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Author Topic: Greespan: Cut Social Security
Section 49
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posted 25 February 2004 03:37 PM      Profile for Section 49     Send New Private Message      Edit/Delete Post  Reply With Quote 
Facing a giant deficit?

Don't want to tax the wealthy?

Here's your enemy: old people


From: Toronto | Registered: Oct 2002  |  IP: Logged
Briguy
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posted 25 February 2004 03:51 PM      Profile for Briguy     Send New Private Message      Edit/Delete Post  Reply With Quote 
Holy Schmoley. Don't question the ballooning military budget. Don't bring taxes in line with other G-8 countries. Cracking down on Republican largesse won't help. The only answer is to leave retirees flapping in the wind.

I suppose that answer seems reasonable when the person promoting it is independently wealthy, and has no fear of ever requiring the public system to stay alive.

So, by my count, Bush has alienated all homosexuals and low-income workers in the same week. When's he going to go for the trifecta and suggest that a woman's place is in the kitchen?


From: No one is arguing that we should run the space program based on Physics 101. | Registered: Nov 2001  |  IP: Logged
josh
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posted 25 February 2004 03:51 PM      Profile for josh     Send New Private Message      Edit/Delete Post  Reply With Quote 
It should be noted that this is a man Bill Clinton reappointed not once, but twice. A disciple of Ayn Rand, Greenspan is dropping all pretense as his days as the J. Edgar Hoover of monetary policy start to dwindle (I think he's do to leave in two years). He has backed all of Bush's tax cuts and now calls for the evisceration of social security and medicare. It's long past time for him to go.
From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
Doug
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posted 25 February 2004 05:57 PM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
He is right though that SOMETHING substantial has to change in the US budget situation, whether that's reduction in programs or increased taxes. You have to appreciate the true nature of the American budgetary problem.

It's bad enough that the deficit this year is over half a trillion dollars. However, this number is produced after accounting for a substantial surplus in the Social Security program - over $160 billion. So between borrowing from the market and borrowing from Social Security the true budget deficit is greater than $660 billion, approaching a third of US federal government spending. (for more on this, a good article is at: http://slate.msn.com/id/2093707/ and another longer report from the IMF at: http://www.imf.org/external/Pubs/NFT/Op/227/index.htm)

When the baby boomers begin to retire in a few years, this Social Security surplus is going to go away and then turn into a sizeable deficit of its own. Current projections show that expected economic growth will only trim half the deficit before this starts to take place, increasing the deficit again into the 2010s. For the same reason, Medicare costs are going to grow immensely. Increasing Medicare spending was promoted most recently by the passage of a pharmacare program for seniors that essentially consists of having taxpayers pay whatever the drug companies want to charge. This is not going to help.

Where Greenspan is wrong is to suggest that impoverishing seniors is the answer for all this.


From: Toronto, Canada | Registered: Apr 2001  |  IP: Logged
Cougyr
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posted 25 February 2004 06:08 PM      Profile for Cougyr     Send New Private Message      Edit/Delete Post  Reply With Quote 
I think that Bush has pushed Greenspan into a corner. (Why Greenspan doesn't quit is a puzzle.) I just finished reading the book on Paul O'Neill, The Price of Loyalty, by Ron Suskind. O'Neill and Greenspan Did a lot of planning on ways to save Social Security; and they put a lot of effort into trying to persuade Bush to set aside enough money to do so. Bush ignored them. Now, it looks like Bush spent the money.
From: over the mountain | Registered: Nov 2002  |  IP: Logged
swallow
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posted 25 February 2004 06:38 PM      Profile for swallow     Send New Private Message      Edit/Delete Post  Reply With Quote 
Republican deficit cutting:
From: fast-tracked for excommunication | Registered: May 2002  |  IP: Logged
Scott Piatkowski
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posted 26 February 2004 01:27 AM      Profile for Scott Piatkowski   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Bush to cut deficit from federal budget

quote:
WASHINGTON, DC—President Bush proposed a $2.4 trillion election-year budget Monday that would boost defense spending, redistribute funds among government programs, and cross out the $477 billion deficit entirely.

"Nobody likes making cuts, but the nation's current rate of spending and the decreased tax revenues we've seen since implementing my tax cuts have created a deficit that we can't afford to carry," Bush said in a nationally televised address. "Someone had to have the vision, leadership, and courage to go in and erase that line altogether, no matter how unpopular and impossible that may be."

According to the Congressional Budget Office, the $477 billion deficit is the country's largest ever, easily topping the previous record of $290 billion in 1992. If the budget is approved, however, the deficit will roll down to $0.0 billion.

In the past, critics have accused the Bush Administration of responding to a mounting deficit and the ongoing recession with unsound fiscal policies like cutting taxes for the wealthy. Bush supporters say the deficit cut proves the wisdom of the president's economic plan.

"Bush has taken a brave step, one that was long overdue," Senate Majority Leader Bill Frist (R-TN) said. "He has taken charge of the budget problem once and for all, simply by saying 'The deficit stops here.'"

Faced with the difficult choice of either cutting government programs or raising taxes, Bush reportedly arrived at the radical new "deficit-cutting" solution late Sunday night, only hours before he was to announce his budget.

"I was staring at the figure for the deficit, and I decided that it simply could not stand," Bush said. "It was too high. Something had to be done. But Americans have been taxed and taxed. I say 'Enough taxes.' By my estimation, this historical crossing-out of the deficit will save American taxpayers millions, billions, and perhaps even bajillions of dollars."

The president then turned to Section 14-D of the official budget document, where the federal government's total expenditures, the GNP, and the difference between the two were listed. Using a black Sharpie, the president crossed out the third figure, eliminating it entirely.



From: Kitchener-Waterloo | Registered: Sep 2001  |  IP: Logged
nonsuch
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posted 26 February 2004 02:17 AM      Profile for nonsuch     Send New Private Message      Edit/Delete Post  Reply With Quote 
This can't be a surprise to anyone who was paying attention (God knows, i try not to, and i still heard it coming). Bush made a speech on September 12th - or it may have been the evening of the 11th - 2001, in which he clearly stated his intention to spend the social security budget on national security instead. I'm guessing the decision had already been made - as the decision to invade Afghanistan and Iraq had already been made - and they were just waiting for the moment to introduce it.
quote:
Bush said that "my position on Social Security benefits is, those benefits should not be changed for people at or near retirement."

This is really cute. Paraphrased: "We'll try to put it on the kids we're sending around the world to get killed, rendering unemployable, saddling with unpayable student loans and poisoning with industrial effluent. Maybe, if we warn them early enough, they'll buy mutual funds." And if that doesn't work, I'll change my position, oh, about Thanksgiving, and wipe out the boomers.

From: coming and going | Registered: Sep 2001  |  IP: Logged
Catus
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posted 26 February 2004 06:06 AM      Profile for Catus     Send New Private Message      Edit/Delete Post  Reply With Quote 
FDR meant for Social Security to not only be a small portion of any worker's retirement fund but also to be phased out shortly after the end of the Great Depression/WWII. Yes, even that great economic dunce realized what a poor idea it was. Even the SCOTUS, in the 1960 case,Flemming v Nestor, decided that citizens were not entitled to the insurance.

Currently the average Social security pension collected is about 9 thousand dollars a year per person. That is far below poverty, althougha couple would live well above poverty. They also probably own their own house (69% of Americans do), 2 cars, major appliances and such so their fiscal outlays are not that great. Cutting the pension by 20% would leave nearly all beneficiaries in the black still.

There are several ways to cut the outlays for Social Security
Cut benefits across the board
Cut all benefits to people with sizable private pension funds/savings.
Raise the age at which benefits are awarded.

Taxing the current workers for retired employees is a bit silly, particularly when retirees outnumber the currently employed.

I forget the actual number but once the Baby Boomer retirees are in full bloom we will have soemthing like 4 workers paying for each Social Security beneficiary. That's right, this problem has come about not due to under taxation, but over-retirement. It is projected that by 2013 pay-outs will exceed payroll tax revenue (Social Security tax) . We will be 23 trillion dollars in the red. 2003 Deficit, 2003 Schmeficit. Twenty-two percent of the budget is eaten up by this monster. The military eats only 16% of the budget.

Punishing the young for the retirement of the old is grossly unfair ( particularly since it is overwhelmingly the young who make up the poor).Robbing Peter to pay Paul will not fix this either

This problem should have been addressed over a decade ago but it was not. Sure, policy papers were written but they were all but ignored by the policy makers, Congress. We could stop taxing savings, or create specific retirement accounts that would act as tax shelters thus encouraging savings and making our population less dependent ona Ponzi scheme that has returns that are often less than what you might find at your local bank.


Let's face it, even European nations are looking to Chile for answers about old age pensions. maybe it's time the US fixed this rather than prolonging the inevitable ( I think Soc Sec has been "fixed" well over a dozen times, mostlately by Newt Gingrich).


From: Between 234 and 149 BCE | Registered: Nov 2003  |  IP: Logged
josh
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posted 26 February 2004 07:44 AM      Profile for josh     Send New Private Message      Edit/Delete Post  Reply With Quote 
The Cato Institute chimes in.

Catus was right about only one thing. FDR never intended that social security be the sole means of retirement. It is not an investment program, it's an insurance program. Currently, the maximum income subject to social security tax is around $90,000. That cap should be eliminated. That would go a long way to easing any future funding problem due to the baby boom bubble. Libertarians like Greenspan and Catus have a vested interest in trashing the program. It should be kept in mind that people like them have opposed social security ever since it was proposed and enacted in 1935.


From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
Michelle
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posted 26 February 2004 08:03 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by nonesuch:
And if that doesn't work, I'll change my position, oh, about Thanksgiving, and wipe out the boomers.

Heh. Except their Thanksgiving is after their election, so probably he would have to change his opinion a little earlier in order for it to work.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
nonsuch
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posted 26 February 2004 02:42 PM      Profile for nonsuch     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
their Thanksgiving is after their election

Exactly! Vote for me and i'll make sure your pension is safe.... And you believedthat?
First comes the seduction, then the screwing. Think of the demographics. How much of the Republican power-base is at or near retirment age?

From: coming and going | Registered: Sep 2001  |  IP: Logged
nonsuch
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posted 26 February 2004 08:33 PM      Profile for nonsuch     Send New Private Message      Edit/Delete Post  Reply With Quote 
Sorry, but this has been preying on my mind.
quote:
Originally posted by Catus:
FDR meant for Social Security to not only be a small portion of any worker's retirement fund but also to be phased out shortly after the end of the Great Depression/WWII.

How is this relevant? FDR believed that, if people had jobs, they would a) earn enough to live on, b) plus a bit more to save, and c) have a company pension. All that has changed.

quote:
... They also probably own their own house (69% of Americans do), 2 cars, major appliances and such so their fiscal outlays are not that great. Cutting the pension by 20% would leave nearly all beneficiaries in the black still.

Do 69% actually own those things, or are they buying those things on credit with compound interest? Given that nearly half have no medical insurance of any kind, and even the better plans are not comprehensive, their fiscal outlay is looking greater every year.

quote:
Taxing the current workers for retired employees is a bit silly, particularly when retirees outnumber the currently employed.

But then, those retirees paid into the fund in the same numbers (assuming that the underemployed cancel out the early dead) over a working life of about 45 years. They're not likely to draw pension for 45 years (ie live to 110); more probably 15 or 20. So there should be a nice little surplus.

quote:
... once the Baby Boomer retirees are in full bloom we will have soemthing like 4 workers paying for each Social Security beneficiary.

Why? Are we expecting people to earn less and less? Probably... but it's not the baby boomers' fault: they educated more of their kids to get high-paying jobs than any previous generation had.
quote:
Punishing the young for the retirement of the old is grossly unfair ( particularly since it is overwhelmingly the young who make up the poor).

Eh? All previous generations have supported their elderly parents, through one means or another. People certainly don't stay young. Why assume that they will stay poor?
If nobody stole the savings, the wages, the jobs - or maybe all of the those - we'll be fine.

[ 27 February 2004: Message edited by: nonesuch ]


From: coming and going | Registered: Sep 2001  |  IP: Logged
hibachi
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posted 26 February 2004 11:04 PM      Profile for hibachi   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Caveat: That deficit chart is in constant dollars. As a percentage of GDP I think you will find it somewhat worse under Reagan...
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prowsej
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posted 01 March 2004 03:31 AM      Profile for prowsej   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Social Security as it stands is not sustainable. George W. Bush has made this with with his prescription drugs benefit programme that is the largest expansion of social security in decades. Besides problems with the way the program is implimented, its a good idea. But changes have to be made to ensure financial sustainabiltiy. The biggest one will be to encourage people to work longer/retire later so that they draw on the benefits later in life. Do any less and the numbers just don't add up.
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josh
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posted 01 March 2004 09:02 AM      Profile for josh     Send New Private Message      Edit/Delete Post  Reply With Quote 
Prescription drugs is part of Medicare, not Social Security.
From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
DrConway
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posted 01 March 2004 06:56 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by prowsej:
Social Security as it stands is not sustainable.

People have been whining that Social Security's been going to go broke for the last 20 years. The people that have a vested interest in keeping the numbers racket going are the ones that constantly insist that the doom-and-gloom scenario of political meltdown will occur if:

1. The US removes the payroll tax cap on the SS tax,
2. The US ends the "trust fund" farce and runs the program on a true cash-in, cash-out basis like any other country does except Canada which for some idiotic reason gambles part of the CPP on the stock market. Even so Canada runs the remainder of the CPP on a pay-in/pay-out basis and says so.

Personally, I think people wouldn't give a damn if the US did this, since the main concern for the most part is that the program be fully-funded.

Besides, all the projections of Social Security meltdown use an economic growth rate of about 1% per year.

Even in the 1930s, the US's economy grew, overall, by 1.3% per year. and from 1990 to 1995, 1.8% per year.

In short, the overly-pessimistic scenario that builds in a number of worst-case assumptions has been used by the Repubs (stinking bastards) as a battering ram to try and frighten people into believing Social Security will not be around forever.

As an aside, ending the Trust Fund numbers games would remove the artificial inflation of the US federal debt that currently happens when Congress grabs the surplus out of the SocSec revenues and dumps them into general revenue. What happens then is that Congress sticks an IOU into the Trust Fund. This is why Bill Clinton's 'debt free' plan could have the US national debt extinguished by 2012. He was only worried about the $3 trillion of non-SocSec Trust Fund debt. The $2 trillion owing into the trust fund is an artifact of the budgeting process.

It's just a shell game with the numbers because it means that money can flow both ways, and peoples' SocSec checks are good for cashing regardless of which governmental pocket the money originally came from.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged

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