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Oct. 8th, 2008 @ 10:30 am 
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So I had posted previously concerning socio-economic affairs such as Social Security; how I felt it was a broken system and should be done away with. This is in part a continuation of the discussion that resulted with Adam.
I’m going to start by restating my viewpoints. I consider myself conservative. For the most part, I feel people should be able to take care of themselves; this is your life, take responsibility. Despite that; I do feel a sense of obligation towards the elderly who have contributed to this nation for all these years and are then potentially left in a bit of a pickle. I still feel you need to take care of your own retirement, but on the other hand, shit happens; like how many people close to retirement just had their 401k’s wiped out? I know one in particular who has lost all gains on her retirement account from the stock slide which has also now consumed 30k of her principle as well. But I’m not going to get into retirement mechanics here… suffice it to say, I think some support system is needed for people that have contributed to society (I’ll touch on this more below).
So why the issues with Social Security then? For that matter, Medicaid and Medicare? Well, this is somewhat complicated, so bare with me.
To start with, and re-iterating what I said in my initial post; Social Security is the pink elephant in the room. Something has to be done about it, but no one (ie. politicians) wants to discuss it. Why does something have to be done? Because it’s going to go bankrupt in 2041 according to the most recent estimate from the SSA (Social Security Administration); but a more notable date is much sooner, 2017; that’s when Social Security will begin owing more than it receives in revenues, and thus increasing the national debt burden at an ever-increasing rate; at that point, not only will your social security deductions be paying for social security, but your income tax will as well. Other issues with Social Security are that it is normally not enough for someone to get by on, even if they have been working all their life. Further, some people don’t want to participate, they would rather take care of their own retirement, but that can’t be allowed currently or it will push those failure dates closer than they are now.
And what about Medicare & Medicaid? Well, Medicare is set to become insolvent much sooner, 2020; and it began paying more than it receives back in 2004; so your taxes are already paying for that. Medicaid on the other hand isn’t trust-fund based, it is annually funded with current revenues and therefore cannot become insolvent.
Below is a pie chart from the Bush administration showing the estimated 2008 budget expenditures. The point of this is to show how money is being spent per year. Medicaid is included in the “Health” slice.
http://services.alphaworks.ibm.com/manyeyes/view/SpewYEsOtha6E2-0f91aE2-
As of 2004 people 55 or older made up 21.6% of the population, which includes people 65 or older (12.6% as of 2005). Combined, Social Security, Medicare & Medicaid consume more than 40% of the annual budget. Remember, that the minimum age to receive Social Security is 67; or closer to 10% of the population.
In the mean time, US education is underfunded, infrastructure is underfunded, and children’s health programs are underfunded. So younger & future generations are getting shafted, while older (and more politically active) generations receive insufficient aid that is on it way to failing entirely and nobody wants to talk about it.
Adam asked me about solutions before. If no Social Security then what, leave them out on their own? For the current generation, I’d argue yes. Anyone under 30 has loads of time to save for retirement (the recession will actually make it easier). For those in their 30’s and 40’s? Well, they could use some assistance, but they still have time. For those who are older it probably too late to do much to them now.
Some may argue that living paycheck to paycheck doesn’t give you the option to save for retirement, that some employers don’t offer pensions and so forth…. I argue that by and large, where there’s a will there’s a way; and where there isn’t a way… well, I’ll get to that shortly.
So solutions…. How do we cut spending on “programs that don’t work” while not shafting the people who can’t do anything about it? Well; I’d start by proposing a phase-out of Social Security. For anyone under the age of 45 as of 2010 you will not receive it, period. For anyone who has been a US citizen for less than 20 years, you will not receive it, period. For anyone who should receive it (67 or older)and makes more than 36k/year, you won’t receive it. The benefits being distributed will have to be cut by 10% but the current tax rate will not change. For people younger than 45; they would apply for it; and only those in the most need would receive it, with people like vets receiving priority. Over time, the thresholds to receive it would not increase with inflation; allowing for a general phase out up until a point; the tax rate taken from people checks would be reduced and Social Security becomes a program specifically to assist people who do not receive a pension and made too little over their lifetime to establish a retirement savings; or for people who get wiped out by the likes of Enron or a recession. For people who dicked around and didn’t care; we’re not here to save you from yourself.
Moving on to Medicare… and Medicaid…, and to an extent, encroaching on Social Security. Universal healthcare. This also help the youth-health programs and so forth. Not required (this is your doctor, you have no choice), but optional (if your employer doesn’t provide it). It probably won’t be any cheaper to run, but run on annual funding instead of bonds or trust funds it wouldn’t be subject to insolvency.
So that’s my take…. Which doesn’t matter, because nobody cares and nobody talks about it. It’s not ideal, but there is no ideal; people need to stop expecting a perfect fix and realize more pragmatic solutions. My 2 cents anyway, you can ignore me.
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Bummer. I'm pretty sick, so my head is all foggy; I'll do my best to respond to your points though. Two separate posts for length!
On healthcare first, since I already have the language in my head: The problem with health insurance as it stands in the US is that people who are generally young and healthy don't bother paying anything, and people who are chronically ill receive a disproportionate share of the benefits. Given these problems, the solution is simple: mandate that young and healthy people pay into the system, use their premiums to fund the chronically ill, and if $CHRONICALLY_ILL_EXPENSES > $YOUNG_&_HEALTHY_PREMIUMS, cut covered expenses and raise premiums to make the numbers balance. Just like Social Security works now, the money that working people pay in goes out to people who are currently entitled; if nobody pays in, then the only way to meet the entitlement is deficit spending (or printing money, etc.). Unfortunately, this solution is politically unpalatable in the US, God knows why. I know we're a nation of free-thinkers and free-behavers, but you already pay for roads you don't use and schools for kids you don't have, what's the logically difference between those and paying for healthcare for people who aren't you?
(Note: people who reject the idea of paying for services that they do not personally consume are morons, and I don't have the energy to ramble about that right now).
On Social Security: I've been trying to figure out a framework for dealing with this question for a while now. The basic issue I have is, do we as a society feel willing to allow people to fail? Catastrophically, completely, unable-to-care-for-themselves fail? Just... stop paying for them, stop giving them food and shelter for free, stop coddling their self-destructive behavior, and let them die of exposure on a street corner or drug OD or starvation?
Interestingly enough, the sides of this argument are not as clear-cut as "yes or no". The US has such a strong culture of community support and compassion that the "yes, allow people to fail" answer is not going to be acceptable within this generation at the very least. There will always be people who try to take care of the desperately poor, even if those folks are poor completely of their own making. Also, as an edge case, emergency rooms generally have language in their charter that dictates they will treat people without respect for "ability to pay". Therefore, we would either have to convince emergency rooms to not treat desperately poor people, or make that the beginning and end of the support we'd be willing to offer in those cases.
But let's run with that the argument that people should apply to receive Social Security benefits. Which people should be helped first, given scarce resources? Which people should be helped last? Should we take into account a person's life circumstances (bankruptcy, family history, etc.)? Medical condition? Age? Gender? Most everybody agrees that people who paid into Social Security their whole life should get what we promised them and they paid for.* Okay, they're first in line. How about people who got shafted by Enron and the like? Okay, they're next. Veterans, let's throw them in there too. What about people who did save for their individual retirement, but lost it in the stock market, like your friend? Where is her place in line? How about people who have debilitating medical problems and can't work? Does it matter if they brought the problem on themselves (obesity, for instance), or if they acquired it through work (black lung from mining)? What about people who are mentally incapable of caring for themselves? What if they are high-functioning enough to hold down a job, but have no concept of "saving for retirement"?
You see the issue; if the government starts making choices about who can or cannot receive government assistance, then you will wind up with a mid-level bureaucrat literally deciding whether people will live or die. That seems like a much greater intrusion into peoples' lives than just about anything else I could name.
I don't know what the answer for Social Security is, but I'm in the camp that doesn't think people should be allowed to fail. There but for the grace of God go I, you know? I've been ridiculously lucky in my life; I've had a good, safe, healthy childhood, parents who loved me and took care of me, no serious medical problems from birth, etc. I won the jackpot just by being born where and when and who I was, and I can't bring myself to not care about what happens to people who weren't as lucky as I have been. I like to think that, if I were in that situation, that people would be willing to help take care of me.
* This is why a plan to phase-out Social Security would be unlikely, btw. People technically pay into the Social Security fund, and receive benefits based on that contribution over their lives. However, the benefits a given person receives actually come from the payroll taxes on current workers. Thus, in order to eliminate the program, you'd have to a) convince current workers to keep paying into a program from which they would receive no benefit, b) find another way to fund Social Security to the extent that people have already paid into it, or c) change the program to use individual savings accounts that get invested in the stock market and then watch the market lose 2,000 points in a week.
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