Tag: Social Security

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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

 

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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.

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national politics & policies

Waste, Fraud and Abuse

There are few things less inspiring than listening to Republican and Democratic Party candidates and their flunkies discuss entitlement reform.

Last weekend, the Romney camp defended its newly acquired reform high-ground from assaults by the current administration. Rep. Paul Ryan had famously charged that the Democrats’ health care reform package of 2010 had “raided” nearly three-quarters of a trillion dollars to help extend Medicare-like benefits to younger populations. The Obama camp swears on a stack of, uh, Bibles, that all it did was cut waste and fraud and, yes, expanded services to seniors in the process and . . .

I don’t have the heart, or stomach, or liver (which organ is it that deals with bile?) to diagnose all this with scientific scrutiny, but I will say, off-hand, both sides look pathetic.

Who can believe that politicians and their hangers-on in the bureaucracies have actually honed in on — much less will actually cut —nearly a trillion dollars of waste, fraud and abuse?

Not that they aren’t there. It’s just that waste and fraud seem awfully stubborn, given that even those spending a lifetime in politics have made no progress against them.

Except during campaign speeches,

Washington politicians seem much friendlier to the wasters, fraudsters and abusers than to taxpayers. And the former are better organized, too.

It’s all preposterous.

And the supposed Republican reformers? They are “defending Medicare” so that older people don’t have to lose anything. But if the system is falling apart, it may be that the only fair thing is for every current recipient to lose something, so as not to lose everything.

The unmentionable truth? Waste is part of the system, and the programs are themselves fraudulent and abusive.

This is Common Sense. I’m Paul Jacob.

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media and media people national politics & policies political challengers

The A-Word

The n-word got dropped on MSNBC’s The Cycle this week. The show’s co-host [No First Name] Touré called Mitt Romney’s use of the word “angry” to describe some of the rhetoric coming out of the White House as “the ‘niggerization’ of Obama”:

“You are not one of us, you are like the scary black man who we’ve been trained to fear.”

Naturally this led to a battle between Touré and conservative co-host S.E. Cupp. She took particular issue with the fact that Touré admitted that VP Joe Biden‘s “chains” comments were divisive, but is now calling Romney a “racist” for saying the Obama campaign is “angry.”

“Do you see how dishonest that is?” she asked.

Good question. But here’s a better one: Doesn’t talk of race and code-words obscure the real issue here, anger?

Romney shouldn’t be calling for the Obama administration to be less angry. He should be angry himself, and castigating the president and his crew for being angry at the wrong things.

We should be angry at the continuation of wars, foreign (the Middle East) and domestic (on psychoactive drug use), to the detriment of fiscal stability as well as our civil liberties.

We should be angry that the nation’s pension system has been systematically stripped of its surpluses for 77 years — by politicians in Washington.

We should be angry that federal (along with state) policy has interfered with medicine to such an extent that the most idiotic ideas around — nationalization/socialization — almost seemed plausible to a sizable minority of Americans.

We should be angry that the Democrats pushed through yet another expensive entitlement, “Obamacare,” while the rest of the federal government sunk further into insolvency.

And yes, we should be angry that our leaders can’t stick to decent issues.

This is Common Sense. I’m Paul Jacob.