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OfflineAncalagon
AgnosticLibertarian

Registered: 07/30/02
Posts: 1,364
Last seen: 8 years, 8 months
How Would You Fix Social Security, Senator Kerry?
    #2981537 - 08/09/04 02:23 PM (13 years, 2 months ago)

How Would You Fix Social Security, Senator Kerry?

When it comes to Social Security reform, John Kerry is clear about what he is against. "I will not privatize Social Security," he declared in his acceptance speech to the Democratic National Convention. "I will not cut benefits."

The Democratic Party as a whole takes the same position through its party platform: "Democrats believe in the progressive, guaranteed benefit that has ensured that seniors and people with disabilities receive a benefit not subject to the whims of the market or the economy. We oppose privatizing Social Security or raising the retirement age."

It is a clear, resounding message...that says absolutely nothing about what Sen. Kerry or the Democrats would do to solve Social Security's looming financial crisis.

Yet Social Security will start running a deficit -- spending more money on benefits than it takes in through taxes -- in less than 15 years, by 2018, according to the last report of Social Security's trustees. The so-called Social Security Trust Fund, which is supposed to help pay benefits until 2042, in reality contains only government bonds, essentially an IOU. While few people doubt that those benefits will ultimately be paid, the federal government will still have to find the money to pay them.

And a lot of money it is. In 2018, the first year that Social Security faces a shortfall, the cash deficit will exceed $17 billion. That's almost as much as Kerry has proposed in increased spending on Pell Grants. By 2022, the annual Social Security deficit will have grown to roughly $100 billion, as much as Kerry would spend for a proposed energy trust, increased veterans benefits, fully funding Head Start, and increased spending on homeland security. By 2027, with the annual deficit approaching $200 billion, you can add in the his proposed increases in aid to state and local governments, his national service plan, and science and technology research. And so it goes.

Overall, Social Security now faces unfunded liabilities in excess of $26 trillion. One has to wonder where Kerry plans to get the money.

Actually, it is all too clear where the money will come from. As former President Bill Clinton pointed out, there are really only three options for Social Security reform: raise taxes, cut benefits, or invest privately. Since Sen. Kerry rules out private investment or benefit cuts, he could legitimately be accused of implicitly endorsing tax increases.

And mighty big tax increases they would have to be: a 50 percent increase in the payroll tax or the equivalent. This would be a tax hike far higher than what Kerry would "save" by rolling back parts of President Bush's tax cuts -- even if he hadn't already promised to use those savings to fund other government spending.

Not that financing is the only problem with Social Security. The program already provides today's workers with a low, below-market return on their tax "contributions" to the program. The program unfairly penalizes African-Americans, working women and others. Workers don't own their money or have any guaranteed right to their benefits. In short, it is a program crying out for reform.

But Sen. Kerry continues to duck the issue.

Frankly, that's not good enough. No one should be running for president if he can't stand up and tell the American people what he would honestly try to do about Social Security. President Bush has made his position clear. He would allow younger workers to privately invest at least a portion of their Social Security taxes through individual accounts. You can agree or disagree with that idea, but at least you know where he stands.

If Sen. Kerry plans to raise taxes to prop up Social Security, he should tell us. If he has another idea, he should share it with us. If he believes that the current program, with all its problems, is the best we can do, he should say so.

Sen. Kerry says that he has "reported for duty." But on one of the most important domestic issues facing this country, he has been AWOL.

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While I disagree with the author's lauding of Bush's firm stance on Social Security, upon which he chose not to act in his first term(surprised?), the rest of this is dead-on. Yet ANOTHER issue where Kerry chooses the 'It doesn't matter how I'd do it, I'd do it better!' route that so many people have for some reason taken hook line and sinker. The facts are there...Social Security will not long remain solvent. Reform must be made lest the people of this country suffer greatly in the long-term. Yet the most liberal member of the Senate is so afraid of alienating a potential voter that he will not ask the questions that need to be asked and give the answers that need to be given. This is not some obscure issue...this is one of the pressing domestic problems of our time, and yet a man whose got a 50/50 shot at being President refuses to acknowledge it.


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?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


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OfflineJesusChrist
Son Of God
Registered: 02/19/04
Posts: 1,459
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2981655 - 08/09/04 02:57 PM (13 years, 2 months ago)

Good article. Our leaders are complete cowards if they don't attempt to do something about Social Security. Waiting for the impendind disaster is not the solution.

"Overall, Social Security now faces unfunded liabilities in excess of $26 trillion." Holy fucking mother of mary. I personally don't have the $26 trillion.

I think that we live in an era that is going to learn a long hard lesson of financial indepence. In the private sector we have had pension hell since the 1980's. Sometimes it was greedy corporate takeover artists that would raid penisons. Sometimes the companies weren't doing that well and decided they couldn't fund them. The Steel industry and the Airline industry today are trying to get out of expensive penision programs. Pension incomes were once thought to be safe and stable, and today they are not. You can't trust any company's pension plan, and you can't trust our government because Social Security is going to collapse under its own weight. The only solution is to allow private citizens to individually manage their retirement accounts.

It is sad, but you really can't trust anyone to look out for you but yourself. That is why privatizing social security is the best option. The Government can't come close to managing my money as well as I could. We gave them a chance, and they have given us 26 trillion of unfunded liablities. What a complete fucking disaster.


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InvisibleAnnapurna1
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2981664 - 08/09/04 02:58 PM (13 years, 2 months ago)

unfortunately..we wont get to find out :sad:...


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OfflineJesusChrist
Son Of God
Registered: 02/19/04
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Annapurna1]
    #2982832 - 08/09/04 07:33 PM (13 years, 2 months ago)

because he won't tell you.


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Tastes just like chicken


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OfflineAncalagon
AgnosticLibertarian

Registered: 07/30/02
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2983254 - 08/09/04 09:23 PM (13 years, 2 months ago)

So where are the Kerry supporters that are usually so vocal on this board? I know you're out there guys...


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?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


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OfflineLearyfan
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2983503 - 08/09/04 10:52 PM (13 years, 2 months ago)

Quote:

Ancalagon said:
So where are the Kerry supporters that are usually so vocal on this board? I know you?re out there guys...




I?m a "anyone but Bush" supporter.







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Mp3 of the month: Johnny Price- Marijuana, The Devil Flower



Edited by Learyfan (08/09/04 10:53 PM)


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InvisibleKingOftheThing
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2983636 - 08/09/04 11:33 PM (13 years, 2 months ago)

dude cant you find articles from normal publications?? that article is from a conservative propoganda website...FYI the only tax cuts kerry is proposing to roll back are those on the top 2% of wage earners


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InvisibleXlea321
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2984655 - 08/10/04 04:15 AM (13 years, 2 months ago)

When it comes to Social Security reform, John Kerry is clear about what he is against. "I will not privatize Social Security," he declared in his acceptance speech to the Democratic National Convention. "I will not cut benefits."

:thumbup:

As for the rest, like King says, if you want to believe what a far right conservative says about what will happen in 2022 go ahead. I prefer a little reality.

Say, you know if we'd invested that 200 billion (so far) we've pissed into the wind in Iraq - you think that might've helped the annual deficit?


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Don't worry, B. Caapi


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Invisibleluvdemshrooms
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Re: How Would You Fix Social Security, Senator Kerry? [Re: KingOftheThing]
    #2984787 - 08/10/04 05:36 AM (13 years, 2 months ago)

He doesn't have to say he'll raise taxes. You need merely add up the costs for the promises he's made.


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You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation. You cannot multiply wealth by dividing it. ~ Adrian Rogers


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OfflineAncalagon
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Registered: 07/30/02
Posts: 1,364
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Re: How Would You Fix Social Security, Senator Kerry? [Re: KingOftheThing]
    #2984925 - 08/10/04 07:20 AM (13 years, 2 months ago)

Quote:

dude cant you find articles from normal publications??



No, no I cannot.

Quote:

article is from a conservative propoganda website



Why can't you comprehend the difference between libertarian and conservative thought? CATO is strongly in favor of exiting Iraq, quite the conservative viewpoint. They critique Bush as much, if not more, than they do Kerry. Its really a shame that you have to resort to poisoning the well when you can't attack the facts. What in that article is bullshit?...this is not information CATO alone has discovered. Innumerous think tanks, institutes, universities, etc. have come to the same exact conclusion: Social Security as a system cannot endure in it's current state. I really hope you have something to enlighten me with.

Quote:

FYI the only tax cuts kerry is proposing to roll back are those on the top 2% of wage earners



As former President Bill Clinton pointed out, there are really only three options for Social Security reform: raise taxes, cut benefits, or invest privately. Since Sen. Kerry rules out private investment or benefit cuts, he could legitimately be accused of implicitly endorsing tax increases.

And mighty big tax increases they would have to be: a 50 percent increase in the payroll tax or the equivalent. This would be a tax hike far higher than what Kerry would "save" by rolling back parts of President Bush's tax cuts -- even if he hadn't already promised to use those savings to fund other government spending.

Where is the fallacy in this logic? There are three options for social security, Kerry rejects two, therefore he HAS to accept the third. It's quite clear. The only reference the article makes to the >200,000 rollback you are for some reason discussing is to mention that the revenue gained from that is not even nearly enough money to pay for all Kerry's programs and then save Social Security...again, it is implicit that Senator Kerry will have to raise taxes.


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?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


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InvisibleXlea321
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2984998 - 08/10/04 09:14 AM (13 years, 2 months ago)

CATO

:grin:

I'd guessed it was by the CATO institute without even checking the link. They have their own unique style of horseshit.

Innumerous think tanks, institutes, universities, etc. have come to the same exact conclusion:

Check who is funding a think tank before relying too heavily on the "independent conclusions" they come up with.

Social Security as a system cannot endure in it's current state

Strange. The British social security system was introduced in the first few years after the second world war ended. You think Britain was in a better state economically in 1945 than it is now? If they'd been around then what do you think the odds would have been on the CATO institute braying "We simply cannot afford the introduction of a social security system now".

It was bullshit then, it's bullshit today.


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Don't worry, B. Caapi


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OfflineJesusChrist
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Xlea321]
    #2985362 - 08/10/04 11:49 AM (13 years, 2 months ago)

Quote:

Alex123 said:
CATO

:grin:

I'd guessed it was by the CATO institute without even checking the link. They have their own unique style of horseshit.

Innumerous think tanks, institutes, universities, etc. have come to the same exact conclusion:

Check who is funding a think tank before relying too heavily on the "independent conclusions" they come up with.

Social Security as a system cannot endure in it's current state

Strange. The British social security system was introduced in the first few years after the second world war ended. You think Britain was in a better state economically in 1945 than it is now? If they'd been around then what do you think the odds would have been on the CATO institute braying "We simply cannot afford the introduction of a social security system now".

It was bullshit then, it's bullshit today.




Social security will hit the wall.  People have known the system cannot sustain itself for quite some time.  The baby boom generation is retiring in droves. Those people spent decades in the work force and attined high earnings.  Now they are starting to stop their high earnings and instead draw off the system.  They were a large part of why the system was "working".  Without them, it will collapse.  The Government never saved any of the money that the baby boom generation gave to them.  Social Security is a ponzi scheme.  If I ran a similar operation in the private financial sector, I would be convicted of fraud.  I am not kidding.

I entered college back in the 80s.  In my freshman year economics class, the very first thing the professor taught was the demographics of demise relating to our social security program.  It wasn't a new thought or cutting edge idea even back in the late 80s.  Mathmatical models had alreadly long predicted the coming failure.  The Professor stressed this as the very first lesson. 

He said that if you get nothing else from my class or from college, I at least want you to be warned that the government retirment program will not be available by the time you all retire.  People need to plan for their retirements, and if you depend upon the government you will be screwed.

The message needs to be sent to young kids today.  They pay their social security taxes and probably a good deal of them think the system will be there when they retire decades from now.  It is not going to happen.

If you don't think the social security system has problems, then I don't know how we can have intelligent discourse and rational debate on the issue.  Just go stick your head in the sand and dream of sunshine.


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Tastes just like chicken


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OfflineAncalagon
AgnosticLibertarian

Registered: 07/30/02
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Xlea321]
    #2985774 - 08/10/04 02:01 PM (13 years, 2 months ago)

On the run so I'll respond in depth and do some real research later, but didn't Great Britain transition from a previous system(probably similar to the one we have now) to one based more on individual retirement accounts? I've definitely read that quite a few times before...will address further later.


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?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


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OfflinePhred
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2988292 - 08/10/04 10:23 PM (13 years, 2 months ago)

How would senator John F Kerry (if ever elected president of the US) fix Social Security? Why, the same way he would fix everything else, of course -- by not being George W Bush:

http://www.theonion.com/news/index.php?issue=4032

pinky


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OfflineLearyfan
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Phred]
    #2988338 - 08/10/04 10:32 PM (13 years, 2 months ago)

Quote:

pinksharkmark said:
How would senator John F Kerry (if ever elected president of the US) fix Social Security? Why, the same way he would fix everything else, of course -- by not being George W Bush:

http://www.theonion.com/news/index.php?issue=4032

pinky




Good enough for me.






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Mp3 of the month: Johnny Price- Marijuana, The Devil Flower



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InvisibleXlea321
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2989860 - 08/11/04 07:35 AM (13 years, 2 months ago)

Britain also introduced the National Health Service just after the war. Free health care for all. Are we really saying Britain can't afford something now that it could afford in 1945?


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OfflineJesusChrist
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Xlea321]
    #2990260 - 08/11/04 10:19 AM (13 years, 2 months ago)

http://www.ncpa.org/~ncpa/studies/s166/s166.html

National Health Care would be a disaster. Don't give the government more power.


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Tastes just like chicken


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OfflineAncalagon
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Registered: 07/30/02
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Re: How Would You Fix Social Security, Senator Kerry? [Re: Xlea321]
    #2990747 - 08/11/04 12:51 PM (13 years, 2 months ago)

Quote:

CATO



I'd guessed it was by the CATO institute without even checking the link. They have their own unique style of horseshit.

Innumerous think tanks, institutes, universities, etc. have come to the same exact conclusion:

Check who is funding a think tank before relying too heavily on the "independent conclusions" they come up with.



Why do you have such trouble countering what is obviously false information with factual information of your own? It's really laughable that you think you legitimately dismiss decades of research done by dozens of groups in quite a few countries as 'horseshit', probably just because you disagree with the premise.

Quote:

Strange. The British social security system was introduced in the first few years after the second world war ended. You think Britain was in a better state economically in 1945 than it is now? If they'd been around then what do you think the odds would have been on the CATO institute braying "We simply cannot afford the introduction of a social security system now".

It was bullshit then, it's bullshit today.



What a shame. The public schools over there must be as bad as they are over here. No matter, I'm always happy to educate:

?Reforming Social Security: Lessons from Great Britain?

Let me start with three facts.

First, although the ratio of pensioners to the population of working age in the United Kingdom is forecast to rise from 30% in 1995 to 38% in 2030, the ratio of public expenditure on pensions to GDP is expected to fall over the same period from 4.2 % to 3.3%.

Second, UK private sector pension funds have ?700 billion worth of investments, more than the rest of the European Union put together.

Third, over the past decade pensioner incomes have risen by 50%, there have been increases at all points in the pensioner income distribution and pensioners are no longer concentrated right at the bottom of the population income distribution.

How has this been achieved? What more needs to be done? And what lessons can be learnt by countries with different systems?

The answers to these questions can be found in an examination of the history of the British pension system since the war.

Throughout that history there is a single recurring theme?the quest of politicians to ensure that pensioners are not left too far behind as earnings grow and the constant problems this has caused for public finances.

Since the National Insurance Act passed by the 1945 Labour Government, Britain has had a non means tested basic state pension. Those who have paid national insurance contributions as part of their tax bill during their working life are eligible for this benefit. It has always been paid for by Government out of current revenues, rather than out of investment funds. In other words, each generation pays for the pensions of its elders. When the system was originally proposed by the social reformer William Beveridge during the war, he intended that the pensions should be phased in over 20 years. Labour decided to pay in full from the outset. The judgement of Britain?s foremost welfare state historian Nicholas Timmins is that ?although it was a mighty expensive decision, almost certainly nothing else would have been politically tenable?.

Beveridge?s scheme involved a flat rate pension paid for by flat rate contributions from employees and employers. By the late 1950s the view began to grow, starting on the left and spreading to the right, that for too many workers, the flat rate pension was too low as a proportion of earnings. Various solutions were advanced with one common feature. In place of a flat rate contribution, better off earners should be asked to pay higher contributions, as should their employers. In return, at least a proportion of their state pension should be earnings related.

The Conservative Government of the time accepted this argument. One aspect of it, however, concerned them. The establishment of occupational pension schemes was growing rapidly by the 1950s, with employers providing retired staff with an income in old age based on the salary they earned during their working life. The Government feared that higher employer contributions for the state scheme would slow or even reverse the growth of these highly desirable schemes.

When the graduated pension was introduced in 1961, therefore, an important provision was made. National insurance contributions from better off employees and their employers would indeed be raised. Yet occupational schemes and their beneficiaries would be allowed to opt out both of the higher contributions and of the extra graduated portion of the pension. A vital principle had been established.

By the middle 1970s the state pension was once again under review.

The incoming 1974 Labour Government argued that, despite the 1961 reform, pensioner incomes were still not keeping pace with other earnings and that something had to be done. They made two changes. The first was to make a formal link between the basic state pension and earnings by instituting an automatic annual uprating. The formula used was to increase pensions by a percentage equal to the growth of prices or earnings, whichever was the higher.

The second change was to go much further than the old graduated pension by introducing a full scale second tier to the UK state pension system?the State Earnings Related Pension, commonly known as SERPs.

SERPs provided a pension based on 25% of the average of the best 20 years of earnings. The crucial second reading in Parliament of the Bill to introduce SERPs was unopposed. According to Lord Lawson, later as Chancellor an important player in the design of the reform programme, the Conservatives were ?clearly wrong to do this ? but believed ?that pensions ought not to be a political football?.

Vitally, however, the Conservative opting out proposals of the 1960s survived. Occupational schemes were allowed to opt out of SERPs.

Yet despite allowing the continuation of opting out, the attempt to boost pensioner incomes through increased state spending was doomed to failure.

When the Conservatives came to power under Margaret Thatcher in 1979, they inherited an ailing economy, a fast rising social security budget and commitments far in excess of our ability to pay for them. In 1950 social security spending represented 5.1% of national income, by 1980 it represented 8.4 %. By far the largest group of beneficiaries were elderly people and by 1965 the cost of pensions was twice that which Beveridge had predicted. The prices and earnings link boosted the state pension in periods of depression and expansion and began to seem unaffordable. In addition, as Lord Lawson puts it, ?it was clear to anyone who took the trouble to analyse SERPs that it was a doomsday machine?. Clearly, reform was necessary.

Margaret Thatcher?s Government therefore did three things.

First, it removed the formal link between pensions and earnings and linked the basic state pension simply to prices instead. The decision was controversial, but was accepted because of the obvious crisis in the UK economy in 1980 and because there were no losers in real terms.

Second, in 1985 the Government turned its attention to the long term problem of SERPs. The Government didn?t just want to abolish SERPs since the arguments for its creation remained good ones. Instead it decided to offer taxpayers two alternatives. One option was to remain in a somewhat less generous SERPs. The percentage of your income that you would be paid, for instance, would be reduced from 25% to 20%.

The other alternative involved a massive expansion of contracting out. Until this point only employer run schemes had been allowed to opt out of SERPs. From now on individuals would enjoy the same right.

A new pension vehicle, the personal pension, was created. Individuals could save into this out of their pre tax income. In addition they could opt out of SERPs and have the state pay a part of their National Insurance contributions into a private fund. Indeed for a limited period those who decided to contract out would receive an extra 2% rebate above that which the state charged for SERPs.

Take up of this second alternative greatly exceeded expectations. The Department of Social Security?s working assumption was that about 500,000 would take out personal pensions and the number might ultimately reach 1.75 million. In the event, take up reached 4 million by the end of April 1990 and by 1993-4 it had risen to 5.7 million.

The results of this series of changes, from the 60s to the present day, have been dramatic. Three quarters of workers are contracted out of SERPs either through occupational or personal pensions. Only 17% remain in SERPs. For the last decade pensioner incomes have been growing faster than earnings. And, according to the OECD, public debt in the UK will be low by 2030, performing far better than almost any other OECD country. Concern that the UK should not be forced to accept joint responsibility for the pension liabilities of other European countries has become one of the most frequently cited arguments against joining the Euro.

This success did not, of course ended the debate.

Some wanted a much larger compulsory private pension. Margaret Thatcher was one such. She told her Chancellor that they had such a pension in Switzerland. ?Yes Prime Minister,? he replied ?but in Switzerland everything that is not forbidden is compulsory?.

Others were concerned about the security of private pensions. After the newspaper owner Robert Maxwell was found to have stolen from the Mirror Newspaper pension fund the Government introduced safeguards to prevent swindles and incompetence depriving pensioners of their income.

Still others believed SERPs remains too expensive and press for its abolition. Once again this option has been rejected, partly because some pensioner?s contributions to SERPs were too small to pay the administrative costs in the private sector. Instead the Government once again reduced long term SERPs entitlements but compensated with reforms to make it more worthwhile for older people to opt out.

Yet the most important debate of all concerned the basic state pension. It remained a large item of Government expenditure, yet current and future recipients believed it was inadequate. So the third stage of reform began. Over the summer of 1996 the then Secretary of State for Social Security, Peter Lilley began to work on new proposals to deal with the problem. His Basic Pension Plus plans were published in the New Year. Under these proposals, the basic state pension and SERPs would be replaced with a state guarantee. New entrants to the workforce would be given a rebate from their taxes paid into their choice of private plans. If, when they reached retirement age, market movements meant that their private plan was not large enough to replace the basic state pension, the state guaranteed to make up the difference. In reality, this wouldn?t happen very often, if at all, and the advantages of a funded scheme would yield the average pensioner a much more generous pension than they would otherwise get.

Of course, the scheme would cost money during the long transitional period. Because young people would be funding their own pension they wouldn?t be paying for the pensions of their elders. However, by the time this cost peaked it would be offset by savings from an earlier reform to raise the retirement age for women to the same as that for men. Another change was to switch tax relief from the time of saving to the time of receiving the benefit. This halved the transition cost.

Lilley?s proposals received a warm welcome in the press and across the political spectrum. The left wing Guardian newspaper, for instance, said that ?like the concept of a share holding democracy, it could also be empowering a new generation, which will have much more control over its retirement arrangements?.

The General Election did, however, reveal one weakness. The scheme was open to attack as ?abolishing the state pension?, even though there would be a guarantee in place and no current pensioners would be affected.

Now the Party is revisiting the scheme with one major change?new entrants to the workforce won?t be forced to join it. They will have an option to do so.

What lessons can be learned from the British experience. I have some lessons for those who oppose such reforms and some for those who support them.

For those who oppose reform.

First, reforming the state pension by allowing opting out into private funds is not as you often suggest, risky and extreme. It has been part of British pension policy for 40 years and in the last decade, in particular, it has become its most recognisable feature. It is almost universally accepted by politicians across the political spectrum and there is no prospect whatever of it being reversed.

The results have been increased pensioner incomes and improved public finances. The only debate in Britain is over how we should go further in increasing the number and amount of funded pensions.

Second, not only are you wrong to describe a move to a funded scheme as risky, it is in fact the only sustainable solution to a recurring problem. In Britain there have been repeated attempts, some of which actually became law, to boost state pensions through long term increases in tax funding. The reason for these attempts is that the state pension keeps falling behind earnings. Yet again and again these attempts have failed. With demographic and political changes the proposals were simply too expensive for future taxpayers to bear. One after the other, either before or after they became law, they were abandoned.

The only proposals that have stuck have been those that have increased private funding and contracting out. They have kept pensioner incomes growing in line with earnings and, primarily because they hand money over to separate non government funds, have not been reversed

This leads to a third point. The truly risky and extreme policy is to ask today?s workers to depend for their pension on the promises of politicians and the goodwill of future taxpayers. In the United Kingdom, someone who stayed entirely in the state system has seen their SERPs entitlement cut and the earnings link on the basic state pension broken. And, although, the latter was accompanied by all sorts of assurances, all to often uprating has not involved any earnings element at all.

What about the lessons for those who would like to see British style reforms introduced in their country?

First, make sure you focus your debate on the long term, the security of young people and the country?s finances. Short term budgetary problems were often the ally of welfare reformers in the United Kingdom, but they were not adequate as the main reason for pension reform. Indeed, almost all the reform involved spending money in the short term and a recognition that without this, long term change was impossible.

Second, victory in any debate about long term reform is useless if pensioners fear their income is under threat.

At every stage in the UK it was necessary to ensure that there were no losers among current recipients and that, as far as possible, future recipients felt they were making a one way bet. The sacrifices this involved were that there could be no short term saving and that the reforms would have to be phased in over very long periods.

Basic Pension Plus would have yielded only costs until nearly half way through the next century. Where savings had to be made to offset these costs, they too were phased in over a long period and did not leave any current recipients worse off. To ensure that fears were not allowed to take hold, the Government was always very clear about the costs of its schemes and the nature of the guarantees it was giving.

Third, you do not need to introduce all the reforms at once. Indeed, in the UK voters were more inclined to support the next stage of reform, because they could see that the previous changes had not left them worse off. It was also less easy to attack the proposals as unworkable or to defeat the entire package by concentrating on its weakest point. The temptation to demonstrate how radical the Government was and its farsightedness, by announcing the entire programme in advance was also eschewed. Each part of the programme was advanced on its merits and given time to work before further innovations were considered.

Finally, the provision of choice is vital. The reforms of the mid 1980s were not imposed on future pensioners, they were given a choice and a financial incentive to choose the private option. Much of the popularity of the scheme depended on the feeling that the Government was providing the opportunity to get a better deal. If voters thought, instead, that they were being forced into a scheme to save money, they would have been much more resistant. The biggest political mistake made with Basic Pension Plus was to make it compulsory.

Your natural political instincts will, I am sure, make you suspicious of the idea that in the UK we have found the perfect formula for painless reform. You instincts would be right. Pensions remain a controversial topic and throughout the 18 years we spent in Government Conservatives had to face criticism of the system we were developing. Yet there is now a remarkable consensus that the decisions were the right ones, that in general they have helped rather than hindered the Party at the polls and that the new Government is far more likely to extend the programme than to reverse it.
----------------------------------------------------
Hopefully you read that and are now aware that Britain faced the same problem we face in America. An ageing population relative to the current workforce demanded that reform would have to be made unless taxes should rise dramatically, benefits be cut dramatically, or both. Like Chile, Australia, and others, Britain realized the insolvency of it's Social Security system and set into motion the series of reforms that would save it...near all of them revolving around letting people take OWNERSHIP of their retirement accounts and investing parts of them.

Alex, you have to open your eyes, just this once. No matter how much it may disgust you, the logical facts are there. The Social Security system of America, cannot endure as it is. The nature of civilized countries today is that people continue to live longer and longer and thus the ratio of workers/pensioners makes it impossible for the status quo to be maintained. I really would like to know where the fallacies are in all of this.


--------------------
?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


Edited by Ancalagon (08/11/04 12:58 PM)


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InvisibleXlea321
Stranger
Registered: 02/26/01
Posts: 9,134
Re: How Would You Fix Social Security, Senator Kerry? [Re: Ancalagon]
    #2991313 - 08/11/04 03:37 PM (13 years, 2 months ago)

It's really laughable that you think you legitimately dismiss decades of research done by dozens of groups in quite a few countries as 'horseshit'

Come on Anca, it's really laughable that you consider a "thinktank" that always reaches conclusions favourable to the conservative right is doing that much in the way of "thinking". Is the world really that lopsided?

Pensions remain a controversial topic and throughout the 18 years we spent in Government Conservatives

This is an argument written by a conservative. It's going to reach the conclusion you want it to reach. Why not cut and paste an article written by someone on the left and try and pick holes in it?

The Social Security system of America, cannot endure as it is.

And I'm sure in 1945 the conservative right would have been screaming "We have just fought a war, how on earth can we afford to introduce social welfare and free health care? The logical facts say we cannot". Just as they were screaming "We simply cannot afford the minimum wage, the logical facts say we cannot" etc etc.

Well, we could and we did. It really comes down to where you want to spend your money. Do you want to piss it away to arms manufacturers and invading any country that takes your fancy or invest in your own population.

Do you have any articles by conservatives saying "We simply cannot afford to launch an invasion of Iraq and occupy the country for years on end"? Or is it just the social welfare stuff we can't afford?


--------------------
Don't worry, B. Caapi


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OfflineAncalagon
AgnosticLibertarian

Registered: 07/30/02
Posts: 1,364
Last seen: 8 years, 8 months
Re: How Would You Fix Social Security, Senator Kerry? [Re: Xlea321]
    #2991403 - 08/11/04 04:06 PM (13 years, 2 months ago)

Quote:

Come on Anca, it's really laughable that you consider a "thinktank" that always reaches conclusions favourable to the conservative right is doing that much in the way of "thinking". Is the world really that lopsided?



This is like pulling teeth. One more time...where is the misstep in their findings? What do you see that they don't? What do their 'corporate backers' and/or 'conservative bias' force them to print here which is verifiably inaccurate? Please Alex, I'm here to learn, show me how they are wrong.

Quote:

This is an argument written by a conservative. It's going to reach the conclusion you want it to reach. Why not cut and paste an article written by someone on the left and try and pick holes in it?




Uh, the point of the article was to dismiss your uninformed view about your own country's Pension system. Do you find fault even in history(that is, real life events that have occurred) itself? Britain's system was unstable and would have gone right off the cliff on the same road the American system is traveling right now had reforms not been initiated. That article just outlines the reforms that were set in motion to save the system. It is shown later in the article just how healthy your current system is BECAUSE of those reforms. Disregard the theme of the article and focus on the historical facts therein, your country had the same problem as ours and you solved it in a manner we should, at least in part, replicate. Again, what there do you find fault with?

Quote:

And I'm sure in 1945 the conservative right would have been screaming "We have just fought a war, how on earth can we afford to introduce social welfare and free health care? The logical facts say we cannot". Just as they were screaming "We simply cannot afford the minimum wage, the logical facts say we cannot" etc etc.




Irrelevant to the discussion. The issue of the social security insolvency being discussed is related to the changing age demographics of a country, not the economic status of that country at a period in time.

Quote:

Well, we could and we did. It really comes down to where you want to spend your money. Do you want to piss it away to arms manufacturers and invading any country that takes your fancy or invest in your own population.




So you agree then that the system is unstable as is and that more and more funds will be needed to keep it stable as the years go on?

Quote:

Do you have any articles by conservatives saying "We simply cannot afford to launch an invasion of Iraq and occupy the country for years on end"? Or is it just the social welfare stuff we can't afford?



Clearly you are either ignorant of or unwilling to recognize the differences between Conservatives and Libertarians. If you're willing to confirm that, I'd be more than willing to provide you with quite a few articles that state just that.


--------------------
?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


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