Bush To Offer Deal On Tax Hike/Social Security Reform?

• December 21, 2006

The Bush administration has sent signals since last month’s elections that the president is prepared to accept some tax increases on upper-income families, worrying congressional Republicans and fiscal conservative watchdogs who say he will compromise with Democrats to win a legacy accomplishment. . . .
The watchdog groups have been demanding that the president repeat his earlier pledges not to raise taxes in order to reform Social Security. But the White House has refused, with officials saying everything is on the table, including tax increases. . . .
Meanwhile, the House’s top Republican on tax cuts, outgoing Ways and Means Committee Chairman Bill Thomas, warned last week that the White House has hinted that it will accept a tax increase on higher-income families in order to win accommodations from Democrats.

So what do we want, Americans? Higher taxes and social security reform, or the current lower taxes and no reform of a program that is becoming more and more exploitive of younger citizens?
I’ve got to tell you, as much as I detest higher taxes and feel they’re a noose around the neck of this country’s economy, I’m tempted to favor a deal raising taxes if it means we’ll get good Social Security reform. We talk a lot about Social Security becoming insolvent in the future (anywhere from a decade to several decades depending on which partisan you’re talking to) and the ratio of those collecting SS to those paying in getting dangerously small (something like 1:2 or 1:3 as the baby boomer generation retires), but for me the most compelling argument for Social Security reform comes from my pay stub.
I’m a young guy. At 26, I’m probably in the youngest age group of truly politically-engaged Americans. I make good money, though not a ton of it, and I pay my payroll taxes like everyone else. I can tell you that when I look at my paycheck and see the hundreds of dollars that are kept out of my pocket each month so that Social Security can be funded I get angry. I mean really pissed off.
Right now I’m paying more in to Social Security than I can afford to pay into my retirement plan, but you can bet that even if that continues (I don’t expect it to always be the case) I’ll still get more out of my invested retirement fund then I’ll ever get out of Social Security. If I were allowed to take that Social Security money and stick it into my own investment account I could retire several times more wealthy than I’m on course to do now. Or, even if I didn’t invest that money into my retirement fund, I could be investing it in a college fund for my daughter. Or a fund for a new home for me and my family.
But I can’t do that, because if I stop paying into Social Security I’ll get arrested and put in jail.
Granted, the President’s plan would only give me a little bit of control over the money I pay into Social Security, but the point of this is that folks who oppose even privatizing the Social Security program a little bit are basically telling me that I can’t be trusted with the money being taken out of my paycheck each month. That’s insulting. It’s worse than insulting, it’s infuriating because they’re telling me that I should settle for the status quo where I get almost no return for the money paid into Social Security when I could be putting my kids through college or building up a nest egg with that money.
So would I accept a tax hike in exchange for some serious Social Security reform? My mind isn’t closed to it.

Tags: Domestic Issues, Politics

http://SayAnythingBlog.com The_Whistler_ofnd

This is the adjustment alone would be enough to prevent Social Security from ever exhausting the trust fund.

That’s not good enough. If I were allowed to invest my money that’s taken from me I’d be able to retire at 65 comfortably.

You know that’s true.

The problem is that the Congress has spent our retirement money and they keep doing it while claiming they are protecting Social Security.
http://SayAnythingBlog.com The_Whistler_ofnd

My prediction? I predict that we get the anti-small business bill without anything for small business. We also won’t see Social Security reform out of this.
http://SayAnythingBlog.com The_Whistler_ofnd

Will said:

I was proposing that the change would affect people for whom retirement is some way off, at least 10 years.

Why exactly screw are you proposing to screw me over? (I’m not taking this personally, just furthering the debate.) Why not just let me invest my own money for my own retirement.

Also there was no surplus during the Clinton years. Every year we owed more money then the year before. Check it out.
http://SayAnythingBlog.com The_Whistler_ofnd

Some people know that they are very unlikely to live to 65 or 70. They’re getting screwed because if they die young they can’t pass along this money in their estate.

In Rob’s example this is especially cruel as they maybe will make retirment at 65 but not live to 70.
http://www.nationalpeo.com/employeehandbook.htm Carol Warner

‘So…you’re telling me to start my own religion? I could. I believe in supply-side economics like other people believe in god.’ Rob, schizophrenia and delusions of grandeur are not valid reasons for starting your own religion. Greed, however, is. Carol Warner, Arizona Employee Handbook
robert108

A gradual increase in the retirement age should be used to keep the ratio at a sustainable level.

This is the adjustment alone would be enough to prevent Social Security from ever exhausting the trust fund.

Will, without even debating the morality of such a plan, which others have done effectively already, the economics is faulty. What you propose is simply another tax, and a disguised one, at that. The real problem is that the “fund” grows at a slower rate than the economy, so there will always be a shortfall, no matter what sort of Enron-style accounting tricks you use. The problem is structural, not procedural.
When first devised, retirement age was 65, and life expectancy was 68, so half the possible recipients would be expected to collect for only three years, and quite a few would never live long enough to collect. You could index the retirement age to the actuarial tables, but that would only reveal the true weakness of the plan as originally formulated: it just doesn’t generate sufficient capital return to ever be solvent.
http://www.sayanythingblog.com/ electnixon

My prediction is also similar. They’ll roll back the tax breaks for those of use who actually pay taxes and give us a next-to-nothing so-called SS reform. This smidgen of reform will then be hailed by all as a huge success until the democrats are out of power again & the media needs some negative news.
http://www.bikebubba.blogspot.com/ Robert M. Perry

The compromise to me sounds a bit like “negotiating the terms of surrender,” not progress.

On the light side, Rob, if you could become Amish or a preacher, you could get out of Social Security. :^)
Bat One

Reform my ass! All the left is willing to do is raise payroll taxes, raise the retirement age, and raise, or eliminate the cap on Social Security wages. Another Band-aid, which will be hailed by the economically and arithmetically disfunctional liberals as a victory that “saves Social Security” when all it really does put the country at further financial risk and make the ultimate crash that much worse.

Ordinarily, I am ill at ease with those on the right and the left whose first response to any hint of contention is to call the other person a liar. But in the case of Social Security (and Medicare, which is in even worse financial shape) anyone whose “solution” does not include some serious structural realignment, including a mechanism to voluntarily opt out of the program in favor of a privately held, market based investment, is either too stupid to be addressing the situation, or a congenital liar whose leftwing spew is an insult to the intelligence of the rest of us who actually know how to add and subtract.
Will

it’s not very fair to tell a person who pays in to the program their whole life that they can collect at a certain age…only to move that age further back all of a sudden to deny them access to even the little bit they’ll get back longer.

That’s why we should stop telling them that ASAP! More specifically, I was not proposing that we change the retirement age for people that are retiring this year or next year. I was proposing that the change would affect people for whom retirement is some way off, at least 10 years.

The real problem is that the “fund” grows at a slower rate than the economy, so there will always be a shortfall,

R108, your response is utter nonsense, but it does hint at another very simple way to improve the financial future of Social Security. Right now, the trust fund is only permitted to invest in government bonds. By eliminating that restriction, we would improve the return on the money in the trust fund. Also, such a move would establish that the money in the trust fund really is money in the trust fund, which right-wingers like to deny.

This change of allowing trust fund money to be invested in other vehicles would have to be implemented slowly and conservatively, so as not to upset the bond market.

The problem is that the Congress has spent our retirement money and they keep doing it while claiming they are protecting Social Security.

Fiscal responsibility has not been one of Bush’s strong points. That budget surplus he inherited is a distant memory.
Troy_Pineri

I can tell you that when I look at my paycheck and see the hundreds of dollars that are kept out of my pocket each month so that Social Security can be funded I get angry. I mean really pissed off.
Right now I’m paying more in to Social Security than I can afford to pay into my retirement plan,

Don’t forget your employer also matches what your SS share. So your contributions are actually twice. I am self-employed, so I actually get to pay the whole thing, it makes me really pissed off too, because I also feel that I will probably not see a dime of it.
http://sayanythingblog.com/ likwidshoe

Right now, the trust fund is only permitted to invest in government bonds. By eliminating that restriction, we would improve the return on the money in the trust fund. Also, such a move would establish that the money in the trust fund really is money in the trust fund, which right-wingers like to deny.

There’s a trust fund? When did that happen?

Maybe “right-wingers like to deny” that there is money in a trust fund because that trust fund doesn’t exist. It all goes into the general fund.

You can thank Johnson for that one. He wanted to find a way to pay for those “Great Society” welfare programs of his and he removed the firewall.

Fiscal responsibility has not been one of Bush’s strong points. That budget surplus he inherited is a distant memory.

What budget surplus? You’re full of fantasies Will.
robert108

Don’t forget your employer also matches what your SS share. So your contributions are actually twice. I am self-employed, so I actually get to pay the whole thing, it makes me really pissed off too, because I also feel that I will probably not see a dime of it.

A common misconception. You, whether you realize it or not, pay the whole amount for the SS pyramid scheme. If you weren’t worth every penny your employer is paying for you, including SS and unemployment, Worker’s Comp and the rest, you wouldn’t have a job. You pay it all, one way or the other.
If we need to raise taxes in any way to “save” SS, that is the sign it isn’t working as any sort of investment program, that it’s just another welfare program. Let’s at least tell the truth here.
http://www.bikebubba.blogspot.com/ Robert M. Perry

The problem with Will’s point is that increasing taxation always reduces the birthrate. It happened in Rome, it’s happened in Europe and the former Warsaw Pact nations, it’s happened in Asia, and it’s happening here. Since the exact relationship isn’t yet determined, the actuaries at Social Security can’t possibly model this in their projections.

Hence, the very premise of their prediction is fundamentally flawed. As I’ve noted before, the welfare state is not a covenant as much as it is a suicide pact, and that’s the prime reason to reform it and (ahem) privatize it.

Shorter lifespans of some people are a great reason, too. Can we at least let them decide where their estate will go instead of giving it to long-lived families like mine? It’s also true that private investments are intrinsically more productive than public bonds–the government produces no useful goods and services, after all.
Bat One

This is the adjustment alone would be enough to prevent Social Security from ever exhausting the trust fund.

Will,

Pleas provide source for your calculations and projections. Also, there seems to be a potential problem with your terminology. You speak of not “ever exhausting the trust fund,” however, there is no money in the so-called trust fund to begin with. Only Special Bonds issued in exchange for those supposedly excess funds which actually go directly into the General Fund of the United States.

So the question then becomes, where will the money come from to redeem all those bonds. The most recent Trustees’ Report says that the “Trust Fund” will go into negative cash flow (start redeeming the bonds) in approximately 7 years. Yet to my knowledge, the federal budget projections make no provision for redemption of those bonds.

So, before we even begin to worry about “exhausting the trust fund,” how about explaining just where all the money to redeem the bonds will come from?
http://www.bikebubba.blogspot.com/ Robert M. Perry

“Shoe,” no need to get snippy with those who have been misled by the MSM, don’t you think?

OK, now refutation of yet another one of Will’s points; there are very good reasons that Socialist Insecurity is not allowed to invest in private stocks and bonds. First of all, liberals have been telling us for a century that government debt is the only safe investment, so it’s a safe bet that if you’d suggested the stock market to, say, LBJ, you would be been laughed out of the house.

From a conservative perspective, you also don’t want government “investing” in private securities because you don’t want some bureaucrat filling out proxy forms and filing motions to harass private industry. It opens up a huge back door for lawless regulation.
Will

What budget surplus? You’re full of fantasies Will.

You’ve forgotten that there was a budget surplus before Bush took office? Selective right-wing memory syndrome, I suppose.
Bat One

Robert M. Perry,

An excellent point about the accounting. What Enron did to their corporate books is chump change… mere doodling on a cocktail napkin… compared to what the federal government does with its so-called “budget.” Social Security is the biggest pyramid scheme of all time, a scam of such magnitude as to make the eyes of Charles Ponzi glaze over in envy. For starters, those budget figures do indeed include the Social Security “surplus” as part of the General Fund revenue, but there is no provision for future, unfunded liabilities discounted to current present value.

People have gone to jail for doing to their corporate books exactly what the federal government does each and every year.
http://sayanythingblog.com/ likwidshoe

Will said, You’ve forgotten that there was a budget surplus before Bush took office? Selective right-wing memory syndrome, I suppose.

Yeah,..it must be “selective memory syndrome” to notice that the debt increased each year of the “surplus”. You got me Will.

Now buy a clue, you asinine twit.
robert108

Will said, You’ve forgotten that there was a budget surplus before Bush took office? Selective right-wing memory syndrome, I suppose.

Actually, that was another Clinton lie. His “surplus” was based on a ten-year projection, based on continued gutting of the military and the continuation of stuff like Enron and the dot.com “boom”. It was all smoke and mirrors.
http://www.bikebubba.blogspot.com/ Robert M. Perry

Will, the national debt increased every year of the so-called Clinton “Surplus” because it was merely Social Security revenues covering over a very real deficit in general spending. Look it up; when debt increases, you are running a deficit, not a surplus, no matter what magic the accountants use to try and cover it up.

Never mind that when honest accounting (GAAP, what the government requires the rest of us to use), the actual “surplus” was a deficit of trillions of dollars due to unfunded Social Security and Medicare obligations.
Will

the ratio of those collecting SS to those paying in getting dangerously small (something like 1:2 or 1:3 as the baby boomer generation retires)

In fact, the ratio drops to 1:1.9 in the intermediate projection and stays there (see this table published in the 2006 Trustees Report). The only way to keep that ratio at a more appropriate level is to raise the retirement age. A gradual increase in the retirement age should be used to keep the ratio at a sustainable level.

This is the adjustment alone would be enough to prevent Social Security from ever exhausting the trust fund.
aNONOMISLY

about the best Bush can ever hope to get from Congress is a Central Bank/FEC (i.e. semi-autonomous institution, etc.), with strict rules forbidding the government from borrowing the money it collects, wich is to be invested in a way modeled after the way in which super-endowed (Yale, Harvard, etc) universites invest their ka-ching in the capital markets. ..no ‘sub-contracting,’ ‘cuz the Dems wouldn’t bite then.
robert108

The key is to have a more nuanced view of what constitutes fairness.

How Kerryesque of you, Will! “Nuance” is your little code word for “lying”. The deal with SS was never tied to life expectancy; you just made that up to cover your ass in this discussion. I know that the SS “promise” cannot be kept, because this is a dishonest pyramid scheme, and has been from the beginning. It’s time to make it into a real investment program, or scrap it and let people keep their money for their own retirement. You do trust the American people, don’t you?
Bat One

Troy,

If I may be so presumptuous… If you have not done so immediately, incorporate yourself, draw up an employment agreement between yourself and your company, and talk to a good (creative) tax advisor to see just what expenses which you currently pay for in after-tax dollars can now be shifted to pre-tax company funds instead. With a bit of careful creativity, you should be able to more than offset your annual Social Security tax bill.

A good tax attorney is literally worth his/her weight in gold.
Will

Whistler said:

Why exactly screw are you proposing to screw me over?

You would not be screwed over by a proposal that has you wait longer than previous generations to start collecting Social Security because … your life expectancy is higer than previous generations. Even with a higher retirement age, your generation could collect benefits for as long or longer than many previous generations.

The key is to have a more nuanced view of what constitutes fairness. For every decade that a typical person in a particular generation has worked, they should on average be able to collect retirement benefits for n years, where n is some number that is somewhat consistent from generation to generation.

On the other hand, if you continue to believe that you’re entitled to retire and collect benefits at age 62 no matter what your life expectancy is, then, yes, the system is unsustainable in the long term. You can not have fewer than two workers per retiree.
aNONOMISLY

..said Central Bank-type organization investing/lending to government unequivoqualy forbidden. No exception.
Will

Here’s what the Bush’s Office of Management and Budget said about Bush’s 2002 budget:

In 1998, the Federal budget reported its first surplus ($69 billion) since 1969. In 1999, the surplus nearly doubled to $125 billion, and then again in 2000 to $236 billion. As a result of these surpluses, Federal debt held by the public has been reduced from $3.8 trillion at the end of 1997 to $3.4 trillion at the end of 2000 and to an estimated $3.2 trillion in 2001. With continued prudent fiscal policies, the budget can remain in surplus for many years. Under the President’s budget proposals, $2.0 trillion in Federal debt held by the public will be retired over the next 10 years–all of the debt that can responsibly be retired.

I guess Bush must be an asinine twit.
http://www.bikebubba.blogspot.com/ Robert Perry

No need to be so hard on Will for admitting, more or less, that the actuarial assumptions of Socialist Insecurity are inherently flawed, R*108. :^) Maybe there’s hope to get out of this boondoggle after all if we get people to realize that government funded pensions induce people to not have kids, and hence their very existence decrees their destruction.
http://www.bikebubba.blogspot.com/ Robert M. Perry

Will, inasmuch as government figures release statements based on flawed accounting schemes, yes. Again, the figures you’ve found more or less include the Social Security surplus as part of the general fund, which is accounting worthy of Enron, WorldCom, or Fannie Mae.
http://sayanythingblog.com robport

Troy, glad to hear you’re on board.

I’m employed in the family business, so I’m well aware of what my employer pays as well. I know because, if my employer didn’t have to pay the other share of the SS tax, I’d be getting paid more.
http://sayanythingblog.com robport

Plus, it’s not very fair to tell a person who pays in to the program their whole life that they can collect at a certain age…only to move that age further back all of a sudden to deny them access to even the little bit they’ll get back longer.

It’s a shell game, and it has to quit.
http://sayanythingblog.com robport

So…your solution is to suddenly make people who have been paying into this program their whole lives wait even longer before they collect their benefits? Even as those before them collect at younger ages?

That’s not very fair.

How about you just let me keep my money and invest it for my own retirement? Oh, right. You’re a liberal, and I can’t be trusted with my own money.
http://sayanythingblog.com robport

So…you’re telling me to start my own religion?

I could. I believe in supply-side economics like other people believe in god.

SayAnythingBlog.com

Bush To Offer Deal On Tax Hike/Social Security Reform?

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