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If fixing Social Security were easy, it would already be done

Discussion in 'Economics, Business, and Taxes' started by Joe Economist, May 7, 2013.

  1. Joe Economist

    Joe Economist Council Member

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    I am torn. On one side, I am curious to know the amount of 'profit' that the Fed made. And yet I don't. It is like sour milk and the curiousity of just how bad it will smell.
     
  2. worldlymrb

    worldlymrb America: Love it or Leave it!

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    If you dilute 1/2 gal of old milk with 2.5T gallons of sugar water, you wont smell a thing. In fact, it might even be tasty. However, if you mention it is really sugar water and not milk, you will be labeled a conspiracy theorist and a rightwing extremist.
     
  3. Woolleybugger

    Woolleybugger Mayor

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    I am too old to believe economic forecasts. Maybe you still believe, good luck. Old people need subsidizing, deal with it. We paid for our parents, you pay for us. What goes around, comes around. Its only money anyway. Who gives a rats ass how it gets done, at the end of the day, we are all just so much flotsam anyway. I suggest you take a chill pill. Worrying is not good for the soul. Better get your ass on a plane to some far away place, enjoy your companion, have a few cocktails, enjoy nature and rejoice you are alive. All the rest of the life you think you are having will disappear once you figure it out. One day you are here, the next you are dust. Money is only a tool for us to live a decent life. If you can have a decent life without money, you are winning the game of life.
     
  4. Joe Economist

    Joe Economist Council Member

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    First, these aren't economic forcasts. They are actuarial math. A forecast is a projection of our many jobs we might have. Social Security is a formula which takes in assumptions and spits out an answer. You may disagree with the assumption, but not with the result.

    Actually you didn't pay for your parents if you are retired today. That is why the system reached insolvency in 1983. Congress then voted that GenXers and late boomers would make up the difference.

    What you haven't noticed is that GenXers and younger now make up a majority of voters. More than 50% of voting aged Americans expect to retire after the Trust Fund is gone. It is only a matter of time before politicians emerge to serve that voting block which is getting mugged. Once that happens, you will have to deal with it.
     
  5. worldlymrb

    worldlymrb America: Love it or Leave it!

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    Soon everybody/everything will need subsidizing.
     
  6. BlanketyBlankBlank

    BlanketyBlankBlank Council Member

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    In our current political climate fixing parking meters isn't easy.

    Social Security is 8 decades old.

    that we employ a system, virtually unchanged that predates about everything else in our lives, should be a national embarrassment.

    and no I'm not advocating 'starving old people' or 'throwing granny off the cliff in a wheel chair'.

    social security, like many laws, was an appropriate solution in it's time. we face demographic shift that is the mirror image of what it was then combined with longer life expectancies and advances in medicine.

    any current fix by the current crowd is going to result in it's transition from an entitlement to another redistributive mechanism with it's rules/regs biased by whichever party happens to be in power.

    I would much rather opt out and finance my own retirement. I understand that there is moral hazard possible since some will say this now and then want to rely on the state to bail them out if they've made poor choices.

    this combined with corporate America's exit from the support system by divesting themselves from pension obligations while sticking the individual with the tab for their retirement in virtually all but the largest corp's, executives or the public sector.

    we need a national debate and a solution. the fix for this and medicare/aid are going to happen. but in a few decades it won't be by choice.
     
  7. Joe Economist

    Joe Economist Council Member

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    It is radically different today than it was at its start. Originally, Social Security was suppose to be self-funded. That means that workers would pay into a system which would use those resources to pay benefits when the worker retired. Congress changed it to a paygo financed system in the 40s and 50s. In fact, FDR veto'd the legislation which started us on the paygo path.

    Social Security isn't a needs driven system. It does not pay a penny based on need. So no one is talking about starving people. The difference in this thread is that I see future retirees as important as those of today. Ignoring the imbalances saves today's granny from a bus only to ensure that a future granny gets hit by a larger bus.

    While life expectancy of a baby is up a lot, life expectancy of people who use Social Security isn't. It is up about 10%. The costs of the system are up as much as 1000%. It is complete balony to blame SS problems on life expectancy.


    Optting out does not help you unless the government abandoned the promises of the past. If you can opt-out, everyone would. Today SS is spending a quarter to buy a dime - actually it is the promise of a dime. How will you pay benefits to existing retirees - out of your income tax. Do you really care whether you pay for SS benefits by payroll tax or income taxes. The dollar is the same even if the pocket is different.
     
  8. BlanketyBlankBlank

    BlanketyBlankBlank Council Member

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    Agreed. I'd opt out if I could, which can never happen. But they can spare future generations from this ponzi scheme
     
  9. Joe Economist

    Joe Economist Council Member

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    You can only spare the future generations to the extent that you inflict the ponzi scheme on the last.

    I don't much care how we reform the system, only that we are honest in the discussion. The worst thing that can happen is discovered risk. That tends to have unpredictable outcomes.
     
  10. EatTheRich

    EatTheRich President

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    Look at the nuclear power industry. It was created entirely at government expense, and turned into a very profitable business by the government. After it had become profitable, it was turned over to GE for free, not for any compelling economic reason, but because GE had a corrupt relationship with the Eisenhower administration. It's the same story with the railroads; to a large extent it's the same story with the utilities.

    Credit is not "one of the most stable industries in history." It is, literally, the most unstable industry in history. And the instability caused by private speculators spilled over into Fannie Mae and Freddie Mac.

    The fact that you are quoting Friedman--an advisor to a fascist dictator--says a lot about where you're really coming from.
     
  11. Joe Economist

    Joe Economist Council Member

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    If it is so profitable why is it that so few nukes are being built? Why is it that companies that own them want out?

    Actually the industry that they wrecked was housing. They used credit to do it. The government caused this mess by creating economic incentives to create risk. They provided lower and lower standards for housing loans, and you are surprised that we had a bubble? When the GSEs would bundle mortgages for which the originator had no liabiility, are you seriously going to blame the private speculator? There was no speculation. The originator made every loan possible to sell to the government - where is the speculation in that?

    The fact that you are looking at the author instead of the quote says a lot about where you're coming from.
     
  12. BlanketyBlankBlank

    BlanketyBlankBlank Council Member

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    do you have any documentation to support your opinion? From someone with a less hysterical name, I might accept it at face value. But methinks you have an axe to grind and that in fact GE didn't have anything turned over to it for free, nor was the entire nuclear industry created at government expense.

    government expense of course being my expense and yours.
     
  13. worldlymrb

    worldlymrb America: Love it or Leave it!

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    EatTheRich was also a slogan used by the mobs in the B.C era of the Roman Empire. Of course the rich (who were also senators of the republic), did not want to be eaten by a starving mob. So, the Roman top 1% (who were also the rulers) began spreading the wealth providing free bread, giant coliseums for circuses, and of course, new glorious wars.
     
  14. EatTheRich

    EatTheRich President

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    That Eisenhower turned nuclear power over to GE is not opinion, it is fact.

    http://lmgtfy.com/?q=atomic+energy+act+of+1954

    The nuclear industry was certainly much more profitable in the 1950s and 1960s before they got squeezed by fossil fuels--but it's not like the U.S. has few nukes--they have enough to kill everyone in the world several times.

    It wasn't Fannie Mae and Freddie Mac bundling mortgages. It was big banks, hedge funds, and insurance companies. And that didn't cause the housing crisis either, what caused the housing crisis is the basic fact that most houses, by design, are owned by banks that charge outrageous interest rates to "homeowners" most of whom will never realistically pay off their mortgages.
     
  15. Joe Economist

    Joe Economist Council Member

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    You spend too much time watching Michael Moore movies. Sub-prime was a fractional part of the housing crisis. I think at its peak it was around 250 billion. If the houses go to zero, the ensuing charge off would have been about 1/50th of the total loss.

    It is a fractional loss caused by bundling. Without Wall Street's bundling of sub-prime loans, there would have been no market for the loans. Bundling of mortgages that enable originators to create loans for which they had no responsibility. And you are surprised that people made dumb loans? People built houses for which they expected people to buy with said loans. The sub-prime loans were made in large part because houses always go up, not because they planned to overcharge people on rates. The loans weren't meant to be held for 2 years.

    The govt did it to create jobs so that Bush could have an economy that he could brag about. The problem wasn't in sub-prime, the problem was in mainstream housing. That was caused by Freddie and Fannie bundling mortgage that should never have been made.
     
  16. Woolleybugger

    Woolleybugger Mayor

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    The risk exposure happened way before Fannie and Freddie got involved in the sub-prime markets and only got worse after 2005. This was about greed, pure and simple. The greed on the part of Wall Street though was the true culprit. This greed continues today. Since they are incapable of controlling their own greed, the government must step in to force them to behave rationally and honestly. Failure of risk managers at all the firms will force us to regulate them or break them up.
     
  17. trapdoor

    trapdoor Governor

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    I'm sorry, but it was the extension of loans to people who couldn't afford them that caused the "bubble." That was a policy that emerged during the Clinton administration.

    Where is "greed control" a government mandate?
     
  18. Joe Economist

    Joe Economist Council Member

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    What policy was that?
     
  19. Woolleybugger

    Woolleybugger Mayor

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    It was not insolvent in 1983 no more than the defense department was in 1983. The actuarial tables assume things in the future, that is a forecast. Whether they do it based on historical numbers or estimates of future numbers, it is still a forecast nonetheless and subject to the same errors as any forecast.
     
  20. Woolleybugger

    Woolleybugger Mayor

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    The elders of today are alive today and need it today. The elders of tomorrow will cross that bridge when they get to it. Your arguments are based upon a notion of pending doom when in fact there is no crisis except in your mind. Dollars can be created to meet the need of the people, its as easy as pie. All it takes is for some future leader to prioritize SS over other areas of the government. What if we decide as a nation to become the new Canada of the world and stop spending 700 billion a year on war?
     

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