Tag: Social Security

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national politics & policies

It Is and It Isn’t

Social Security, entitlements

At least once a month the same hoary “meme” lands in my social media feed, an incensed objection to calling Social Security benefits “entitlements”: Why, Social Security isn’t an entitlement, it’s an earned benefit! We’ve been paying for it all our lives!

This old chestnut is a sad indicator that American education isn’t up to snuff and an even sadder indicator that people are especially confused about the country’s biggest wealth transfer program.

An “entitlement” is something one is owed. We are entitled to Social Security benefits, it is said, because we are forced to pay into the fund. That’s why it’s called an “entitlement program.” 

That being said, it sadly isn’t. Social Security has never been run soundly as a pension fund. From the beginning, and by design, politicians have used it as a way to buy votes, but — in typical politician fashion — they have lied about it. 

But the Supreme Court hasn’t. That body has made it quite clear that Social Security is not an entitlement program, but a mere “welfare” program, subject to the whims and wiles of tax-​and-​spend politicians.

Because of the lies and evasions, American voters remain perennially confused, and get very uncomfortable when the insolvency issue is brought up. Hence the issue’s long status as the “third rail” of American politics, with the frontrunners in the current presidential race each accusing the other of seeking to touch that rail.

Nevertheless, Eric Boehm notes at Reason, a few Republican challengers now talk about a major overhaul. Chris Christie wants means testing; Nikki Haley wants to raise the retirement age. Vivek Ramaswamy says we must act sooner rather than later, but Tim Scott said seniors shouldn’t take any cuts — which Boehm notes misses the true nature of the problem. 

So, is the GOP finally getting serious?

I wouldn’t bet my retirement on it.

This is Common Sense. I’m Paul Jacob.

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media and media people national politics & policies tax policy

Decreases & Increases & Krugman

Paul Krugman, taxes, Social Security

Social Security was never designed for sustainability. The “Ponzi” element was there at the beginning: early recipients received HUGE benefits over their contributions, but as the population matured, that ratio of what working taxpayers put in compared to what they received in benefits decreased. 

Further, because there never was a “lock box” much less any investment of funds — it was always a transfer scheme — as the system matured it hit the point of financial default. Back in the 80s this was fixed by raising the taxes on working people.

And then the kicker: with the rate of reproduction in the U.S. falling like Sisyphus’s rolling stone, the ratio of taxpayers to subsidized retirees went in the wrong direction. The folks assigned to keep track of the system’s finances predict that a major insolvency moment occurs about a decade from now, a few years ahead of earlier predictions.

So what does Nobel-​winning economist Paul Krugman, of The New York Times opinion page, advise?

While we fret about the devastation that benefit cuts and tax hikes would cause, Reason’s Eric Boehm notes that Krugman doesn’t think the cuts are necessary. “First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.”

Hope over reason! And the progressive’s blithe acceptance of always-​increasing tax burdens.

Serious people should confront facts … and avoid Krugman.

This is Common Sense. I’m Paul Jacob.

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general freedom international affairs too much government

The Population Implosion

Elon Musk

At the risk of turning Common Sense with Paul Jacob into Common Sense About Elon Musk, consider the second best thing about Musk’s Twitter preoccupation: his own tweets.

“At risk of stating the obvious, unless something changes to cause the birth rate to exceed the death rate, Japan will eventually cease to exist,” Musk posted on Saturday. “This would be a great loss for the world.”

A very significant observation, at odds with so much of the Official Narrative of Approved Subjects and Opinions.

Recognizing that depopulation is the big problem for the developed nations of the world, not over-​population rubs up against most of what we’ve been told for years.

But it’s true.

Japan is not alone, here, in showing a demographic collapse. It’s merely the most advanced in population decline. Russia is in a bad way, and many European countries’ native populations are in zero population growth. The United States, too, is growing only because of immigration, legal and illegal.

Behind the numbers, though, is a disturbing reality: the instability of our welfare state policies. In America, and in most advanced nations, government-​run social pension programs require a growing population to properly service. Yet, Social Security, by removing the need to have children as a natural safety net (where we beget offspring to help take care of us in old age), actually disincentivizes the population growth that might make the system sustainable.

 Elon Musk did not offer a fix. But by pointing to a very real problem, he’s done us a great service, speaking simple truth instead of propaganda.

This is Common Sense. I’m Paul Jacob.

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national politics & policies responsibility too much government

The Problem with Public Accounts

Social Security, savings, socialism, public accounts, Chili

President Trump’s promise not to cut one dime from Social Security and Medicare doesn’t square with the fiscal cliff these programs are headed for. To save the system, benefits must be cut, taxes must be raised, or both.

Or else replace the system.

No wonder, then, that John Stossel insists we “Fix Social Security Before It Goes Broke,” and rescues a decades-​old proposal: “private accounts,” which he says “would certainly pay retirees more than Social Security will ever pay.”

In Chile, where they have tried this, private accounts have worked out pretty well, contributing to the once-​impoverished country’s rise to “the richest country in Latin America.” 

Had the United States adopted such a system, at Social Security’s inception, the amount of capital flowing into projects big and small would have not merely prevented the stagflation of the Seventies and brought us almost unimaginable wealth, it might have turned political eyes towards accountability, prudence and stability.

But, because Social Security was set up as a Pay As We Go system, we paid … and the money went.

It got so messed up that by the 1980s Ronald Reagan charged Alan Greenspan with “fixing” it. That “fix” mainly meant increasing taxation. The decades of revenue surge over outflow was spent by Congress for war and handouts. And now we’re reaching a repeat of the late 1970s’ Social Security insolvency.

Meanwhile, Chilean leftists “hold street protests against private accounts,” Stosssel reminds us. “They’re angry because capitalists get a slice of the pie.”

Back in the USA, Democrats demand that more benefits be wrung from Social Security. Are they dead set on proving why socialism doesn’t work?

This is Common Sense. I’m Paul Jacob.

 

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Accountability moral hazard nannyism national politics & policies responsibility too much government

Population to Government, “Hello”

population, government planning, social security, ponzi, illustration

Government “central planning”? I’m against it.

But it’s socialism, fascism, and allied isms that I oppose. I’m not against “government planning.”

We could use some.

Take population. When government sets up complicated institutions, like Social Security or Medicare, those institutions must match the general trend of the number and make-​up of those served.

Or else fail spectacularly.

But as everyone knows, Social Security was set up when the population was growing, and expected to continue … at a positive rate. The whole logic of the system depended on population growth.

What if populations shrink?

The Center for Disease Control and Prevention (CDC) now reports that the general U.S. “fertility rate has dropped back to its all time low of 62.5 children per 1,000 American women ages 15 to 44 years,” informs science writer Ronald Bailey.

The “total fertility” rate is now “1.84 children over the course of an American woman’s lifetime.”

A steady-​state population replacement rate is thought to be 2.1 children per woman.

Trouble is, if your main institutions depend on population growth, and instead, population declines, things are liable to go catawampus.

No wonder European nations, which are undergoing even more startling negative population growth, flirt with allowing huge influxes of hard-​to-​assimilate refugees. At the back of governmental minds may be: how do we keep going?

Some of today’s social anxiety may have to do with this shift in population growth, and government strategy.

Before politicians try to plan a whole industry — like, say, “single-​payer” medical services — maybe they should learn how to arrange the existing government, to accommodate the direction society demonstrably wants to go.

This is Common Sense. I’m Paul is Jacob.

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population, government planning, social security, ponzi, illustration

 

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Accountability folly government transparency moral hazard national politics & policies responsibility

Unfair Reform?

Donald Trump, Presidential, Social Security, illustration

I am sure we all think it would be great, other things being equal, to try to make many of life’s unfairnesses less … problematic. But most grown-​ups understand (or used to) that “life isn’t fair” is a truism for a reason.

So when Republican presidential candidate Donald Trump criticized his competing GOP hopefuls for wanting to reform Social Security and other so-​called “entitlements,” I was unimpressed.

“Every Republican wants to do a big number on Social Security,” Trump said last year, referencing Medicare and Medicaid as well. “And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want to be cut.”

Not fair.

Well, yeah.

But the unfairness is not in fixing the system by raising retirement ages, etc. The real injustices lie in the past, with previous fixes and … “unfixes” — that put us in the fix we are currently in.

And not fixing it now will lead to further, more obvious “unfairness” in the future.

Trump is just avoiding responsibility. By not addressing the problem honestly, we do not make things or keep things fair. We make things worse.

Peter Suderman notes that Chris Christie’s endorsement of Trump, last week, puts the lie to the New Jersey governor’s much-​ballyhooed seriousness about entitlement reform.

Well, yeah.

But no major politician wants to handle it. For the problem shows how deep the unfairness runs in the American system.

That would require real leadership.

This is Common Sense. I’m Paul Jacob.

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Donald Trump, Presidential, Social Security, illustration

 

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Accountability folly general freedom moral hazard national politics & policies responsibility too much government

Giving Up on the Future?

Social Security, wealth transfer, young, old, elderly, Germany, Japan, baby boom

Both Germany and Japan now transfer money, on net, from the young to the old. Austria, Slovenia, and Hungary, The Economist reports, do the same.

The instrument of this transfer? Well, the elephant in the room: those nation’s entitlement programs — their versions of our “Social Security.”

John O. McGinnis, George C. Dix Professor in Constitutional Law at Northwestern University, explains how unnatural the direction of the transfer is. Normally, societies “give more to the young than the young can ever repay.” Remember the truism, “the children are our future”? Families, McGinnis explains, “exemplify this principle. Socially too, the intergenerational flow of resources is what creates civilization as each generation receives benefits from the previous one.”

Taking from the young to give to the old, on the other hand, is not just counter-​intuitive. It stifles innovation, entrepreneurship, progress itself.

What drives the trend? It is complicated. But the politics behind redistributionist programs is the main culprit:

The elderly vote more than the young, who have more distractions, and politicians are thus all too eager to give them goodies. And while individually the elderly would like to direct more resources to their young relatives, when they act in politics they face a kind of tragedy of the commons. They cannot prevent others from living off the state, so they might as well do themselves.

As my generation, the infamous Baby Boom, retires, the demographics turn Social Security against society’s main purpose: building a future. The culture refocuses on retirement … preparing for death.

Another way — on top of growing debt and increasing regulatory burden — we’re leaving our kids with less than we had.

This is Common Sense. I’m Paul Jacob.

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Social Security, wealth transfer, young, old, elderly, Germany, Japan, baby boom

 

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Accountability national politics & policies responsibility

Assuming the Fix

caution, danger, debt, social security, collage, photomontage, illustration, JGill, Paul Jacob, Common Sense

Social Security, like similar systems in Europe, is on a trajectory to insolvency, which could lead to a sovereign debt crisis.

The reason for the crisis? Social Security has always been a pay-​as-​we-​go system, dependent on many workers paying in to a system that sends their contributions to a smaller number of retirees. When the number of retirees expands above the ability of workers to cover at established rates, the system goes broke. Meanwhile, all the system’s budget overages from the beginning to the present date have not been saved and invested. Congress has been taking the overages and spending them, putting IOUs in a notebook.

It is a serious problem.

Or, it isn’t! That is, not if you believe The Nation, which states in a recent article that this is all the result of a legally mandated “bogus” accounting conceit. The Congressional Budget Office, you see,

assumes that Social Security and Medicare Part A will draw on the general fund of the US Treasury to cover benefit shortfalls following the depletion of their trust funds, which at the current rate will occur in 2034.
That would obviously lead to an exploding debt, but it’s a scenario prohibited by law.

The Nation’s somewhat confused author suggests the dire warnings are wrong because “Congress could preemptively pass laws to avert the situation before the deadline; it could take the approach favored by progressives and increase revenue to the programs by lifting the payroll tax cap, or alternatively raise the retirement age and lower benefits.”

Well, yes. But until a fix happens, the doomsday warning stands.

Why does he think we make the warning?

This is Common Sense. I’m Paul Jacob.

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caution, danger, debt, social security, collage, photomontage, illustration, JGill, Paul Jacob, Common Sense

 

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Common Sense

Weekend with Bernie: Sanders’ Eleven

Weekend with Bernie Sanders, http://cognitivebiasparade.prosite.com/, Paul Jacob, James Gill

Bernie Sanders has a horde of helpers. Consider the attached visual meme; “Occupy Democrats” seem to have captured Bernie’s philosophy: spend and meddle.

All of the spending in the first item of Bernie’s 11-​Step Economic Plan are best directed at the state level. Bernie voters should wonder: why haven’t politicians in the states kept up infrastructure?

There are reasons why some of us want to privatize more infrastructure: more responsible upkeep.

Bernie's PlanOh, and why hasn’t the doubled amount spent on public K‑12 schooling in my lifetime led to better schools or better-​educated grads?

Just let that one hang there, and then contrast it with the disaster the feds have made of college costs while trying to “make college more affordable.”

Expanding Medicaid in one plank, and making “healthcare available to all,” in another, I take as repetition for emphasis. But the fact that Bernie’s backers want to expand spending in programs that recently have seen dramatic expansion — Social Security (in the form of radically increased rates of disability retirements), Medicaid (Obamacare), and food stamp participation (SNAP) — even while the programs lurch into insolvency, along with the whole federal budget, sends up a red flag … for irresponsibility.

Then there’s all the fiddling with free employment contracts that they pretend helps the poor, but can’t: unionization, raised wage minimums, and “equal pay” … for, presumably, unequal work, since we already have laws enforcing equal pay for equal work.

Several points are vague enough that, as stated, I could jump on board: I, too, want to reform the tax code and … “close corporate loopholes.” So does, famously this week, Donald Trump.

But what I mean by this and what progressives like Sanders mean? Big differences, I suspect.

This is Common Sense. I’m Paul Jacob.

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Weekend with Bernie Sanders, http://cognitivebiasparade.prosite.com/, Paul Jacob, James Gill

 

Categories
ideological culture too much government

Togetherness

“We’re all in this together,” folks say. I’ve even said it. But are we?

Yesterday, I discussed Mitt Romney’s secretly recorded comments on the “47 percent” he believes are hell-​bent on supporting President Obama … and an apparently different 47 percent not paying federal income taxes. Romney expressed a not unreasonable fear that government bailouts and handouts and entitlements will cause dependency, and there will come a breaking point where those working and producing will be unable to shoulder that burden.

But Mr. Romney shouldn’t go along with the bifurcation of the American public facilitated by the structure of the federal income tax and the payroll taxes for Social Security and Medicare. Most people of all incomes are paying a lot more in taxes than they should have to, even when they do not pay federal income taxes.

Moreover, while no doubt some folks wallow in dependency through welfare or crony insider deals, the vast majority of Americans desire to stand on their own two feet. Part of the 47 percent not paying income taxes are people on Social Security, as noted in an online comment by John C. Bisely:

To lump Social Security in with the other parasites is very disturbing to me. I didn’t ask for SS, it was a government run insurance for my retirement that made sense, actually. The politicians used it as a cash cow and stole billions to buy votes — plus the fact, I gave them real dollars at the time I paid into it and they give me, inflated fiat!!!

Mr. Bisely, like most Americans, is not a parasite. He’s earned his way in this world. He deserves a less parasitic government.

This is Common Sense. I’m Paul Jacob.