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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 59646  
Subject: Re: Such different conclusions Date: 2/19/2007 4:20 PM
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Well Goofyhoofy, I don't think you've considered the possibility that Americans may choose to redirect the huge amount they currently pay into Social Security and Medicare to new programs, leaving the existing, grossly underfunded programs to collapse, or to pay greatly reduced benefits. After all, that is the usual fate of Ponzi schemes that make enormous promises but are grossly underfunded to pay all the promises people are expecting.

This is a perfect example of showing your predisposed bias in the face of facts, so thank you for posting it.

Let me decompose some of it. First, it is not a Ponzi scheme, as you have been told before. It fulfills none of the requirement of a Ponzi scheme. http://en.wikipedia.org/wiki/Ponzi_scheme I understand that kind of hyperbolic language goes over well on that other retirement board, but here I think we'd appreciate a more factual approach. The reality is that Social Security works like an insurance product, paying out benefits out of current revenues. There is no "get rich" aspect, it is not short term, there is no schemer, no one is absconding with the funds.

In any case, concentrating much or (for many people) all of their hope for retirement in such grossly underfunded programs hardly seems prudent. Better the bankruptcy you might make for yourself than the bankruptcy that has already been engineered by government.

Again, you use the language so loosely as to make it devoid of meaning. In MadCap's case - or in the millions of other which might parallel it, those people could go "bankrupt" just as they lose their ability to earn anything in the corporate world. That's "bankrupt", as in no income, no assets. Zero. Nada. No money to pay rent, mortgage, food. Broke. Busted.

In the case of Social Security, alarmists such as yourself throw around the word "bankrupt", but even the most pessimistic projections show that the program would pay 90% of promised benefits. That's still enough for recipients to pay rent, food, perhaps have a telephone. Not a great life, I'll grant you, but it's not "bankrupt" in the sense of the original post (on another board) which engendered this thread.

Words have meaning. You shouldn't use it one way in one sentence, a completely different way in the next, and pretend you have proved something.

[I know your solution to the SS problem is "means-testing", but for me that's a complete non-starter. Oh, it's an attractive idea on its face, I'll grant you, but it takes Social Security from a universal participatory program where everyone contributes and everyone receives (not in perfect harmony, given differing life spans, contribution rates, etc.) to a welfare program where everyone contributes but only some receive. I'll make a not-terribly prescient prediction that about 12 minutes after such a change is enacted, the Wall Street Journal, Rush Limbaugh, you and your cohorts on the other board will be screaming about this "DAMN WELFARE PROGRAM" and crying about how people should prepare for themselves, and why should you be taxed to support them." It's politics, which is a real part of the situation, and one which your solution, as admirable as it might sound, completely ignores.]

In a poll taken a few days ago among people on this board, 80% said they expected to receive less then the benefits currently promised or none at all

Funny. Polls in the 1970's said exactly the same thing, and then Ronald Reagan (of all people) raised the SS contributions and put the program "on a firm footing", and for the next 25 years we have paid 100% of the promise. It would not be so hard to put the program back on a 100% footing again, heck for half the money we have pissed away in Iraq (where did that money come from, again?) we could do it. With a raise of the cap we could deal with 75% of it, and with minor tweaks elsewhere the rest could be done. Of course the anti-tax Right sees "raising the cap" as a tax increase, and so they scream their heads off; the Left sees the Right spending billions and trillions on corporate welfare - all with magic money from nowhere - and wonders why we can't do the same for Social Security.

Indeed, President Bush's offer of part ownership in one's payment of Social Security taxes can be viewed as a way of offering people ownership of part of what they pay as an incentive to continue supporting the program.

Indeed, yourself. The "part ownership" is a chimera, as false as "We'll be greeted with flowers", unless you can explain how an underfunded program can afford to be even more underfunded while you divert some of the incoming revenues elsewhere, even while you pay out the benefits promised, which you claim to care about. Along the way, perhaps you can revisit all those great arguments made, about how swell it's working in Britain (the program has completely changed twice now and is heavily regulated as the market makers used high fees and penalties to empty the small so-called pension accounts), or in Chile, held up as a model of success, except oops, a mere two years later the Chilean government is talking about taking the program out of private hands and putting it back on government footing. And why? Because the private program wasn't producing enough income for people to live on, and they are facing a "destitute in the streets" program of significantly higher proportion than when they had the government system.

I'm in this for selfish reasons. I think it's better for me not to have a large destitute population, rummaging garbage cans and doing who knows what else just to stay alive. I think it helps flatten the business cycle, shallowing the depths of recessions and depressions (and so does Alan Greenspan, Peter Lynch, and Warren Buffett, among others). I think it helps our country and our economy, and I think it has done so, reliably, for almost 80 years.

And you go around hollering "bankrupt".
 
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