----- Original Message ----- From: "John D. Giorgis" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[email protected]> Sent: Thursday, January 20, 2005 8:14 AM Subject: Re: Social Security
> Dan, > > While Gautam and I agree on many things, our opinions diverge on the > subject of Social Security. I simply do not believe that Social Security > saved capitalism. > > Furthermore, you wrote that: "the purpose of SS was to provide a floor to > keep the elderly and disabled out of poverty. For the most part, it has > done this splendidly." While there is no doubt that Social Security has > largely eliminated elderly poverty, it manage to do so through a scheme of > highly regressive taxation. I have a hard time calling this "splendid." The tax is regressive, but the benefits are highly progressive. The combination is progressive. The regressive tax was a necessary compromise to get SS. I realize that you have philosophical objections. But, I think you have very little feel for how desperate things were in the Depression, and how FDR gave hope to millions. It's true that his spending programs before WWII were too small to get the ecconomy jump started, but the ecconomic growth during his first two terms was fairly decent....all things considered. > It also managed to do so by saddling the country with an unsustainable > pyramid scheme, designed and operated by the central government. No, it hasn't. That criticism could have been levelled in the '70s, but the last compromise kept it projected to be in the black for 75 years. Now, all we need to do is slow the true rate of increase (after inflation) of the payments so that, not only will it be projected to be in the black until 2080, but the relative cost will be reduced after that. >While ostensibly it has created a trust fund, the current federal government is > essentially reliant upon the borrowing that trust fund is financing - which > could pose some problems once that sort of borrowing goes away. Moreover, > by providing its benefits to everyone, Social Security has managed to > depress national saving, which according to most economic models has > depressed long-term growth in this country. What was the time lag between the start of social security and the depression of national savings? Since national savings didn't start dropping noticably until the '90s, when they fell through the floor, wouldn't it make sense that, if this is true, we should see the present elderly have the majority of their income provided by earnings off their savings. At the very least, we should see that for those 75+, right? Well, it's not true. See http://research.aarp.org/econ/beyond_50_econ_tables.html Well, lets look at what folks that age have saved, then. Also from the source, we have the median net worth as: 50-61: 127k 62-74: 148k 75+: 129k With the annuities Erik was talking about, the median income from this money would be in the range of 5k-7k/year. But, this is net worth, which should include the worth of their houses. > I don't know what you mean when you say that if Social Security were simply > a true welfare program, instead of continuing to use regressive taxes to > finance payment checks to the rich, that it could be either "gamed or cut." > Are you saying that Social Security cannot be "gamed or cut" now? No. It's just that cutting payments for the poor is the easiest way to make big inroads in the budget. Bush is now talking about cutting Medicaid, but not Medicare. > I definitely support changing the indexing of SS benefits to inflation > rather than wages. (Which in the long run, is essentially what you > propose - you just want to increase the benefits for the lower tier first.) > What I can't understand, however - is why do we want tax dollars going to > write checks for people who made $160,000 per year? Because including everyone in the program was the price that had to be and has to be paid to have Social Security. Cutting the benefits for people who've had 15% of their earnings go to taxes because they could count on an income from the same tax source just wouldn't fly. If it were a welfare program, it would be quickly cut down to where aid for children now is. >If a Republican > proposed sending checks to these people you would be lambasting them to no > end. Not necessarily. If a Republican were to propose, say, nationalizing health to get us closer to the cost/benefit ratio in Great Britian, then I wouldn't lambast them. The net effect of SS is progressive. It would be more progressive if the cap on income were taken off, but that's hard to get by Congress for obvious reasons. >Put the name "Social Security" on it, and payments to rich people > suddenly become sacrosanct. Furthermore, in the long run, under your > 2045 "fixed" column, doesn't everyone end up with the same sized benefit - > rich and poor alike??? Is this desirable??? Compare it to Bush's plan to the present plan. The top income earners get a bit more, the lower income workers get significantly less, and there are an extra 2 trillion in federal bonds that have to be sold. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
