Democrats versus Republicans

[sailaway21]

Recent criticism has caused me to expand my horizons in the views that I present here. Do not mistake the posting of the editorial from the looney left's premeir rag to be an endorsement of it's cockamamie content. This posting is for entertainment purposes only. Mind you, if you live in Cleveland you can just skip to the end, you've heard it all before. Herewith the Nation's view on the upcoming elections and their opinions on adult leadership. The ingestation of food or drink during the reading of the editorial is contra-indicated!
http://www.thenation.com/doc/20080107/editors

[cardiacpaul]

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA)
Program.
He promised:

1.) That participation in the Program would be completely voluntary,

2.) That the participants would only have to pay 1% of the first $1,400
of their annual incomes into the Program,

3.) That the money the participants elected to put into the Program
would be deductible from their income for tax purposes each year,

4.) That the money the participants put into the independent "Trust
Fund" rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and,

5.) That the annuity payments to the retirees would never be taxed as
income.

Since many of us have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that we are
getting taxed on 85% of the money we paid to the Federal government to "put away" you may be interested in the following:

Q: Which Political Party took Social Security from the independent
"Trust Fund" and put it into the General fund so that Congress could
spend it?

A: It was Lyndon Johnson and the Democratic controlled House and Senate.

Q: Which Political Party eliminated the income tax deduction for Social
Security (FICA) withholding?
A: The Democratic Party.

Q: Which Political Party started taxing Social Security annuities?

A: The Democratic Party, with Al Gore casting the "tie-breaking"
deciding vote as President of the Senate, while he was Vice President of the US .

Q: Which Political Party decided to start giving annuity payments to
immigrants?

A: That's right! Jimmy Carter and the Democratic Party.
Immigrants that moved into this country, at age 65, began to receive Social Security payments! The Democratic Party gave these payments
to them, even though they never paid a dime into it!

Now, after doing all this, the Democrats tell you that the Republicans want to take your Social Security away!

And the worst part about it is uninformed citizens believe it!

[retclt]

Great Post!

. . . and another good example that shows we are a nation of sheep.

[retclt]

Short article but makes a point. The Clintons can drag Chelsey along to campaign for them but make her untouchable to the press. She's 27!!!

http://apnews.myway.com/article/20071231/D8TS58V00.html

[RAGNAR]

When arguing against an error the size of Social Security, so much fundamental logic is contradicted that being concise becomes almost impossible -– the errors are just too broad.

(I’m abbreviating Social Security as “SS”.)

An acquaintance runs the Personal Retirement Alliance. One of the scenarios he uses when discussing the SS mess strikes me as nothing less than incredible.

Scenario assumptions:

1) An 18-year-old enters the workforce at today’s minimum wage, earning $10,712/year on a 40-hour workweek.

2) He stays at that wage, i.e., skill level, until he retires at 67, a lower retirement age than the one anticipated for those entering the workforce today.

3) 10.6% of his wages ($1,135/year, or less than $100/month, or less than ~$4.30/day worked) is diverted to a private investment account that’s sheltered from taxation (this is a dramatic reduction of the current rate of SS tax, as employers must match employee SS “contributions.”)

4) Return offered by this investment account runs at a constant-dollar rate of 6% (far, far bellow historic norms.)

5) Inflation is factored out of the scenario (constant-dollar value.)

By retirement, this program would yield a $359,406 retirement fund for someone who never made more than minimum wage during his career – a wage meant for someone with a teenager’s skill level and maturity.

Final scenario assumption:

Since this nest egg is now the sole source of income it’s invested as cautiously as possible as soon as the worker retires. Using the government’s own Thrift Savings Plan calculator (TSP.gov) with its historically low 4.25% annuity interest rate (~2/3s of the rate of return that built the nest egg), we see that the fund would earn $2,073/month.

THIS IS MORE THAN TWICE WHAT THIS NO-THOUGHT, NO-ABILITIES, NO-PASSION, NO-AUTONOMY, NO-GROWTH, NO-LUCK, NO-KNOWLEDGE, NO-GUTS, HERMITIC entity was making while working. (The capitalized characterization is how government advocates see the average citizen, i.e. mindless. They never claim that they themselves, or government critics for that matter, need these programs. It’s this fictional “thing” that needs the programs, and if providing "It" the unearned means sinking everyone else, well, so be it.)

Compare this return to what SS would give this worker by today’s payout schedule: $590/month, 72% less than what the private program would afford. (Of course as things stand now, SS won’t e able to pay more than ~$432/month when this worker retires.)

Factor in higher rates of return during the fund’s growth period, rates that are closer to historic norms, and the nest egg grows exponentially – as does the payoff after retirement.

Adjust for the normal salary growth of the lower-income class, or for an average middle-classer’s income, and you can drink yourself to death in one night of contemplating the gap between what’s possible with private, super-cautious investment that requires almost no financial savvy, and what SS offers. (The impact SS has on those of or above the middle middle-class is nothing short of criminal, but I don’t address them here because these people aren’t the justification for SS – just its biggest victims.)

Further:

- The nest egg is in the citizen’s name. If he wants to consume the annuity, fine. If he wants to venture-invest part of that annuity, fine. If he wants to give all or part of the nest egg to a non-profit or to his heirs, or he decides to spend every penny, well, he has the options and the right – he also has the consequences.

- This nest egg would fuel and stabilize the economy – it wouldn’t erode it as SS does.

- The biggest benefit eliminating SS affords is the sense of accomplishment and independence at retirement. There’s no concern with government budgets, no AARP, no pandering by terror-instilling politicians. (An added benefit here is the independence of the worker from his employer managed pension plan – to say nothing of alleviating employers of the burden of providing retirement for everyone it’s ever hired.)

The above demonstrates categorically that SS devastates lower-income folks. Only a mind with motives that have nothing to do with the poor, or benevolence, or fairness, can pretend to think otherwise. (Same for minimum wage, progressive taxation, union-empowering legislation, Medicare/Medicaid, agricultural subsidies, education plans,…, pick any government program.)

Yes, even after market forces have reduced commission rates to a bare minimum, Wall Street would make a bundle if SS were ever privatized – a bundle, BTW, the financial sector has been deprived of since FDR had the effrontery to enact SS.

So what?

The point is that this worker, the bare minimum type, would retire independently, with twice the income he had during his minimal career, and the nation’s economy would be far, far stronger. And should he die early, he'd still have the capital, his do pass on as he wishes.

[sck5]

Heres the problem with your arithmetic and assumptions - You assume that everyone will earn your average rate of return even while you are arguing that they are free to invest it where they want and consume it instead if they like.
Well, this may or may not be news to you but there are fair number of idiots out there. There are even a fair number of supposedly savvy capitalists who have gone bust (just think of the dot com bubble bursting and now the housing market - many more example exist if you want to think about it.

The problem is that a lot of people will NOT have enough to live on at the end of the day if a system like you seem to want is put in place. What are we going to do about them? Do you really think that we will let a large number of grandpas and grandmas starve in the street? I dont want to live in a country that would do such a thing.

Social Security was constructed on the basis of what was politically possible in 1932. If we had it to do again we might design a different system. But now that we have it, and now that about a third of old people rely on it for virtually all of their income and another third rely on it for at least half their income it is very hard to pay for any kind of transition (especially now that we have dug such a deep financial hole in the last 7 years). And as a 51 year old who has been paying extra all my working life to build up the trust fund to prefund my own retirement, I sure as hell want to get my Social Sec. payments in a few years when it is my turn.

Otherwise, how am I going to pay for a slip for my boat?

[sailaway21]

sck5,
Actually the numbers are not off at all. You could make one minor correction and say that the money would need to be invested in a broad based market fund or one indexed to the Dow to eliminate the idea of speculation. and I did not get the impression that Rag's was advocating any type of early withdrawal.

Where you got the idea that SS got in trouble in the last seven years or that the government got in trouble over the last seven years is beyond me. The federal deficit is shrinking. Of course that could change-especially if we increase taxes.

If you're proposing relying on SS for retirement, you're already resigned to grandpa's and grandma's starving in the street. The system is broken and there isn't any more money. The country that you wouldn't want to live in has already spent the money. It's gone. It's good that you have been investing for retirement. Given the actuarial tables, you've got another thirty years to go, which is the good news. The bad news is, social security doesn't. If you think you're going to receive your "fair share", whatever that is, you should be prepared for a shockingly new definition of "fair".

The truly amazing thing is that you want to continue as we are? What about your heirs? Shouldn't they have a shot at a retirement system that is more than a pyramid scam? Why should we wait for things to get worse yet? Usually, when a debt counselor talks to an individual that is in the situation that the SS system is in, they advise them, "you're already in the hole, please stop digging."

[RAGNAR]

Originally Posted by sck5

Heres the problem with your arithmetic and assumptions - You assume that everyone will earn your average rate of return even while you are arguing that they are free to invest it where they want and consume it instead if they like.

I always hate the de facto premise behind such statements, namely, that people are stupid and incapable of taking care of themselves.

Nonsense.

People may chose a path and/or and eventual character that makes self-reliance difficult or, in the rare instance, impossible, but that's hardly an argument against the idea that privatizing SS would benefit EVERYONE in countless ways. (Ever ask what people did Re retirement before SS, both in the US and throughout history?)

Well, this may or may not be news to you but there are fair number of idiots out there.

A few points:

-- I don't accept this convenient, Original Sin-based POV -- at least not to the numbers implied. I also don't see the relevance of this fact in a free nation. Of course their are idiots and self-destructives out there. Equally true that the more Gov goes Mommy, the higher the disfunction rates. Some people, through thousands of daily decisions and affirmations, end up with a character that leads to disfunction. Others pick a path that launches companies like Microsoft, an entity that has done more to raise worldwide productivity/living standards than all Gov programs the world over combined and cubed. Such is the nature of free societies, folks.

-- How does the fact that there are people incapable of looking after their own, simple, 101-level affairs mean that the rest of us, be we the majority or a minority, should sacrifice our lives to these people at the point of a gun? By what right do the unable have such claims on the property of others?

-- I don't see why you assume one needs to do much to get good, safe, financial advice. that 6% is relatively simple to achieve. Most cautious retirement plans, the tool most Americans use and more and more people in general end up with enough to retire, yield that much or more.

-- Further, by unleashing the economy through private retirement accounts, we improve standards of living immeasurably, making it both easier to achieve Retirement Critical Mass and eaier to recover from the consequences of being an idiot.

There are even a fair number of supposedly savvy capitalists who have gone bust (just think of the dot com bubble bursting and now the housing market - many more example exist if you want to think about it.

Capitalism is an economic system. Being a proponent of that system doesn't make one a savvy investor. Capitalism unleashes one's potential. It also sends out life-and-death signals Re the need to develop a certain character. It does not, cannot, bypass Freewill to assure that everyone develops these 101-level skills

Further, all there is out there is private investment of retirement moneys. Govs don't create wealth -- they drain it and stall its creation.

Millions and millions of people have safe retirement portfolios the world over. But even if this weren't true: I don't see how such character defects, be they found in your capitalist or your idiot, add up to the rest of us having to pay the price for their shortcomings through a system that minimizes their chances of recovering from their issues.

The problem is that a lot of people will NOT have enough to live on at the end of the day if a system like you seem to want is put in place.

Not true. All would have far more than SS pays out now, both in real dollars and in the soar in productivity and innovation. You'd also take Dc out of our lives, the latter being its own reward. Don't forget that the example I offered lists the absolute worse case scenario Re income. What adult who honestly wants to make his way works for $10K/year?

What are we going to do about them?

First, we drop this Leftist habit of exaggerating the % of the downtrodden.

Second, we recognize that life is life, not some effortless paradise where wealth just shows up.

Third, we unleash the only force that can accelerate standards of living so that those who end up in a bad way can rise easier, namely, Capitalism.

Fourth, we stop glorifying misery.

Fifth, we stop pretending that people aren't able to, with genuine, longterm effort, take care of themselves far better than any Nanny State ever did or could.

Last and most important: drop the idea that something is gained by these people when government acts on their behalf.

Do you really think that we will let a large number of grandpas and grandmas starve in the street?

This is another area of concern to me, namely, if Gov doesn't do something, well, that's it. Fact is most giveaway help is done privately, not through Gov. Fact also is that private non-profits are far more effective at ending problems, where Gov is only great at creating them. One would think that there was no charity in the world before Marx and FDR clouded these issues.

I dont want to live in a country that would do such a thing

THis is a false alternative, so don't worry, it won't happen. The alternative to Gov controlling everything isn't hoards of homeless. Only MArx and a handful of Western intellectuals every believed this.

Social Security was constructed on the basis of what was politically possible in 1932.

It was constructed in defiance of what was politically possible, by a tyrant who sought alleviate a mess that was created by the principles he enacted to counter it.

If we had it to do again we might design a different system. But now that we have it, and now that about a third of old people rely on it for virtually all of their income and another third rely on it for at least half their income it is very hard to pay for any kind of transition (especially now that we have dug such a deep financial hole in the last 7 years).

No one worth listening to has ever said that SS should be dismantled without taking into account the fact that a significant % of Americans rely on SS, and that they can't be expected to stand on their own past a certain stage in their lives. However, the rest of us can and should. (Last: condition for continued SS payments should be a review of recipients' lifestyles.)

And as a 51 year old who has been paying extra all my working life to build up the trust fund to prefund my own retirement, I sure as hell want to get my Social Sec. payments in a few years when it is my turn.

As you should. However, that doesn't mean SS should stand. That system has cost you and everyone a nearly incalculable fortune and, far more important, the feeling of efficacy that can only come from knowing you can stand alone.

[cardiacpaul]

" However, the rest of us can and should. (Last: condition for continued SS payments should be a review of recipients' lifestyles.)"

are you suggesting that some gov't body should have a check off sheet that would determine whether I'm smart enough to manage my own money or not? thats scary.

It was constructed in defiance of what was politically possible, by a tyrant who sought alleviate a mess that was created by the principles he enacted to counter it."

Partially true.
With the US In a deep depression, the industrial revolution gearing up, the dynamics of the country were changing. People that had generational family farms were moving to the cities in droves.
As a rural agricultural based economy and lifestyle, families typically had multiple generations living under the same roof. with the moves to the city, that ended (for the most part)

[cardiacpaul]

"-- How does the fact that their are people incapable of looking after their own, simple, 101-level affairs mean that the rest of us, be we the majority or a minority, should sacrifice our lives to these people at the point of a gun? By what right do the unable have such claims on the property of others?
-- I don't see why you assume one needs to do much to get good, safe, financial advice. that 6% is relatively simple to achieve. Most cautious retirement plans, the tool most Americans use and more and more people in general end up with enough to retire, yield that much or more.
-- Further, by unleashing the economy through private retirement accounts, we improve standards of living immeasurably, making it both easier to achieve Retirement Critical Mass and eaier to recover from the consequences of being an idiot."

the only issue I have is... There is a VAST number of people, regardless of socio-economic status or background that would NOT save for the future.
According to some more useless stats, over 20% of the wage earners in the US DO NOT have a bank account, thats right no checking or savings account. They cash their paychecks at wal-mart, the grocery, check cashing establishments. Are you telling me that given that little tidbit, those people would shave off X% and drop it off at charles shwab?