Bad Investment

August 16, 2012

Turns out Social Security may not only be an unwise investment for new and future retirees, it may not be an investment at all. A recent Associated Press report noted that today’s new retirees are part of the first generation that has paid more into the Social Security system than they will actually receive after retirement.

One such example from a 2011 Urban Institute study was given in the AP article:

“A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85 …”

Though Medicare has come back into the spotlight with the media attention toward Mitt Romney’s new VP pick and his now infamous proposal of remaking the single-payer healthcare system into a “premium support” system (something Romney also supports), reform of the other big entitlement elephant in the room, Social Security, has rarely been discussed since the failed attempts by the last presidential administration to partially “privatize” it.

Perhaps Social Security reform deserves new attention. After all, the program’s own trustees state in their latest annual report that after 2033, “tax income would be sufficient to pay only about three-quarters of scheduled benefits…”  At that point, one could just as well literally hide their money under their mattress and guarantee a more secure retirement. Assuming they remember where they hid it, they at least would not lose any of their money. Not to even mention the problem of inflation.

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Outcry from the ‘Entitled’

October 27, 2010

Part of a report on the French parliament’s decision to up their retirement age in order to address budgetary problems:

In an attempt to revive a protest movement that has lost momentum, unions plan a new nationwide day of street demonstrations and strikes Thursday that are expected to cause travel problems. France’s civil aviation authority says Thursday’s strikes mean airlines must cancel a third of their flights at Charles de Gaulle, Paris’ main airport, and half their flights at the smaller Orly airport south of the capital. Airlines generally try to spare long-haul flights in such cancellations. A two-week train strike has been tapering off, and only a small number of trains were to be canceled Thursday … Striking dock workers have exacerbated the fuel shortages. Oil tankers are lined up in the Mediterranean as far as the eye can see off the port of Marseille, waiting to unload. The Normandy port of Le Havre faces a similar situation.

[picapp align=”left” wrap=”true” link=”term=france+retirement+age&iid=9988247″ src=”http://view2.picapp.com/pictures.photo/image/9988247/gallery/national-union-led.jpg?size=500&imageId=9988247″ width=”234″ height=”155″ /]All of this is over a decision to raise the retirement age from 60 to 62. Perhaps a disturbing effect of an engrained entitlement culture?

If (and that’s a big “if”) American politicians attempt to meaningfully address our country’s looming debt problem by tackling our entitlement programs, Social Security and Medicare, will the opposition behave just as childish? There’s something ironic about acting immature about retirement benefits.


Projected Spending

May 24, 2010

Here is a graphic from the Congressional Budget Office showing what areas are estimated to make up the bulk of federal spending 10 years from now:

Note the amount entitlement spending will make up — proof that the answer to fixing our budgetary issues is not just to cut earmarks. Reining in deficit spending is going to require looking at popular programs like Medicare and Social Security.


Better Late Than Never?

November 15, 2009

Former President George W. Bush made headlines this past week by announcing the start of the George W. Bush Institute. Among the key points in his speech was that he believes he went against his basic free-market beliefs in setting up the TARP program toward the end of his presidency.

He said the following:

I believe in the power of free enterprise, which made the decision I faced last fall one of the most difficult of my presidency. I went against my free market instincts and approved a temporary government intervention to unfreeze the credit markets to that we could avoid a major global depression.

He then argued that steps taken by the federal government since then have gone too far:

As the world recovers, we’re going to face the temptation to replace the risk and reward model of the private sector with the blunt instruments of government spending and control. History shows that the greater threat to prosperity is not too little government involvement but too much.

Here is a clip of that part of the speech:

His speech implies that, except for the $700 billion bailout program, his presidency stayed true to his free-market, anti-government beliefs. The real history is not so kind. Besides TARP, just some of the other deviations from those principles included the Medicare prescription-drug bill and “No Child Left Behind.” Both measures increased the federal government’s role in two important aspects of people’s lives: health care and education. Overall spending, a large part due to the two wars in Afghanistan and Iraq, went up during the eight Bush years.

Perhaps it was practical necessity that drove his administration to pursue such policies that went against what Bush claims are his instincts. Or maybe it was political maneuvering. Regardless of why he chose to deviate, the fact is that he did deviate well beyond just the TARP program.

If this is a true change of heart, great; better late than never. Too bad he didn’t make the change before he left office. Implementing these pro-government-intervention policies, particularly the Medicare expansion and TARP, only gave the Obama administration more cover in expanding the bailouts and wanting to expand the government’s role in health care.