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Letters to the Editor

Safety net

September 18, 2010

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To the editor:

Millions of taxpayers paid billions of dollars for decades into unemployment insurance and Social Security benefits. Many worked for years without collecting a penny from either program because they died at a young age, were never laid off or downsized or had a job shipped overseas. Let no one “refudiate” the facts that both of these safety nets have “hemorrhoidged.” Those monies have disappeared and not a member of Congress will explain why or how.

Have these dollars been morphed into lifelong retirement and health care benefits for former public servants? One does not have to be a rocket surgeon to understand that politicians should not be allowed to pass legislation that does not apply to everyone.

Comments

QuinnSutore 3 years, 7 months ago

That's why I have a private savings and a private 401(k), I don't need the government managing my money.

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KUprestidigitator 3 years, 7 months ago

You don't understand merrill? Trying to rationalize with a liberal automaton is as likely as staying dry while voiding into a gail force wind.

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SnakeFist 3 years, 7 months ago

merrill: I don't understand: On the one hand, you imply that money paid into Social Security is safely sitting there for the day we'll need it; but on the other hand, you say that if Social Security were privatized, i.e., if government couldn't immediately spend the money paid into it, then the deficit would grow.

I think the synthesis is that government spends the money immediately and then puts "IOUs" in the form of bonds in its place. The question a lot of people have is whether those IOUs will be worth anything when the time comes.

I do agree, however, that it would be incredibly foolish to gamble away retirement money in the stock market.

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HaRDNoK9 3 years, 7 months ago

Can anyone tell me how to become a "Rocket Surgeon"?

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allenwsmithphd 3 years, 7 months ago

This comment was removed by the site staff for violation of the usage agreement.

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Richard Heckler 3 years, 7 months ago

What impact will privatization have on the national debt?

Unless taxes are raised, the government will have to borrow up to $4 trillion over the next 20 years to make up the money that is drained out of the system by private accounts. Bush and Congress already racked up a $475 billion deficit in Bush's first term.

Social Security privatization will raise the size of the government's deficit to nearly $700 billion per year for the next 20 years, almost tripling the size of the national debt.

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How will the rest of the U.S. economy be affected if the privatization plan is enacted?

Put simply, moving to a system of private accounts would not only put retirement income at risk--it would likely put the entire economy at risk.

The current Social Security system generates powerful, economy-stimulating multiplier effects. This was part of its original intent. In the early 1930s, the vast majority of the elderly were poor. While they were working, they could not afford to both save for retirement and put food on the table, and most had no employer pension.

When Social Security began, elders spent every penny of that income. In turn, each dollar they spent was spent again by the people and businesses from whom they had bought things. In much the same way, every dollar that goes out in pensions today creates about 2.5 times as much total income.

If the move to private accounts reduces elders' spending levels, as almost all analysts predict, that reduction in spending will have an even larger impact on slowing economic growth.

The current Social Security system also reduces the income disparity between the rich and the poor. Private accounts would increase inequality--and increased inequality hinders economic growth.

For example, a 1994 World Bank study of 25 countries demonstrated that as income inequality rises, productivity growth is reduced. Market economies can fall apart completely if the level of inequality becomes too extreme. The rapid increase in income inequality that occurred in the 1920s was one of the causes of the Great Depression.

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Richard Heckler 3 years, 7 months ago

Let's remind ourselves that Social Security, which cut poverty rates among the elderly from 35% in 1960 to 9.4% in 2006, is no Robin Hood plan that robs the rich to pay for the retirement of the working class. Rather, it is a mildly redistributive public retirement program financed by contributions from the wages of working people.

In fact, Social Security taxes fall far more heavily on the poor and working class than on the well-to-do. Payroll taxes are a fixed 12.4% (actually 6.2% on employees and 6.2% on employers); they are levied only on wage income, not on property income; and the cap on wages subject to the tax (the subject of the debate between Clinton and Obama) means that while most workers pay the tax on every dollar of their income, the highest earners pay it only on a part.

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Jimo 3 years, 7 months ago

Weird letter. Not quite sure where to start. I guess I won't.

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notajayhawk 3 years, 7 months ago

merrill (anonymous) says…

"Privatizing Social Security Would Place the Nations Economy at Risk"

Of course it would. That's because politicians have stolen the money for other purposes. What kind of ridiculous logic is using that very fact as an excuse to let them keep doing it?

Suppose you found out - years ago - that someone at your bank has been embezzling your money. They're in way over their heads, and if you stop making your deposits there, let alone demand your money back, the bank will fail. merrill might be the only person in the universe who would keep giving them his money.

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Don Brennaman 3 years, 7 months ago

Merril "On this point politicians are consciously misrepresenting the truth with the intent to deceive." What would Merrill do to rectumfy the situation?

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Don Brennaman 3 years, 7 months ago

Merrill tries to refudiate this post with idiotsyncrasies. Where's the money?

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Don Brennaman 3 years, 7 months ago

Anneht, I agree. Nonetheless the money has been paid in for specific purposes.

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Don Brennaman 3 years, 7 months ago

Merrill's job needs to be over siezed.

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anneht 3 years, 7 months ago

Is it not true that the taxpayer (worker) does NOT pay into unemployment funds? Rather, that the employer bears this burden alone, as a cost of doing business? I can't recall ever seeing a deduction from a pay check for "unemployment insurance".... am I correct?

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Flap Doodle 3 years, 7 months ago

For new readers of this forum, merrill has several sets of posts that he throws in whenever he gets a chance. The ones on this thread are part of his "magical thinking about social security" set.

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Tom Shewmon 3 years, 7 months ago

I'm just trying to figure out how to pronounce “hemorrhoidged.” Afterall, I'm no rocket surgeon. I'm not refudiating anything you said either. I'll bet Ann Gardner got a kick out of this one!

LOL Don!

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Richard Heckler 3 years, 7 months ago

Myth #5: Social Security adds to the deficit Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.

There simply is no hard evidence that Social Security will fail. There is a tremendous amount of money in this pot that generates a tremendous amount of interest dollars annually.

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Richard Heckler 3 years, 7 months ago

Social Security is Safe Insurance not a risky investment program.

Millions of Americans have lost their retirement funds due to: • Unexpected job losses to outsourcing • The savings and loan scandal during the Reagan/Bush years • ENRON • Dot com fraud • Bernie Maddoff • Home loan fraud during the Bush/Cheney admin which put an estimated 11 million out of work

To list only a few of the schemes that have penetrated the retirement funds of honest citizens.

In essence we never know from one day to the next if we will be employed.

As we all know Wall Street investing offers no guarantees of security.

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Richard Heckler 3 years, 7 months ago

Where is the hard evidence that Social Security is going broke or will go broke?

There is no hard evidence.

It's all speculation coming from speculators who can provide no hard evidence. This message is also coming from politicians.

Why are we hearing this nonsense? Because Wall Street brokers will be the group that would begin receiving these tax dollars from our politicians. This is very very risky. Owners of these tax dollars aka taxpayers will have zero control.

Leave the safe insurance money alone. WE KNOW that Wall Street cannot be trusted with your tax dollars or your life and is subject manipulation.

Then our tax dollars would also be spent on commissions etc etc etc. This is wasted tax dollars that need to stay where they are.

How many people trust that no white collar Wall Street criminals will steal their retirement funds?

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Liberty_One 3 years, 7 months ago

The thing is these social programs are just extra taxes that the people have been duped into paying. Instead of trying to reform these things just get rid of them.

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Richard Heckler 3 years, 7 months ago

Top 5 Social Security Myths

Myth #1: Social Security is going broke. Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer. Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security. Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8

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Richard Heckler 3 years, 7 months ago

Until 1984, the trust fund was “pay-as-you- go,” meaning current benefits were paid using current tax revenues. In 1984, Congress raised payroll taxes to prepare for the retirement of the baby boom generation. As a result, the Social Security trust fund, which holds government bonds as assets, has been growing. When the baby boomers retire, these bonds will be sold to help pay their retirement benefits.

If the trust fund went to zero, Social Security would simply revert to pay-as-you-go. It would continue to pay benefits using (then-current) tax revenues, and in doing so, it would be able to cover about 70% of promised benefit levels

The system won’t be bankrupt in any sense. On this point politicians are consciously misrepresenting the truth with the intent to deceive. That is what the dictionary defines as lying.

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Richard Heckler 3 years, 7 months ago

Privatizing Social Security Would Place the Nations Economy at Risk "Social Security privatization will raise the size of the government's deficit to nearly $700 billion per year for the next 20 years, almost tripling the size of the national debt.

Put simply, moving to a system of private accounts would not only put retirement income at risk--it would likely put the entire economy at risk." http://www.dollarsandsense.org/archives/2005/0505orr.html

In essence we never know from one day to the next if we will be employed. As we all know Wall Street investing offers no guarantees of safety. The best way to explain Social Security is to say what it is. It’s an insurance system that protects your income when you retire or face disability, and provides income to your children if you die.

Politicians want you to look at Social Security as an investment--but it is a form of insurance that guarantees a constant stream of income in retirement or in case of disability, adjusted to protect against inflation, for as long as you live.

It has repeatedly been said by politicians that those who put their money in private accounts are “guaranteed” a better return than they’ll receive from the current Social Security system.

But every sale of stock on the stock market includes the disclaimer: “the return on this investment is not guaranteed and may be negative”--for good reason.

During the 20th century, there were several periods lasting more than 10 years where the return on stocks was negative. After the Dow Jones stock index went down by over 75% between 1929 and 1933, the Dow did not return to its 1929 level until 1953(24 years).

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