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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5267  
Subject: Poll: How should Americans view SS? Date: 10/12/2000 2:18 PM
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Public safety net and I'm under 45 years old
Public safety net and I'm over 45 years old
Paid-for insurance and retirement plan and I'm under 45
Paid-for insurance and retirement plan and I'm over 45
None of the above

Click here to see results so far.

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Author: fjcleary Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1249 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 5:07 PM
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I think that it is very important for all to understand that Social Security is safety net for families whose wage earner becomes disabled or dies at a young age. While it is not a replacement for life and disability insurance it does provide supplimental income when one wage earner dies or is disabled. This can mean the difference between being able to cope and a financial disaster for many young families. Let's not throw out the program before we understand the spectrum of potential benefits social security provides.

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Author: TheKep Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1251 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 5:36 PM
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1) Long-term disability payments (16%)
2) Survivors and/or dependents (43%)
3) Retired Workers (41%)

What will win more electoral votes, selling social security as a safety net or pandering social security to the baby boomers and future Floridians as a retirement benefits plan?

I think you know the answer.

Oh, and tell David the Market says Bush will win.

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Author: jc19401 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1253 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 5:54 PM
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to be perfectly honest, I do notlike this poll. More precisely, i do not like the way the word "insurance" is used in this poll. Social Security and the benefits that it provides are not proceeds from any insurance. Social Security is a pay-as-you-go tax, rob from peter to pay paul, a transfer tax, in other words current Social Security taxes pay for current benefits.

An insurance policy, is where I pay a premium for a set amount of benefits to be paid when conditions are met. This is not true with Social Security. It was never true with Social Security, ever since Social Security was implemented, it has always been a wealth transfer tax. That's the reality. If you do not believe me, then research Ida Tarbell. She was the very first recipient of Social Security RETIREMENT benefits (the original intent of Social Security). look at how much she paid into the system, and then look at how much she got back. That's the problem of Social Security.

No social security should not be life "insurance", nor should it be a disability "insurance", nor should it be a safety net. If you want federal funding for helping the poor, fine, do it through the normal federal budget. Social Security has become a gigantic public assistance program. Social Security is nothing more than a SCAM. It is just a SCAM, a ponzi scheme. if you wnat to help the poor, do it through the annual federal budget, don't hide it behind Social Security.

Social Security should not be a national public safety net. Who would qualify? What happens when 30% of the eligible workforce lose their jobs due to a depression? Who will monitor recipients to ensure that they comply with the provision of receiving benefits? Who will make sure that the recipients are not milking the system?

I say curtail Social Security, reduce the benefits paid out and reduce the programs and bring it back to it's original intent.

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Author: gdgrimm Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1255 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 6:05 PM
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And those people fall into the category of haven fallen through the cracks:

be re-structured as a public safety net for those who, for whatever reason, fall through the cracks?
TMFBuster

I think another way to phrase this poll that might be clearer is whether SS should be resturctured and viewed the same way car insurance and home-owner's insurance viewed (i.e. something you spend money on but hope and pray never to receive any money back from) or should SS remain and continue to be viewed the way it is today (i.e something you spend money on and not only do you expect money back, but you hope and pray to get as much back as possible).

That difference in perception (whether you actually want to get money back or not) is the difference between a safety net and an entitlement.

I don't mind having gov't programs that help people out should they fall or fail once in awhile. But a program that encourages people to want money from the gov't even though they have the means of self-sufficiency isn't what I think the gov't should be doing.

And that's one of the reasons why I don't like SS like it is.

Garth

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Author: EspressoSW One star, 50 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1262 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 6:44 PM
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I figured out a long time ago that as a self-employed maximum earner, I'll never get out of SS what I put in unless I live to 122 :-) So of course it's a social insurance program helping needy recipients more than non-needy ones. Well, so what? "Helping the needy" sure sounds more like the role of government than "Helping the rich get richer" (the stock market does that one).

You don't hear about the "safety net" part of SS from politicians precisely because it sounds too much like help for the poor, who as we all "know" are undeserving and contemptible, at least to the more affluent folks who might actually bother to vote.

Our politicians don't have the guts to defend basic compassion in the face of the inevitable hateful and simplistic rhetoric against it.

Espresso


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Author: dsarvadi Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1265 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 7:52 PM
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Reading TMF Busters comments on the social security debate made me understand how little people understand about the subject. Buster suggests that we should consider the system a paid up insurance program for the diabled and survivors, as well as a retirement program, and he disparages George Bush's proposal to allow us to put aside a small fraction of what we pay in private sector investments. Some, like Buster, apparently consider this to be heresy, "taking" money from social security and putting it in private pockets, thereby "depriving" the government of the ability to give more money to those who the politicians determine are more deserving. Sorry, Buster, that argument never held any water, even when it ws being made in the 1960's.

Let's talk about Busters first lament regarding the disability program. First, the disability program pays a meager payment for an enormous premium. The reason is that the money is not invested in anything; it's simply spent, just like the money that is paid in as part of the retirement system. A private insurance program takes premiums from the insureds, INVESTS IT, and pays out to those who qualify. That's why rates keep going down, while many private disability programs have built in inflation protection. Can't be done on the government's system.

Buster may not be old enough to remember what happened from about 1960-1975, but I am. Basically, the system was running surpluses and the Dems in Congress pushed through increases in benefits that inevitably sowed the seeds of the system's destruction. That's the basic flaw in the system: benefits are determined not by what you out in or what the investment returns, but on who holds the political power and who is in the favroed group at that particular moment.

Second, the disability program is not the problem. I have no doubt that we could buy a far better disability insurance policy for the money that we pay into the system for this part of the program, and the correct solution to the problem is to convert the disability program into a program like the federal government's health insurance program. Make everyone select a disability insurance program from a menu of plans vetted by a government-chartered, private sector organization (preferably three or four, so we don't concentrate economic power too much) similar to Freddie Mac. The premiums could be securitized like mortgages (don't ask me the details, I'm not an expert in that), and pooled in a true insurance system. If this approach works so well for the government employees' health insurance, why can't it be made avbailable to the rest of us? And I am confident that we could create a disability INSURANCE program, instead of what is currently, bascially, a welfare program, by following such a model.

Back to the retirement program. My first year of paying FICA taxes totaled about $70, of which half was deducted visibly from my paycheck, and the remaining half was "paid" by my employer. (For those who have't checked this out, somebody who retires today receives all of what they paid in in less than 4-5 years. So much for a right to the money. They already get all they put in). That particular sleight of hand continues to this day, with the fiction that employers pay half the cost of FICA persisting in the minds of the indisciplined. In not unmasking this charade, Buster and a host of others persist in the myth that somehow the Ponzi scheme called social security can survive the demographics of an aging population that the US is facing.

For one who calls himself FOOLISH, Buster could not be more foolish (or, to put a more accurate label on it, WISE) than the Wall Street experts who try to tout stocks incessantly. What surprises me is that someone who prides themselves on adhering to the FOOL principles would make such poor analysis of this important subject. How can you ignore the fact that the money that is paid into the SSI funds are not put in any kind of trust, but are spent, and IOU's from the US Goverment are put in the place of OUR money? Whether the government will be there to pay them off is irrelevant. What is important is that the money, instead of being put into productive, assest-creating businesses the way the stock market does, is put in the hands of politicians whose ONLY interest is in spending it with NO prospect of a return. So the money is gone, and we have a pay as you go system, that is doomed to fail because eventually there will be too many of us oldsters to be supported by you young folks.

Which brings me to the real tragedy of the sleight of hand that Roosevelt created. By not putting the money in real investments, Roosevelt created a system where the current retired population can demand greater government assets (read citizen taxes) through political action at no cost. The only people there who can make those resources available are those who are not retired. So, we now have a system where the beneficiaries can make demands that they don't have to pay for. A classic economic system designed to create demand that always outstrips supply. Worse, we have now gotten to a point where the tax rate is so high that it effectively prevents people from saving money when they should be doing it the most -- when they are young. Today SSI, FICA, and Medicare cost 15.3% of income up to an annual salary of roughly $80,000. The tax starts at the first dollar of income and runs at a reduced rate until the last dollar of income is taxed (medicare taxes do not stop at $80k, they go on forever). So all the economists' complaints about how terrible our savings rate is so bad sound hollow to me, because, with the first 15% going to the government, it's clear where the 7% that used to be saved in this country is going; it's going to teh government (the government has in effect expropriated the amount that used to go into our savings). Our grandparents thus created a system where they transfer the younger generation's savings to themselves through the political system, and it hits the young the hardest, because they typically haven't reached the income level where SSI taxes abate. This is intergenerational thievery.

That's what makes the current Gore proposal so much worse. He wants to take the money and give it back to the government (remember the IOU's; Gore doesn't say that the money will be invested in interest bearing securities that have a chance of beating inflation, rather it will be spent and more iou's issued). We've been there, done that! That's what got us into this mess to begin with. So Gore's "solution" is not a solution at all, but another sleight of hand, another effort to steal our future.

So what about Bush's proposal? Well, the first ptinciple is that it puts money back to productive use and creates a situation where there is a real chance a significant fraction of the people in our country will have something more than bare subsistence to look forward to in retirement. And we don't have to guess whether it will work. We only have to look to Great Britain -- with a Labor government no less -- and Chile to see what will happen. Both have had semi-private systems in place for a number of years, and none of the Chicken Little scenarios the Gore-phans hyperventilate about have occurred. Moreover, in Chile at least, the savings and investment have fueled 7% -- yes that's right 7% -- growth for a LONG time. I haven't checked the numbers lately, but those are the last figure I remember.

More importantly, the Bush plan puts money into the system in a way that creates a bigger pie, not simply cuts up one that is os stagnant like Gore's. The Bush plan will add to the national wealth by making large sums of money available to the economy for building new businesses, products, and indeed even market segments. It offers the opportunity to make us all richer.

Moreover, we will need one day, perhaps soon, to replace the money that overseas investors have been pouring in for the last ten of fifteen years. By adding to the money supply (not the Money Supply that economists talk about) available for investment,we can make life better for all Americans, not just those favored by the politicians. I think that's a more generous, and more optimistic view of the world and our country than Gore's sourpuss (that's! the phrase to describe him that I have been searching for. He always looks like he just sucked on a lemon) and envy-based plan. It reminds me of how I felt in 1961 when Jack Kennedy was elected, or when the moon landing occurred.

Finally, as a member of the Boomer generation, I think we have one legacy that we should leave to our children. We should create a system for disability and retirement that doesn't put them in the position of having to pay for our retirement and their children's college educations at the same time. It is shameful that so many of our retirees continue to support a system that basically steals their grandchildren's future. It MUST be changed.

Sorry for the polemics. This subject really gets me going because it is so unfair to the younger generation. I am resigned to paying the full rate until I retire in about 20 years, but I am determined to prevent this burden from falling on my grandchildren when I retire. I urge ALL Fools to support a system that creates wealth and doesn't just spread limited resources among an ever larger group of people. Fool On!

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Author: iburrell Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1266 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 7:52 PM
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Social Security original intent was to be old age insurance. From day one, it was paying some people more than they put in. Initial retirement benefits were low, lower than old age welfare benefits.

The thing that makes Social Security look like a retirement plan is that the benefits received are loosely based on the amount put in. It is really based on the numbers of years worked and amount from the highest three years. And it is capped at a certain amount. Describing it as a retirement account with the revolving funds is a bad idea.

Personally, I feel that social programs should be paid through income tax. That is because a fixed rate tax with a cap is regressive. The poor pay proportionally more of their income to Social Security. If it is going to be paid through payroll taxes, then the cap should be removed and all workers taxed equally.

- Ian


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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1267 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 8:45 PM
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dsarvadi: "My first year of paying FICA taxes totaled about $70, of which half was deducted visibly from my paycheck, and the remaining half was "paid" by my employer. . . . That particular sleight of hand continues to this day, with the fiction that employers pay half the cost of FICA persisting in the minds of the indisciplined. In not unmasking this charade, Buster and a host of others persist in the myth that somehow the Ponzi scheme called social security can survive the demographics of an aging population that the US is facing.

Today SSI, FICA, and Medicare cost 15.3% of income up to an annual salary of roughly $80,000. The tax starts at the first dollar of income and runs at a reduced rate until the last dollar of income is taxed (medicare taxes do not stop at $80k, they go on forever). So all the economists' complaints about how terrible our savings rate is so bad sound hollow to me, because, with the first 15% going to the government, it's clear where the 7% that used to be saved in this country is going; it's going to the government (the government has in effect expropriated the amount that used to go into our savings).

Sorry for the polemics."


Actually, I agree with much of the polemic, but I suggest that also suggest that you are playing withe the statistics to exagerate your point.

If you intend to count the dollars paid by the employer for purposes of calculating the percentage, then, for accuracy and consistency, you should also add the dollars into the income side and recalculate the percentage.

I will accept the accuracy of 15.3% cited above, but round to 15% for purposes of this discussion (in order to keep the math simple); I will also use the 80k limit suggested (but I think that it is 76,200 for 2000, after being 72,600 for 1999 and I am sure it will inflation adjsut up for 2001) to keep the math simple.

Assume 80k stated gross salary. Employee "pays" $6,000 in FICA (7.5% of 80k); employer "pays" similar amount --- another 6000$ for a total of $12,000 contributed (15% * 80k).

Suggesting that the employer pays is a fiction and then using those dollars to calculate personal savings rate with also adjusting the income side is misleading. If those really were employee dollars, then employee contributed 12k/80k + 6k = 12k/86k = 13.95% --- still a not insigincant amount but more than 1 full percent less than that suggested by the original poster, and still unaccounted for.

Making this "correction" would also change the effective income tax rate calculations for employees with earned income because employees also do not pay income tax on the 1/2 "contributed" by the employer.

Making this adjustment for a more accurate calcuation does not suit the general position of many who would concurrently that we (USA residents) are overtaxed and should also have lower FIT rates, too. [Note to dsarvadi - this last comment is not directed at your personally because I have not read enough of your posts to know you well enough, even in cyberspace; but is directed at many of the pundits I read in the more tradditional press]

Just my $0.02.

Regards, JAFO
(who has always been partial to Disraeli's comments about three kinds of lies: lies, d@mn lies, and statistics.)

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1268 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 8:47 PM
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Suggesting that the employer pays is a fiction and then using those dollars to calculate personal savings rate without also adjusting the income side is misleading.

Sorry about poor proofing. JAFO

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Author: alsmidt One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1269 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/12/2000 9:41 PM
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I think W is on the right track by letting Americans invest their own money. I'll buy into the argument posted earlier about increasing the size of the pie instead of just changing its distribution. Al Gore needs to take a step back and realize that the American people are NOT all stupid ( just some of them :) and suggesting that we can't invest our own money is just plain insulting. Social Security ideally would be a forced retirement plan (managed by idividuals) with NO security net (that should be part of a regular federal budget and not based on previous earnings (but that's another topic....))

If the program is ever to be fixed, I think someone just has to have the guts to be mean and do it. But, you'll never see any politician advise that!! :) Personally, I've given up hope -- hopefully my Foolish nest egg will be enough for me 40 years from now.

Good luck to everyone!
Alec

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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1275 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 12:30 AM
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I think that it is very important for all to understand that Social Security is safety net for families whose wage earner becomes disabled or dies at a young age. While it is not a replacement for life and disability insurance it does provide supplimental income when one wage earner dies or is disabled. This can mean the difference between being able to cope and a financial disaster for many young families. Let's not throw out the program before we understand the spectrum of potential benefits social security provides.

Disability is a complex issue, but when it comes to survivor benefits, I'm not sure I understand why we can't come up with a better way to handle the problem than through Social Security deductions.

What if we just set it up so that anyone without adequate private life insurance, beyond some mandated minimum, has premiums automatically deducted from their paycheck to cover their dependents. The money would go into a public fund, with premiums determined by actuaries to balance inflows and outflows.

No doubt, the public insurance would be more expensive, but wouldn't this give people a greater incentive to get what they need from the private sector?

Naively,
Buster

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Author: pedrowa Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1278 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 1:42 AM
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A "lock-box" may not be much as such, but its existence would make any breaches a bit more apparent.

More importantly, the investing nest egg should be increased. I favor increasing, significantly, the wage level that is contributing (taxed) to the fund. Perhaps something around $150K in year 2K dollars.

I also like the idea that Gore advanced in the first debate wherein the budget surplus be paid to debt reduction and the resulting savings in interest expense on the national debt be applied to the Social Security fund. Reduction in general interest rates would probably ensue with benefits to businesses, mortagors, and individuals, and local governments including school districts.

As a nation we certainly need a safety net for those that do not, for any of several reasons, live a normal healthy, economically rewarding, life.

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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1280 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 4:06 AM
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Buster suggests that we should consider the system a paid up insurance program for the diabled and survivors, as well as a retirement program,

Um, exactly where did I say this?

he disparages George Bush's proposal to allow us to put aside a small fraction of what we pay in private sector investments.

Because I don't like the idea of mixing personal retirement savings up with a public assistance program.

Some, like Buster, apparently consider this to be heresy, "taking" money from social security and putting it in private pockets, thereby "depriving" the government of the ability to give more money to those who the politicians determine are more deserving. Sorry, Buster, that argument never held any water, even when it ws being made in the 1960's.

Some, like dsarvadi, seem determined to smoosh Buster into their conveniently designed liberal box, by attributing points of view to Buster that have no relevance to what he actually said.

Let's talk about Busters first lament regarding the disability program. First, the disability program pays a meager payment for an enormous premium.

I don't recall lamenting anything. What I asked, was whether we could take disability insurance payments out of the public till and return them to the private sector, while keeping intact a public safety net for those who aren't properly insured.

A private insurance program takes premiums from the insureds, INVESTS IT, and pays out to those who qualify. That's why rates keep going down, while many private disability programs have built in inflation protection. Can't be done on the government's system.

Exactly my point! Well said. Actually, slightly inaccurate in that incoming private premiums are generally paid out in claims, while company profits are generated by investing the float, but that's a picky technicality. We agree in principal.

Buster may not be old enough to remember what happened from about 1960-1975

I remember most of it, as I was born in 1960, although I can't claim that I was very interested in economic policy at the time...

That's the basic flaw in the system: benefits are determined not by what you out in or what the investment returns, but on who holds the political power and who is in the favroed group at that particular moment.

Good point. I wouldn't want my private retirement accounts mixed up with these goons. Let's get retirement funds out of SS completely. I'm with you.

And I am confident that we could create a disability INSURANCE program, instead of what is currently, bascially, a welfare program, by following such a model.

Excellent idea. I asked if we could do something about this, and you've shown me a possible solution. Thanks.

In not unmasking this charade, Buster and a host of others persist in the myth that somehow the Ponzi scheme called social security can survive the demographics of an aging population that the US is facing.

I can't defend the unspecified "host of others," but, speaking for myself, I not only attempted to "unmask the charade," but I came up with a clever little parallel to family budgets to help people more easily digest the unmasked beast:

The main reason that the trust fund gets such crappy returns is that it doesn't exist, at least not in the way it's commonly perceived to exist. We can compare the "trust fund" to a family budget. In this scenario, there is no nest egg beyond monthly income and expenses, and short-term emergency savings. In other words, there is no money to invest for the long term, and without this, stock market rates are not a practical expectation.

Was I too clever by half?

How can you ignore the fact that the money that is paid into the SSI funds are not put in any kind of trust, but are spent, and IOU's from the US Goverment are put in the place of OUR money?

Ignore it? Not true. I cleverly unmasked it!

By not putting the money in real investments, Roosevelt created a system where the current retired population can demand greater government assets (read citizen taxes) through political action at no cost.

Interesting angle. I hadn't thought of it this way. Thanks.

Our grandparents thus created a system where they transfer the younger generation's savings to themselves through the political system, and it hits the young the hardest, because they typically haven't reached the income level where SSI taxes abate. This is intergenerational thievery.

I knew granny was up to something. I just knew it.

So Gore's "solution" is not a solution at all

I think this is almost exactly what I said. Look, if you're just going to repeat everything I said in my article, I'm going to have to ask for some royalty fees.

So what about Bush's proposal? Well, the first ptinciple is that it puts money back to productive use and creates a situation where there is a real chance a significant fraction of the people in our country will have something more than bare subsistence to look forward to in retirement.

Seems to me that it keeps retirement savings that should be private locked up in a public welfare system which, as you point out, is fundamentally flawed (whether granny is a good-for-nothing thief, a godless lefty or just never thought the whole thing would get so screwed up. I'll let you decide).

More importantly, the Bush plan puts money into the system in a way that creates a bigger pie, not simply cuts up one that is os stagnant like Gore's. The Bush plan will add to the national wealth by making large sums of money available to the economy for building new businesses, products, and indeed even market segments. It offers the opportunity to make us all richer.

Assuming we actually get a surplus, this makes sense to me. Let's just force the government to set up one big savings account, invest the long-term portion and call it "emergency fund for welfare payments." Then we can all start saving for retirement.

I urge ALL Fools to support a system that creates wealth and doesn't just spread limited resources among an ever larger group of people. Fool On!

Thanks for your interesting thoughts. You've helped me think it through some more.

What surprises me is that someone who prides themselves on adhering to the FOOL principles would make such poor analysis of this important subject.

I'm not sure how I became the whipping boy for your polemic, especially since we agree a lot more than we disagree, but if it helped you to frame some of your arguments, I'm happy to further the discussion.

Best regards,
TMFStrawDog









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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1281 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 4:18 AM
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(who has always been partial to Disraeli's comments about three kinds of lies: lies, d@mn lies, and statistics.)

JAFO,

Thanks for setting this straight on the math. We just can't have too much unemotional accuracy on this topic.

As long as we're being precise, though, I just have to squeeze one of my pet peeves in here. As a former statistician who has often been critical of the art, I have to admit, nonetheless, that this example may have been a case of d*mn lies, but it really doesn't have anything to do with statistics. It's math, or maybe accounting, but without a sample and an inference, it can't be statistics.

Askin' for it,
Buster

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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1286 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 5:21 AM
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I also like the idea that Gore advanced in the first debate wherein the budget surplus be paid to debt reduction and the resulting savings in interest expense on the national debt be applied to the Social Security fund.

Sounds great in theory, but how do we prevent congress from spending savings in interest payments? Sounds even tougher to pin on them than surpluses that get away.

Thanks for the post!

Buster

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Author: gtdchuck Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1292 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 7:46 AM
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The poll is severely flawed. It forces people to
assume insurance is a neccesary part of Social Security. A better approach to reform would be to
entirely seperate the insurance and disability aspects - set up seperate, tax funded program(s) for them.
The current system ties them to a ballooning retirement
debt, which unquestionably needs reform.

The poll (and the article it follows) ignore the
basic problem.


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Author: art0710 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1296 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 9:12 AM
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One comment about the amount that we, as individuals pay: We pay 7.65% and our employers pay 7.65%. Does anyone really think that our employers would give us that 7.65% if they didn't have to pay it to the government? I don't. So, let's start using 7.65% as the SS tax that we pay.

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Author: ceastlund Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1299 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 9:32 AM
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One comment about the amount that we, as individuals pay: We pay 7.65% and our employers pay 7.65%. Does anyone really think that our
 employers would give us that 7.65% if they didn't have to pay it to the government? I don't. So, let's start using 7.65% as the SS tax that we
 pay. 


It has been reported that every time the SS tax on
the employer goes up, wage increase lag by a
similar amount.  So, it is likely the same market
force would require the employer to pass any
SS tax savings to the employee, though not
necessarily immediately nor completely, depending
on the job market.

I'd like to make a few more comments on SS:

1. Of course you get more than you put in,
   it is a SURVIVOR plan.  If only one person
   fails to make it to 65, there will be extra
   money for all who make it to 65.
2. Most people will get more than they put in,
   because 1) most people don't get much back
   2) the few who put in the max put in way
   more than they get back.

The above two points are just the definition of
a survivor plan.  The very lucky/blessed/hard working
balance out the others.

The big problem I have with SS is that it takes
15% of the wage base to provide a very minimal
retirement support.  Japan is held out
as a model for private savings, and their savings
rate of 20% is enough for all retirement.

Chris


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Author: foolme1111 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1307 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 10:54 AM
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Al Gore needs to take a step back and realize that the American people are NOT all stupid ( just some of them :)
____________________

IMO, Algore is counting on the stupid (a better description is naive, ignorant, undereducated) American people to get himself elected. He is pandering to their fears and jealously of the prosperous segment of our population who have worked hard for their successes. He harps about big business, but I wonder what his alternative is. Many people work for these companies, and to hamstring them would put many out of work. Oops!! There goes the tax surplus.

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Author: iliveinazoo One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1314 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 12:41 PM
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I also like the idea that...the budget surplus be paid to debt reduction and the resulting savings in interest expense on the national debt be applied to the Social Security fund.

Sounds great in theory, but how do we prevent congress from spending savings in interest payments?


Hi Buster.

To answer your question, the way to prevent Congress from spending the savings achieved by paying down the Federal debt is to divide the sovereignty: make sure that Congress is controlled by the party that is not in the White House. Even better: divide Congress itself -- let one control the House of Reps, the other the Senate. That way, any big spending (read: Demo) bills or outrageous (read: GOP) tax cut bills will be unlikely to ever make it onto the President's desk. And if they do, he can veto them.

I myself intend to vote for the candidate whose party is viewed as most likely not to control Congress after the elections...

Thanks for opening up this (very interesting and useful) can of worms. In my opinion, most of us (myself included) are still fundamentally confused about government finance in general, and the Social Security system in particular, so any (even moderately informed) discussion is bound to help. The general tenor of the posts illustrates this point nicely. For instance, hard as it is to fathom, many still seem to believe that what they pay each paycheck in FICA tax is "their" money, as if they had an individual account somewhere, earning a pathetically low rate of return.

The quote you cited: the individual who liked the idea of paying down the Federal debt is at least partly right. As I understand it, under the current pay-as-you-go system the the only way to "save the surplus for Social Security" is to use the surplus to expunge the accumulated Federal debt. That way, the Government will be better equipped to pay future beneficiaries. There is no "lock-box" (sorry Al). And ill-advised tax cuts, besides fueling inflation, will make the goal of debt reduction impossible (sorry George).

On the other hand, as I understand it this only delays, rather than eliminates, the inevitable point when the system goes into the red. Ultimately, we need to overhaul the entire system. It is unfortunate that the electorate isn't holding the candidates to higher standards: both Gore and Bush are either woefully ignorant on the subject, or else have contempt for us in their mischaracterizations and rhetoric.

I am generally in agreement with your assertion that the best thing government can do is to structure the incentives so that individuals and families take on their proper responsibilities for saving, investing, and insuring, and then providing a general safety net for individuals who, due to poor luck, catastrophe, personal failings, or whatever, haven't done so. But we should be clear that this would require a radical restructuring of what has been, to date, the "third rail" of American politics. I'm not sure the electorate is truly prepared for the kind of changes you are suggesting.

Thanks again!

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Author: GeorginaW Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1329 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 2:49 PM
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TMFBuster wrote:

The Social Security program has three key components. Numbers in parentheses, below, indicate proportion of total 1999 Social Security benefits paid from the Old Age, Survivors and Disability Insurance (OASDI) program (the bulk of payments):

1) Long-term disability payments (16%)
2) Survivors and/or dependents (43%)
3) Retired Workers (41%)


Actually, the number in the parentheses indicate the proportion of the awards during 1999. That is to say, 41% of the people who were granted Social Security benefits during 1999 were retired workers.

GW


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Author: eliminateSS One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1346 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/13/2000 8:13 PM
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Your numbers are misleading. There are two distinct program. Disability program (2% payroll tax) and the Old Age Survivors Insurance Progarm (10.6%).

What you have done is combined your "2) Survivors and/or dependents (43%)" which is actually split between the two programs.

For example, if you as a worker become disabled, you can draw disability. If you die, your wife may draw survivors benefits up if there are children under age 18. If no children under age 18 or as soon as they turn 18, she can not draw survivors benefits.

A suviving spouse may at age 62 or over apply for OASI benefits under the deceased spouses work history. This is paid from OASI which is everyone over 62, even though some may be disabled or survivors of deceased workers.

There are some 33 million retirees and some 41 million people drawing OASI/DI benefits. 33 million is not 41% of 41 million, more like about 78%.

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Author: Adder715 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1353 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/14/2000 1:04 AM
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TMFBuster,

You apparently wrote an article that got a lot of response on this board. I haven't seen the article. Can you direct me to it?

Also, on your 16/43/41 statistics -- I think you were very close to a good source for the breakdown between survivors and old age benefits.

Try
www.ssa.gov/OACT

That is the actuary's section, so you'll get plenty of statistics. In particular, it looks like DI/Survivors/Retirement ratios (of current benefits) was about 13/4/83 in 1999.

To get that ratio, I'm including "Children" and "Widowed mothers and fathers" but not "Widows and Widowers" in the "survivors" 4%. I believe that the last group is people of normal retirement age who are collecting benefits on their deceased spouse's work records.

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Author: mjj6686 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1363 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/14/2000 4:23 PM
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Just make the Senator's & Representatives retirement plan comparable to others--dependent on years of service and salary while employed. Then put them on Social Security. Quickly we would see SS move to the top of the legislative agenda for real debate and resolution.

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Author: dsarvadi Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1370 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/15/2000 10:00 AM
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Ian, THanks for your reply. However, your idea of taxing for "social programs" through the income tax, while seemingly simple, is aggravatingly impossible to implement in practice. A better idea is a flat tax, at 1-3% with a for everyone up to a certain income, say 20K and indexed for inflation, then 10-15% of income for the rest. I would treat all money received as income, and if the tax rate is low enough, no one will complain about the payment for estate taxes, capital gaains,etc. I would also tax the transfers from trust funds to beneficiaries. The Kennedys, Fords, and Rockefellers have escaped for too long. And I would make everyone write a check to the government four times a year so they see real money going to WAshington, not the funny money we now call withholding.

You and others will complain that we shouldn't tax the poorest, The problem with not doing so, is that like any other economic benefit, zero cost creates infinite demand. Everyone should pay something (I don't mind paying more if I have more) so they all have a stake in the decisions that is not just what they get but what it costs them, because everyone benefits from government. Moreover, requiring people to pay taxes creates a sense of owenership and dignity that doesn't exist with the welfare handouts we now so generously characterize as earned income tax credits.

The thing to remember is that we have tried all of the tired ideas that GOre and his followers have urged on us for 75 years, and they have gotten us into this mess. Time for some new ideas, and to learn from history instead of repeating it.

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Author: dsarvadi Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1372 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/15/2000 10:06 AM
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JAFO, thanks for your two cents (actually 2%). Your analysis proves my point, because it doesn't matter how we alculate the percentage, it is nearly (or more than, depending on how we do it) the 7% savings rate that economists would dearly love to see in the US again. The point is that 13.5, 13.8 or 15.3% is a BIG HIT, far greater for most Americans that the income tax, and one that the government should not have sole control over.

"Making this "correction" would also change the effective income tax rate calculations for employees with earned income because employees also do not pay income tax on the 1/2 "contributed" by the employer"

I assume here you mean to refer to the self-employed. SE payers pay the FULL 15.3%, which is where my figure came from. How do I know this? Because I pay it. The computer does it now, but the calculation is 15.3% of income.



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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1418 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/16/2000 6:46 PM
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A few people correctly took me to task for the numbers I presented in my poll. Thanks to eliminateSS and GeorginaW for getting me to double-check. I apologize for the confusion.

I mistakenly chose the 1999 NEW BENEFITS numbers instead of the overall OASDI program numbers. In other words, the breakdown I gave applies only to the roughly 4 million folks added in 1999.

Here is a clearer breakdown for the WHOLE PROGRAM.

There were "more than 44 million persons receiving monthly Social Security benefits in December 1999." Here is the breakdown:

Type Total
of Number
Beneficiary (000s) Percent

Retired workers 31,028 69
Workers 27,775 62
Spouses and children 3,253 7

Disabled workers 6,524 15
Workers 4,879 11
Spouses and children 1,644 4

Survivors of dead workers 7,044 16

Two other notes:

1) This is broken down by number of people, not by amount of benefits paid.

2) This doesn't give us a direct breakdown of elderly vs non-elderly recipients. As eliminateSS points out, there are some elderly among disabled and survivor spouses. Given these facts and the table, his numbers:

There are some 33 million retirees and some 41 million people drawing OASI/DI benefits. 33 million is not 41% of 41 million, more like about 78%.

seem plausible to me, although I didn't check them.

Here is the source I'm using:

http://www.ssa.gov/statistics/fast_facts/2000/ff2000.pdf

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Author: TMFBuster Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1419 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/16/2000 6:52 PM
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Ooops, I apologize. Adder715 gives the breakdown I was trying to come up with. I tried to read ahead to prevent duplication, but you folks generated a lot of posts, man! :)

For those of you who missed it, here are some better numbers compliments of Adder715

Try
www.ssa.gov/OACT

That is the actuary's section, so you'll get plenty of statistics. In particular, it looks like DI/Survivors/Retirement ratios (of current benefits) was about 13/4/83 in 1999.

To get that ratio, I'm including "Children" and "Widowed mothers and fathers" but not "Widows and Widowers" in the "survivors" 4%. I believe that the last group is people of normal retirement age who are collecting benefits on their deceased spouse's work records.


Adder,

Here's the link to my article (the least I can do) :)

http://www.fool.com/news/foth/2000/foth001012.htm

Regards,
Paul




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Author: Whitestar53 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1428 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/17/2000 7:40 AM
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At its origin SS was created to "assist the extended family to care for the extreme elderly" -- when it started the average life span was 57 years. If indexed for longivity, you would be 85 to draw, withholding would still only be 1%, and you'd have a lot more $$ to provide for your own (life & disability insurance, retirement ...) Its too bad that most in America want to be cared for by the government (surf/slave mentality) instead of taking care of themselves and their own families. The primary fault for the government takover of charity is because the Churches of the land have forgotten their responsibilities. My neighbor knows my needs much better than some politican a thousand miles away.

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Author: eliminateSS One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1431 of 5267
Subject: Re: Poll: How should Americans view SS? Date: 10/17/2000 9:52 AM
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<<<when it started the average life span was 57 years. If indexed for longivity, you would be 85 to draw>>>

You are mixing two distinctly different life spans. 57 years is one I never saw and is definetly not at age 65. 85 is one I have yet to see, but if you add the life expectancy at age 65 to 65, you might get 85. My guess is you have to look at life expectancy at age 67 and add 67 to get 85.

You are using "fuzzy" statistics here.

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