballs chance of finding a job. In good times or in bad.
I have no problem with them gradually raising the retirement age. It would give incentive to younger folks to save for old age. They would not do it voluntarily I suspect, but at least they know what the consequences are. SS was a false sense of security for the last generation.
Fire,
I'm not paticularly opposed to this idea but can you identify a state that can claim that this approach avoided or resolved their employee pension funding woes?
Perhaps a good part of the states' pension "funding woes" are the result of benefit promises that are out of line with their funding capabilities. In general, the benefits are relatively more attractive than SS both in terms of retirement age and $, especially for higher income workers. In any case, how would restricting the state pension plans to only investing in government securities improve this situation over the long term?
... and because our political system is incapable of addressing the extraordinary rise in healthcare costs....the largest portion of any state budget today.
We've all been mugged.
How could SS or public pensions ever be reduced? What would be the mechanism? I don't see how it could be done by legislatures, because retirees are voters, there are a lot of them, and there are going to be more.
That's a reason for cutting benefits. My question was about the mechanism for cutting benefits. Would checks to retirees be reduced in their amounts? On whose authority? Or would banks stop honoring the checks? What would actually happen?Uh, because we can't afford the promises the politicians made?