Respectfully submitted by Lawrence E. Rafferty (rafflaw)- Guest Blogger
We have all heard the cries that so-called entitlement programs like Social Security need to be cut in order to “save” them from extinction. Now that I am 62 years of age, I have become more interested in the issue of Social Security’s solvency.
CEO’s have gotten involved in the process through the now infamous Fix the Debt campaign initiated and funded by Billionaire Pete Peterson and the parallel campaign started by the Business Roundtable. Both of these campaigns are supported by big business and CEO’s of large corporations with no concern where their retirement funds are going to come from.
“In the current budget debate, the loudest calls for Social Security cuts are coming from two lobby groups led by CEOs who will never have to worry about their own retirement security.
The report, titled Platinum-Plated Pensions: The Retirement Fortunes of CEOs Who Want to Cut Your Social Security,
points out that two organizations, Fix the Debt, a PR and lobby machine launched in 2012 and led by more than 135 CEOs of major corporations, and the Business Roundtable, a 40-year-old association made up of about 200 CEOs of Americas largest corporations, are involved in a protracted campaign aimed at cutting, and ultimately, gutting Social Security.
Platinum-Plated Pensions, written by Sarah Anderson, the Director of the Global Economy Project at the Institute for Policy Studies, and Scott Klinger, Director of Revenue and Spending Policies at the Center for Effective Government, found that the CEOs belonging to Fix the Debt and Business Roundtable are sitting on massive nest eggs of their own.” Bill Berkowitz
Maybe I am an exception, but I was amazed to read the report linked above to see just who is claiming that the only way that Social Security can be saved for us mere peons is by raising the retirement age and reducing benefits. Many of the CEO’s making this claim have millions in their own pension or retirement accounts.
“According to Platinum-Plated Pensions, The average Business Roundtable CEO has $14.5 million in his gilded nest egg, more than 1,200 times as much as the $12,000 median retirement savings of U.S. workers who are within 10 years of retirement.
Ten CEO members of the Business Roundtable (four of whom are also members of Fix the Debt) have corporate retirement plans valued at more than $50 million. Of these, three have retirement assets of more than $100 million.” Bill Berkowitz
Now, in all fairness, just because someone has no need for their Social Security benefits, it doesn’t automatically disqualify their opinions on the subject of improving Social Security for all of us. However, these CEO’s do not have a real stake in what happens to Social Security because if it exploded tomorrow, they still have millions in their own accounts.
The ideas that Fix the Debt and the Business Roundtable have offered do nothing to make it more equitable or make Social Security work better for all retirees. Their idea of a “fix” is to delay benefits and force poor and middle class workers to stay in the work force even longer.
They even claim that raising the minimum retirement age to 67 is necessary because we are all living longer. Even that claim is suspect. One economic expert has brought some sunlight to the living longer claim.
“Before I get there, however, let me briefly take on two bad arguments for cutting Social Security that you still hear a lot.
One is that we should raise the retirement age — currently 66, and scheduled to rise to 67 — because people are living longer. This sounds plausible until you look at exactly who is living longer. The rise in life expectancy, it turns out, is overwhelmingly a story about affluent, well-educated Americans. Those with lower incomes and less education have, at best, seen hardly any rise in life expectancy at age 65; in fact, those with less education have seen their life expectancy decline.
So this common argument amounts, in effect, to the notion that we can’t let janitors retire because lawyers are living longer. And lower-income Americans, in case you haven’t noticed, are the people who need Social Security most.” Paul Krugman
While I am hoping Mr. Krugman is correct that lawyers are living longer, his evidence seems to suggest that the Fix the Debt and Business Roundtable people are all wet. Could those millionaire and Billionaire CEO’s have some ulterior motive? Could the CEO’s efforts and money spent pushing their Fix actually be an attempt to prevent the country from taxing the wealthy on all of their income or reducing or eliminating many of their tax benefits that harm the economy and fatten their wallets?
I have often wondered why millionaires don’t have to pay Social Security taxes on all of their income like the rest of us who make less than the $113,700 maximum for 2013. When a CEO makes $20 million a year, that CEO pays Social Security taxes on the first $113,700. When someone makes $60,000 a year, they pay Social Security taxes on their entire income. Why shouldn’t Social Security taxes be paid on all income, no matter what the sources? Wouldn’t that be more equitable?
Mr. Krugman also suggests that part of the problem seniors are facing is that the 401k accounts that many of their employers intitiated have not earned what was necessary to retire on due to the market crash and employer greed and employees making poor financial decisions.
“Today, however, workers who have any retirement plan at all generally have defined-contribution plans — basically, 401(k)’s — in which employers put money into a tax-sheltered account that’s supposed to end up big enough to retire on. The trouble is that at this point it’s clear that the shift to 401(k)’s was a gigantic failure. Employers took advantage of the switch to surreptitiously cut benefits; investment returns have been far lower than workers were told to expect; and, to be fair, many people haven’t managed their money wisely.” New York Times
What do you think is needed to strengthen Social Security for all workers? Paul Krugman and many Senators like Sen. Elizabeth Warren agree that we should be talking about strengthening Social Security and not cutting it. Some of the CEO’s mentioned above who have millions in their own retirement accounts have actually run up deficits in their own employees retirement accounts, but yet they still claim cutting benefits and extending the minimum retirement age are the way to go.
“While gilding their personal pensions, many Roundtable CEOs have allowed massive deficits to grow in their employee retirement funds:
- Of the Business Roundtable CEOs whose firms provide pension funds for their workers, 10 have deficits in these funds of between $4.9 billion and $22.6 billion.
- The Roundtable CEO with the largest deficit in his companys worker pension fund is Jeffrey Immelt of General Electric, with $22.6 billion. Immelts personal retirement fund is worth more than $59 million, the sixth-largest among Roundtable CEOs.” Bill Berkowitz
Are these CEO’s merely doing an end run in an attempt to steer Social Security funds into the private sector? Are they trying to steer the discussion away from taxing more income to strengthen Social Security? What do you think and who do you believe?
If Gene H & others have no leaders they can hold up that we should consider supporting then support will go where it’s welcomed, Rand Paul, Bridenstein, etc…
Don’t like, fine, show us worthy leaders.
The only people in the US who starve to death are anorexics, usually upper middle class W/F’s.
Tony,
The taxes that are collected today indeed are spent today instead of being laid aside for use in the retirement of the taxpayer. You’ve defined a Ponzi scheme. It’s “legal” when done with the power of the State, but Madoff rots in jail.
We should, therefore, continue to increase the tax in order to keep pace with inflation? With declining workforce participation, how do you propose to continue to fund the Ponzi?
Is that why we need to soak the rich (who have the desire and the means to hide their assets from taxation)?
ron wrote: “We should, therefore, continue to increase the tax in order to keep pace with inflation? With declining workforce participation, how do you propose to continue to fund the Ponzi?”
Hi Ron.
It is amazing how facts do not matter to some people. In 1950, there were 16 workers per retiree. Now there are 3. The government’s projection is there will be 2 in 2030 and without changes the system will be bankrupt. We have a culture that encourages people to apply for disability benefits, with lawyers more than happy to help them get it. We have a culture encouraging families to have less children, to abort unborn children, and to avoid marriage or encourage non-reproductive gays to marry. Clearly there are more people getting in on the payout end, and less on the pay-in end, yet we have pundits claiming there is no pyramid structure to the financial scheme of Social Security.
Supporters talk about it being an insurance scheme with investments, neglecting to realize that the investment is in treasury bonds, which is basically an IOU to yourself. The interest and payback still comes from the taxpayer, but the dollar is not worth as much because of inflation. Furthermore, while most insurance plans expect never to make a payout at all and its customers know that, Social Security promises to pay everyone, just like a Ponzi scheme. One advantage it has is that people and businesses are forced to pay whatever government says they have to pay.
Various ideas are put forward to fix the problem. One idea is to raise taxes. Another idea is to raise the age of retirement. Another idea is to lower the benefits paid. Yet another idea is to add a privatization scheme to people investing in their own retirement fund. This is a way to weed people out from reaching the top of the pyramid. Nobody chooses a path, because nobody wants to touch Social Security. Truth is that it was a mistake from the beginning, but one that we must now live with. The problems with Social Security are miniscule compared to the problems we will have with Obamacare in 50 years if it is not repealed.
I think you might find value in the following article:
Dismantling the Pyramid: The How & Why of Privatizing Social Security
by Karl Borden, professor of financial economics at the University of Nebraska.
http://www.cato.org/pubs/ssps/ssp1.html
Bron,
And yet when does Marx ever enter into discussion around here except to dismiss his ideas? There you go trying to paint people as Marxists who are most certainly not Marxists. I think Marx was stupid and his idea was (and is) fundamentally flawed . . . and in very similar ways to laissez-faire capitalism is stupid and flawed. Neither ideas take basic human nature into account. Communism ignores what motivates people and laissez-faire capitalism plays to one of the worst elements in human nature: greed. But I digress. Contrast Marx’s presentation in this forum to Rand, who you (and a couple of others) pimp endlessly. Other than one notable exception, no one thinks Marxism is a good idea and he doesn’t post nearly as frequently as the Randian set. Rand being unpleasant takes a distant second seat to the more relevant matter of her being demonstrably a sociopath (ASPD) by both DSM and WHO criteria (which explains why her work has a distinctly sociopathic bent) and the hypocrisy of her bemoaning social programs only to use social programs (which illustrates not only hypocrisy but her sociopathy as well – it’s all bad except when it becomes her turn).
The truth hurts sometime, but it has the benefit of being the truth.
However, it is an improvement that you actually give the appearance of backing away from Rand to attempt to associate yourself with more reputable (and sane) philosophers.
Is it finally starting to sink in what a disaster Objectivism is?
One can only hope.
That would be my holiday wish for you, Bron.
To wake up from your Aynish fever dream.
Bron: The left has a vested interest in keeping people poor and dependent.
The greedy apparently have a vested interest in letting the poor, the disabled, and those too old to work starve and die early.
ron: Please also consider that a tax dollar paid in 1990 was spent on goods in 1990, and a tax dollar paid today is spent on goods today. Inflation does not really matter in this instance; the objective was to provide a sandwich in 1990, and the objective today is to provide the same sandwich today.
The taxpayers of 1990 were not trying to fund their own sandwiches in 2013. They were meeting their obligations to their elderly in 1990. Taxpayers today are meeting their obligations to their elderly of 2013, which will include some that were taxpayers in 1990. In the same way, trying to fund a modest retirement that includes roughly the same modest buying power.
James Knauer:
“” We are a nation of financial illiterates.”
Not everyone holds the dollar in such esteem or importance, nor is there any Constitutional requirement for greed at the expense of your fellow citizens. The dollar is only a vehicle. It requires avarice to turn into the pornographic centerpiece of our society at the expense of anyone who isn’t rich.”
That doesnt have anything to do with being rich, it means to learn how to manage and use the money you do make so you wont be broke all the time and living pay check to pay check.
It means being able to buy a house if you want, or investing in the stock market or buying a duplex and renting one unit and living in the other. These are things that are available to the middle class but many piss their money away on gadgets and other worthless trinkets from china or party too much or buy a 30,000 car with a 450/month payment when they could afford a Hyundai with a full service plan for 250/month.
What about the citizens who are paying for the financial illiteracy of others? Dont they count or are they only milch cows to be used by people unwilling to learn how to manage their money?
Your fellow citizens, most of whom are middle class, are pulling the wagon. Financial litteracy would help more people pull the wagon and lighten the burden on the rest of us. Maybe even trim the wagon to the point where the truly needy are the ones being carried.
But then where would the left get votes? A man who knows how to fish doesnt need a fish monger. The left has a vested interest in keeping people poor and dependent.
For Michael Marsalek,
http://www.zerohedge.com/news/2013-11-23/killing-we-paid-our-taxes-we-earned-our-benefits-social-security-ponzi-meme
Please also consider that for a tax dollar paid in 1990, a dollar in benefits today are not equal. Today’s dollar pays for much less.
Gene H:
I’ll leave that up to you to decide. I have my opinions on that subject. And it is why I am open to what you have to say. I did think it was a bit hypocritical and was actually surprised when I read it.
But I dont worship Ayn Rand and her ideas are pretty much those of Locke, Jefferson, Bastiat and others. She had some good ideas but seemed to be rather hard to be around from what I can infer. I see that in many creative people.
Karl Marx, from what I can tell, was a real POS but no one seems to mention that when discussing his ideas.
So I say, since Marx was a real POS who took money from rich people [at least he wasnt a hypocrite, eh], had sex with his young housekeeper and generally was an a$$hole to one and all, scientific socialism isnt worth a sh*t and everyone who thinks it is good is nothing but a theiving, philandering POS.
Just using your “Logic” of course.
Sorry for some mistakes in my previous comment.
I typed too fast and did not proof read properly.
Fill in the holes in the hull as needed.
Social Security & Medicare are entitlement programs that the recipients of benefits have contributed to. Generally speaking, Social Security and Medicare beneficiaries are old, disabled, easily taken advantage of and less likely to riot or take up arms against the government. Welfare, Medicaid and food stamps are safety net programs, not entitlement programs, that the recipients have made no contribution to. Barack Obama has aggressively promoted expansion of the food stamp program which now has the highest number of recipients ever. There is no question that government spending must be significantly reduced and until spending is brought under control, the government must better order its priorities. For example: during the recent government shut-down, World War 2 vets were locked out of open air monuments to their service. Meanwhile, the National Mall was opened for illegal aliens to rally & demonstrate for immigration reform.
A kinder, gentler nation’s Ship of State (like our peer nations) is what was envisioned by both FDRcare and Obamacare.
It is just that the meme complex called “The Selfish River“, upon which the Ship of State floats. Then The Selfish River flows through the scenic, lake-filled Happy Valley with understandable and “socially acceptable selfishness” on board.
Then The Selfish River experiences drops in the altitude of the state lands it flows over, to wind its way down into “Sociopath Canyon”.
There the self-described “higher ups” on board begin to want more commodities in the cargo, more share than other crew members and/or passengers receive.
Up to a certain point within Sociopath Canyon, the Ship of State can return up-river to the meandering flows of the more peaceful, happier, and less dangerous waters within the Happy Valley area.
From that early point in Sociopath Canyon, however, The Selfish River begins to morph until it turns into a raging maelstrom of white water rapids.
Churning ever more violently on, it eventually enters “Psychopath Canyon”, from whence no Ship of State has ever returned.
All that remains thereafter, takes place on “The Delta of History”, where the outflows from Psychopath Canyon fan out like the Mississippi River Delta.
A place inhabited mostly by “The Talking Heads”, “The Pundits”, “The Relatives”, and “The Scholars.”
They pick through the remains of the Ship of State, the bodies of the crew and passengers continually, seeking “The Answer.”
Some of them examine the wreckage for “Posterity’s Sake”, “History Books”, and “Empirical Autopsies”, all of which, when bound into handsome volumes, come in many colors, sizes, and shapes.
The Talking Heads, Pundits, and Scholars fight in a debate concerning “what the shapes of the pieces mean”, where they once fit on the Ship of State, and why it broke up into so many pieces.
While The Relatives morn.
And, a few of them get the “Big Picture.”
” We are a nation of financial illiterates.”
Not everyone holds the dollar in such esteem or importance, nor is there any Constitutional requirement for greed at the expense of your fellow citizens. The dollar is only a vehicle. It requires avarice to turn into the pornographic centerpiece of our society at the expense of anyone who isn’t rich.
A) Government is inefficient and incapable of executing this well (see website designs, Post Office, Medicare/Medicaid, SNAP, etc).
B) Making a large mistake larger sounds like two wrongs make a right.
C) If you’re writing an economic article and quoting Paul Krugman to support your argument, you have a losing argument.
D) Progressive taxes are immoral. http://tinyurl.com/l73dk2z
Ha! I meant “The Founding Fathers did not sail from some island…”
Senator Elizabeth Warren – Floor Speech on Social Security
http://www.youtube.com/watch?v=G4xrOarEWi8
Elizabeth Warren Lays Out Why We Should Expand Social Security
David: Social Security is a quasi-pyramid scheme that is not sustainable.
No it isn’t, it is an insurance system. All insurance companies pay current claims out of incoming premiums. They aren’t bank accounts. They never have the reserves to pay everybody if every client suddenly made a claim due to some disaster. It is always a probabilistic approach, your coverage can only continue if their number of clients paying premiums does not fall beneath a certain threshold (that covers claims, administrative overhead, and any competitive profit demands).
Social Security is an insurance system run by the government as a non-profit. It is just as legitimate an operation as Geico or State Farm.
Bill H: I think that is a lot to ask of people; people’s attention, worry and help are usually directed by things that affect them. The Founding Fathers did sail from some island to found a Democracy they had no intention of living in and benefiting from; they were motivated by what they perceived as being victimized and subjugated by King George.
Likewise, a union of factory workers may be demanding safer equipment and practices for all because they are close enough to the problem to see people are getting killed. The legitimacy of their argument should not have to wait for some altruistic hero that has never worked in a factory to see and champion their cause.
I think the more salient point is whether Rafflaw’s interests in the problem are purely selfish interest, or an interest in decreasing the inequity he has come to recognize as a result of impending changes in his financial prospects. I think we are smart enough to tell the difference between purely selfish demands and an advocacy for truth and fairness.
“Now that I am 62 years of age, I have become more interested in the issue of Social Security’s solvency.”
With all respect, social responsibility would suggest becoming concerned before the problem directly affects you. A goodly part of this nation’s problem is that the vast majority of the voting population is concerned about only that which directly affects them, and votes for only that which favorably affects them.
lotta,
The Swiss is an interesting one.