Let's say we assemble a package of changes to Social Security, including a diversion of funds from Social Security to private accounts that somehow manages, by the necessary combination of tax increases and benefit cuts, to achieve solvency for th eprogram. If you put it all on a balance sheet, the diversion would have to count as an outflow...a reduction of the cash available to pay benefits.
Now. Remove that diversion from the balance sheet.
Suddenly the size of the necessary tax increase or benefit cut is reduced. Drastically.
It's that simple.
Article comments
— go to most recent comments1 - RJ
Social Security, in its present form, is a Ponzi Scheme.
The money one currently "invests" for their "pension" is spent NOW, and is not guaranteed at all. It is simply a poorly-managed welfare program.
It's that simple.
2 - Eric Olsen
I am absolutely confused about this in just about every way possible
3 - Eric Berlin
Oh wow.... I get it...
Wait, I really don't.
4 - Eric Olsen
exactly
5 - P6
*sigh*
More proof of the desperate state of American education in mathematica.
6 - Eric Berlin
I don't like to toot my own horn very often, but I'm actually reasonably bright.
It's obvious you're trying to convince us of something, but for the life of me, I can't figure out what that might be. Therefore, I'm left neither swayed nor enlightened.
Perhaps you can do a job of improving the education system on BlogCritics, if not the United States, and better explain yourself and what you're trying to accomplish.
7 - P6
Cmon guys, this is PRE-algebra.
8 - Eric Berlin
Why don't you SPELL out how simple it is, then.
Whatever IT is.
9 - P6
The less you divert, the less you have to collect on the other side.
10 - Eric Berlin
I give up.
11 - Steve S
P6, you are saying that the money taken out of SS for private accounts, does not help SS but makes it worse off, because less money is going into it?
I think that's a given. Bush does not want to save SS, he wants to destroy it.
12 - Steve S
Or what you are saying is that diverting money to private accounts AND tax increases AND benefit cuts can save SS, BUT that by diverting money, you need to compensate with MORE tax increases and MORE benefit cuts.
13 - Eric Berlin
I think the Bush Administration has been going after a longterm Starve the Beast strategy since they took office.
14 - P6
Steve, both statements are true.
Is it really that hard to see? It seems so blatant...
15 - Steve S
No, I got it. I began to question if I got it or not, because of the comments, but apparently, I got it.
16 - alienboy
i don't understand Prometheus 6 either, and it seems a moot point.
there is absolutely no way on earth that the USA will do away with its social security system.
If you want the streets of every burb in america clogged with the poor, the needy, the losers of the free market, the returned victims of war, to turn the usa into some kind of post-Dickensian superslum, it would be a great idea.
I'm fairly sure every serious politician understands this. the public debate seems more manipulative than serious policy debate...
17 - P6
Did you understand Steve S?
<set cynicism="on">
Why not? It would save the government money and lower the unemployment rate with a single gesture.
<set cynicism="on">
Seriously, mathematics is never moot. And the only way to get rid of the manipulation in the debate is to confront it with fact.
18 - P6
Hm. It seems my cynicism is stuck in the "on" position...
19 - alienboy
you can get treated for that these days, p6...
20 - P6
Penicillin? :-)
21 - Terry Turner
I think what you're saying is that if you take money out of Social Security to pay for the private accounts, then you'll have to raise taxes or cut benefits to make up for the loss.
22 - Richard
You have not explained shit, and it ain't simple
23 - Eric Berlin
"post-Dickensian superslum" -- great great phrase, alienboy.
24 - SFC SKI
I asked this question on a similar thread and it got lost in a lot of other partisan snark.
If under the current SS plan, there will be fewer workers paying into SS and more retirees taking out of SS, to the point where eventually there will be more going out than coming in, why shouldn't alternatives be on the table?
I don't agree that Bush is trying to kill SS, short of disbanding it entirely, today, and emptying the fund, how could he possibly destroy it in the less than 4 years he has in office?
25 - Maurice
I think I can summarize P6's point:
If we are going to jump through hoops to supplant SS why not jump through the same hoops to save SS?
The problem is SS is not worth saving. It is one of the few government programs that you can call bad with absolute certainty. I don't mind paying my property taxes knowing that they are used for many things that don't affect me. I do mind paying SS knowing that it is used for many things not associated with people trying to retire. Also the benefit is negligible ($1000/month) for most people.
I think a very realistic goal would be to just get them to quit robbing SS to pay other bills.