02 January 2008|
Rebuttal: Robert Scheer
Just my luck: I finally get to be a senior citizen only to discover that the President considers my longevity a grave threat to the nation. That's why, after seven decades of unmitigated success in protecting seniors from the vagaries of market forces, the White House now wants to turn Social Security itself over to the vagaries of market forces.
You should be aware that the vagaries of market forces are what fund Social Security, yet it is the gross ineptitude of bureaucracy that has created a $26 trillion unfunded liability in the system. Furthermore, it is the personal control of finances that represents the only chance to save public retirement.
You should also be aware that the stock market has a historical return on investment of nearly 10%. So much for vagaries.
Greed perfectly meshes with ideology in the Republican Party, and the attempted sabotage of Social Security is just another example.
Sophistry meshes with demagogy from the Left, and this statement (and the article that surrounds it) is just another example.
However, unlike you, I'm going to back mine up.
While the followers of Milton Friedman talk about the free market in religious terms, Wall Street is slavering at the possibility of one of the biggest potential windfalls in human history if the Social Security spigot is turned its way. The attendant investment fees alone would be enormous--certainly higher than the minimal 1 percent overhead costs the current Social Security system consumes.
I suppose we should be pleased that Social Security consumes little overhead. However, overhead is not the principle that is creating a $26 trillion unfunded liability. It is the fact that by 2030, two workers will be bankrolling the checks for only one retiree.
Although, I hope you sleep well at night knowing you can cite one statistic regarding something Social Security actually does relatively efficiently. Good work, Sherlock.
What's astonishing is that despite the recent spate of abrupt corporate bankruptcies and Wall Street corruption scandals, the President would have us believe only stockbrokers can save Social Security, and the stability of the entire fund would be tied to a stock market that has been known to tank now and again.
As of yet, however, the stock market isn't known to face deficits in 2019.
Furthermore, the payment return on tax investment for Social Security currently stands at a whopping 2%.
Now, let us assume for the sake of example, that we had private accounts in the 1920s-1930s. Were an individual to work up until the day before Black Tuesday, 1929, retire, and then wait until the stock market hit absolute bottom in 1932 to cash out his savings, the man would have received approximately 4% of what he put in.
I'll put this another way for you, Mr. Scheer. The worst stock market tank job in American history would have net a worker nearly twice as much than does the current state of Social Security.
Further, even the President's key advisors admit that the short-run cost of "privatizing" Social Security would add trillions of dollars to the Bush legacy of federal government red ink.
1) If you were concerned with the quantitative deficits of government programs, you would observe the data I have related to you and camp out discreetly on the side of Social Security reform.
2) Because you failed to cite an actual figure (I expected little else), I shall interpret your imaginary datum as somewhere between $2 and $8 trillion dollars in short-term costs.
3) Social Security has, as I have already informed you, a $26 trillion unfunded liability. That's, at best, three times higher.
4) By 2060, if nothing is done by reform, Social Security and Medicare will comprise over 70% of the federal budget.
5) In public policy, we often assume cost increases for a greater good. For example, you would cite the cost of welfare payments as money well spent. I would use the example of police officers. More officers mean more taxes, yet the net benefit to society is larger than the cost. In this case, even if private accounts cost more than inaction (which they don't), the vicissitudes of financial control from public to private hands would be considered sufficient to offset it. Why do I make this point? Simply to prove the three-dimensional paralogistic construction of your argument.
While I am all for expanding opportunities to invest in tax- deferred retirement accounts (like 401k's), it does not follow that Social Security should be exposed to the same risks. Social Security is the safety net for the elderly that has since its inception protected millions from facing abject poverty upon retirement--even if their pensions should evaporate, as they did for the employees of Enron.
1) Well, they almost never face abject poverty, as I will show you in a minute.
2) 17,000 Enron employees lost their pensions. As it is, the company recently paid out $321 million to help that, and they likely will pay more.
3) By 2030, there will be 70 million Americans facing retirement. By simple arithmetic, a bankrupt Social Security system will affect about 4,117 times more people than your laughable Enron example.
4) Finally, Enron's collapse would not have affected the workers' personal retirement accounts, were they to have had them. Just something to think about.
Along with Medicare, Social Security is the key reason seniors are no longer the most impoverished class in our society or a crushing burden on their children. This last needs to be mentioned to counter the argument that ensuring the security of baby boom seniors would impose an intolerable burden on younger workers.
According to the U.S. Census, which presumably you despise, the age group 65 to 69 is the richest of all demographic sectors in America. Furthermore, the average net worth of those individuals over 75 is eleven times larger than the net worth of adults under 35.
For who is going to replace those Social Security checks, should they stop coming because Grandpa picked the wrong stock? The kids and grandkids, that's who, if they have any real family values.
Grandpa won't pick the wrong stock, because he'll diversify. Certainly, you could make diversification a legal requirement - a statist intervention I am sure would just tickle you pink.
The historical returns I cited previously eliminate the possibility of some fanciful bankruptcy, with the presupposition that one has a diversified portfolio to eliminate unsystematic risk.
If any of the following statement was confusing to you, I suggest you consult a basic finance textbook.
I speak out of an experience I'm sure many of you share. My mother retired after forty years as a garment worker, after which she lived with me until she died at the thankfully old age of 88. Her presence was of great emotional value to our family, but because of her two-decade bout with Parkinson's, it would have represented a serious financial burden on my wife and me had it not been for government support.
For your information, due to Social Security's financial distress, currently there are approximately three workers paying for every retiree. Presumably you find this situation acceptable, yet you find the situation where you and your wife would use your large income to pick up the slack insulting and beyond reason.
Also, the average monthly Social Security stipend last year was $879.70. Is it your contention that the emotional value of care for your mother was not worth $800/month from a self-admitted wealthy man?
Demagogy is disgusting. But when it reaches this level, it is nauseating.
The President says the system that has served us well in the past is no longer sustainable. He, or rather those cooking the books for him, attempts to scare us with projections that the Social Security trust fund will begin to run deficits thirty-eight years from now.
You can't even cite the figures of your opponents correctly. The year is 2018, and the people "cooking the books" were the members of the Social Security Board of Trustees. They work for Social Security (meaning they have little financial interest in seeing its demise), produce a report annually, have been doing so for years, publish it on the website of the Social Security Administration for your edification, and offer three different projections (best case, optimistic, and pessimistic) in order to guard against supererogatory alarm.
Isn't learning fun?
But those numbers assume no dramatic change in the increasing ability of seniors to retire later and otherwise continue to earn income that is taxable. The anti-Social Security crowd is trying to make this a young-versus-old generational fight, even though seniors still pay taxes like anybody else. We even pay taxes on most of our Social Security earnings, if our household income rises above a pittance.
Seniors tend to pay a lot of taxes, because they tend to still have a lot of money. See above for a review.
Second, the "anti-Social Security crowd" is the pool of young workers who will be retiring to nothing should we adopt your policies of nostalgic inaction. As it is, you and your heavily-aged brethren have little interest in the proceedings, as neither your benefits nor your taxes will be affected.
Interestingly, 18-to-34 year olds are more likely to believe in the existence of UFOs than in the future existence of Social Security. When your "safety net" is considered less believable than paranormal activity, it is wise to consider reform.
If the President is truly worried about the federal coffers running dry he should stop cutting taxes for us better-off folk.
Your solipsistic synecdoches are more relevant than even you realize. You are wealthy and old by your own admission. You may now look in the mirror and greet the face of America's seniors, and not the chimera of indigent octogenarians forced to choose between wheat germ and a flu shot.
Oh yeah, there's more. If you are better off, you'll have an even more difficult time explaining how mommy's Social Security check was financial inflow beyond your capabilities.
However, if it turns out that we need additional taxes to cover the obligations of the Social Security trust fund four decades from now, so be it.
That's easy for you to say. You'll be dead.
After all, money distributed to the elderly through Social Security is poured right back into the economy.
Actually, it isn't. Most of it isn't spent, as an extension of the piece of common sense highlighted earlier. It is saved, partially because most seniors don't need it and partially because most seniors barely receive anything.
Second, if economic stimuli is a salient criterion for Social Security policy, you should consider the economic benefits for private accounts. Those are guaranteed to go into the economy. Stock investment is one of the most effective methods by which one stimulates the economy, as it directly augments the working capital of American corporations, thus freeing room for employment, investment, or expansion.
In the end, your point is amusing because:
a) The justification you cited does not apply to the policy you are trying to support; and b) It only applies to the policy you oppose.
For three-quarters of a century, Social Security has guaranteed us all a life of modest dignity as we live out the end of this mortal coil.
The facts, which you happily transcend with admirable savoir faire, dictate that the system of Social Security is failing at even its basic duty, while all it does now is deliver meager returns to wealthy individuals, and paid for by an ever-shrinking pool of young workers.
So--if you'll pardon this senior's use of a curmudgeonly truism--I say if it ain't broke, don't fix it.
Yeah, it's broken. And if you'll pardon this twenty-something's use of a puerile tautology - I say do some research, old man.