Newt Gringrich said he talked to actuary

[GuineaPig]

during the debate tonight. Something about social security calculations. Yay actuaries!

[d123454321]

OMG OMG OMG OMG OMG

[gaddy]

Ha I caught it too, coming fresh off the SS paper on exam 6 i found that short bit pretty interesting. Romney's plan is awesome, and he used the word "balance" in a way I have no idea how to take it. Maybe he meant "end the deficit for maybe a year."

[independent]

GINGRICH: ....

First of all, it’s totally voluntary. If you want to stay in the current system, stay in it. If you are younger and you want to go and take a personal savings account, which would be a Social Security savings account, you can take it.
Your share of the tax goes into that. The employer’s share goes into the regular fund to pay for the regular fund. ...

So the Social Security actuary estimate if you make it a voluntary program, 95 to 97 percent of young people will take the program, because it is such a big return on your investment, you’d be relatively stupid not to do it. OK.

Apparently Gingrich didn't include the rest of the actuary's statement, which might have gone something like ....

Since current benefits use roughly 100% of current taxes, any tax money used to fund private accounts would have to be offset by benefit cuts to current retirees, increases in other taxes, or increased borrowing.

Newt didn't specify which of those he favored. I wonder why.

http://foxnewsinsider.com/2012/01/17/transcript-fox-news-channel-wall-street-journal-debate-in-south-carolina/

.....

Romney said
ROMNEY: Let me lay it out. First of all, for the people who are already retired or 55 years of age and older, nothing changes.
...

What — what I would do with Social Security is that I would lower — if you will, the 2.0, the version for the next generations coming up, I’d lower the rate of inflation growth in the benefits received by higher-income recipients and keep the rate as it is now pretty high for lower income recipients. And I’d also add a year or two to the retirement age under Social Security. That balances Social Security.

So Romney wants raise taxes/increase borrowing enough to continue the current program for everyone who is over 55 (of course he didn't say that), but then lower monthly benefits for people younger than that.

[Ron Weasley]

So Romney wants raise taxes/increase borrowing enough to continue the current program for everyone who is over 55 (of course he didn't say that), but then lower monthly benefits for people younger than that.

Among the many unpleasant ways to address SS, have you heard of any pleasant alternatives. I haven't, and I can't think of any to promote.

[independent]

Among the many unpleasant ways to address SS, have you heard of any pleasant alternatives. I haven't, and I can't think of any to promote.

Nope - everything I know of is lower benefits, higher taxes, or some combination of the two (I think that "more borrowing" doesn't count as addressing the problem).

2/3 of Romney's plan makes sense to me (higher retirement age, lower benefits for higher income workers). It's the part about grandfathering in everyone over 55 that I don't like.

Of course, he's not talking about significant changes like a flat benefit funded by general revenue. That makes even more sense to me.

[notreallyme]

Since current benefits use roughly 100% of current taxes, any tax money used to fund private accounts would have to be offset by benefit cuts to current retirees, increases in other taxes, or increased borrowing.


They are still getting the employer portion (which is idiotic but as others mentioned we have to screw someone at some point). so that and increased borrowing would pay the current benefits.

Plus where is the Employee portion going? It doesn't say. Do you still have to invest a percentage of your wages? What about Medicare?

[Ron Weasley]

The grandfathering part makes it easier to perpetuate the system (whether or not that is desirable is another discussion altogether).

In the short run, the folks 55 and over have been told all of their working lives that SS would be there for them, and they've paid increasing SS taxes over their careers to support the promise. There is a sense of fairness involved. This sense of fairness is important for the younger workers also.

Younger workers are being told that they will have to bear an unfair burden for SSN, but they will at least get some pay off in the future. If they see their grandparents or parents get "ripped off" instead of treated "fairly" by letting today's 55 and older collect their expected benefits then the day will come when today's younger workers realize that they have less reason to trust that anything will be there for themselves when they retire.

[The Drunken Actuary]

That's it. I'm rooting for Newt in the R primary.

[Werewolf]

So Romney wants raise taxes/increase borrowing enough to continue the current program for everyone who is over 55 (of course he didn't say that), but then lower monthly benefits for people younger than that.

Romney's plan is the best of the alternatives, none of which are good. The change to the retirement age works to counteract the demographic forces that have been making Social Security unsustainable. The change to the indexing increases the progressivity of Social Security and enables growth to help close the funding gap.

I would still want to see a benefit cut for current and near retirees, even if it's just a token cut.

[Jack]

Among the many unpleasant ways to address SS, have you heard of any pleasant alternatives. I haven't, and I can't think of any to promote.

No but nothing this dumb.

[independent]

They are still getting the employer portion (which is idiotic but as others mentioned we have to screw someone at some point). so that and increased borrowing would pay the current benefits.

Plus where is the Employee portion going? It doesn't say. Do you still have to invest a percentage of your wages? What about Medicare?

The way I read his answer, the employee portion is being used to buy stocks and bonds in individual accounts. The employer portion (yes, I agree that it's idiotic to pretend they are really separate) pays some of the current benefits, but Newt apparently plans to make up the rest with additional borrowing.

Every dollar that goes into the individual accounts is matched by a dollar of new borrowing. That's what he isn't saying.

Newt says this is voluntary, but almost all young workers would choose the individual account route (it would be foolish not to - his plan guarantees that if your individual account falls below what trad SS would have paid, the gov't makes up the difference).

I didn't read his Medicare proposal.

[Standtall]

Of course we have to lower benefits and/or raise ages. Either that or raise taxes to fund it more.

I like government smaller so lower benefits, less people on them is good by me.

:judge:

[FormLetter]

The way I read his answer, the employee portion is being used to buy stocks and bonds in individual accounts. The employer portion (yes, I agree that it's idiotic to pretend they are really separate) pays some of the current benefits, but Newt apparently plans to make up the rest with additional borrowing.

Every dollar that goes into the individual accounts is matched by a dollar of new borrowing. That's what he isn't saying.

Newt says this is voluntary, but almost all young workers would choose the individual account route (it would be foolish not to - his plan guarantees that if your individual account falls below what trad SS would have paid, the gov't makes up the difference).

I didn't read his Medicare proposal.

Any idea what happens to the equivalent of the employer portion on someone who is self-employed and hence pays the whole thing?

[Harry]

The way I read his answer, the employee portion is being used to buy stocks and bonds in individual accounts. The employer portion (yes, I agree that it's idiotic to pretend they are really separate) pays some of the current benefits, but Newt apparently plans to make up the rest with additional borrowing.

Every dollar that goes into the individual accounts is matched by a dollar of new borrowing. That's what he isn't saying.

Newt says this is voluntary, but almost all young workers would choose the individual account route (it would be foolish not to - his plan guarantees that if your individual account falls below what trad SS would have paid, the gov't makes up the difference).

I didn't read his Medicare proposal.
If these young workers choose these "private" accounts, what happens if they get sick or disabled and need SS? Shitoutofluck?

[erosewater]

Wil there be restrictions on how you invest a private account? If not, what do we do if people make bad investments and lose everything? I'm assuming they'd build in some kind of fallback, which would then encourage risky investing.

[Dr T Non-Fan]

Perhaps all interest income should be tax-free? Downside to it is that all those wealthy people not working pay even less in taxes.

I think a consumption tax would take care of that, though.

Or, make the first $15,000 or so of interest income tax free. (Not sure what a good amount would be off the top of my head. I'd have to check my own 1040 for the optimal amount.)

[independent]

Any idea what happens to the equivalent of the employer portion on someone who is self-employed and hence pays the whole thing?


If these young workers choose these "private" accounts, what happens if they get sick or disabled and need SS? Shitoutofluck?

I have no idea for either of those. The Googling I did came up pretty empty on details. The WSJ says this: He didn't say how old workers would have to be to qualify to open private accounts or what portion of their payroll taxes they could divert into personal accounts. or how much the transition to a new system would cost the government.

Funny how that "transition cost" (aka additional borrowing) gets ignored.

http://online.wsj.com/article/SB10001424052970204531404577052120307957642.html

I did see some other references that Gingrich is essentially signing on to the Paul Ryan plan, but I don't think Newt said that.

[gaddy]

Wil there be restrictions on how you invest a private account? If not, what do we do if people make bad investments and lose everything? I'm assuming they'd build in some kind of fallback, which would then encourage risky investing.

Yes - this was part of the rebuttal question to newt, and he didn't cover the downside (obviously). But the statement was that the worst you could do is the standard benefit. can't work as stated, as you already mention, due to the encouragement to invest in riskier assets. even a moderately risky portfolio could end up doing worse than the standard benefit.

[dfunkhou]

2/3 of Romney's plan makes sense to me (higher retirement age, lower benefits for higher income workers). It's the part about grandfathering in everyone over 55 that I don't like.

I agree. I'm also disturbed by how older generations, who promised themselves far too generous benefits, are going to keep them in full. It's like if I wrote a contract that stated "my not-yet-born child will provide me twenty million dollars if I reach age 70." To hell if it's ridiculous, what are they going to do? In the meantime I'm going to spend, spend, spend; not save a dime - cuz I'm set. Inevitably, when he or she reaches adulthood and realizes what's required of him or her they're going to be pissed. So, what should we do? Require me to get real? Nope, we're going to require they pay for my overgenerous benefits that I promised myself.

It it any wonder that in a generational payment system, benefits are expanding?

[Descalzo]

So Mark Stein was right: All the socialists have to do is pass a law, then it's in, and then you have the socialists vs. the socialists in every election. The best the Republicans can hope to do is run Romney as a more efficient socialist than Obama.

[GuineaPig]

If these young workers choose these "private" accounts, what happens if they get sick or disabled and need SS? Shitoutofluck?

long term disability insurance?

[Standtall]

long term disability insurance?

Too obvious. You might need to draw a picture.

[Werewolf]

Don't suggest individual responsibility. Liberals hate that.

[Harry]

long term disability insurance?
Right. For those responsible enough, healthy enough, and can afford private insurance...sure. Do you really think young people are going to go out and purchase that type of insurance? At least you realize that SS is not simply a retirement account...

[Standtall]

Right. For those responsible enough, healthy enough, and can afford private insurance...sure. Do you really think young people are going to go out and purchase that type of insurance? At least you realize that SS is not simply a retirement account...

This is what is missing in this country. We let people make too many damn decisions for themselves already. The Government knows better than the people what they need! :lol:

[FormLetter]

And even better, if government doesn't know what is best for everyone, at least Harry does.

[Harry]

And even better, if government doesn't know what is best for everyone, at least Harry does.
Not really, but I do know that there are many irresponsible people out there. And when they get disabled, we will eventually be paying for them and seeing them homeless on the streets. A social insurance system is a reasonable thing for a civilized society to have.

[FormLetter]

Would it offend your eyeballs to see them homeless on the streets?

[Harry]

Would it offend your eyeballs to see them homeless on the streets?
Yeah, that's the point. :roll:

[Double High C]

That's it. I'm rooting for Noot in the R primary.

IFYP

[Atropellador]

Not really, but I do know that there are many irresponsible people out there. And when they get disabled, we will eventually be paying for them and seeing them homeless on the streets. A social insurance system is a reasonable thing for a civilized society to have.People should suffer the consequences of their irresponsible decisions. If you're unwilling to let this happen, you will never be able to create the right incentives, and will be stuck paying ever-increasing subsidies.

[Guerilla poster]

Newt has nice shoes...

[Double High C]

People should suffer the consequences of their irresponsible decisions. If you're unwilling to let this happen, you will never be able to create the right incentives, and will be stuck paying ever-increasing subsidies.

Certainly true as a rule, but as an absolute?

That would be problematic, for among other reasons:

1. There sometimes are costs pushed onto society as a result of an individual's poor decisions.
2. Most people would have a moral problem with refusing all medical care to dying people without any money (many of whom made poor health and financial choices earlier). If you are a true fundie, you have to argue for denial of such care and letting them die.

[Atropellador]

No, not as an absolute. I'm sure you can find numerous ways to complicate the issue.

[Atropellador]

Newt has nice shoes...Damn extrovert, making the rest of us look bad

[Dr T Non-Fan]

Certainly true as a rule, but as an absolute?

That would be problematic, for among other reasons:

1. There sometimes are costs pushed onto society as a result of an individual's poor decisions.
2. Most people would have a moral problem with refusing all medical care to dying people without any money (many of whom made poor health and financial choices earlier). If you are a true fundie, you have to argue for denial of such care and letting them die.
Those same moral-problem people have a problem opening their own wallets and paying for that medical care to dying people.

Last I checked, everyone will die eventually. Oh, and there are too many people on the Earth. Two birds, one stone.

[Atropellador]

2. Most people would have a moral problem with refusing all medical care to dying people without any money (many of whom made poor health and financial choices earlier). If you are a true fundie, you have to argue for denial of such care and letting them die.This answer has been given in another thread months ago, but...

For emergency services, it's not generally possible to verify someone's coverage status or ability to pay before rendering services. For non-emergencies, I'd say if someone had been able to buy insurance but chose to spend the money on frivolities instead, then one day finds he needs treatment but can't afford to pay out of pocket, then yes, I'd leave him to die.

[R. Daneel Olivaw]

Certainly true as a rule, but as an absolute?

That would be problematic, for among other reasons:

1. There sometimes are costs pushed onto society as a result of an individual's poor decisions.
2. Most people would have a moral problem with refusing all medical care to dying people without any money (many of whom made poor health and financial choices earlier). If you are a true fundie, you have to argue for denial of such care and letting them die.

So what's your point?

Use: if PV medical costs < PV of probable future benifit to society, pay for the care, otherwise don't.
Same reasoning I use for death penalty over life without parole.

[GuineaPig]

Right. For those responsible enough, healthy enough, and can afford private insurance...sure. Do you really think young people are going to go out and purchase that type of insurance? At least you realize that SS is not simply a retirement account...

If gummit hadn't chosen what was best for the people for decades, common knowledge would say - buy LTD! But as long as there is a social safety net, who cares?

[erosewater]

A safety net to protect people from consequences outside of their control is a necessary part of a civilized society, but the existence of said safety net ensures that it will be needed as it will encourage irresponsible behavior.

[notreallyme]

A safety net to protect people from consequences outside of their control is a necessary part of a civilized society, but the existence of said safety net ensures that it will be needed as it will encourage irresponsible behavior.

That is pretty good ..... Yours?

[Double High C]

A safety net to protect people from consequences outside of their control is a necessary part of a civilized society, but the existence of said safety net ensures that it will be needed as it will encourage irresponsible behavior.

Great post. (Much better than mine.)

Much of my point was that, for moral and/or practical reasons, we have to create SOME systems that will encourage SOME bad behavior. I would agree (with perhaps all here) that systems that INTENTIONALLY transfer away ALL the risks and consequences for irresponsible, or ill-advised, behavior, are bad, as they are a drain on society and for the most part, in the long run, are not helpful to the individuals who become dependent on them.

Having said that, I also think that, in some cases, restricted choice is appropriate. Yes, I'm taking about some form of Obomney individual mandate.