The "Third Rail"
There is a popular cliche about Social Security: it is the electric "third rail" of politics. In other words, for politicans, trying to cut or get rid of Social Security is like grabbing hold of the third rail on the subway. You get fried.
Historically, politicians who would cut Social Security get to stay home after the next election because someone else is going back to Washington in their place, someone who understands that Americans Love Social Security.
At Rock the Vote, we consider the military draft to be the "third rail" of politics for young people. The draft was a huge part of the 2004 presidential election and any politician who would think about bringing back the draft will have to grapple with the fact that young people stormed the polls on this issue--and could do it again.
The military draft issue really took off in 2004 after Senator Chuck Hagel (R-NE) called for a national dialogue on the topic. Appearing on NBC’s Today Show in Spring of 2004, Sen. Hagel raised the possibility of renewing the military draft, saying, “It’s unfair to ask only a few people to bear the burden of fighting and dying.” He added that all Americans should “share the sacrifice” of protecting our nation.
We admire Chuck Hagel for having the courage to be honest about what he wants and what it might cost US. It takes courage to call for sacrifice, and Senator Hagel's stance sparked a debate that made politics real for young people.
So now Senator Hagel has grabbed another third rail, and is calling for young people to make a different sacrifice. As part of his plan for privatization of Social Security, he's calling for raising the retirement age so that you can't collect full Social Security benefits until you are 68.
Now, most of us think of retirement as something that you do at age 65. But here is something we bet you do not know. The last time our representatives sat down at the table to change Social Security, they raised OUR retirement age to 67.
Just as with the potential military draft, we think there is a better alternative. There's enough money in Washington to pay Social Security benefits down the road but some politicians want to spend it on other priorities. Today, that is Iraq, or tax cuts. Tomorrow, it will be something else. That's how it works.
We don't have to resort to raising the retirement age even higher than 67. We need the politicians to make economic security for our generation a priority when they make the decisions. That's what Rock the Vote is all about.
But still, Senator Hagel, we appreciate you for being upfront with us, and putting your cards on the table.
Historically, politicians who would cut Social Security get to stay home after the next election because someone else is going back to Washington in their place, someone who understands that Americans Love Social Security.
At Rock the Vote, we consider the military draft to be the "third rail" of politics for young people. The draft was a huge part of the 2004 presidential election and any politician who would think about bringing back the draft will have to grapple with the fact that young people stormed the polls on this issue--and could do it again.
The military draft issue really took off in 2004 after Senator Chuck Hagel (R-NE) called for a national dialogue on the topic. Appearing on NBC’s Today Show in Spring of 2004, Sen. Hagel raised the possibility of renewing the military draft, saying, “It’s unfair to ask only a few people to bear the burden of fighting and dying.” He added that all Americans should “share the sacrifice” of protecting our nation.
We admire Chuck Hagel for having the courage to be honest about what he wants and what it might cost US. It takes courage to call for sacrifice, and Senator Hagel's stance sparked a debate that made politics real for young people.
So now Senator Hagel has grabbed another third rail, and is calling for young people to make a different sacrifice. As part of his plan for privatization of Social Security, he's calling for raising the retirement age so that you can't collect full Social Security benefits until you are 68.
Now, most of us think of retirement as something that you do at age 65. But here is something we bet you do not know. The last time our representatives sat down at the table to change Social Security, they raised OUR retirement age to 67.
Just as with the potential military draft, we think there is a better alternative. There's enough money in Washington to pay Social Security benefits down the road but some politicians want to spend it on other priorities. Today, that is Iraq, or tax cuts. Tomorrow, it will be something else. That's how it works.
We don't have to resort to raising the retirement age even higher than 67. We need the politicians to make economic security for our generation a priority when they make the decisions. That's what Rock the Vote is all about.
But still, Senator Hagel, we appreciate you for being upfront with us, and putting your cards on the table.
posted by Hans Riemer at 5:41 PM
29 Comments:
OMG Reimer, you are so intellectually irresponsible! Surely RtV can afford to hire someone who has some small degree of knowledge about SS to write on the subject, can't they?
Raising the retirement age for SS has NOTHING to do with private accounts. Even the most out-of-touch economists like Peter Orszag and Paul Krugman (not to mention RtV's own blog) acknowledges that, if the program's financing structure isn't changed, SS benefits will need to be cut by 20% to sustain the program for current generations (and will have to be cut further to sustain it for future generations). The most likely way to do this is raising the retirement age.
So, Reimer, let me get this straight. Current retirees and near retirees paid way lower tax rates into SS than current young people. Current retirees and near retirees have the highest level of benefits in the history of the program (and just got a nice boost to their Medicare programs courtesy of a financially irresponsible Bush administration). Current retirees and near retirees REFUSE to have anyone touch their benefits, even though they horribly underfunded Social Security during their working years. And, to support the current retirees and near retirees, today's young people and their children will have to pay even higher FICA taxes AND have significant benefit cuts.
I don't know Reimer's age, but I'm guessing he's demonstrating the validity of the rule that young people shouldn't trust anyone over 40.
Dude, youre wasting your time debating Riemer. He used to work for 2030, a lobbying group for old people who want higher benefits and want to make young people pay more Social Security and Medicare taxes to pay for it. Riemer's just doing what hes paid for -- and hes not paid for representing us.
I must agree with Mr. Riemer with regards to Senator Hagel's courage in addressing the structural problems facing Social Security and our generation. Since he is so quick to castigate the Senator for his courage, I would like for Mr. Riemer to tell us "what Rock the Vote is all about" by proposing his own solution to the problems facing Social Security, if he will even admit there are any. If you have spent any time on this site and read the comments, you will quickly realize that Riemer and Rock the Vote do not speak for this generation and have an uphill battle if they think that we will allow them to leave us high and dry in our retirement.
There is no guarantee. Anyone who says that Social Security provides a guaranteed benefit is LYING TO YOU!
In Richardson v. Belcher, 92 S.Ct. 254 (1971), the Supreme court said: “The fact that social security benefits are financed in part by taxes on an employee's wages does not in itself limit the power of Congress to fix the levels of benefits under the Act or the conditions upon which they may be paid. Nor does an expectation of public benefits confer a contractual right to receive the expected amounts.”
Social Security, as it exists today, is nothing more than government expropriation of 15.3% of each workers salary with no concomitant obligation to return any portion of it. Theft, by any other name, is still theft and we must abolish this system in favor of complete privatization.
i can't believe the politicians' crap. they're saying, "give us $100 now and we'll maybe give you $75 when you retire". wtf? no way, fix it or let me keep my money and i'll invest it myself!
Not to mention that retirees are living a lot longer than they did way back when SS was started. Now we have people who will never pay into it, such as people with disabilities, and baby boomers taking way more out of SS than is being put into. I say revise the system and ween people onto privitization. I'd rather get my own money back later and be able to pass it on to my grandkids.
Not to mention that retirees are living a lot longer than they did way back when SS was started. Now we have people who will never pay into it, such as people with disabilities, and baby boomers taking way more out of SS than is being put into. I say revise the system and ween people onto privitization. I'd rather get my own money back later and be able to pass it on to my grandkids.
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Please know that ss was never meant to be lived on entirely, only to supplement retirement income. The generation that is living on ss now knew how to save money, live in the same house and pay it off, didn't use credit cards, a generation of pay as you go. Most if in good health can live off ss only because they planned it that way. As for health they are getting better benefits without having to pay for it...there was an increase in their monthly payment to go along with the increase in benefits...so nothing is free in this world. Also if you think having a private account "guarantees" you money at retirement - think again - and hope when you retire with money in the securities market that the market is going your way and not crashing. Then what will you have? The word "guarantee" is NEVER used in the brokerage industry and if it is, fire your broker or yourself. At least with ss you have a cushion. And where is the money coming from to pay for this private account system....what are we talking..in the trillions? Won't that money come out of ss, your ss? I think everyone needs to get back to the basics - learn how to save, learn basic accounting and leave the instant gratification to the weak.
Social Security was never designed to be a retirement program but just a supplement to a retirement plan.
Social Security has created generations of Americans who have become dependent on a government system that is not a responsibility of government. Retirement planning is a personal responsibility and anyone under the age of 30 who is planning on retiring on Social Security is extremely irresponsible -- do you honestly believe that a 20 year-old should spend the next 47 years without investing in their own retirement in some non-Social Security system?? That's ridiculous.
The privatization of Social Security means improved freedom. Right now, money is taken out of our checks against our will and then invested in a system as politicians see fit. That, my friend, is abuse of power. I want to put my money where I see fit.
Finally, the privatization of Social Security means freeing up funds now being used by the government and putting them into the economy. This means more money in the private sector for things like innovation (e.g. better medicines, technology).
How anyone under the age of 30 can support the current system or any form of it completely baffles me. It's a view I expect from those wanting a hand-out but not from anyone looking out for the best interests of *our* generation.
Fact in Point: Hans Reimer is eminently qualified to speak about Social Security as founding member and past Director or the 2030 Center. Google it.
Fact in Point: SS benefits are just as guaranteed as the rate of exchange for the US dollar: our spending choices as a country are inexorably linked.
Fact in Point: Privatisation has been tryed and IS FAILING in Great Britain and Chile. Check out the fun they're having with misappropriation scandals and decreased benefits.
Fact in Point: SS was never meant be anything more than a roof over your head and food on the table after a lifetime of work. Should we trust our entire country's standard of living to the stock market? Ever hear the adage about putting all of your eggs in one basket? Ever learn about The Great Depression or any of the other 20-odd recessions in the past 70 years?
Fact in Point: There are alot of ways to fully fund SS rather than raising the retirement age. How about raising the income cap past $90K a year? The wealthiest Americans have been outpacing the rest of us in income for decades now. The rich keep getting richer and taxed less. Is that a problem? I say yes.
This stuff is all well and good, but this Reimer fellow does not cite a single source. I mean, 50% of statistics are made up on the spot. Some citations would go a long way toward convincing me...
I cannot express in words how very disappointed I am to find that an organization like Rock the Vote, supposedly designed to represent younger peoples' interests, would so completely sell themselves out on this issue. The fact of the matter is, based on current projections, the money younger people put into SS will achieve a whopping NEGATIVE 2% - 3% return on their FICA contributions to achieve the supposed 'guaranteed benefits' they are scheduled to receive. If younger people could take the FICA taxes they pay now into a system that guarantees they will lose money, and instead invest it in a responsible and balanced portfolio, they will come out literally hundreds of thousands of dollars ahead than if they stay in the current system, achieving a negative return rate. I'll take the 'non-guaranteed' road any day of the week and so should nearly every person reading this blog.
I am 37 years old and have worked in the finance industry for nearly 20 years. I am a business analyst by trade and work every day, all day long, with financial calculations. Listen to me: ANYONE telling (or selling) you the idea that SS privatization is somehow 'bad' for younger people CANNOT be trusted. They are full of something very brown and very stinky. The only people who will benefit from leaving the system 'as is' are people who are in their late 40s to mid-60s right now. Even people my age will benefit tremendously from privatization. Do not believe Rock the Vote's position on this issue. They are, at best, misguided or at worst, have sold you out.
Also, remember that in addition to the 7.65% FICA tax you pay, your employer pays ANOTHER 7.65% to Social Security on your behalf. And do not think for a moment that money doesn't come out of your pocket--it absolutely does. Your employer understands this cost of employing you and sets your wage accordingly because they know they also have to bear the payroll taxes for you. It would not cost your employer one penny to give you a 7.65% raise right now, today, if they didn't have to pay into FICA.
Think about that--over 15% of everything you earn your entire working life goes into the SS system. If you could invest for yourself even a small portion of that 15% for your own benefit you will come out miles ahead. Have you ever heard of an investment paying NEGATIVE return rates? You, me, and every other worker under 40 is saving a significant portion of their money into just such a system--our wonderful Social Security program (tongue firmly in cheek). Support privatization now--it's one of the few things Bush has actually gotten right. Don't believe the lies.
I cannot express in words how very disappointed I am to find that an organization like Rock the Vote, supposedly designed to represent younger peoples' interests, would so completely sell themselves out on this issue. The fact of the matter is, based on current projections, the money younger people put into SS will achieve a whopping NEGATIVE 2% - 3% return on their FICA contributions to achieve the supposed 'guaranteed benefits' they are scheduled to receive. If younger people could take the FICA taxes they pay now into a system that guarantees they will lose money, and instead invest it in a responsible and balanced portfolio, they will come out literally hundreds of thousands of dollars ahead than if they stay in the current system, achieving a negative return rate. I'll take the 'non-guaranteed' road any day of the week and so should nearly every person reading this blog.
I am 37 years old and have worked in the finance industry for nearly 20 years. I am a business analyst by trade and work every day, all day long, with financial calculations. Listen to me: ANYONE telling (or selling) you the idea that SS privatization is somehow 'bad' for younger people CANNOT be trusted. They are full of something very brown and very stinky. The only people who will benefit from leaving the system 'as is' are people who are in their late 40s to mid-60s right now. Even people my age will benefit tremendously from privatization. Do not believe Rock the Vote's position on this issue. They are, at best, misguided or at worst, have sold you out.
Also, remember that in addition to the 7.65% FICA tax you pay, your employer pays ANOTHER 7.65% to Social Security on your behalf. And do not think for a moment that money doesn't come out of your pocket--it absolutely does. Your employer understands this cost of employing you and sets your wage accordingly because they know they also have to bear the payroll taxes for you. It would not cost your employer one penny to give you a 7.65% raise right now, today, if they didn't have to pay into FICA.
Think about that--over 15% of everything you earn your entire working life goes into the SS system. If you could invest for yourself even a small portion of that 15% for your own benefit you will come out miles ahead. Have you ever heard of an investment paying NEGATIVE return rates? You, me, and every other worker under 40 is saving a significant portion of their money into just such a system--our wonderful Social Security program (tongue firmly in cheek). Support privatization now--it's one of the few things Bush has actually gotten right. Don't believe the lies.
Day Traders???...where are they now? Yes, that was a fad a few years ago. Another "get rich fast", "control my own money" until it got boring sitting in front of a monitor all day long OR when they lost their money. No guarantees;-) If you are in the industry you are one up on the majority of young people out in the world. The younger generation doesn't want to be bother with watching their account, oh sure in the beginning they will, but that also will get boring. Oh, yea, who makes money off this...a broker? So this will help the broker out there get more money in their pocket. Gotta factor that part in. All I am saying is - take this ss stuff seriously, look at all angles, just don't be satisfied with the sound bits. Ask questions, that's your right. Bush does not like people asking questions, defying his wishes. Bush throws an idea out there, guess he thinks it's cute, without giving ALL the angles or a clear plan. And the plan isn't to spend trillions of your $$$s to make the plan he wants to work. SS probably could stand some twinking without costing everyone's future.
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Sorry ImtheAmericanDream, but Reimer can't be that eminently qualified to discuss SS if he's arguing that "private accounts must repay principle and interest." His posts on this blog show only a simplistic understanding of SS issues and financing, and no recognition of such crucial issues as Social Security's transfers of wealth from future generations to current ones -- an issue that *should* be central to a Web site supposedly dedicated to the concerns of young people. But then, as other commentators have written on this site, Rock the Vote isn't about political activism for young people, it's about duping young people to acquiesce to the demands of baby boomers.
Reimer appears to be nothing more than a shill for baby boomers who want to continue to rob young people and future generations through federal borrowing and Social Security.
As for Yellow911's claim that SS income is guaranteed, that's both legally and economically false. The Supreme Court has ruled that SS benefits can be lowered at any time, in accordance with the will of Congress; workers have absolutely no right whatsoever to benefits from the system. Moreover, we know economically that the design of the current system is not sustainable for current workers, and will be even less sustainable for future generations. So much for your claim about SS benefits being "guaranteed."
There is no 10 year period in American history where a 50/50 (half stocks, half bonds) portfolio has underperformed the paltry Social Security returns.
If the financial markets are in such ruin for several decades that it performs worse than SS's negative returns (not including the expected reduced payments of 25% over time), then the gov't won't have the money to pay the SS anyways!
I have an issue about the age for retirement being constantly changed for the benefit of people using the money so as to not allow people to retire when it is time for them to step down and rest. This problem has increased so dramatically until it has become an overpowering issue among Bee-Line employees. They want the retirement age at 55 or 57 with full benefits. They have been on strike for 13 days now and it has now become such an inconvenience to people who rely on this service as their sole means of transportation. There are limited amounts of cab services and the ones that are running are trying to take riders for almost close to double what the fare would normally be. The ONLY consolation Bee-Line Riders have gotten is the assurance that they will be able to use thier monthly passes the following month for as long as the strike is on and that the next month's pass will be prorated. I am not telling them to end thier strike but let's be very realistic about the retirement age that they are asking for. I fully understand what it is like to work with the public on a daily basis and if they should get their retirement package the way they want it why shouldn't others be able to do the same? The age that they are seeking is a bit unrealistic. But the retirement age as it stands now is very unfair. You force people to HAVE to work longer and yet unemployment is so much higher. The jobs that could become available if people retire at a decent age like say 60 or 62 would free up a lot more jobs for those who are not employed. The income it takes to keep someone in a position that long could probably pay two or three people's salary at starting level. But this is just my opinion. There was even talk about them taking away our benefits from us? Yet it is one of the things that automatically comes out of EVERY pay check. I am hoping that a resolution to the Bee Line Bus situation is resolved soon. I do know that if the Bee Line workers get what they want in regards to retiring at such an early age with full benefits it will set a precedent and it will open up doors to other civil service employees to want the same. I know I would love to be able to retire at age 55 with full benefits. This is what the government is forcing workers to do, look for a way to retire and get their benefits before there is none to retire with. But truthfully how could there not be any money left for people to retire with when they take out of paychecks all over the United States for Social Security everytime someone works? I know priorities need to really get straightened out and take care of home first.
Rising health care costs and longer lives of retirees necessitate more money to be paid into the current system. This makes perfect sense. The Democrats would have us believe that it's our civic duty to abide by this dictum. But I've been working since I was legally allowed, and had I the opportunity to save, in a 401K or other personal retirement fund, all of the money that was nonvoluntarily witheld from my paycheck every week, I'd already have a sizeable nestegg--enough to comfortably retire after grad school. Social Security has not been the norm of American society since our nation's birth; it has not been the one right to which every citizen looks forward as he approaches old age. Rather, it sought to supplement retirement less than half a century ago and now it's become too costly for us to continue.
Idealists and Democrats should be far less clingy to programs and institutions--we got rid of slavery and Jim Crow, and I'd say we've done pretty well for ourselves in the interim. Government programs should not endure indefinitely, so groups like Rock The Vote that paint them, especially Social Security, as such are duping America's youth into believing that our rights are being restricted by eliminating a faulty system that leeches off our hard work and effort.
Wow. I just heard on TV from Jo Anne Barnhart, the Social Security Commissioner, that the Social Security Administration employs 81,000. All these people needed to administer (not sell, not earn returns on the money, etc.) an ENTITLE program. This boggles my mind.
Compare that to other huge employers that actually need to create value and sell things:
Microsoft: 57,000
Exxon: 85,900
Gov't waste to the extreme in this entitlement program and we're all paying for it.
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please explain why I should not be able to keep more of the money I earn and invest it an account that can be used by my family if I do not live to retirement age?
You should really consider doing some research before you sit down behind a keyboard.
RTV needs better people.
please explain why I should not be able to keep more of the money I earn and invest it an account that can be used by my family if I do not live to retirement age?
You should really consider doing some research before you sit down behind a keyboard.
RTV needs better people.
How do we know if SS is really broken?
QUOTE:Just as with the potential military draft, we think there is a better alternative. There's enough money in Washington to pay Social Security benefits down the road but some politicians want to spend it on other priorities. Today, that is Iraq, or tax cuts. Tomorrow, it will be something else. That's how it works
How what works? Rockthevote is always quick point out a problem but never seems to contribute, or even recommend a solution. I think your political views inhale briskly and am glad you weren't next to me taking fire in Iraq. On second thought, it's people like me that provide your freedom of speech so I guess we should be the bigger people here and just write it off as mediated juvenile left wing lala land politics. Better yet, let's just report rockthevote as spam and be done with it, because that's all it really is anyway.
Retirement age is the least to be worried about. The social security tax rate has been going through the roof. See the tax rate history at:
http://www.ssa.gov/OACT/ProgData/taxRates.html
or a chart at http://redgar.com/socsec.htm
If only I could invest the money on my own, then I could lower that retirement age significantly.
Jay
People who support privatization are just plain selfish. I come from a fairly affluent family so I know when it comes to retiring I am not going to be relying on my social security check. Social Security is a risk-free promise to people not as lucky as you and me. To me there should be 4 guarentees is life: you are born, you die, you pay taxes and you deserve to receive social security. Don't take away a guarentee that is going to keep people out of poverty. The market is just too risky for people who are relying on their social security check. And when it comes to "freedom" in private accounts. The presidents plan has certain stocks and bonds already picked out. You will not have the choice to pick what percent of money you want in stocks or bonds. They don't want to make it too risky and they don't want you to constantly moving your money around which actually leads to higher returns. Social Security does need to be strengthen but not torn apart!
Kiki says "People who support privatization are just plain selfish."
Acutally, it is people like the AARP who oppose private accounts that are selfish. Since AARP members will not be affected by privatzation, why oppose it? It would only benefit the younger generation while not having any affect at all on current or near retirees.
She then goes on to say "Social Security is a risk-free promise to people not as lucky as you and me."
Not risk free? By the time I retire, there will be no money left in social security. The government spent it all. Since I have no legal right to the money, I will have to depend on the politicians in the future to decide how much money I'll be able to collect and at what age Ican retire. What kind of guarantee is that? With personal accounts, the money is mine. I don't have to rely on government for the money. If I die before I retire, it will belong to my children rather than the government. If preferring to rely on myself rather than the whims of politicians for the welfare of myself and my children is selfish, I guess I am. I prefer to call it prudent.
She then says "To me there should be 4 guarentees is life: you are born, you die, you pay taxes and you deserve to receive social security."
Social security is not guaranteed. Private accounts that you control are.
Kiki then shows her ignorance of the stock market by saying "The market is just too risky for people who are relying on their social security check."
Over every 10 year period, including the great depression and the more recent mini-crashes, the stock market has out-earned the miniscule 1.5% interest paid by social security. Over it's lifetime, the stock market has averaged around 10% per year, and well managed mutual funds average more than 12%. Risky is allowing the government to take your money and relying on them to tell you when and how you can receive it.
Again she shows her ignorance by saying "And when it comes to "freedom" in private accounts. The presidents plan has certain stocks and bonds already picked out. You will not have the choice to pick what percent of money you want in stocks or bonds. They don't want to make it too risky and they don't want you to constantly moving your money around which actually leads to higher returns."
Part if this is not true at all. The President has yet to define a plan. Just a basic outline of options that he would like to see. Any plans out there are pure speculation. The Thrift savings plan he mentioned, which is what US government employees, including Congress, have, several mixtures of mutual funds and bonds. You can chose which of these to invest in, so there is a choice. Some are more conservative and have more bonds while others are more speculative and have more stocks. As you get closer to retirement, you should become more conservative.
As for moving your money around, it MIGHT lead to higher returns if you are lucky enough to catch the stocks at the right time, but more often lead to poorer returns.
Finally she concludes that "Social Security does need to be strengthen but not torn apart!"
However, she offers no way to strentghen it. Social Security will be bankrupt in 17 years. Yes, if you have no savings and owe more than you make, you are bankrupt. Increasing the cap would mean that you would also have to increase payouts. It might help, but not much. The only options that would extend (not guarantee which is not possible) the solvency are to increase the retirement age, reduce benefits, or, most likely, both.
What private accounts do is 1) guarantee that you will have money to live on when you retire (and more money than you would get from the current social security system), and 2) have something to leave your children when you die. This latter benefit is particularly important to the lower income portion of the population.
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