Social Security’s 75th: It will outlive its attackers, and thrive
- August 13, 2010
- 11 comments
- Posted in Government, Latest Posts, Retirement, Taxes
Let me get this straight. Conservative budget balancers say that we can’t afford Social Security. This weekend marks the program’s 75th anniversary. The “anti’s” say it’s past time to phase it out. End socialism in the U.S.! If you’re old and poor, your kids should take you in. Harumph.
The same conservative budget balancers say we should keep the Bush-era tax cuts for people earning $250,000 and up. The debt that the government issues to cover tax cuts is different from the debt it runs up on safety-net spending. It’s good, patriotic debt that honors our free-enterprise system. The ink from tax cuts isn’t red, they say, it’s only pink. Light pink.
Huh? Debt is debt. It’s dollars in and dollars out. We have a whole party of people who seem to have failed third-grade arithmetic.
The funny thing is that the Social Security shortfall projected over 75 years, just about matches the 75-year revenue loss from keeping high-income tax cuts in place. One deficit is supposedly bad (the one that helps everyone). The other, equal deficit is good (the one that helps country’s highest-income people).
Social Security is fixable, although you wouldn’t know it from the well-funded attacks. It can pay full benefits through 2037 without any changes, even at today’s slow pace of economic growth, and three-quarters of the promised benefits forever. So it’s far from bankrupt.
Relatively modest changes would place the program on a sound financial footing for 75 years and beyond. There are plenty of blueprints around. All it takes is some gentle reductions in the growth of future benefits and a small increase in the payroll tax. Another dandy fix would be to put today’s 10 million jobless back to work, so they could start paying taxes into the program again.
Social Security will outlast its attackers. I hope to be around for its 100th anniversary but, if not, tell it hello from me. The program will still be keeping our elderly out of abject poverty — including the parents of conservatives who might, finally, come to appreciate its worth.
Tags: federal deficit, social security, tax cuts
Thanks Jane! It is a delight to hear a common sense assessment of the social security debate.
Thanks, Howard
Ms Quinn. I agree soc. sec. will likely be there for my children, even if I begin to draw some out at age 67 next May, or if I can wait to age 68 in 2012 I might. However, for us older folks who face cash at 1% and less these days, is it true one can buy very short term bonds or bond funds, and not see price up and down like intermediate or normal treasury bonds? For example , does Fidelity or Vanguard have a mutual fund only composed of very short term bonds, that has very mimimal risk and little to no volitility, and yet perhaps as good or better a per cent yield return that normal bank CD accounts today, at around 1% or less? tx. jim. 8-18
Yes, you’ll find short-term bond funds, but they’re not much better than CDs (and worse, if you have a high-rate CD –see Bankrate.com, for the country’s best CD rates). Vanguard’s currently yields 0.94%. Prices rise and fall on all short-term bond funds, but usually not by very much. There are exceptions. Sometimes these funds boost their yields with derivatives, which makes them more volatile.
Dittoing Howard’s comment!
As an added income generation , since CDs pay so little now, for retired or older generations, we all know to buy on dips and sell on highs , or time the market is risky. We might reduce the risk using mutual funds, broad selections of companies, but they do not accomodate rapid buy and sell, and the fees to buy and sell and also significant. Will the new ETF s offer some of this protection , and could persons try to find ETFs that are similar in profile or investments as some of the mutual funds they like, and buy and sell on dips and rise in market as it will seem to be up and down and more or less flat while the economy is slow and lost footing for a while? What is the down side to this concept, or new option for investors, that did not seem to exist earlier? Thanks for any input, Ms Quinn. Jim .
There are ETFs that follow the market as a whole — for example, ETFs that mimic the movements of the S&P 500. In my opinion, trying to time the market by trading ETFs is use as futile as trying to time with individual stocks. The downside is that you’ll get in or out too soon or too late. Remember — full-time professionals can consistently time the market, and you and I can’t either.
Ms Bryant. which would be more safe in spite of return, vanguard VIPSX or short term bond fund with vanguard? would rollover of IRA to bank CD in IRA get better returns at today bankrates? jim . 8-23
Look at bankrate.com for the highest CD rates. Short-term bond funds vary in price, depending on changes in interest rates, but typically not very much. A mutual fund invested in TIPS varies, too–perhaps by more, because TIPS are longer-term bonds. Nothing is “safe” except a direct investment in Treasuries, savings bonds or CDs, held to term.
I can see some 1.3 APY for 12 months for a jumbo or 100K CD in banks, seems quite low or poor, some are lower, the 1 to 1.3% seems best they have to offer. If one wants safety, however, not many options around. In a stock account , like Vanguard , they pay almost an actual Zero in interest on prime money market, while it was near 6% not many years ago. For older folks seeking safety for some majority of savings, I cannot help but feel both Federal gov. and all the banks and mortage holders or writers of recent time, and wall street types , are stealing from the elderly. Esp. those who buy and sell options, and who gimmeck the system with computers and systems. Further, The federal government asks everyone to save for their old age, and if you did, if you did a fair job of it, the federal goverment is behind the low rates to cause devalued buying power of those funds you did save. How can congress and the US leaders justify doing this so long long term? It is rewarding the most guilty of our financial systems and our system, is it not? jim . 8-24
Yes, the years of our rampant financial free-for-all — driven by Wall St profit-making — are now being paid for by average workers, savers and investors. It pains me to say that raising short-term interest rates right now, to give savers more income, would hurt the economy, slowing growth and making joblessness worse. I wish it were otherwise. And the Wall St bankers don’t even have to give their bonuses back, and seem to be lobbying successfully to avoid paying higher taxes on their multi-million dollar incomes. Why does the public keep okaying tax cuts for the rich? Even the people who supposedly opposed deficits.