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?
DavidM:
If I remember correctly the founders were against a tax on labor. Part of that pesky John Locke and his admonition that man owns his own labor.
As for social security, they think it is invested in treasury bills or bonds or who knows what.
Tony C wrote: “Permission for the Congress to set taxes was built into the Constitution from the start. Are you saying you reject the Constitution?”
Direct income tax on the people was not in the Constitution from the start. That took the 16th Amendment in 1913, only 100 years ago. Look at the oppression that single amendment has caused the people of the US. Look at the destruction of liberty and freedom, all in the name of War and Social Reform.
ron: It is apparent that some desire a majority without bounds…perhaps we should reconsider our basic principles:
Perhaps you should learn to read and understand what you are arguing about. I consider that a basic principle.
ron: How do you assert that taxation is “stealing”? Taxation is legal, theft is not. Permission for the Congress to set taxes was built into the Constitution from the start. Are you saying you reject the Constitution?
ron says: So we should save / expand Social Security because we’re interested in promoting life?
Is outlawing murder of adult citizens “promoting life?” Yes, save and expand Social Security because we are interested in preserving the lives of our existing, adult citizens.
ron says: Are you a pro-lifer?
We may debate when life starts, I have a scientific answer to that based on brain development markers; but I think most of us agree that life starts sometime before we learn to talk. I am certainly pro-life for already born persons, which includes retirees.
ron says: This sounds a great deal like the majority getting to destroy the minority because they can have more food and water…survival of the fittest?
Except retirees (or the entire collection of people eligible for Social Security) are NOT a majority, and they don’t “destroy” any minority, so all your arguments are invalid. If you make clownish arguments you just look like a clown.
It is apparent that some desire a majority without bounds…perhaps we should reconsider our basic principles:
http://www.lexrex.com/enlightened/AmericanIdeal/yardstick/pr12.html
Tony C.: Why would it be moral to save lives, prevent starvation, decrease misery and homelessness? Do you understand the word moral, or is that just a synonym for selfishness in your dictionary?
So we should save / expand Social Security because we’re interested in promoting life? Are you a pro-lifer?
This sounds a great deal like the majority getting to destroy the minority because they can have more food and water…survival of the fittest?
How do you assert that stealing money from working people and then giving it back to them at a reduced rate decreases misery?
I was going to write this anyway & later now I see another headline making my point exactly.
“Insurance Goes Not Reduce Risk! Insurance Massive Increase Risk!”
The 2007-8 Wallst Crash was Directly Caused By Insurance. This coming Crash on Wallst will be Caused By Insurance!
**Half Of New Greek HIV Cases Are Self-Inflicted To Receive €700 Per Month Benefits, Study Finds
Tyler Durden’s picture
Submitted by Tyler Durden on 11/25/2013 11:19 -0500**
http://www.zerohedge.com/news/2013-11-25/greek-tragedy-half-new-greek-hiv-cases-are-self-inflicted-receive-%E2%82%AC700-month-benefit
Ron: As to the funding, the imbalance is anything but a temporary anomaly. It is a permanent and ongoing function of a scheme of redistribution under color of law.
Oh, redistribution of wealth… I don’t have a problem with that. And it is legal, by the way; not “under color of law,” just flat legal and Constitutional.
Ron says: Why would it be prudent or moral to generate debts and then pass them off to future generations?
Why would it be moral to save lives, prevent starvation, decrease misery and homelessness? Do you understand the word moral, or is that just a synonym for selfishness in your dictionary?
As for “future generations,” every generation deals with the debts and acts of its ancestors; we are no different. Future generations will be adults like us and will deal with the problems facing them at the time; I do not regard performing a moral act now, saving lives and preventing misery now, as a burden to future generations. Just as I do not regard any costs of World War II a burden on me, that generation did the world a service. After that service, our debt was higher than it had ever been, and they spent even more rebuilding the world, also a service. I do not resent them for that, or passing any of the costs on to their “future generations.” We paid it down and grew our way out of those debts.
As for “prudent,” I just don’t care, morality has a higher weight than money. We don’t let old people just die in misery when we can prevent it for a few percent of our paycheck. Or 10%, or 20%. We aren’t that selfish. (You might be, but the majority of us are not.)
I’ll be sure to be sure to be appropriately shocked when you display some actual precision in your definitions and/or some wisdom. The function is in the form and proper names come from examining each and everything to answer the question what is it in itself. The form of a Ponzi scheme and the form of social insurance programs are inherently different.
Gene H wrote: “The form of a Ponzi scheme and the form of social insurance programs are inherently different.”
Are you really that obtuse that you see NO similarities at all?
Ponzi – 1) pays returns to its investors from … the money paid by other investors
2) the perpetuation of returns requires an ever-increasing flow of money from new investors to sustain the scheme
You don’t see these two elements as descriptive of Social Security?
I guess we will never have to raise Social Security tax then, or raise the retirement age. Not according to Gene Howington and the left wing lying blogs. I guess there is plenty of money so we should just expand Social Security! That is great news. Thank you for making us feel better.
I’ve investigated Ponzi schemers. I know one when I see it and I have learned here a great phrase, “Wisdom is calling things by their correct name.” I support SS. I want it fixed. It cannot continue on this fundamental “legal” Ponzi scheme track w/o some very big and painful fixes. It’s surreal to see people thinking otherwise.
“A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme.”
Contrast with . . .
“Social insurance is any government-sponsored program with the following four characteristics:
the benefits, eligibility requirements and other aspects of the program are defined by statute;
explicit provision is made to account for the income and expenses (often through a trust fund);
it is funded by taxes or premiums paid by (or on behalf of) participants (although additional sources of funding may be provided as well); and
the program serves a defined population, and participation is either compulsory or the program is subsidized heavily enough that most eligible individuals choose to participate.
Social insurance has also been defined as a program where risks are transferred to and pooled by an organization, often governmental, that is legally required to provide certain benefits.
In the U.S., programs that meet these definitions include Social Security, Medicare, the PBGC program, the railroad retirement program and state-sponsored unemployment insurance programs.”
Apparently some people wouldn’t recognize a real Ponzi scheme if it bit them in the wallet.
Oky,
You seem to miss the point that the lobbying and campaign finance systems discourage most if not all people with any real integrity from running for office. I’ll give you someone I’d vote for (if I lived in Virginia). Two in fact. Mark Esposito and Jonathan Turley. Their values are not transient or subservient to political expediency. Even though we may disagree on specific issues (although I’ll stipulate that Mark and I disagree on very little), I know both would keep their “eye on the ball” so to speak. I’ll throw in a third if I lived in Florida: Mike Appleton. However, until we get some substantive change to the campaign finance and lobbying systems – in addition to breaking the two-party/no real choice stranglehold gerrymandered into systems local, state and Federal – we won’t get candidates with integrity and a true sense of civic duty. We’ll continue to get greedy amoral scumbags who look at political service as a way to fan their overheated egos and enrich themselves and their cronies at the expense of the American public instead of realizing that working for the good of all is simply the highest calling a human being can have.
There is a reason good people who might otherwise be called to public service decline.
They are unwilling to sell their souls or compromise their integrity for the monied elite seeking to turn this country into a feudalistic authoritarian totalitarian fascist nightmare state.
Bernie Madoff and all Ponzi schemers wish they could operate w/ the impunity and lack of actuarial discipline of SS. Madoff did for awhile.
By all means, Bron. Rely upon statistical outliers to judge the value of complex systems. That’s just the trap of binary thinking at work again. Also a giant case of the fallacy of composition.
And there is no such thing as “compassionate Objectivism”. It’s a doctrine based in selfishness as a virtue and compassion as a weakness. You might as well say your preferred form of chicken is fish.
My preferred form of chicken is dead. They’re easier to eat that way. Don’t put up as much of a squawk.
Tony,
The purpose of insurance is to transfer risk from one person to another entity. When one experiences a financial event that is covered under the policy, they submit a claim, prove that the event occurred (via pictures of damage or bills), and are paid an amount equal to the agreed value of the claim.
If Insurance company A is unable to pay its policies, there are many other (more fiscally solvent) entities willing to engage in commerce.
The ironically named Social Security program taxes someone during a period when they are ineligible to make claims and returns devalued dollars to said persons IF they survive long enough to make a one time claim where an endless stream of money comes in monthly.
The government has a monopoly on the force it implements to “fund” the program.
These two concepts are similar only in that they deal in matters monetary.
As to the funding, the imbalance is anything but a temporary anomaly. It is a permanent and ongoing function of a scheme of redistribution under color of law.
Why would it be prudent or moral to generate debts and then pass them off to future generations?
Gene H:
I like my form of Objectivism, call it Objectivism with a human face. I have never thought a social safety net is a bad idea. I just think there is no reason to have so many people trapped in it. A net catches fish too, the people who live in the net are wasted lives. Human potential just pissed away for $30,000 per year, the proverbial “30” pieces of silver.
I have always remembered the young women I worked with who were only allowed to make a certain amount of money or they lose all their benefits. At some point, it isnt the poor we are worried about but the class of people from Ivy League schools who run those programs. Poverty programs, in my opinion, are a jobs probram for many left leaning Ivy Leage Liberals who dont really care about the poor and are using their positions for power and social engineering. No poverty no bucks, theirs is a vested interest in themselves and their ideology. Votes and money for the cause at the expense of the middle class.
Agent Orange submitted a Bill to replace FDRcare and Obamacare.
It is called Sadomasochism for those my daddy
hatesdoes not health care for.Agent Orange gets off on it.
** It is not a Ponzi scheme anymore than an Insurance company is a Ponzi scheme.**
Thanks for pointing that out Tony C.
You’re exactly right, Insurance co’s are govt sponsored Ponzi Scams!
They all should be treated as such.
Insure our survival …
Ponzi our survival …
Two concepts, not one.
Insurance is a concept based on what could happen, and how to deal with it as fellow passengers on a ship of state, a nation, a planet that nourishes us.
The degree of “what could happen” is also degree of “risk.”
We don’t know, and it does not matter, whether it will happen to us or won’t, so we insure that if it does happen we have joined the pool to help each other if it does happen.
The exceptional among us will never get sick, become unemployed, or suffer the other “indignities” the rest of us risk experiencing in this life.
Fantasy for some, risk management in concert for others.
Ron: You’ve defined a Ponzi scheme.
No, I have defined an insurance scheme, which works exactly the same way. Premiums today pay claims today, premiums tomorrow pay claims tomorrow. The insurance company is not a bank account. Once you are covered, you can collect a million dollars on a policy for which you have paid a total of $500.
It is not a Ponzi scheme anymore than an Insurance company is a Ponzi scheme.
As for funding; fund it the same way we fund other unprofitable ventures, like unnecessary wars. Borrow the money. The imbalance is due to a temporary anomaly, the Baby Boom, and it will pass, and the debt will be repaid by future generations. Or raise taxes on corporations, increase their share of social security, from equal to the employee contribution to double or triple the employee contribution. Or increase the minimum wage. Whatever; there are a thousand solutions. Print the shortfall.