This column ran 2/27/10 and can be found at www.waltonsun.com
America needs to make some hard choices very soon.
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My wife and I begin most mornings with a 2-mile walk.
There is something serene about seeing the sun rise over Grayton State Park. Often I say a silent prayer to Gov. Lawton Chiles, who had the foresight to protect that beautiful piece of God?s green earth.
Recently, by mutual agreement, we delayed our excursion. Grover (Nitwit) Norquist was being interviewed on MSNBC?s ?Morning Joe,? hosted by our former congressman Joe Scarborough. Norquist?s solution to our financial problem is cutting taxes and eliminating wasteful spending. Conservative stalwart Pat Buchanan immediately chastised Norquist, insisting that he spell out what programs Norquist would cut: ?How are you going to cut 10 percent GDP out of the federal budget? without paring Social Security benefits, Medicare and Medicaid reimbursements, military spending and interest on our debt?
Norquist refused to answer the question because it cannot be done.
His intransigence fuels our problem; perhaps Americans can?t handle the truth. Touting tax cuts as a solution is like trying to lose weight without changing your lifestyle.
For starters, we are fighting two wars; wars, by definition, are expensive. Wasteful spending is in the eye of the beholder. The sowal. com message board chided FHA loan programs in Elkhart, Ind., as an example of wasteful spending. But to the good citizens of Elkhart, replacing the Clyde Wells Bridge probably looks like pork. The magnitude of wasteful federal spending is in direct proportion to the distance it is from your front door. No, Mr. Norquist, there are no easy answers to our financial problems.
Recently I bought ?Choosing the Nation?s Fiscal Future,? (free download at www.nap . edu) published by National Academies Press with a grant from the MacArthur Foundation. Bipartisanship is not dead; collaborators on this report included members of the American Enterprise Institute and The Urban League. These folks realize our problem is neither conservative nor liberal, but American. This report defines four ways to slow the spiraling increase of the federal debt relative to the economy by fiscal 2012 ? none of which Mr. Norquist will find palatable because they all involve tax increases of some degree or dramatic spending reductions.
Any politician who tells you that we can get out of our dilemma without some degree of pain is deluding you.
The committee proposes four ways to solve our budget woes.
1. Low spending and revenue: Tax revenue would stay essentially the same, but it would require ?sharp reduction in growth rates for health and retirement programs.?
2. High spending and revenue: Tax revenue increases to 33 percent of GDP (currently 18-19 percent). Social Security benefits would be secure (not Medicare); other current federal spending could be higher.
3. Intermediate: Revenues increase to 25 percent. Growth rates for Medicare, Medicaid and Social Security would be lower, but other public infrastructure investments could continue.
4. Intermediate B: Revenue could slightly increase over 25 percent, but growth rates for entitlement programs would be higher, with a corresponding decrease over federal spending. Given the easily projected numbers, the federal debt will be 150 percent of GDP by 2040. Of course, the economy would melt before then.
To paraphrase Robert Plant in ?Stairway to Heaven,? there are four paths we can go by. In the long run, there?s still time to change the road we are on.
Replies
24
SoWal Insider
When social security was first created, full benefits kicked in at the ripe old age of 65. Today that age limit is 67. Medicare applies similar age restrictions. Yet between 1930 and today, life expectancy has increased nearly 20 years, from 59 to 78.
At some point we are going to have to accept major changes in a system that was once an end of life safety net that has now become a support system that encompasses nearly 1/4 of our life expectancy. Add to this the fact that politicians have spent 100% of the excess reserves meant for smoothing over population changes, resulting in a brewing fiscal calamity of epic proportions. We will have to deal with this at some point in the near future. The current system is unsustainable.
At some point we are going to have to accept major changes in a system that was once an end of life safety net that has now become a support system that encompasses nearly 1/4 of our life expectancy. Add to this the fact that politicians have spent 100% of the excess reserves meant for smoothing over population changes, resulting in a brewing fiscal calamity of epic proportions. We will have to deal with this at some point in the near future. The current system is unsustainable.
Edited
Beach Fanatic
When social security was first created, full benefits kicked in at the ripe old age of 65. Today that age limit is 67. Medicare applies similar age restrictions. Yet between 1930 and today, life expectancy has increased nearly 20 years, from 59 to 78.
At some point we are going to have to accept major changes in a system that was once an end of life safety net that has now become a support system that encompasses nearly 1/4 of our life expectancy. Add to this the fact that politicians have spent 100% of the excess reserves meant for smoothing over population changes, resulting in a brewing fiscal calamity of epic proportions. We will have to deal with this at some point in the near future. The current system is unsustainable.
I've often wondered if people of a certain age and accumulated wealth would be willing (and the government would let them) to drop out of social security and forego what ever benefits they have accumulated for the opportunity to start investing that money themselves in private accounts.
SoWal Insider
pay more taxes if you want the entitlements
Beach Fanatic
pay more taxes if you want the entitlements
I don't want any cheese (social security) I just want out of the trap (taxes)
SoWal Expert
I've often wondered if people of a certain age and accumulated wealth would be willing (and the government would let them) to drop out of social security and forego what ever benefits they have accumulated for the opportunity to start investing that money themselves in private accounts.
My idea was that they could choose to forgo the benefits and get to deduct that amount on their taxes.
That way the money stays in the fund, but they still get to benefit somehow.
AND the politicos can't use SS or Medicare for anything - it STAYS in those accounts.
Beach Fanatic
My idea was that they could choose to forgo the benefits and get to deduct that amount on their taxes.
That way the money stays in the fund, but they still get to benefit somehow.
AND the politicos can't use SS or Medicare for anything - it STAYS in those accounts.
Under your plan would they still have to keep paying into the system or could they move forward with private accounts after they gave up their accumulated benefits?
My husband and I are 51 years old and have done well. I would be willing to walk away from the money that we've already put in (even without a tax deduction). I can't see how they will reform social security without something like this happening.
SoWal Expert
They still have to pay in - for a variety of reasons.
Opting out sounds good - until people poorly invest or the market tanks or their pension falls through or someone dies or there is a health issue or something else happens and they then need that income. I want it to still be a fallback option for them if it is needed.
I think a lot of people would be willing to give up their benefits if they had the means to do so and if so, I want them get rewarded somehow.
Social Security is only supposed to be a portion of your overall planned retirement income anyway. I think it is 25%?
I pay SS though I don't realistically think I will get much out of it as a healthy working person of my age - but fate often has other plans.
Opting out sounds good - until people poorly invest or the market tanks or their pension falls through or someone dies or there is a health issue or something else happens and they then need that income. I want it to still be a fallback option for them if it is needed.
I think a lot of people would be willing to give up their benefits if they had the means to do so and if so, I want them get rewarded somehow.
Social Security is only supposed to be a portion of your overall planned retirement income anyway. I think it is 25%?
I pay SS though I don't realistically think I will get much out of it as a healthy working person of my age - but fate often has other plans.
Beach Fanatic
Social Security was never meant to be the only retirement income a family has. Unfortunately, for many that seems to be the case. It must be reformed and is much more in need of that reform than the health care system, IMO. It almost seems that if you planned with forethought, saved for retirement and didn't put all your eggs in one basket, you are now looked upon by many as someone who has cheated the system. I hope I am mistaken in thinking this and if someone can point out where I am in error I would appreciate it. It does seem to me, to reiterate, that if you worked hard, saved your money and are entitled to things you planned for and receive, in today's world you don't care about the other guy. In most instances nothing could be further from the truth.
SoWal Expert
I don't hear that planning ahead or well is cheating the system, but I frequently hear that "too conservative, too old fashioned, not making your money work for you like you should, you are thinking too far ahead, being pessimistic, not taking advantage of the system, you'll never get rich that way" etc.
Please note that this is NOT what I hear from anyone w/ a clue about financial planning - or even the SS administration. :roll:
Please note that this is NOT what I hear from anyone w/ a clue about financial planning - or even the SS administration. :roll:
Beach Fanatic
They still have to pay in - for a variety of reasons.
Opting out sounds good - until people poorly invest or the market tanks or their pension falls through or someone dies or there is a health issue or something else happens and they then need that income. I want it to still be a fallback option for them if it is needed.
I think a lot of people would be willing to give up their benefits if they had the means to do so and if so, I want them get rewarded somehow.
Social Security is only supposed to be a portion of your overall planned retirement income anyway. I think it is 25%?
I would not be willing to give up what I had accumulated if I was still going to be forced to pay in. That, imo, is nothing but wealth distribution.
SoWal Expert
But when you are contributing to it and when you are getting money (or not) from it are two different time periods.
IMO better to contribute and then not need it than to opt out, need it, and have it unavailable.
IMO better to contribute and then not need it than to opt out, need it, and have it unavailable.
Beach Fanatic
I may be misreading Margarita but I think she is saying she would forego SS payments for the use of tax credits for the money due her. I could accept that as well. I just finished my yearly tax return and the results as to what I paid and owed was stunning. Two people, no dependents, no write offs or deductions except standard and you are really whomped up along side of the head. Some could forego SS and would for something in return but others cannot. What I really want is to see less of my money wasted on frivolous project such as underground turtle crossings on Interstate highways and such.
SoWal Expert
Welcome to my world - and I doubt I'll see a dime of that money I am paying into SS.
I thought she was saying that she wanted to stop paying into SS now (pre-retirement at 51). I like the idea of being able to opt out and get credits etc., but am concerned as to what will happen if people opt out and then NEED Social Security.
I am basing that on the current craptastic job many are doing saving for retirement, accumulating debt, paying their mortgages, getting health and long term care insurance etc.
I thought she was saying that she wanted to stop paying into SS now (pre-retirement at 51). I like the idea of being able to opt out and get credits etc., but am concerned as to what will happen if people opt out and then NEED Social Security.
I am basing that on the current craptastic job many are doing saving for retirement, accumulating debt, paying their mortgages, getting health and long term care insurance etc.
Edited
Beach Fanatic
I may be misreading Margarita but I think she is saying she would forego SS payments for the use of tax credits for the money due her. I could accept that as well. I just finished my yearly tax return and the results as to what I paid and owed was stunning. Two people, no dependents, no write offs or deductions except standard and you are really whomped up along side of the head. Some could forego SS and would for something in return but others cannot. What I really want is to see less of my money wasted on frivolous project such as underground turtle crossings on Interstate highways and such.
I would completely walk away right now from the money that I have put into Social Security (with or without a tax credit) but from this point forward want to opt out and invest future SS money into a private account.
SWGB
I would completely walk away right now from the money that I have put into Social Security (with or without a tax credit) but from this point forward want to opt out and invest future SS money into a private account.
Just think if you had that option 2-3 years ago?
Beach Fanatic
Just think if you had that option 2-3 years ago?
I could have done a lot better than the government
SWGB
I could have done a lot better than the government
I don't remember the SSA panicking when the stock market bottomed out. The point is that while you may possess the investment skills necessary to avoid financial calamity the average person does not. Hence the reason SS was set up in the first place.
SoWal Insider
I don't remember the SSA panicking when the stock market bottomed out. The point is that while you may possess the investment skills necessary to avoid financial calamity the average person does not. Hence the reason SS was set up in the first place.
Why would they, they don't have any money to invest, the politicians spent it all.
Beach Fanatic
I don't remember the SSA panicking when the stock market bottomed out. The point is that while you may possess the investment skills necessary to avoid financial calamity the average person does not. Hence the reason SS was set up in the first place.
This is how Social Security was set up in the first place.
Franklin Delano. Roosevelt (Terms of Office March 4, 1933, to April 12, 1945), a Democrat, introduced the Social Security (FICA) Program. He promised:
1.) That participation in the Program would be completely voluntary,
2.) That the participants would only have to pay 1% of the first $1,400 of their annual Incomes into the Program,
3.) That the money the participants elected to put Into the Program would be deductible from their income for tax purposes each year,
4.) That the money the participants put into the Independent ?Trust Fund? rather than into the General operating fund, and therefore, would Only be used to fund the Social Security Retirement Program, and no other Government program, and
5.) That the annuity payments to the retirees would never be taxed as income.
Beach FanaticAuthor
This is part of the problem.
Everyone (or most everyone) has focused only on Social Security - the Gordian Knot is Medicare/Tricare.
Everyone (or most everyone) has focused only on Social Security - the Gordian Knot is Medicare/Tricare.
SoWal Insider
This is part of the problem.
Everyone (or most everyone) has focused only on Social Security - the Gordian Knot is Medicare/Tricare.
Both systems need to have their retirement ages lifted and benefits slashed, but both political parties resist such change, they know elderly voters very well. It'll take a major crisis before the American pubic is willing to accept the change we need. Democrats seem to be doing a pretty good job these days of driving us in that direction.
Beach Fanatic
Both systems need to have their retirement ages lifted and benefits slashed, but both political parties resist such change, they know elderly voters very well. It'll take a major crisis before the American pubic is willing to accept the change we need. Democrats seem to be doing a pretty good job these days of driving us in that direction.
"Entitlements must be cut. By 2030, the Congressional Budget Office is estimating that Social Security, Medicare and Medicaid will make up 75% of our budget spending. In other words, unless we get a handle on entitlement spending, it will be impossible to get our deficits under control. That means the age eligibility for these programs must be raised and the amount spent per person will need to be dropped to try to close the gap between what we take in and what we pay out. Given how explosive this issue is politically, it's not going to be easy to accomplish. However, it's not realistic to believe that future generations of Americans are going to be willing to live like indentured servants for decades to support their own personal senior citizen who's lying around in a hammock somewhere, enjoying a 25 year long retirement. The sooner we start making changes, the easier it will be on everyone and the less shock there will be to the system when the inevitable changes start to take place."
John Hawkins : 5 Ugly Truths Americans Will Have to Face - Townhall.com
Beach FanaticAuthor
Spending cuts alone won't save Medicare.
One of the reasons it is in such dire straits is because of the totally unfunded Medicare Part D.
Please lets keep the politics out No one is blameless.
One of the reasons it is in such dire straits is because of the totally unfunded Medicare Part D.
Please lets keep the politics out No one is blameless.
SoWal Insider
The last time we implemented successful, major reform of systems like this, we did it with a moderate democrat in the White House, and republicans controlling Congress. I have high hopes for the near future!
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