402. jadegold - May 9, 1999 - 9:06 AM PT
ProfE:
"1. Do nothing; SS as we now know it collapses. The political consequences will be very severe."
Overstated. According to the SSA, the Trust Fund begins to run a deficit around 2030, if nothing is done. However, this is a forecast based upon an ultra-conservative average annual economic growth rate of 1.5 percent. If the economy grows at an easily sustainable 2.2 percent rate, SS remains solvent almost indefinitely.
"2. Raise taxes of all types to cover the shortfall in the trust fund
while maintaining benefits at or near present levels."
That's an alternative---however, probably not needed. A better alternative--and much less painful--would include these modest steps:
1.) extend Social Security coverage to currently excluded state and local employees;
2.) increase the length of the computation period for workers' average earnings from 35 to 38 years;
3.) tax Social Security benefits that exceed already-taxed contributions, as with private-defined benefit retirement plans;
4.) correct the current overstatement of the consumer price index used to calculate cost of living increases; and
5.) credit income taxes on Social Security pensions to the pension rather than to the Medicare trust fund;
Additionally, some percentage of the Trust Fund could be swapped from treasury securities into equity securities.
403. ProfEmeritus - May 9, 1999 - 9:21 AM PT
JadeGold
It is great to have the discussion back on somethng related to the "graying of America."
404. jadegold - May 9, 1999 - 9:24 AM PT
ProfE;
Indeed, sir!
405. CalGal - May 9, 1999 - 10:01 AM PT
"tax Social Security benefits that exceed already-taxed contributions, as with private-defined benefit retirement plans; "
Yes, but wouldn't that immediately cause a tax increase for most elderly?
And I can't remember when retirees start to get back less than they put into it, but it's coming fairly soon, isn't it?
If we start taxing the excess right away, there will be howls of rage coming from the current retirees. But if we wait and phase in the tax there won't be much to tax.
The one of your suggestions that should be implemented immediately is the CPI overstatement. Unlikely again, due to howls of rage.
406. CalGal - May 9, 1999 - 10:10 AM PT
One of the reasons I think Social Security should be reengineered is *because* the elderly have such a stranglehold on it. Politicians risk their wrath if they even mention it. Yet the younger workers (40 and under) don't get involved because, as thoughtful points out, they have no faith in Social Security--nor do they want it, by and large.
One solution is to pat the younger workers on the head and tell them that they don't know what's good for them. And discuss payroll tax increases, extending the retirement age, and so on. All this in support of a program that the majority don't support for themselves.
In other words, keep them disengaged and stop them from participating in the political process. They won't care, they don't believe in it, and consequently won't serve as a balance to the overly powerful elderly. Politicians will continue to fear the elderly and know that the status quo is something that the younger workers are already resigned to. The future wreck is someone else's problem.
Or you can reengineer it in such a way that *does* seem to work for them, while not breaking the basic commitment to the current retirees.
If there were ever a proposal that caught the interest of the younger workers because it actively benefitted them--something like ProfEm's idea--you might see an enthusiasm that would incent politicians to risk upsetting the elderly for a constituency that will be around a lot longer.
407. jadegold - May 9, 1999 - 10:16 AM PT
Caligala;
Again, these are modest proposals which are not suggested as a pick list.
I'm not convinced that a tax on SS benefits which exceed already-taxed
contributions would amount to such a great increase in taxes when coupled with the other proposals. I'm not convinced that much, if any tweaking, is necessary to "fix" SS.
One aspect of privatization that hasn't been raised is the issue of transition costs.
408. jadegold - May 9, 1999 - 10:21 AM PT
Caligala;
There is no "trainwreck" coming---that's silly libertarian nonsense.
Politicians haven't been ignoring the problem, the problem is that they've exacerbated it through misinformation and scare tactics. The system works, it's made a real difference, and should continue to work with very little fine-tuning.
409. CalGal - May 9, 1999 - 10:24 AM PT
Jade,
I have no real issue with any of your proposals; I think a few of them are unlikely to fly.
I'm not in favor of complete privatization--as I said, I think that SS should ensure a baseline income if you can't do any better on your own. But I addressed the transition costs earlier--if enough people agreed that the current program is patchwork and doesn't make sense, then sticking with it just because change would be a short-term bitch is silly.
410. CalGal - May 9, 1999 - 10:32 AM PT
Jade,
Re "train wreck": there are so many different numbers put out there that no one knows what to believe. Even you say that a few "modest proposals" are needed to make it completely safe. And at least two of those proposals don't have much of a chance.
There are all sorts of opportunities for SS to get in more serious trouble. Boomers might demand more in payments and scare politicians into voting for them. A serious recession might hit. Whatever.
Speaking for myself, I have no real issue provided that the payroll tax doesn't get hiked seriously and they keep the income cap in place. I'll just continue to view SS as gravy if I do happen to get a check when I retire.
But from a systemic viewpoint, I think it should be redesigned. The world is very different from when SS was put in place and if enough people today don't want it, that should at least be taken into consideration.
The fact that people in their 30s are very unlikely to get back what they put into it is sufficient on its own to demonstrate how very different the program is. Just because it has been the best solution doesn't mean it will continue to be.
411. FreeToChoose - May 9, 1999 - 10:51 AM PT
here is an interesting position paper on SS reforms.
It's fairly short, 2 or 3 screens. More importantly, instead of the usual pabulum, it lists ten options for solving the problem, identifies what proportion of the problem the option would fix, and summarizes some public opinion on each of the options.
This means you can go through and pick a set of options that add up to 100% of the problem and see how much popular support each gets.
Full disclosure: while I don't know the author, he represents an organization to which I belong and actively support.
The site is part of the official government SS site.
Frankly, I was surprised how easy it was to create a solution without creating onerous burdens on anyone.
412. ProfEmeritus - May 9, 1999 - 1:22 PM PT
jadegold
Your view in #402 is somewhat complacent. There are many imponderables in those projections. Like all projections based on future economic growth, they could be off target by as much as 50%. The small OASDI trust fund surpluses today could be wiped out and reversed in a deep recession. High unemployment would pari passu reduce tax yields, precpitating an early crisis.
To rephrase a well-known aphorism, if the system is broken, fix it. I think that it is broken; what kind of social policy finances income transfers to the rich through regressive taxation on the low and middle income groups.
FTC
Re the link in #411, that is a very good list of possible reforms, but their effect also involves a lot of guesswork. Do you think that the town meeting sample was representative of the general population?
CalGal
I wonder how widely held are the views of the elderly which you report. I am in that disparaged group as are most of my present associates. I would happily forego social security benefits, and I believe that most of my friends would agree to such a change if it were in the interest of the country as a whole. PS, I am a member of AARP.
413. CalGal - May 9, 1999 - 1:37 PM PT
Prof,
I'm sorry--I wasn't trying to disparage the elderly but rather to discuss them in terms of their political power. Or at least their perceived political power. Whenever the debate on SS is broached, one of the first points made is that it is the "third rail", that elderly Americans will resist any changes made to Social Security, and so on.
Don't get me wrong; I'm not complaining if they *are* that powerful. They (lobbyists, voters, etc.) are doing their job--sticking up for their interests in the political system. And I realize that those over 65 are not a monolithic block; I apologize if you thought I was implying otherwise.
It is the younger generations who are not involved in this debate, who aren't making politicians feel the cost of their disapproval. Because they aren't, the debate is too heavily weighted towards one side. Everyone is pushing the payback time to a future that the elderly and the politicians are less concerned with. And without the proper players in the debate, who can blame them?
I was pointing out that if a proposal with real meaning to those under 40 was made, it might serve to get them involved and even out the debate.
414. ProfEmeritus - May 9, 1999 - 2:56 PM PT
CalGal
No apology required at all. I said that with tongue in cheek. I agree completely with your point about involving the younger generation. I made that point to Boba when he was posting here a few days ago under that name.
415. FreeToChoose - May 9, 1999 - 3:15 PM PT
Prof E
“Re the link in #411, that is a very good list of possible reforms, but their effect also involves a lot of guesswork. Do you think that the town meeting sample was representative of the general population?”
It is my understanding that the calculations of the effects were done by either the American Academy, or the SS Actuary or some combination, not by the general public. The percentages favoring were people who visited sessions discussing the proposals; the votes were taken after the options(and presumably the effects) were discussed. I assume they aren't representative, in the sense that they made a conscious decision to go to a discussion forum, but they are “ordinary” people as opposed to policy wonks, or academics, or some other such group.
416. ProfEmeritus - May 10, 1999 - 12:50 PM PT
Thanks, FTC.
Now that we seem to have solved (or should I say have looked at) most aspects of social security, perhaps we should turn to other inportant problems of the graying. Of prime interest is:
What will the effect of VIAGRA be on the graying of American - and vice versa.
417. BoomerJeff - May 10, 1999 - 12:53 PM PT
It is clear that the supporters of SS have no idea what the purpose of the program is or should be. You guys are all united around a single principle: The government MUST, at all costs, continue to collect taxes in some amount from someone, and it must continue to pay benefits in some amount to someone.
Yet you can't agree on what the original purpose of SS was. You can't agree on what the purpose of SS should be in the future. You talk about "saving" and "fixing" SS but you have no vision for what a healthy, renewed SS would look like. You guys haven't even identified the problems that need correction!
If you plan to "FIX" something you have to first know
1. What should it look like if it's functioning perfectly, and
2. What does it look like now, and
3. What's the difference?
You have no answers to theses questions yet you've spent 200+ posts discussing what measures to take to "fix" SS.
You are astounded to find that the government has and continues to promise that every last individual who works at least 10 years during his/her life will receive benefits and that wealthier workers will receive greater benefits. Clearly you think this is unacceptable. And you are fully prepared to see the government simply abdicate this promise, even as you fail to understand why some of us don't trust government!
But then, this is the bunch that voted for Bill Clinton! What else would one expect?
418. JadeGold - May 11, 1999 - 6:45 AM PT
On the contrary, BoomBoom, I know what the purpose of SS is and so do millions of Americans. Because you don't, doesn't mean that everyone else is wrong.
Yes, we the Govt. collect taxes in order to provide an income supplement to the retired elderly. Additionally, SS provides for the disabled, orphans, and widows. We do this because we the Govt have decided that it is right. We the Govt looked at a poverty rate of 65% among the elderly and rightfully deemed it unacceptable. Equally, we the Govt determined that the disabled and orphans not be abandoned.
If you don't like it, BoomBoom, change it. You're part of the Govt---elect like-minded people. Or, run for office. I'll give you a hint, though, lying about something is not going to endear you to many folks.
419. ProfEmeritus - May 11, 1999 - 7:17 AM PT
Boomer
Jade Gold has it right. A democracy does not allow those groups mentioned by Jade to suffer. That was the original intention. What has gone wrong is that those elderly who do not need assistance are receiving it. This is aggravated by a regressive tax to finance the system. This can be easily fixed by providing assistance only to those who need it to avoid poverty. This can be done by setting income ceilings. Such reform would also substantially reduce the tax burden on low and middle income groups.
420. JadeGold - May 11, 1999 - 7:34 AM PT
BoomBoom,
Please not that I do not agree with ProfE's version of means testing.
421. JadeGold - May 11, 1999 - 7:38 AM PT
not=note
422. BoomerJeff - May 11, 1999 - 7:43 AM PT
Jade
Who is included in your "we the government?" Are you a government employee or elected official? I'm not. I am not "the government." I, along with 200 million other Americans over 18 have one vote. That doesn't make me "the government."
I haven't lied about anything. I got my info directly from the SS web site.
So, according to you, the purpose of SS is to provide "a supplement". That's interesting. So the primary responsibility for providing for retirement income falls on the individual, right? The government is only providing a "supplement". Does it not occur to you that 12.6% of your income for 45+ years is a bit steep for "a supplement?"
423. JadeGold - May 11, 1999 - 7:57 AM PT
BoomBoom;
I've explained Govt and democracy to you before. In fact, I suspect that there are laws that you support and I don't---that's a product of we the Government. The fact that we have SS is testament to the fact that most Americans---in fact, an overwhelming majority--want SS.
You can whine, pout, hold your breath until you turn blue, but the fact remains that we are the Govt.
As for SS benefits, you persist in ignoring the benefits that are provided to children and widows and if you become disabled.
It is a supplement, BoomBoom, it was never intended as anything else. As I said before---if you bank on SS providing all your retirement income, you're going to have a crappy retirement. Nor, can you argue with the results of SS. We used to have a poverty rate among seniors that approached 65%; poverty among seniors today is around 12%.
424. BoomerJeff - May 11, 1999 - 8:00 AM PT
ProfEmeritus
"A democracy does not allow those groups mentioned by Jade to suffer."
1. The form of government described in the Constitution is not a democracy. I will admit however that folks who desire a democracy have managed to bring about changes that make the US Government more and more democracy-like.
2. Nothing in the definition of a democracy suggests that it automatically includes retirement benefits provided by taking money from the young and giving it to the old.
3. Some members of these groups, those who have no income other than that provided by SS do indeed suffer severe poverty. So the US government is most certainly allowing those groups to suffer.
"That was the original intention."
Whose original intention?
"What has gone wrong is those elderly who do not need assistance are receiving it."
What do you mean, "gone wrong"? The program has provided benefits to every single individual who meets the minimum 10-years-of-work requirement since the very first day in 1935. How can you pick out a core feature of the program and assert that due to this feature something has "gone wrong?" That's like saying that what's "gone wrong" with gravity is that it makes flying difficult.
continued...
425. BoomerJeff - May 11, 1999 - 8:00 AM PT
conclusion:
"This (benefits to everyone and the so-called regressive tax) can be easily fixed by providing assistance only to those who need it to avoid poverty."
Why can't you recognize the fact that Americans have been promised, since the first day of SS that EVERYONE will collect benefits? Why don't you realize that to change the program after people have paid into it their entire lives is a monsterous betrayal of trust? I don't trust government. But presumably you and Jade do and you think anyone who doesn't is foolish. Yet you would betray the trust of anyone who agrees with you and you don't seem to understand that doing so would cause millions of people to trust less and oppose SS.
426. ChristiPeters - May 11, 1999 - 8:10 AM PT
Is Social Security really the only issue related to aging worthy of discussion?
(Just wondering)
427. JadeGold - May 11, 1999 - 8:13 AM PT
BoomBoom;
Right wing whackjobs like to describe our Govt as a "Constitutional Republic." All this demonstrates is the ignorance of the right wing. Democracy comes in two forms: direct and republic. In a direct democracy, citizens vote directly on each and every law or proposed legislation. By contrast, a republic is a representative democracy, where laws are passed not by the people, but their elected representatives. Adding the term "constitutional" to the word "republic" is silly and extraneous, since all nations have constitutions.
428. BoomerJeff - May 11, 1999 - 8:15 AM PT
Jade
Safeway strives to increase the stock of the most popular, fastest selling products and reduce or eliminate the stock of slow sellers. They strive to set prices that customers are perceive to be good values.
So each time I shop at Safeway I, along with the rest of Safeway's millions of customers, influence their product/pricing decisions.
I have at least as much influence over Safeway as a customer as I have over the US Government as a voter.
oes that mean I AM Safeway?
429. JadeGold - May 11, 1999 - 8:17 AM PT
" Nothing in the definition of a democracy suggests that it automatically includes retirement benefits provided by taking money from the young and giving it to the old."
As noted earlier, you have demonstrated that you have no concept of what democracy is or isn't.
Under either form of democracy, retirement benefits can be provided through whatever mechanism we the Govt deem necessary. There's nothing 'automatic' about it.
430. JadeGold - May 11, 1999 - 8:23 AM PT
BoomBoom;
Not quite. But you're not far off. For example, in your Safeway example, you as a consumer have no say as to the makeup of Safeway's management or board of directors. You cannot influence their policies .
However, you can choose not to patronize Safeway which may cause Safeway to adjust their marketing strategies. You can choose certain products over others which influences their pricing and stocking of items. But your influence is pretty narrowly confined.
431. BoomerJeff - May 11, 1999 - 8:28 AM PT
Jade
You didn't answer my question. You agree that I do, along with millions of others, influence Safeway's business decisions. Just like I, along with millions of other voters influence government policy by voting for or against candidates who propose various policies.
So by your reasoning I AM Safeway. Right?
432. JadeGold - May 11, 1999 - 8:41 AM PT
Wrong, BoomBoom, you influence a very small segment of Safeway.
433. BoomerJeff - May 11, 1999 - 8:49 AM PT
BTW Jade,
The policies of any business are influenced by customers. In fact, i wouild submit that customers have more influence over business policies than voters do over government policies.
Businesses stop selling products that customers demonstrate, by not buying, they don't like. Yet government proceeds with policies that overwhelming majorities demonstrate, by their votes and their voices they don't like. Business subsidies, for example.
In all my experience here in the fray and other online political discussions I can say that I've never encountered a single person who supports business sbusidies. No Conservatives, no Liberals, nobody. The GOP conducted some polling a year or so ago and found that 90some % oppose business subdsidies. Yet the government continues to subsidize businesses and neither party seems inclined to make an issue out of it.
434. JadeGold - May 11, 1999 - 8:50 AM PT
Here's an example, BoomBoom.
We are the Govt: If you can garner enough support, you can overturn or enact any law--even amend the Constitution. There is no part or aspect of our society that we the Govt cannot influence, change, omit, enact.
WRT Safeway: let's say you buy Safeway brand coffee at $5/lb. Let's say you think $5/lb is too much. So, you and your ilk decide to not buy Safeway brand coffee---this may eventually drive the price of that brand down, but there is a point which Safeway can no longer offer that coffee. Thus, you have two options, neither of which you fully control. You can drive the price down to a certain point---which you have no idea what that point is. Or you can do without having Safeway coffee offered as an option; this will probably affect the price of other brands.
435. BoomerJeff - May 11, 1999 - 8:52 AM PT
End of #433 above
Any business that discovered something that 90% of potential customers wanted and were not able to get would break the sound barrier in its rush to meet that customer demand.
436. JadeGold - May 11, 1999 - 8:52 AM PT
BoomBoom;
WRT business subsidies--nonsense. Ask anyone who works for an industry like shipbuilding, manufacturing, etc. if they're against business subsidies.
437. CalGal - May 11, 1999 - 8:54 AM PT
BJ,
"Why don't you realize that to change the program after people have paid into it their entire lives is a monsterous betrayal of trust?"
It's not a monstrous betrayal of trust. It's business as usual. And Jade is right in that the voting public conspired with the government to keep from facing it.
The issue isn't whether or not we'll feel betrayed. No one will. The issue is whether or not it's necessary.
I don't see why you're so upset. There is more possibility now for change than at any other time in the past 60 years. The majority of younger voters don't believe in Social Security, apparently.
If so, all it will eventually take is someone clever enough to articulate a decent plan that interests these younger voters.
So quitcher kvetching. The government didn't do anything that the majority of the people didn't think was a good idea.
438. CalGal - May 11, 1999 - 8:55 AM PT
And incidentally, all of this has nothing to do with the elderly; it's degenerating again into a political battle.
439. JadeGold - May 11, 1999 - 9:00 AM PT
Caligala;
Belief is but a perception. People spend billions on anti-aging pills, ointments, etc. They don't work.
SS does.
440. CalGal - May 11, 1999 - 9:03 AM PT
JadeGold,
As I've mentioned before, the very fact that people now pay into SS far more than they will ever get out of it is proof that it isn't our father's SS.
But that's besides the point. I didn't assert that SS doesn't work. I asserted that most people under 40 don't believe in it. Their lack of belief is entirely relevant when it comes to changing the system. Whether it works or not.
441. BoomerJeff - May 11, 1999 - 9:30 AM PT
Jade
Obviously the few folks that directly benefit from business subsidies favor them. However, 90% of all Americans oppose them. Why isn't that enough for "we the government" to respond?
Do you doubt for even a second that if 90% of the public wanted to be able to buy some product or service that business would rush to satisfy them?
442. BoomerJeff - May 11, 1999 - 9:33 AM PT
Jade
Your support for SS rests on your assertion that "We are the government," an assertion I've demonstrated to be nothing more than a meaningless slogan.
But, even if one believes that "we are the government," how does that justify taking money from people for retirment benefits that will either be zero or much, much less than they could earn via a no-risk savings program?
It appears that the only reason is that it satisfies your need to exert force over your fellow humans.
443. BoomerJeff - May 11, 1999 - 9:37 AM PT
CalGal
you make my point. You expect folks to trust government yet you don't understand that changing the rules decades after the program begins is a betrayal of trust.
I rest my case.
444. ProfEmeritus - May 11, 1999 - 9:50 AM PT
ChristiPeters
Re Message #426, I'm with you. I tried to change the focus, but failed.
445. JadeGold - May 11, 1999 - 9:58 AM PT
BoomBoom;
WRT business subsidies, I doubt very much that there is overwhelming support to end them. Again, ask those employed in heavy industry and manufacturing if they're willing to lose their jobs.
We are the Govt. This is beyond dispute.
Further, the overwhelming majority of Americans support SS. They want to see it continued. Yes, you *might* be able to make more money *if* you invest that money in another way. However, you have three problems with your scheme.
1) you don't address orphans, widows and the disabled.
2) you don't compell people to make any investments--thus they could end up with nothing at retirement.
3) you are not guaranteeing any return--thus one could invest conscientiously and still wind up with nothing.
446. CalGal - May 11, 1999 - 10:00 AM PT
BJ,
?????
Where do I suggest the people trust the government?
447. BoomerJeff - May 11, 1999 - 10:06 AM PT
CalGal
You don't think folks should trust government? Does that mean you don't? If you don't why don't you propose ending SS? To the extent that it "works" (and there seems to be no agreement here as to what that would look like) it depends on government and politicians being trustworthy.
448. bubbaette - May 11, 1999 - 10:07 AM PT
The worst thing about aging I've noticed so far is that I break much easier than I used to. And I don't heal as well.
It seems that as most folks age they become more philosophical and mellow. I wonder if society will mature as the largest age cohort ages, or if we'll be as juvenile as ever.
449. vonKreedon - May 11, 1999 - 10:12 AM PT
BJ writes, "I rest my case." And about time to, the case was extremely tired and desperately in need of rest.
450. BoomerJeff - May 11, 1999 - 10:26 AM PT
So Jade,
Your "we are the government" is just a slogan contrived by collectivists in the hope of reducing resistance to government intrusion into our lives. It is meaningless. We are obviously not the government.
We interact with the government, we elect lawmakers but that doesn't mean that we ARE the government.
Regarding your number 3 problem with "my scheme", individual savings and investment…
Several life insurance companies offer retirement plans wherein you deposit regular monthly contributions and they GUARANTEE that you will receive a specific dollar per month retirement benefit. They back that guarantee with their record of 100 – 200 years in business during which no customer has ever failed to receive what was promised to him/her.
Constrast that with SS. The government doesn't promise that anyone will receive any specific amount. We can observe current retirees and expect that we might get as much as they are getting but there is certainly no "guarantee." There are several proposals to curtail benefits to people who have paid into the system in good faith for 10 to 40 years. I recently learned that my eligibility age was raised from 65 to 66!
So if it's a guarantee you seek, obviously the private sector should be your choice.
As to your numbers 1 and 2, suppose I agree that savings is to be compelled by government and that any program must include widows/orphans benefits. Will you then join me in calling for an end to SS?
451. JadeGold - May 11, 1999 - 10:33 AM PT
It's not a slogan, BoomBoom. It's a fact--we are the Govt. We elect these folks and we run for office. Only a cretin believes that Govt is some occupying or alien force.
BoomBoom, you still don't address widow, orphans, and the disabled. Further, you don't address compulsory investment---I suspect you won't.
452. CalGal - May 11, 1999 - 10:36 AM PT
BoomerJeff,
Look, you shouldn't trust the government for anything other than the bare minimum. My preference for SS (which might also be incorporated as part of a negative income tax) is that we all pay some minimal amount as insurance in the event that we can't do better.
Do we have any guarantees, in the event that we don't do better, that the government will deliver? Hell, no. But it's pretty likely that they will. I mean, people count on welfare (don't fume) and it's always there.
But the reason why I support the government owning up to providing people a reasonably secure old age is because the government as a collective is more reliable than some of the individuals in it. It is far more likely that the government will come through on a bare minimum of SS payment than that all the lower income people out there will plan for retirement.
453. vonKreedon - May 11, 1999 - 11:07 AM PT
BJ - Regarding 'trusting' the government, I have considerably more trust in the government than I do in the private sector. To use an analogy, I am a stockholder in the government, I am not a stockholder in most of the private sector.
454. ChristiPeters - May 11, 1999 - 11:10 AM PT
bubbaette -
Have you noticed any differences in temperature sensitivity related to age? Do you know any older folks who are particularly sensitive to heat or cold?
As my Dad got past 70, he seemed to want the house at around 80 degrees. This really annoyed my Mom who had wanted it at around 60 degrees since she passed 65.
455. ProfEmeritus - May 11, 1999 - 12:58 PM PT
I think older folks become more sensitive to a lot of environmental factors, including temperature. Also, they are much more susceptible to illnesses. Moreover, body parts wear out.
The result of all of this is that seniors' medical costs are far above those of the other age groups. As the population ages further, our society will need more facilites to care for the elders: more retirement homes, more nursing homes, more ICU units and more rehabilitation centers. Who will provide these, and who will pay for care in them? I suggest that society will have to provide a large part of the care which low income and low asset people cannot afford.
Medications are another aspect of aging. The need for medicine and therapy increase geometrically with each added year. Many seniors must choose between medicine and food since medications are not covered by Medicare. That coverage should be added; there are proposals in Congress to do this. This should be done on a means testing basis rather than across the board.
456. ChristiPeters - May 11, 1999 - 1:09 PM PT
Thank you ProfE.
I agree.
I believe quality of care at nursing homes is a big issue right now. I have certainly heard a lot of suggestions that if you have a loved one in a nursing facility, you should be ver involved and check up on them frequently with unannounced visits. Also, that you should not place your loved one in a facility that is unwilling to allow unannounced visits.
457. ranheim - May 11, 1999 - 1:12 PM PT
JadeGold
Are you stating that due to the fact that I vote at every opportunity, I "AM" the government?
Why don't I feel that I am then?
Does my voice have as much sway with my congressman (in the real world he is an Ophthalmologist) as someone who has the bucks to donate to his campaign funds? No!
I am even more distanced from my two senators.
In 1965 I was in the USAF stationed in Washington,D.C. I watched my father-in-law visit the offices of the three I mentioned above. The two I most remember were Senators Ellender and Russell Long. He knew them by name; they knew him by name. No question, he was represented and he was a part of THAT government.
Were I go to Washington today, I doubt that the door to the office of either Senator Breaux or Landrieu would be open to me. I have certainly not met either one. There would be no recognizing each other; with a personal comment. I suppose that says something about me. But, additionally, I feel that something fundamental has changed. And we lack representation - as our father's generation did not.
My father-in-law did not have big bucks to give; he was a farmer. I don't have big bucks to give; I,m a rural GP. But, he was a part of the government of 1965 in a way that I cannot be in 1999. I can't put my finger on the change - but it has occurred!
458. BoomerJeff - May 11, 1999 - 1:21 PM PT
So vonKreedon
You trust the government with 12.4% of your earnings more than you would trust Citibank or New York Life or Prudential? The government takes the money without promising you any specific return. At this very moment the President and Congress are horse trading with the SS accounts of millions of people.
The private sector promises you a return and some of the companies have flawless records going back more than a century of always delivering what is promised.
Yet you trust the government more? What do you trust them to do?
459. vonKreedon - May 11, 1999 - 1:24 PM PT
BJ - I trust the government more than private enterprise to respond to the needs of society. I view government as the active agent for society. Private enterprise is the active agent of capital.
460. BoomerJeff - May 11, 1999 - 1:42 PM PT
vonKreedon
Government is uniquely qualified to serve all of society as a group in a few specific ways, most notably maintaining a military to protect the whole country from the threat of invasion by foreign thugs.
But this discussion is about the needs of individuals rather than the unidentifiable "needs of society." When you deal with a private sector company on a savings program they make an individual contract with you. they promise to pay you $X per month when you retire. They obligate themselves to you.
But government presents SS as a retirement program wherein they take YOUR money in exchange for benefits to be paid to YOU in the future. They won't tell you how much your future benefit will be because they don't have to. If New York Life had the power to take your money without your permission they wouldn't bother making a specific promise to you either.
So please explain why you trust government more with your retirement savings program when it must use armed force to attract its customers, it makes no specific promises about how much you'll receive upon retirement and all you know for sure is that it will take 12.4% of your money.
461. vonKreedon - May 11, 1999 - 1:46 PM PT
BJ - Private companies renege on deals on a regular basis, bankruptcies, changes in ownership, changes in fine print. Sorry, I trust the government far more than I trust capital.
To hold that the Government must not respond to changing circumstances, what you are doing by claiming that any changes to SS are a embezzlement, is to hamstring governments power to act for society.
462. BoomerJeff - May 11, 1999 - 1:48 PM PT
Jadegold
You didn't answer my Message #450 which is a response to your Message #445
463. ChristiPeters - May 11, 1999 - 1:49 PM PT
ok, I give up
Let's just rename the thread the Social Security thread and be done with it.
464. CalGal - May 11, 1999 - 1:51 PM PT
Prof,
In saying that we'll pick up the tab for seniors' medication (which I agree, we should), we just decided to foot a big bill.
As a related issue: Are seniors allowed to get regular insurance, rather than Medicare? Is it any more feasible for government to subsidize the cost of insurance rather than run the insurance program themselves?
465. BoomerJeff - May 11, 1999 - 1:57 PM PT
vonKreedon
To some extent your reference to bankruptcies, changes in ownership, changes in fine print are simply misinformed. The contractual obligations of a corporation are legally binding on any future owners. A new owner cannot ignore those obligations. Further, it is illegal to "change fine print." But then, I think you know that.
It is true that if a company went bankrupt its customers might lose part or all of what they had been promised.
But...
There several life insurance companies with flawless records going back decades, even centuries, always paying exactly what is promised to their customers.
On the other hand, government continuously changes the rules after the game starts. Compared to almost any life insurance company the government's record of honoring its obligations is terrible. If you doubt this get to know a few wounded combat veterans.
Besides, why do you excuse government as responding to "changing circumstances" and still trust it when you obviously wouldn't excuse John Hancock Mutual Life if they wanted to reneg on a promise due to "changing circumstances?"
466. vonKreedon - May 11, 1999 - 1:59 PM PT
Because government is acting for society and Hancock is acting for capital.
467. AuNaturel - May 11, 1999 - 2:04 PM PT
The Government takes on a life of it's own, independent of the electorate. As does any organization. The VAST ranks of civil saervice employees and faceless bureaucrats outnumber the elected portion by thousands to one. Even among those who are elected, once they go to Washington, Potomac fever eventually sets in and they easily lose contact with the real world - if they ever had such contact to begin with.
If you are not in one of the favored groups today, you are one of "US" and the government is "THEM".
468. AuNaturel - May 11, 1999 - 2:07 PM PT
"Because government is acting for society"
LOL!!!! Government acts for government. That means keeping high powered pressure groups happy. The only difference between Repugs and Dems is which pressure groups they play cucumber for.
469. BoomerJeff - May 11, 1999 - 2:09 PM PT
Im not really sure what "acting for capital" means since capital is inantimate and has no will to desire or appreciate someone's acts. Perhaps you are refering to investors or stock holders. If so consider that Hancock has no capital investors, or stock holders. It is a mutual life insurance company. All "profits" (actually gains on investmens in real estate, stocks, bonds) go to customers. Does that make a difference?
Please describe what "acting for society" looks like and how it relates to an individual retirement savings program.
470. BoomerJeff - May 11, 1999 - 2:12 PM PT
inantimate = Inanimate
471. ProfEmeritus - May 11, 1999 - 2:14 PM PT
CalGal
Re Message #464 I haven't thought carefully about those questions. What do you think?
472. BoomerJeff - May 11, 1999 - 2:18 PM PT
CalGal
Seniors are required to use Medicare and in many circumstances it is illegal for a medical providor to accept direct payments for services from seniors instead of whatever Medicare provides.
Last year my Dad was in a Hospital. The day came when, according to Medicare standards he had to be discharged. I asked the hospital to keep him two extra days so I could arrange for a skilled nursing facility. I told them he had plenty of money and I would gladly pay them directly if Medicare wouldn't cover it.
Answer: NO. Illegal. He couldn't pay for two extra days with his own money.
473. ProfEmeritus - May 11, 1999 - 2:27 PM PT
There should be some favorable environmental effects from the Graying of America. Urban sprawl should abate because fewer new households will be formed. Also, seniors do not demand as much of the world's exhaustible resources. As the society reaches the Solow type stationary state, with stagnant population size, there should also be less pollution, and less noxious emissions into the atmosphere. The demand for transportation expansion might also lessen as seniors (especially the "very old") are less peripatetic.
474. BoomerJeff - May 11, 1999 - 2:27 PM PT
AuNatural
"The only difference between Repugs and Dems is which pressure groups they play cucumber for."
I'd like to know what presure groups the Repugs are serving. They seem to be utterly without any direction or agenda. I can't see that they are carrying water for anyone. Certainly not for Conservative voters. Is there a pressure group that bribes politicians to look stupid and propose nothing?
475. vonKreedon - May 11, 1999 - 2:30 PM PT
BJ - Yes, that does make a difference to me, that the organization is acting as a collective rather than as a capital accumulation vehicle.
Acting for society in regards to retirement, it looks like enuring that retirees are not living in abject poverty without adequate housing, food, or medical care.
In response to Au's LOL, let me say that I am NOT arguing that OUR government acts purely and effectively as an agent of society, but that is the function of democratic government. That function is corrupted by a variety of factors: bureaucratic orientation, power politics, the power of capital. Still, I prefer a political process over a private one.
476. CalGal - May 11, 1999 - 2:33 PM PT
Prof,
Well, I haven't thought it through entirely either, but here's as far as I've gotten.
For reasons such as BJ mentions, I don't see why people shouldn't be able to buy their own insurance. Why penalize the wealthy--and at the same time force them to accept government funded healthcare? It doesn't seem to make sense.
The government could subsidize a fixed rate--and all insurance companies could be mandated to offer low-end coverage? Obviously, that would mean HMOs for the lower income people, but it would ensure that they had access to medical care and prescription drugs.
A well-off senior in excellent health, otoh, could opt for major medical coverage and nursing home insurance. Reasonably cheap, even at that age--and the cost of drugs wouldn't be the headache it is for those at the lower end of the scale.
It would make more sense to provide a subsidy of some sort. Except at the lower income levels, where it would cover the complete cost.
And the subsidy could be means-tested or a flat amount.
I am starting to see the point of Friedman's argument on negative income tax--why have all these patchwork programs? This program could be used just as easily for poor people of any age.
477. BoomerJeff - May 11, 1999 - 2:42 PM PT
Well, I have to go do something productive.
vonKreedon I would submit that your prefernece for government over the private sector is based only on faith. And there is plenty of data that should shake your faith.
It doesn't take faith to deal in the private sector. The natural human tendency to lie, cover up mistakes, and try to get something for nothing is offset by several, natural, market-driven forces. When it comes to government however, there are no market forces holding officials feet to the fire. They can and do get away with much,much more, partly because they have such a well-honed propaganda machine.
An example of the effects of propaganda is your willingness to excuse government's reneging on an obligation because "circumstances change." Unlike the private sector, government sees to it that all its various challenges are presented in great detail on TV news making folks sympathetic and willing to drop all standards for judging success or failure.
Since you don't know what challenges or "circumstances" the Bank of America faces you are unwilling to excuse it from any contractual obligaion. And you shouldn't. I wouldn't.
478. BoomerJeff - May 11, 1999 - 2:44 PM PT
So vonKreedon
I just noticed that in your #475 you said it makes a difference to you that Hancock is a mutual life company.
Would you then favor ending the SS program in favor of required savings in mutual life companies?
479. vonKreedon - May 11, 1999 - 2:47 PM PT
The market forces that you laud are what led to society demanding that government regulate, else we have unsafe products, unsafe working conditions, unsafe investments, etc. etc. because the purpose of capitalism is to increase capital, not to produce things that people want of need.
Regarding requiring investment in mutual life companies, I'm not wedded to any specific solution, but I fail to see the substantial ideological difference between current SS and requiring some other investment.
480. BoomerJeff - May 11, 1999 - 3:03 PM PT
"The purpose of capital is to increase capital, not to produce things that people want or need."
So how do you go about increasing capital then? How do you do it other than by selling to people what they want/need?
The difference between SS and a mutual life company is that the company guarantees a specific return on your savings and government doesn't. The company is bound by a contract to do exactly as it promises and the government isn't.
Wouldn't you rather trust your retirement savings to a program with specific benefits written into a contract rather than to a bunch of politicians of the future who are more concerned with polls and soundbites than with honoring past promises?
481. Greystoke - May 11, 1999 - 3:19 PM PT
"The company is bound by a contract to do exactly as it promises and the government isn't."
Yea, the company will pay unless it goes bankrupt, which is not an uncommon occurrance. The government has yet to go bankrupt.
482. BoomerJeff - May 11, 1999 - 3:26 PM PT
Greystoke
Some governments have gone bankrupt. The SS program, according to Bill Clinton, is in trouble and needs to be "saved." Congress doesn't seem inclined to take any action at all wrt SS. If and when action is taken the "fix" will be to simply give us less than we expected and/or charge us more than we expected!
Are you aware of private sector companies that have done that? Simply change the deal years after it started?
483. ProfEmeritus - May 11, 1999 - 3:56 PM PT
CalGal
I am a firm believer in the ability to pay principle. So I would like to see means testing for all such medical care, now uncovered, on the basis of that principle. The lowest income people would pay zero, the top incomes e.g., over $200 K, would pay the full freight, etc down the income spectrum.
I am not sure I would trust the private sector with this. They do a terrible job in handling Medicare payments. Also, insurance companies sometimes try to avoid paying legitimate claims. I myself had to sue to collect on medical insurance with a private company and the lawyers got half. There was no doubt in anyone's mind about the legitimacy of my claim. I would be concerned about the small man versus the insurance companies.
484. aldavis - May 11, 1999 - 4:06 PM PT
Von Kreedon
Your understanding of capitalism doesn,t seem to be very deep. While it is true that any business must keep a eye of profits, they are a by product of producing a good of service which people choose to have. It could be argued that what is produced is not really "needed", for example, I don't need this computer, unless I want to waste some time trying to explaoin the obvious to someone.
485. aldavis - May 11, 1999 - 4:09 PM PT
PE
Since you are a believer in "ability to pay" would you suggest that those who have more pay a higher fee for the Fray, or for food, or for entertainment. You liberals have the strangest idea of "fairness."
486. aldavis - May 11, 1999 - 4:15 PM PT
BoomerJeff
You point out one of the absurd features of SS and Medicare. Once one agrees to accept SS, one has no choice to accept Medicare as a primary provider. I pay every month for HMSA (same as Blue Cross) and yet the hospital sends the bill to Medicare.
the answer to this is to realize what SS is (welfare) and treat it as such. All expenditures should come out of the general fund and only given to those who cannot fend for themselves. And there should be some stigma for those who should have provided for themselves but were too profligate to do so.
We have gotten so far away from individual responsibility that it seems a lot of people don't even understand it.
If a majority of people like the welfare state, there would be nothing stopping them from making voluntary contributions.
487. ProfEmeritus - May 11, 1999 - 4:17 PM PT
The Fray, food and entertainment are not public goods; they are private goods.
488. ChristinO - May 11, 1999 - 4:21 PM PT
Aldavis,
You, not unlike BJ, seem to have a rather unrealistic view of capitalism. It's all well and good to say that the market controls the actions of the manufacturer and there is certainly truth in that, BUT slavery is highly profitable and still an abhorrent institution. Cheap materials, inferior product, slave wages, sweatshops, insider trading, monopolies all of these are part of the glorious tradition of unchecked private commerce.
Just for the record there likely isn't a single customer in my company's database that would give up his low phone rates just because the owners of our company abuse and defy the wage laws. The only body that will do anything about that is the EDD. There is an endless mountain of money to be made by being underhanded and unscrupulous in this world.
489. aldavis - May 11, 1999 - 4:27 PM PT
ChristinO
I don't disagree with one word you said. Capitalism is a terrible system, it is just better than any other system on earth that I know about. You seem to think that it is the government that solves all the problems and I seem to think that government makes more problems than it solves.
There are also tremensous rewards for giving people a fair deal both as workers and buyers, and it my opinion that is more common than the things you mention.
PE
In the final analysis everything is a commodity. Food is a more important commodity than madical care as all need the former and some never need the latter. Making false distinctions may help your argument, but it does not alter reality.
490. cllrdr - May 11, 1999 - 4:51 PM PT
"You seem to think that it is the government that solves all the problems and I seem to think that government makes more problems than it solves.'
Loves'Old Sweet Song, eh al? There's an enormous difference between the government offering a few necessary checks and balances, and claiming that it "solves all problems" and "makes more problems" et. al. ad nauseum.
491. aldavis - May 11, 1999 - 5:21 PM PT
cllrdr
Oh how happy I would be if that all it were, just a few checks and balances. There seems to be no problem that this government does't think it can't solve with enough laws, and they fuck things up royally.
Take drug enforcement as an example amoung many.
492. thoughtful - May 11, 1999 - 5:44 PM PT
ProfE, re Message #473 There are some problems with that:
1) the population is not going to be stationery due to the baby boomlet -- the kids of the boomers which has caused a secondary bulge in the population. Some call it the e-generation for echo boom or electronic generation.
2)It is incorrect to think of seniors as a single group. I would divide it into two groups -- the elderly and the superelderly. Depending on wealth, the elderly can do a lot of traveling, own second retirement homes, do lots of recreation, etc. These are very active folks, maybe recently retired who enjoy reasonably good health. The superelderly are the group that are 80+ and do a lot less travelling as illness such as senility, heart disease, osteoporosis, etc. start to take their toll. These are the folks that end up in nursing homes or with lots of nursing care which put the serious drain on medicare/medicaid funding.
493. ProfEmeritus - May 11, 1999 - 5:47 PM PT
thoughtful
Good analysis.
494. CalGal - May 11, 1999 - 5:54 PM PT
Prof,
You think giving claimants grief is something only private insurance companies do? I think not. Medicare can refuse to pay, have weird requirements that make no sense at all--in fact, I doubt it is distinguishable from most insurance companies in that sense.
Besides, don't many doctors refuse Medicare patients?
So I don't think there would be a big difference between the government handling it versus private sector. Yes, insurance companies are big, bad, and mean. But remember who we're comparing them to.
Incidentally, insurance companies are rotten to individual claimants because they don't comprise a big portion of their market. That could change if a program like this were implemented. Individually insured people would be a significant market segment.
Which reminds me--I haven't gotten my policy renewed since I quit my job and went out contracting again. I really have to get organized.
495. thoughtful - May 11, 1999 - 5:57 PM PT
BoomerJ, re trust in govt vs. private, we put money into a deferred annuity which, like an insurance policy, guaranteed us a fixed rate of return and a lifetime income upon retirement -- that was until they went bankrupt. Finally they were taken over by another firm who, with the blessings of the courts, changed the rules on us. Were we upset? Hell no. We were happy that they were able to rebuild *something* so we didn't lose our entire nest egg.
496. aldavis - May 11, 1999 - 6:01 PM PT
Thoughtful
I agree with PE that your analysis is a fairly good one. Just one thought to share. this young elderly with the second home and ability to travel, should they become loter on the responsibility of the total society, or should they have provided for that nurseing home eventuality. right now I'm in the first group, but I will provide for the later years myself and feel that all who can should do the same. Of course, once one knows that government will take younger people,s money to care for you, it is pretty tempting to just live it up and screw the consequences.
497. thoughtful - May 11, 1999 - 6:06 PM PT
Re private vs. public, capitalism vs. government, capitalism is the most efficient way we know of allocating scarce resources. From this, everyone benefits. However, this is a process without a heart. Stealing candy from a baby is a redistribution of scarce resources as well, but hardly something this society considers as appropriate. Government serves to put limits on those activities which the governed consider harmful, even if they result in less efficient allocation of resources. However, the relationship between capitalism and government goes further than that in that capitalism cannot thrive without government. Think not? Think of Russia. Capitalism requires government to protect private property and enforce contracts. Without that, capitalism cannot function.
498. CalGal - May 11, 1999 - 6:13 PM PT
Well, I don't recommend leaving the government out of the process entirely. I did say that insurance companies should be mandated to offer coverage at whatever rate the government provided. In other words, if the government paid retirees $300/month for insurance, then insurance companies would need to provide a policy at that amount.
In other words, the government needs to step in to ensure that insurance companies aren't such ruthless bastards that people don't get insured. I just don't see the need for them to be in the insurance business.
499. thoughtful - May 11, 1999 - 6:14 PM PT
aldavis, to some extent, today's superelderly are the depression generation which was one of the most frugal and which saved a lot -- a lot more than this country is today. So to some extent, they have provided for that "nursing home" eventuality -- despite the fact that (as I know from personal experience) many of them grew up in the era when family took care of family and they expected their offspring would do the same for them. However, the lifetime earnings of someone through the 40s, 50s, 60s, and 70s --even those of the middle class-- could hardly afford the nursing home and drug costs today for any length of time. As I said earlier in this thread, the home my Mom-in-law is in costs over $72,000 per year. How many years' salary in the 60s would be absorbed by that fee? Not to mention the fact that whole families were being raised on that one small salary.
Another issue (and I don't remember the stat well) is that something like only 1/3 of people aged 80+ will even end up in a nursing home. It's a question of if you want to play the odds. You can buy nursing home insurance, provided you are <75 and in good health, but, depending on level of coverage, it is very expensive.
500. aldavis - May 11, 1999 - 6:26 PM PT
Thoughtful
But you never really answer the underlying question, though you hint at it when you state there was once a time when families took care of their own. My contention is that because people are almost not expectied to take care of themselves, many don't.