The editors at Bloomberg have decided that condemning younger workers to a more dismal future is the best way to deal with the Social Security program’s giant long-run shortfall.
They want workers to pay higher taxes to prop up the bankrupt system. And, in exchange for those higher taxes, they want to give people less retirement income. Here’s what they wrote in their editorial.
Social Security’s finances need shoring up. But there is nothing wrong with the program that Congress couldn’t fix in a week. Gradually raising the retirement age to 69, changing the formula for cost-of-living increases, and raising the cap on wages subject to the payroll tax would close most of Social Security’s funding gap for the next 75 years. Such changes would rely about 60 percent on tax increases and 40 percent on benefit cuts, and would mainly affect the wealthiest Americans by asking them to pay more and get less in return.
Think of this as the pay-for-a-steak-and-get-a-hamburger plan. Social Security already is a bad deal for workers, forcing them to pay a lot of money in exchange for relatively meager retirement benefits. The folks at Bloomberg want to double down on that approach and make a bad system even worse.
And they want higher payroll taxes on investors, entrepreneurs, small business owners, and other “rich” people. Apparently, some people think it is a good idea to copy European fiscal policy at the exact moment that Europe’s welfare states are collapsing.
Not surprisingly, the editors at Bloomberg reject personal retirement accounts. I am 100 percent confident that they personally benefit from IRAs and 401(k)s, but I guess peasants like us are unworthy.
We don’t think private accounts should be among them. If workers divert some of their payroll taxes to an investment account, that would decrease the flow of money into Social Security and deprive retirees of benefits of equal value. Bad investment choices, or bear markets that lower returns on stocks and bonds, could add to their woes. In other words, private accounts would only make matters worse.
This is remarkable. They actually think that personal retirement accounts are more risky that the empty promises of politicians – even though the system has close to $30 trillion of unfunded promises (in inflation-adjusted dollars!), and even though we see in Europe that very bad things happen when the welfare state collapses.
This video explains why personal retirement accounts are a good idea, including an explanation of how we could transition to a new account and a discussion of how 30 nations already have adopted this pro-growth reform.
So here’s the choice we face. The Bloomberg editors want higher taxes and bigger government – an approach that dooms American to European-style stagnation (and that’s the optimistic scenario). Or we can go with personal retirement accounts – an approach that is working all over the world, while simultaneously boosting growth and creating more retirement security.
Seems like the right choice is rather obvious.
By the way, I can’t resist one last dig at the Bloomberg crowd. Their editorial is titled “Social Security Is No Ponzi Scheme,” yet nowhere in the column do they justify this absurd assertion. At least they should be honest and admit the current system is a pay-as-you-go racket that relies on taxes paid by young workers to finance benefits for old retirees.
And I also can’t resist linking to this cartoon, which makes the obvious connection between Bernie Madoff’s Ponzi scheme and the one the government imposes on us.
Can I have my cash out Social Security settlement now, please?
From the Bloomberg Editorial: “Bad investment choices, or bear markets that lower returns on stocks and bonds, could add to their woes.”
I tend to be a doom and gloomer (at least for the time being), but the chances that ones’s return on SS funds “invested” will outperform even “Bad investment choices, or bear markets” …….are probably less than zero.
[...] not surprised that left-wing journalists want to trap American workers in a bad system. But I am disappointed that a lot of Republican politicians feel the same way. [...]
[...] not surprised that left-wing journalists want to trap American workers in a bad system. But I am disappointed that a lot of Republican politicians feel the same [...]
[...] not surprised that left-wing journalists want to trap American workers in a bad system. But I am disappointed that a lot of Republican politicians feel the same [...]
A fantastic explanation yet again for the layman like myself. I suspected a government retirement program was the worst option of all, but hadn’t seen the figures to prove it.
This will beget some heated conversations with my “retired” buddy. He only worked until 35, which was when a botched surgery ruined him for life. He didn’t save a single penny before then and found himself completely dependent on the government and his family for handouts until he finally reached social security eligibility age. He could care less about who pays what and what percentage they should be entitled to. His only concern is not having his benefits reduced in any way, shape, or form.
Which brings me to another realization: when you live your life in pain every day, you are no longer concerned with God-given rights of yours or anybody else; you only care about who’s going to pay for your pain medication and when. The lesson I’ve learned from this is that when ObamaCare is responsible for providing your pain medication, you will not argue about any government overreach in fear of having your medication reduced or altogether eliminated.
[...] 1. He does not modernize Social Security system with personal retirement accounts. He does have reforms to rein in the program’s long-run outlays, thus addressing the system’s fiscal crisis. But this generally means workers will pay more and get less, thus exacerbating the system’s other crisis, which is the anemic ratio of benefits received compared to taxes paid. [...]