Social Security--Fix it or scrap it?

Signing the Social Security Act of 1935

Depression Breadline

Ford Hunger March

Dorthea Lange Depression Photo

Walter Reuther on Labor Day in Cadillac Square

World's Largest Container Ship

Social Security Needed Now More than Ever

The debate on changing Social Security from its original social insurance concept to one of individual savings and investment has focused on the numbers and how best to assure that funding is sufficient for future benefits.

Equally important is a recognition and understanding of the conditions that led to the adoption of Social Security in 1935 and recognition that workers today still face great insecurities as globalization and trade change the face of American industry. Examining the forces that gave rise to Social Security provides perspective to the debate over our country's needs today.

During the early 20th century, the United States evolved quickly from an agrarian and small-business economy in which people lived independently on farms and in small towns, to an urban society in which workers in industrial centers such as Detroit found themselves dependent for their livelihood on the state of the economy, on the viability of their industry and employer, and on their own good health.

Detroit's population grew from 285,000 in 1900 to 1.6 million in 1935 as workers flocked from farms in the South and Midwest to work for big wages on Ford's assembly lines, but, far from their farms and relatives, they faced new insecurities.

For example, after attracting thousands of workers to Detroit, Henry Ford shut down his Rouge plant for six months in 1927 to change from the Model T to the Model A and had massive layoffs again in 1931, dumping 60,000 workers onto the relief rolls without income to sustain them, far from their farms where they could have grown their own food.

New Deal measures such as the Wagner Act, Social Security, unemployment and workers' compensation provided security in the event of layoff, injury on the job and arbitrary firing and when, as Walter Reuther put it they were "too old to work and too young to die."

Also forgotten in this debate on Social Security is the role played by New Deal programs in the preservation of the free enterprise system.

When Franklin D. Roosevelt was inaugurated, unemployment in the United States was 30 percent, and many people were embracing socialism or communism as a model for our country. On March 7, 1930, John Schmies, Communist Party candidate for mayor of Detroit, led a Ford hunger march from Detroit to Dearborn. After the Wagner Act was passed assuring the right to organize unions and bargain collectively and the steel, auto, electrical and rubber industries were quickly unionized, union leaders such as Walter Reuther cleaned the communists out of the labor movement and proceeded pragmatically to address the needs of union members.

The result was the construction of a remarkable edifice by employers and union leaders through free collective bargaining that included paid holidays and vacations, health care and pensions, highly-paid jobs and a private system of industrial jurisprudence that provided due process in the workplace. These measures provided answers to universal questions such as: What happens to my family if I'm injured or get sick and can't work? When I'm too old to work? And what protection do I have if I'm fired arbitrarily?

Now, thanks to global competition, the foundation of our industrial edifice is cracking. Detroit's population has fallen from 1.6 million in 1935 to 899,000 today, and the city's finances are in dire straits. Less than 10 percent of the private workforce in the United States is unionized. Manufacturing jobs are scarce. More and more Americans get low-wage jobs with few benefits through temp agencies. Car industry pensions are underfunded, as is the federal Pension Benefit Guaranty Corporation, and health care benefits aren't funded at all but paid out-of-pocket only so long as the companies are able.

In the golden '50s and '60s, retirement security was viewed by the companies and the UAW as based on a three-legged stool: Social Security; a non-contributory pension plan (plus lifetime health benefits); and personal savings.

With our industry under global siege, defined benefit pensions underfunded and disappearing, and personal savings declining, now is not the time to weaken the Social Security leg of the retirement stool by subjecting it to the risks of private securitites markets operated by investment bankers and for-profit mutual funds where serious conflicts of interest have been revealed in the past couple of years.

Private savings and investment accounts, IN ADDITION to Social Security and employer pensions and increasing the national savings rate are important. But nothing in Bush's privatization plan would do this. Greater participation in 401(K) plans and IRAs by low income workers should be encouraged by offering immediate eligibility and automatic enrollment with better tax incentives for participation and additional regulations to curb excessive administrative and trading costs.

President George W. Bush's proposed "reform" of social Security springs from longstanding haters of FDR and the New Deal and from hopes of enhancing the appeal of the GOP to young voters. The libertarian CATO Institute has been waging a public relations campaign effort to gut Social Security for several years. The Bush administration proposals failed to recognize that Social Security, as originally conceived, has served us well and is as needed now as it was in 1935. A few minor adjustments are all that's needed to put Social Security on a sound financial footing for the forseeable future.

[This article was adapted from one that appeared as an op-ed by Ralph Deeds in the Detroit Free Press February 23, 2005]

How President Obama's Chained CPI Proposal Would Affect Social Security

More Details: How plan affects Social Security

A key feature is a revised inflation adjustment called chained CPI.

This formula would curb annual increases in a broad swath of government programs but would have its biggest impact on Social Security.

On average, annual increases in Social Security payments, government pensions and veterans benefits would be about 0.3 percentage points smaller each year, the Social Security Administration says.

The cost-of-living adjustment for 2013 was 1.7%, or about $21 a month for the average Social Security retiree. Under the new measure of inflation, it would have been about 1.4%, or a little more than $17 a month. (Associated Press 4-6-13)


COMMENT: Sounds to me as if President Obama got some bad advice from Geitner, Rattner, Bowles or other Wall Street Banksters!

Robert Reich on Chained CPI

Kudos to Senator Dick Durbin for His Social Security Proposal

WASHINGTON—Illinois Sen. Dick Durbin, the Senate's No. 2 Democrat, said Wednesday he would ask lawmakers to create a commission to recommend ways to shore up the finances of Social Security.

A commission would remove negotiations over the retirement program from the broader discussion in Congress of what changes to taxes, entitlement programs and other federal spending should be enacted to reduce the deficit. Separating Social Security from those emerging discussions could prove to be a contentious idea.

Dick Durbin of Illinois, the Majority Whip in the U.S. Senate, has announced plans to introduce a bill creating the formation of a Social Security Commission to address the program's long-term solvency.

Mr. Durbin described his proposal at breakfast sponsored by The Wall Street Journal and said he would file legislation in the coming months. It would create a bipartisan panel that would have 180 days to approve a plan to ensure that Social Security is solvent for 75 years.

Both chambers of Congress would be required to vote on the plan—or an alternative that achieved the same result—on an expedited basis.

Mr. Durbin envisions an 18-member commission, with six people appointed by President Barack Obama and the remaining 12 divided equally between House and Senate lawmakers. The task force would have to come up with 14 votes for Congress to consider the plan.

"If we're going to seriously take on these entitlement programs, we need buy-in from both parties," Mr. Durbin said. "There's a path in the middle here."

A Social Security commission in the early 1980s led by Alan Greenspan, who later went on to be Federal Reserve chairman, proposed benefit cuts and other changes that were credited with placing the system on firmer footing. But recent panels charged with solving fiscal problems have failed. The 2010 Simpson-Bowles deficit panel failed to advance a sweeping debt-reduction plan. Now, Mr. Durbin is trying to line up co-sponsors to test whether a panel with a narrower mandate could succeed.

Some members of that 2010 panel are skeptical a Social Security commission would succeed. The outcome "tells you how good commissions are," said Sen. Tom Coburn (R., Okla.), a panel member.

Other colleagues are rooting for Mr. Durbin. Sen. Mark Warner (D., Va.) said he expects to be a co-sponsor. Sen. Mike Johanns (R., Neb.) said that "if somebody can convince me that is the best pathway, because it takes away from the deficit-reduction talks, I'm open to that."

The White House didn't immediately respond to a request for comment about a new commission, but Mr. Obama's recent statements suggest he might be reluctant to back one.

Mr. Obama has said he would back a significant change to Social Security, switching to a new measure of inflation, under which benefits would rise more slowly, but only if Republicans agree to support new tax revenues aimed at cutting the deficit. That suggests Mr. Obama sees the Social Security changes as part of a broad discussion of multiple fiscal matters.

Turning Social Security over to a commission would remove a negotiating chip and make it harder for Mr. Obama to offer anything in exchange for the tax increases Democrats say are necessary for deficit reduction.

Some other Democrats are wary of a commission, seeing it as a step toward cutting benefits. "I don't trust a lot of these commissions," said Sen. Tom Harkin (D., Iowa.) "They look at the books and they try to figure things out from numbers without thinking about what's happening to real people. I'm afraid that they might take a look at Social Security in a way that does not relate to what people's lives are like."

Mr. Durbin was a first-term lawmaker when the Greenspan commission's recommendations were put to a vote. New to Congress in 1983, Mr. Durbin said he was in a "cold-sweat panic" when he found out he would have to vote to increase the retirement age to 67 from 65. He voted for it—and was re-elected.

One lesson, he said, is to move forward on tough changes with support from both parties. "There wasn't anyone who lost the election over that issue. Why? It was bipartisan," he said.

Write to Siobhan Hughes at siobhan.hughes@dowjones.com

A version of this article appeared March 21, 2013, on page A4 in the U.S. edition of The Wall Street Journal, with the headline: Democrat Seeks Panel on Bolstering Social Security.

2012-2013 Fiscal Cliff Negotiations and Social Security

President Obama made a serious policy mistake and and a negotiating error when he offered to adopt "chain CPI" for future Social Security cost of living adjustments as a part of a "grand bargain" to resolve the "fiscal cliff" negotiations. It would be unconscionable to reduce the benefits of Social Security recipients many of whom have little else to rely on for support because their defined benefit pensions have been discontinued, their 401k or IRA savings are miniscule or non-existent whose health insurance has disappeared and who may be facing foreclosure of their home. When inequality of wealth and income has reached historic proportions in this country is hardly the time to pick the pockets of our most vulnerable citizens in order to pay off debts attributable, in part, to tax breaks for the top 2 percent of Americans.

Moreover, changes in Social Security should be handled separately from overall budget or "cliff" negotiations because the Social Security trust fund is capable of paying full benefits through 2033. That is, there is no emergency, and Social Security cannot be blamed for the current deficit situation which was caused by the Bush administration's addition of an un-funded Medicare drug program, two wars and tax cuts. There is plenty of time to make the small adjustments required to put Social Security on a sound financial footing for the forseeable future, considering all the "fixes" which have been suggested including removing or increasing the earnings cap, raising the retirement age and the tax rate and adopting a means test.

Discussions of Social Security changes should be held entirely separately from the deficit discussions, perhaps together with discussions of badly needed changes in 401k plan regulations. However, even though the GOP didn't agree to President Obama's proposal, it will be difficult for him to remove it from the negotiating table. Even if the change in the CPI was deemed advisable, that concession should have been used as a "pearl without a price" to seal an overall "grand bargain."

Here are some facts form the National Committee to Preserve Social Security and Medicare

Fact #1...Social Security's trust fund has historically taken in more money than it pays out in benefits. During the troubled 2011 economy--and even with the Social Security payroll tax holiday in effect--trust fund assets increased because total revenue exceeded expenditures for benefit payments and administrative expenses.

Fact #2...Without making any changes whatsoever, surrent projections show Social Security able to pay full benefits through 2033.

Fact #3...Beyond that, the actuaries prject a relatively modest gap between taxes collected and benefits paid, but there are reasonable, solid, relatively modest adjustments that would endure the viability of Social Security for many years to come. So it follows that...

RADICAL CHANGES ARE NOT NECESSARY TO "SAVE" SOCIAL SECURITY. Indeed, proposals to privatize Social Security would deeply undermine the program's long-term health, and most Americans have flatly opposed this harmufl idea. However, some in Washington continue to push harmful changes to ward off a "deficit crisis"...

Fact #4...For the past several years, the debate has centered around sweeping reform proposals based on the false claim that spending on ALL social insurance programs--Social Security, Medicare and Medicaid--is a grave challenge to9 the nation's economic health. And the powerful forces in Washington perpetuating this myth say we must CUT SPENDING on these programs, but the truth of the matter is...

Fact #5...Even before the Wall Street crisis crippled our economy, the Bush Administration's tax breakes for mostly wealthy Americans were a major reason behind our historic national debt and the resulting pressure to rein in spending.

Fact #6...Spending cuts on Social Security are an unfair approach to deficit reduction as they would not only weaken this program but be used to finance TAX BREAKS FOR MILLIONAIRES! and yet

Fact #7...One proposal under consideration would REDUCT THE ANNUAL SOCIAL SECURITY COST-OF-LIVING (COLA) as a way to pay down federal debt. Proponents of this plan want to change the current COLA formula by tying it to a "chained CPI." Under this dangerous proposal the typical 65-year-old who filed for benefits at age 62 could ultimately see an annual benefit cut of nearly $1,400

IF YOU CARE ABOUT THE FUTURE OF SOCIAL SECURITY, YOU BELONG IN THIS DEBATE. ...It probably seems like the politicians, Wall Street and the policy experts have all the answers and all of the clout when it comes to deciding what is best for Social Security. But, do they?

Fact #8 ...While Congress may hold the levers of power concerning Social Security, it's you who they listen to most.






Letter to the NYTimes from Eric Kingson, Professor, Syracuse University

I disagree with Peter Orszag’s assertion that the co-chairmen of the deficit-reduction commission have handed the White House “a highly progressive reform plan for Social Security” (“Safer Social Security,” column, Nov. 15). At least, not unless you really believe these notions:

¶Annual cost of living adjustments, which do not fully reflect the rising cost of health care, are too generous.

¶Future retirement benefits for low- and moderate-income people under the age of 50 should be reduced because the life expectancies of the better off are increasing at a greater rate than theirs.

¶Retirement, disability and survivors protections should be cut by as much as 36 percent for young people entering the work force today.

Americans should not be stampeded into cutting increasingly critical Social Security protections. It’s time to ask those who have reaped the benefits of runaway tax cuts and growing income inequality to pay their fair share, not cut Social Security.

It’s time to “scrap the cap,” that is, to require contributions on all earnings above $106,800. Doing so would fully address the projected shortfall for 75 years. And it would provide a few extra dollars to improve benefits.

Eric Kingson
Manlius, N.Y., Nov. 15, 2010

The writer, a professor of social work at Syracuse University and co-director of Social Security Works, was adviser to the 1982 National Commission on Social Security Reform and to the 1994 Bipartisan Commission on Entitlement and Tax Reform.

11-10-10NYTimes--Bi-Partisan Deficit Panel Draft Recommendations

The plan would reduce projected Social Security benefits to most retirees in later decades — low-income people would get higher benefits — and slowly raise the retirement age for full benefits to 69 from 67, with a “hardship exemption” for people who physically cannot work past 62. And it would subject higher levels of income to payroll taxes, to ensure Social Security’s solvency for the next 75 years.

But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nation’s books.

http://www.nytimes.com/2010/11/11/us/politics/11fiscal.html?hp


401k Plan Regulations Need Reform

The current recession 2008-09 has decimated the 401K savings of many if not most Americans. This may present an opportunity to make needed changes in 401k regulations. Changes are needed because the plans are not performing their intended function--participation is not as high as it should be; the costs of many plans is too high; and participants too often must choose among a bewildering array of investment options including the stock of their own employer. Savings have been invested inappropriately for retirement accounts, and the results have been abysmal for many if not most participants.

Last month John Bogle, inventor of the no-load, low cost, tax efficient index mutual fund and founder of the VanguardGroup, which is the not-for-profit, investor-owned, second largest mutual fund group in the world, recommended to Congress a number of improvements in the regulations governing 401k plans. Unsurprisingly, Bogle recommended automatic enrollment and limiting investments to broad stock and bond index funds. A link to Bogle's testimony is provided below. [John Bogle has been called "The Warren Buffett of mutual funds." He has devoted his life to reforming the mutual fund industry.]

Don't BeTricked!

McCain Supports Privatization of Social Security

A Stalwart of Retirement Planning: the IRA by J. Alex Tarquinion in the NYTimes 4-27-07

 

Alex Tarquinio points out that the Individual Retirement Accountor IRA is often overlooked in retirement planning. More than 90 percent of IRA money comes in the form of roll-overs from 401k plans. Only 14 percent of American households that were eligible to make direct IRA contributions did so in 2006....Fifty-seven percent of "prime working-age Americans," had no retirement plan at work. Contributing to an IRA makes senses for such people.

Read Tarquinio's excellent article here;

http://www.nytimes.com/2008/04/27/business/yourmoney/27iras.html?_r=1&scp=1&sq=alex+tarquinio&st=nyt&oref=slogin

That Looks Too Risky!

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Comments 61 comments

Chuck profile image

Chuck 9 years ago from Tucson, Arizona

Good article, Ralph. And, here is the link to my contrary view http://hubpages.com/money/The-Social-Security-Syst... I always enjoy a good exchange with you. Chuck


Ralph Deeds profile image

Ralph Deeds 9 years ago Author

Thanks for your comment, Chuck. Some day we'll have to get together for a beer in Tucson. I have a brother and a sister who live there.


Paul Edmondson profile image

Paul Edmondson 9 years ago from Burlingame, CA

I see two things playing out with younger people. First, few of us count on social security and second, I believe we are more frugal as a generation than baby boomers. Our generation will have to save more and spend less to live in retirement.

I have little faith in the government to return the funds we invested in our retirment years. I also see the huge draw down that's coming as our parents retire and the workforce shrinking as something that was not considered when social security was designed to have the current workforce pay for the previous.

I'm not up to speed on the borrowing against social security. Are we setting our selves up to have outstanding loans with depleted equity until there is nothing less to secure the loans? Or is it more of a concern that the money goes to something else and then it won't be available to people when it comes time to collect?


Chuck profile image

Chuck 9 years ago from Tucson, Arizona

You're on. Give me a call whenever you plan to come. It would be great to meet you and have a beer. The next few months are the best time of the year for visiting Tucson as the weather is great - sunny and a balmy 70+ temperature.


Ralph Deeds profile image

Ralph Deeds 9 years ago Author

Social Security needs only minor tweaks to assure that you will receive benefits, Paul. The public has been misled by concerted PR campaigns by CATO, the Heritage Foundation and similar groups who would like to do away with Social Security and Medicare. Fortunately, they are out of step with the majority of Americans.

Medicare is the program that will soon run out of money, not Social Security.


Joey Gallo 667 profile image

Joey Gallo 667 9 years ago from Jersey City

haha I like that last editorial


William F. Torpey profile image

William F. Torpey 9 years ago from South Valley Stream, N.Y.

The GOP has been fighting to end Social Security since the day Roosevelt put pen to paper. The Reagan plan, picked up by King George, has been to put the country in such a huge deficit that they could then claim the U.S. will go broke if it doesn't kill all of what's left of Roosevelt's programs, especially Social Security. Their plan to privatize Social Security (and just about everything else) is just another facet of that plan. To privatize Social Security is to end it! There's plenty of money to fund Social Security well into the next century, provided we don't start World War III before Bush leaves office. With the help of the right wingers, big business has all but killed unions in this country (first by moving plants down South and now by sending jobs to Asia, Africa and the MidEast. Keep up the good work Ralph.


Ralph Deeds profile image

Ralph Deeds 9 years ago Author

Paul Krugman aggrees in his op-ed 11-16, "Played for a Sucker."

http://www.nytimes.com/2007/11/16/opinion/16krugma...


bobmnu profile image

bobmnu 8 years ago from Cumberland

Iin Wisconsin there is a public employee retirement plan that is similar to what President Bush proposed. Employees own the fund and it is controlled by an elected board. the State oversees the fund, but unlike SS the state can not take or borrow money from the fund. Over the years I have contributed to both the State Retirement Plan and SS. I am now drawing more money and was able to retire early (age 57) than I will draw from SS at age 65. This system is a good comprimise because you have to contribute, there are death benifits for your named survivor, and you have the option of taking a lump sum if you leave the system.


Ralph Deeds profile image

Ralph Deeds 8 years ago Author

That sounds like a good system, in addition to, but not as a replacement for Social Security. I too am retired and drawing from a private pension fund which pays me double my Social Security benefits. I would not be able to live comfortably without BOTH Social Security and my defined benefit pension. Moreover, I saved in addition in my employer's 401k plan. In my experience all three plans are needed to provide for an un-reduced standard of living in retirement.

The best solution is to preserve Social Security and provide additional incentives for participation in 401k savings and investment plans to replace defined benefit pension plans which most employers are dropping.

I wonder what the the Wisconsin state fund invests in? I hope they haven't invested in subprime mortgage-backed securities. Many state investment funds have been hurt by these unfortunate investments peddled by big Wall Street banks.


barranca profile image

barranca 8 years ago

Enjoyed this hub....worthwhile reading. The real budget monster is the cost of medicine in this country....it is the issue that is most important to address rationally. Unfortunately most of the politicians running for President and pussy-footing around at best. The only truth speaker with an honest plan is Dennis Kucinich. SINGLE-PAYER: get rid of private insurance, and employer based plans. This is the answer most civilized nations of the world have come to.


Iðunn 8 years ago

great hub, great comments. :)


Bogey047 profile image

Bogey047 8 years ago

Enjoyed the Hub

Tom

3bg3cvemr6574


Bogey047 8 years ago

Enjoyed the Hub

Tom


Ralph Deeds profile image

Ralph Deeds 8 years ago Author

Tnx for the comment.


Job Nigeria 8 years ago

That's a nice idea...........


Confidential Access 8 years ago

Fix it....to build it again is need more time.....

regards,

http://www.confidential-access.com


Ed at AAFR 8 years ago

Couldn't agree with you more. BTW, the American Association of Future Retirees is dedicated to exactly what you are trying to do: save Social Security, and don't "reform" it out of existence. (FYI, I'm the Executive Director.) I'd like to invite you to become a member; it doesn't cost anything & we need people like you who not only think as we do but are articulate about getting the word out. Please check us out at http://www.aafr.org . I'd appreciate your feedback about our site, it's fairly new.


Ralph Deeds profile image

Ralph Deeds 8 years ago Author

Good site. I signed up although I'm not sure I'm eligible. I'm already retired!


Ed at AAFR 8 years ago

Yes, you're eligible & are already enrolled as a member! There are no age requirements... all that matters is that you support our goals of preserving Social Security and other important programs for future generations. Even if you're a "current retiree," you can be a "future retiree" at heart (which most are if they have kids & grandkids).


pgrundy 7 years ago

Excellent article Ralph. For the past ten years I've been watching my wages and benefits decline. I was hired in to a multinational insurance corporation in 2001 which was the last year they offered pension benefits. Everyone hired after 2001 had to rely on a 401K.

I stayed long enough to be vested so supposedly I will get a small benefit whenever I decide to start drawing on it, but it wouldn't shock me if they find a way to get rid of that too the way things are going.

My 401K lost 33% of its value last year and when the bank went down I took a distribution becaus I needed it. The job I found in November offers no pensions, no health insurance, no benefits except a 401k packed with mutual funds that are all currently losing large amounts of money--plus, they constantly require work off the clock, which is technically illegal at an hourly wage job. I've started joking that maybe they could find some volunteers to do the work, and they answer me as if it's a serious suggestion because they really are that shameless.

I'm 55. I'll be happy if I'm not a greeter at WalMart when I'm 80--if I make it to 80. Privatizing social security is a shameful greedy grab by the uber-rich for the few cents 99% of us have left. I don't know why more people aren't more whipped up right now about it. I spend half of every day arguing with people who think the UAW single-handedly destroyed the American economy. It's very depressing.


Amanda Severn profile image

Amanda Severn 7 years ago from UK

Out of curiousity, what percentage of tax do you pay in the States? I ask because I gather that many Americans equate Social security and Universal Healthcare with high taxation, and I don't believe that to necessarily be the case.


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Employees and employers each pay 7.65% Social Security tax on the earnings up to $109,000 for a total of just over 15%. In addition single income tax payers pay 10%--35% depending on income, deductions etc. Also, they pay state sales and property taxes which vary from state to state.


Amanda Severn profile image

Amanda Severn 7 years ago from UK

Here employees pay 22% on any amount earned between £2231 - £34600 pa, and 40% on anything higher than that. In addition they pay 11% National Insurance contributions on any amount over £5,460 pa. For this we Brits have Universal Healthcare, a basic (but quite low) pension from age 65, and Social Security benefits (known as a job-seekers allowance) for if we are made unemployed. We also have non-contributory public education until age 18, but this is partly funded by local authorities , to whom we pay local taxes (usually between £100 and £200 per property on average)

There's a lot to be taken into consideration, but do you think we pay a huge amount more?


countrywomen profile image

countrywomen 7 years ago from Washington, USA

Amanda- Ok all that is little confusing. Can you tell me if some one earns like $6000 per month which is roughly 4000 pounds (without any contribution to personal investments like 401k) after taxes how much would be a person's take home salary.


Amanda Severn profile image

Amanda Severn 7 years ago from UK

CW - £4000 per month would be quite a generous salary here, as an average salary is somewhere between £1800 and £2500 depending on your location and profession. On £4000 per month you might expect to take home very roughly £2600. That may not sound like much if you're used to lower taxation, but I imagine you or your employer would be paying a generous whack to health insurance?


ChristopherD 7 years ago

Hey Deeds a topic you can relate too. You must be an expert on it having one foot in the grave yourself. But too bad you had to probably copy and paste the whole thing.


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

I wrote the article. It was originally published as an Op-ed in the Detroit Free Press. If you disagree with it why don't you explain why?


C.J. Wright 7 years ago

Ralph,

Well written HUB. My problem with social security is this, you can never draw out what you pay in. Its simply not possible. It's caused more problems than its solved. For example you mentioned the forming of Unions. No one could argue that the unions haven't played a role in the demise of Detroit. Just another example of good intentions and the road to hell...


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

C.J., Thanks for your comment.

We are all lucky that Bush was not able to turn Social Security money over to Wall Street! Incentives for investing more in 401k plans should be increased, on top of Social Security, not in place of Social Security. This will be especially important for people who are not covered by traditional defined benefit pension plans which are rapidly disappearing from the scene.

Some people draw out more from Social Security than they pay in, some less. Some none. Some die or become disabled before retirement age and Social Security payments help support their families. That's the way insurance works. The UAW was not known for self restraint in pressing it's demands. But two parties signed every contract--the union and the management. In the past several years the UAW has agreed to some huge cutbacks in wages and benefits, too late to save very many jobs. The big increases in wages and benefits came for the most part when the companies didn't have a lot of competition and were quite profitable.


C.J. Wright 7 years ago

Ralph,

Can't argue with you on the Bush thing. No doubt what would have happened to all that money if it would have been moved over to 401K's. It would have been flushed with the rest of the market. Don't get me wrong, I'm not saying that 401K is the answer to Social Security. I'm just not going to be for any social program thats compulsary. You point out something that I don't think a lot of people understand. Social Security is INSURANCE, not a retirement investment. You pay into it, its compulsary and you only get it(some of it) if you meet the criteria and prove need. Do you believe that the average Joe would agree to that, if explained that way?

The Unions have created a lot more problems than the obvious(auto industry) They have created third party hires, temp and contract agencies(indirectly) so employers can avoid a Union from forming. Its a disaster. UAW really hurt the image of all Unions. I personally don't believe they have any real purpose anymore, other than to line the pockets of the Union management. How do you get Michigan back to work now? Will they work for less money? There are a lot of tough questions and no easy answers.


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Tnx for your comment.

One little correction: After age 62 you don't have to "prove need" in order to collect Social Security benefits. Benefits are reduced if you start collecting before the normal (65+) retirement age. The only time you have to prove need is if you are filing for a Social Security Disability benefit. For that benefit you have to provide medical evidence that you are unable to work.

I spent 34 years negotiating with the UAW and could say a lot on the subject, but I don't feel like going into a long discussions of the pros and cons here at this time.


C.J. Wright 7 years ago

34 years!?? You must be exausted! Sounds like a lot of work and worry.


Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Well, I went through a few all nighters and a lot of weekends every three years. Actually it was quite interesting.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Looting Social Security, Part 2, William Greider in The Nation

'

He's baaack--the Wall Street billionaire who wants to loot Social Security. This time, Pete Peterson has invented his own "news network" to promote his right-wing rants about shrinking the only retirement security system available to millions of working people. Peterson styles himself as a patriot saving the nation from fiscal insolvency and has committed $1 billion to that cause (a chunk of the wealth he accumulated at Blackstone Group, the notorious corporate-takeover firm). His efforts might be dismissed as ludicrous--except money does talk in Washington, and Peterson is now buying Washington reporters to spread his dire warnings.


Leighandrew profile image

Leighandrew 6 years ago from USA

Excellent read-how can more people be taking out now than putting in ?


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

I guess that may be true because the population is aging, and the formula needs to be tweaked a bit to keep it on a sound footing--raising the age for a normal benefit, raising the maximum income subject to Social Security tax, dampening the cost of living adjustment formula or a combination of the above possible "fixes." This is not a big deal. The big deal is dealing with projected increases in the cost of Medicare. This is a serious problem with no magic bullet solution.


Iðunn 6 years ago

thought I would give you a heads up on this Hubber. genius and only 7 fans. go figure.

http://hubpages.com/politics/Shut-Up-and-Pay-Your-...


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Ralph Deeds 6 years ago Author

NYTimes--7-31-10

Social Security, which has its own dedicated stream of income, is projected to pay out more this year than it is taking in, but that is a function of the weak economy. Social Security will, according to the last annual report from its trustees, be able to pay full benefits through 2037. Then, if there are no changes in the program in the meantime, the taxes collected will be enough to pay out only about 75 percent of benefits through 2083.

So while Social Security’s finances are stable in the short term, most experts agree that the program needs to be bolstered for the long term. Among the proposals circulating is one from Representative John Boehner of Ohio, the House Republican leader, who recently suggested raising the retirement age to 70 for people at least 20 years from retirement.

Other options include increasing Social Security payroll taxes, subjecting more income to the tax, reducing initial benefit payments or cutting cost-of-living increases (which would affect current retirees).

http://www.nytimes.com/2010/07/31/your-money/31mon...


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

8-6-10 NYTIMES

Medicare will remain financially solvent for 12 additional years, until 2029, because of the cost-cutting measures in President Obama’s recently enacted health care legislation, the program’s trustees projected on Thursday.


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Ralph Deeds 6 years ago Author

NYTimes Editorial 8-10-10

Here’s the bottom line: The recently passed health care reform bill is promising to have a positive effect on Medicare, assuming Republican opponents don’t succeed in killing the reform in court or otherwise undermining its main provisions. Social Security is holding up even in the face of a weak economy. According to the reports, the date of insolvency for Medicare’s hospital fund was pushed back, from 2017 to 2029, because of cost-saving measures in health reform. As for Social Security, without any changes, it will be able to pay full benefits until 2037 and partial benefits after that, the same estimate as in last year’s report, despite temporary setbacks from the recession.

Of course, neither program is sound for the long run. But the reports show there is time for lawmakers to reform and strengthen both of the programs for the long haul. The real question is whether they will rise to the challenge or continue to view these vital programs as battlegrounds for scoring partisan points.

http://www.nytimes.com/2010/08/10/opinion/10tue2.h...


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Ralph Deeds 6 years ago Author

Is Social Security Really a Pension Plan?--Floyd Norris

But the reality is that Social Security is not a normal pension plan, even though it somewhat resembles one because the benefit level is related to the recipient’s income while he or she was working. It is what it was when it was created in the Great Depression: a plan to tax working Americans to pay for benefits given to retired and disabled workers, and to their families.

More here:

http://www.nytimes.com/2010/11/05/business/05norri...


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Ralph Deeds 6 years ago Author

Here's a summary of the debt commission's 11-10-10 proposal wrt Social Security changes:

The plan would reduce cost-of-living increases for all federal programs, including Social Security. It would reduce projected Social Security benefits to most retirees in later decades, though low-income people would get higher benefits. The retirement age for full benefits would be slowly raised to 69 from 67 by 2075, with a “hardship exemption” for people who physically cannot work past 62. And higher levels of income would be subject to payroll taxes.

But the plan would not count Social Security savings toward the overall deficit-reduction goal that Mr. Obama set for fiscal year 2015, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to help balance the nation’s books.

http://www.nytimes.com/2010/11/11/us/politics/11fi...


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Ralph Deeds 6 years ago Author

Safer Social Security--Peter Orzag in the NYTimes

Social Security is not the key fiscal problem facing the nation. Payments to its beneficiaries amount to 5 percent of the economy now; by 2050, they’re projected to rise to about 6 percent. Over the same period, federal health care costs will increase six times as much.

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Stephen Savage

Opinionator

Peter Orszag's Columns for the Opinionator

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Nevertheless, Social Security does face an actuarial deficit. Current projections suggest that, after 2037, benefits would need to be reduced by more than 20 percent to match revenue. Measured over the next 75 years, the deficit in Social Security is expected to amount to 0.7 percent of the economy — not a huge amount, but a deficit nonetheless.

http://www.nytimes.com/2010/11/15/opinion/15orszag...


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Letter to NYTimes Re: Social Security Reform Proposal by Peter Orzag, former Obama budget czar:

I disagree with Peter Orszag’s assertion that the co-chairmen of the deficit-reduction commission have handed the White House “a highly progressive reform plan for Social Security” (“Safer Social Security,” column, Nov. 15). At least, not unless you really believe these notions:

¶Annual cost of living adjustments, which do not fully reflect the rising cost of health care, are too generous.

¶Future retirement benefits for low- and moderate-income people under the age of 50 should be reduced because the life expectancies of the better off are increasing at a greater rate than theirs.

¶Retirement, disability and survivors protections should be cut by as much as 36 percent for young people entering the work force today.

Americans should not be stampeded into cutting increasingly critical Social Security protections. It’s time to ask those who have reaped the benefits of runaway tax cuts and growing income inequality to pay their fair share, not cut Social Security.

It’s time to “scrap the cap,” that is, to require contributions on all earnings above $106,800. Doing so would fully address the projected shortfall for 75 years. And it would provide a few extra dollars to improve benefits.

Eric Kingson

Manlius, N.Y., Nov. 15, 2010

The writer, a professor of social work at Syracuse University and co-director of Social Security Works, was adviser to the 1982 National Commission on Social Security Reform and to the 1994 Bipartisan Commission on Entitlement and Tax Reform.


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

Restoring balance to Social Security would also make Americans feel more secure about their retirement. Surveys have repeatedly shown that many Americans do not believe that Social Security will be there for them. While such an assessment is wrong — even without any changes, Social Security payroll taxes could pay 100 percent of benefits for the next 25 years, and 75 percent to 80 percent of benefits for decades thereafter — anxiety about the program’s future leads people to grab benefits as soon as they can. The problem is that benefits claimed at the early retirement age, 62, are 25 percent smaller than at the full retirement age (currently 66) and are likely to be inadequate when retirees have exhausted their other sources of income later in life. Eliminating the Social Security shortfall will, therefore, reduce the misplaced fear that causes Americans to claim benefits early.

http://www.nytimes.com/2011/04/05/opinion/05munnel...


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Ralph Deeds 5 years ago Author

Trust Fund FAQs

Frequently Asked Questions about the Social Security Trust Funds

What are the Social Security Trust Funds?

How are the trust funds invested?

What interest rate do the trust funds' assets earn?

What happens to the taxes that go into the trust funds?

If all the income is invested, how do benefits get paid each month?

What were the amounts of securities bought and sold during recent years?

Why do some people describe the "special issue" securities held by the trust funds as worthless IOUs? What is SSA's reaction to this criticism?

Can the Social Security Trust Funds remain solvent without making changes to the program?

Were the assets of the Social Security Trust Funds depleted in the past?

For answers to the above questions click on this link.

http://www.google.com/search?q=Social+Security+Tru...


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Ralph Deeds 4 years ago Author

Disagreement Over Effect of Payroll Tax Cut's Effect on Social Security

WASHINGTON — For all of the partisan brawling over President Obama’s call to extend a temporary payroll tax cut for 160 million Americans, one concern is bipartisan: a significant minority of Democrats and Republicans say that cutting the taxes that finance Social Security benefits will further undermine the program.

Alex Wong/Getty Images

A one-stop destination for the latest political news — from The Times and other top sources. Plus opinion, polls, campaign data and video.

The Obama administration, many budget experts (but not all) and the chief actuary for the Social Security Administration say the proposal will do no such thing. But some conservative Republicans and liberal Democrats who agree on little else are just as adamant that it will.

Both parties predict the payroll tax cut will be extended beyond its Dec. 31 expiration, though the question of how — or whether — to pay for it and some other unrelated issues in the year-end legislation continued to hold it up on Wednesday. Still, the disagreement over the tax cut lingers. It is less over money than philosophy, and reflects a debate as old as the 75-year-old program about Social Security’s fundamental structure.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

Financial Outlook Dims for Social Security - NYTimes.com

The Obama administration reported a significant deterioration in the financial outlook for Social Security, and that the financial condition of Medicare was stable but still unsustainable.


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Ralph Deeds 4 years ago Author

10-20-12WallStreetJournal--"How Much is Social Security Worth?" Ellen E. Schultz

Conquering Retirement: How Much Is Social Security Worth? - WSJ.com

A 50-year-old might have accrued a SS benefit worth $1,750/mo at full retirement age. Assuming annual cost-of-living adjustments of 2% a year and a life expectancy of 90, the present value of his SS benefit would be $588,551.

Some people believe they can't count on Social Security or pensions to be there when they retire, so they don't include them in their retirement projections. They might be unduly pessimistic.

Social Security does have problems, of course. If no adjustments are made, then in 2036 the system will deplete its reserves, meaning it will be paying out one dollar for every dollar it takes in. If that happens, beneficiaries might receive reduced benefits.

Yet nondraconian fixes, such as slowing the cost-of-living adjustment, raising the cap on income subject to payroll taxes or raising the retirement age could restore it to health.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

11-16-12NYTimes--Life and Death Deficits?? Paul Krugman

Life, Death and Deficits - NYTimes.com

Raising the retirement age on Social Security and Medicare would be a harsh blow to Americans in the bottom half of the income distribution.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

2012-2013 Fiscal Cliff Negotiations and Social Security

President Obama made a serious policy mistake and and a negotiating error when he offered to adopt "chain CPI" for future Social Security cost of living adjustments as a part of a "grand bargain" to resolve the "fiscal cliff" negotiations.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

Kudos to Senator Dick Durbin for his proposal to divorce SS from budget discussions and create a separate panel.

WASHINGTON—Illinois Sen. Dick Durbin, the Senate's No. 2 Democrat, said Wednesday he would ask lawmakers to create a commission to recommend ways to shore up the finances of Social Security.

A commission would remove negotiations over the retirement program from the broader discussion in Congress of what changes to taxes, entitlement programs and other federal spending should be enacted to reduce the deficit. Separating Social Security from those emerging discussions could prove to be a contentious idea.

Dick Durbin of Illinois, the Majority Whip in the U.S. Senate, has announced plans to introduce a bill creating the formation of a Social Security Commission to address the program's long-term solvency.

Mr. Durbin described his proposal at breakfast sponsored by The Wall Street Journal and said he would file legislation in the coming months. It would create a bipartisan panel that would have 180 days to approve a plan to ensure that Social Security is solvent for 75 years.

Both chambers of Congress would be required to vote on the plan—or an alternative that achieved the same result—on an expedited basis.

Mr. Durbin envisions an 18-member commission, with six people appointed by President Barack Obama and the remaining 12 divided equally between House and Senate lawmakers. The task force would have to come up with 14 votes for Congress to consider the plan.

"If we're going to seriously take on these entitlement programs, we need buy-in from both parties," Mr. Durbin said. "There's a path in the middle here."

A Social Security commission in the early 1980s led by Alan Greenspan, who later went on to be Federal Reserve chairman, proposed benefit cuts and other changes that were credited with placing the system on firmer footing. But recent panels charged with solving fiscal problems have failed. The 2010 Simpson-Bowles deficit panel failed to advance a sweeping debt-reduction plan. Now, Mr. Durbin is trying to line up co-sponsors to test whether a panel with a narrower mandate could succeed.

Some members of that 2010 panel are skeptical a Social Security commission would succeed. The outcome "tells you how good commissions are," said Sen. Tom Coburn (R., Okla.), a panel member.

Other colleagues are rooting for Mr. Durbin. Sen. Mark Warner (D., Va.) said he expects to be a co-sponsor. Sen. Mike Johanns (R., Neb.) said that "if somebody can convince me that is the best pathway, because it takes away from the deficit-reduction talks, I'm open to that."

The White House didn't immediately respond to a request for comment about a new commission, but Mr. Obama's recent statements suggest he might be reluctant to back one.

Mr. Obama has said he would back a significant change to Social Security, switching to a new measure of inflation, under which benefits would rise more slowly, but only if Republicans agree to support new tax revenues aimed at cutting the deficit. That suggests Mr. Obama sees the Social Security changes as part of a broad discussion of multiple fiscal matters.

Turning Social Security over to a commission would remove a negotiating chip and make it harder for Mr. Obama to offer anything in exchange for the tax increases Democrats say are necessary for deficit reduction.

Some other Democrats are wary of a commission, seeing it as a step toward cutting benefits. "I don't trust a lot of these commissions," said Sen. Tom Harkin (D., Iowa.) "They look at the books and they try to figure things out from numbers without thinking about what's happening to real people. I'm afraid that they might take a look at Social Security in a way that does not relate to what people's lives are like."

Mr. Durbin was a first-term lawmaker when the Greenspan commission's recommendations were put to a vote. New to Congress in 1983, Mr. Durbin said he was in a "cold-sweat panic" when he found out he would have to vote to increase the retirement age to 67 from 65. He voted for it—and was re-elected.

One lesson, he said, is to move forward on tough changes with support from both parties. "There wasn't anyone who lost the election over that issue. Why? It was bipartisan," he said.

Write to Siobhan Hughes at siobhan.hughes@dowjones.com

A version of this article appeared March 21, 2013, on page A4 in the U.S. edition of The Wall Street Journal, with the headline: Democrat Seeks Panel on Bolstering Social Security.


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Ralph Deeds 3 years ago Author

3-30-13NYTimesEDITORIAL "Social Security, Present and Future"

Social Security, Present and Future - NYTimes.com

There are sensible ways to reform Social Security, but it is not driving the deficit. It should not be part of the deficit discussions, and benefits should not be reduced by chained CPI or any other method.


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Ralph Deeds 3 years ago Author

How President Obama's Chained CPI Proposal Would Affect Social Security

More Details: How plan affects Social Security

A key feature is a revised inflation adjustment called chained CPI.

This formula would curb annual increases in a broad swath of government programs but would have its biggest impact on Social Security.

On average, annual increases in Social Security payments, government pensions and veterans benefits would be about 0.3 percentage points smaller each year, the Social Security Administration says.

The cost-of-living adjustment for 2013 was 1.7%, or about $21 a month for the average Social Security retiree. Under the new measure of inflation, it would have been about 1.4%, or a little more than $17 a month. (Associated Press 4-6-13)

COMMENT: Sounds to me as if President Obama got some bad advice from Geitner, Rattner, Bowles or other Wall Street Banksters!


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Ralph Deeds 3 years ago Author

4-20-13NYTimes "Obama's Budget Negotiating Chip Has Big Downside for Old and Poor" by Tara Siegel Bernard

The Potential Effect of Obama’s Social Security Proposal - NYTimes.com

Many of those who would be affected by President Obama’s Social Security proposal face higher health costs and have little hope of working again.


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Ralph Deeds 3 years ago Author

6-3-13NYTimes OP-ED by Paul Krugman, The Truth About Social Security and Medicare

The Geezers Are All Right - NYTimes.com

News flash: Social Security and Medicare aren’t doomed!


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Ralph Deeds 3 years ago Author

6-3 thru 6-9 Bloomberg Businessweek "In Australia, Retirement Savings Done Right

In Australia, Retirement Saving Done Right - Businessweek

Australia has a superior retirement savings system with features the U.S. would do well to emulate.


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Ralph Deeds 3 years ago Author

6-9-13NYTimes--Robert Schiller on How to Fix Social Security

To Fix Social Security, Use the Right Wrench - NYTimes.com

Switching to a new index for calculating Social Security benefits is a hot topic in Washington. But maybe we should consider a much different benchmark--tying SS benefits to GDP.


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Ralph Deeds 3 years ago Author

6-19-13NYTimesEDITORIAL "What's Next for Social Security?"

What’s Next for Social Security? - NYTimes.com

Benefits are shrinking while retirement needs are growing. There are sensible ways to fix Social Security without undermining it as a support against hardship in old age.


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Ralph Deeds 3 years ago Author

http://www.pbs.org/wgbh/pages/frontline/retirement...

The Retirement Gamble raises troubling questions about how America’s financial institutions protect our retirement savings.

EXCELLENT PROGRAM!!

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