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