From: utzoo!decvax!ittvax!swatt
Newsgroups: net.politics
Title: Re: Social Security - (nf)
Article-I.D.: ittvax.588
Posted: Fri Jan 21 14:23:28 1983
Received: Sat Jan 22 03:55:26 1983
References: ihlpb.259

In 1973 I attended a symposium given at the University of Chicago
titled "The Economics of Financing Government", featuring Milton
Freeman and others.  One person who had worked at HEW gave a talk
about the Social Security system.  He said several co-workers had
attempted to calculate the "unfunded deficit", the difference
between obligations and income if SS enrollment were stopped right
then.  They came up with various numbers up to $800 BILLION.  He said
they had a special name for numbers of that size, "MEGO" numbers, for
"My Eyes Glaze Over".

The problems with SS are not entirely the fault of the federal
government.  I believe when it was first set up, the retirement age was
65, but in the 50 years since initiation the average lifespan has
increased, and more people go to college before entering the work
force.  Thus people start paying into the system later and live longer
to collect benefits.

What IS the fault of the federal government is that this situation was
not continually adjusted so the overall system remained actuarially
sound  ($outgo == $income).  The political control over SS
administration guarantees that "popular" changes get made (increase
benefits), while "unpopular" ones don't (increase taxes).

Looking at my W-2 summary for 1982, I find that just over $3,000 was
deducted from my paycheck for FICA; ITT contributed the same amount.
Under the IRA rules, I can only put $2,000 into my own private
retirement account.  Even so, if I put the maximum into the IRA each
year, when I retire at 65, I will have MORE money available (before
taxes) from the IRA than my benefits from SS, to which I will have
contributed 3 times as much (this projection made certain assumptions
about interest rates that may no longer be valid).

Several general objections to present SS system:

  1)	I'll bet, without having to look, that the SS trust funds
	are invested in treasury notes.  The government thus lends
	itself the money it collects for retirement at interest rates
	it choses to pay.  As I believe the government borrows far too
	much anyway, this is a sneaky way to borrow more from "captive
	investors".

	BTW, this is part of the fraud administrations commit when
	they say "we spent X times as much on social programs as
	military programs".  They are including the SS payments, which
	are by law separate from general revenues.

  2)	I'm willing to go along with a system that funds a decent
	retirement for all workers, even if it means the higher earners
	will pay more and get less, but the system ought to be
	actuarially sound overall.  The true cost of the retirement
	program ought to be visible.  This means taking it away from
	political control.

  3)	As long as the SS system is going to stiff the higher earners,
	the tax laws on IRA's should be liberalized for those who chose
	to put their own money into their own retirement.  Say a
	maximum non-taxable contribution of up to the total individual
	+ employer FICA payments.  Since I am operating on the
	assumption that when I retire my effective available SS
	benefits will be 0, I would gladly pay more money into
	something that is mine personally.

  4)	Given an inflationary economy, the ONLY way to survive is
	to continually increase your income.  This makes "retirement"
	a relative thing.  People over 65 who still work to maintain
	their standard of living have their SS benefits reduced or
	eliminated.

  5)	The whole philosophy of "from each according to ability;
	to each according to need" simply CANNOT be fair given
	different opinions about "ability" and "need".  A central
	government determination of both opens the way to the
	the worst kind of tyranny.


There was a recent item in the news about the public employees of a
city or state going OFF the social security system.  Does anybody know
what the provisions are in the SS act that allow this?  Would it apply
to any governing body?  If so, it might be a possible answer to the SS
mess.

	- Alan S. Watt