posted
I'm no economist. But...isn't this about math? Shouldn't there be just one answer? How/why are there so many different opinions on when Social Security will fail? Well... I could see a why...people with their own mysterious agendas plotting on how the money should be spent. Is this just a case of 2 + 2 = 5? People fighting over what to call the color blue?
Or maybe people with only half the facts or half the education trying to make decisions about a system they imagine they understand?
posted
This may make me sound like a total idiot, but can someone please tell me just what, exactly, the social security problem is?
Posts: 7877 | Registered: Feb 2003
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posted
Well, there's a lot of things that make this complex. First of all, you can't perfectly predict future income. We pay money into the social security system to pay for those currently on social security. We do this in the hope that future genreations will be able to pay for us if we need it. Since we don't know how much people will be paying into the system several years down the line, we can't predict revenue. In addition, we cannot predict costs. This is especially true in the case of medical expenses. Medical costs have recently been growing rapidly, but the actual amount of the growth is hard to predict. Likewise, it is impossible to predict the death rates of people on social security, so we don't know how many people will actually be recieving benefits. The only option we have is to try and extrapolate from past performance, but that is not a given. Many estimates agree that there will at some point be problems, but there are just too many unknowns to give an accurate estimate.
Raia- The problem is that many people expect the social security system to run out of money. When this happens the US government will either have to cut back on benefits, draw on money outside of social security, or be unable to pay the benefits that are promised.
posted
No, it doesn't. When a person contributes to the social security system, they are not actually paying for their future benefits. They are instead paying for those currently recieving benefits.
There are 3 major problems with this:
1) Benefits are increasing (for example, perscription drug coverage). 2) Life expectancy is increasing, so therefore people are on social security a longer percentage of their life. 3) Shifting population percentages. As the boomer generation reaches retirement, the percentage of retired people vs working people has increased dramatically.
So basically, the expenses are rapidly increasing, but there is no similarly increasing revenue source.
Posts: 2437 | Registered: Apr 2005
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posted
Ah, that makes sense. So, basically, in order for this to work, people would just have to pay more and more and more social security, and they don't get to use it?
I see the problem.
Thanks for the explanation, ricree. Posts: 7877 | Registered: Feb 2003
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What about drugs? Isn't the high price of drugs our own invention? The rest of the world doesn't have to pay the same price, US citizens pay ten times more (or something like that). Again, I'm no economist, but can't the government force the drug companies to lower their prices? I think Canada did this. Of course the argument is that these huge prices fuel research. OSC did an article about this too...mentioning the fact that part of the problem is people living too long...and the fact that our drugs actually work (as opposed to 60 years ago).
Posts: 4953 | Registered: Jan 2004
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posted
The high prices aren't so much something of our own invention as they are created by those countries that heavily regulate their prices. There is certainly a huge cost that goes into researching each drug that makes it to market, as well as the many drugs that don't. Essentially, consumers in the US (and any similarly priced areas) are forced to subsidize the lower prices that people in other areas enjoy. If they didn't force the prices low, the US price would drop somewhat as it reached a reasonable average. Of course, the low priced countries would see a similar rise in cost. I can't really blame those countries, after all, it is a pretty good deal. That said, someone has to be left holding the bag, and in this case it happens to be us.
Posts: 2437 | Registered: Apr 2005
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posted
The other issue is that we have been generating large surpluses for years from social security (more people putting in than taking out), but have basically loaned it to ourselves to pay for other government programs. Had we not done this, SS would have been solvent for the foreseeable future.
That was what the "lockbox" argument was all about 5 years ago.
posted
Drug prices don't have to be high, you know. You don't need to look any further than Pfizer's annual profits to see that. If America started regulating drug prices I don't expect Pfizer would become insolvent.
In other words, I think the "blame those damn socialists" argument is specious.
Posts: 10886 | Registered: Feb 2000
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posted
*shrug* While I personally think the 'medical industry' needs to be taken out to the woodshed a little bit, so to speak, I confess I'm worried about the long-term ramifications of doing so.
You don't get cutting-edge research and amazing breakthroughs from companies that are merely avoiding insolvency.
Posts: 17164 | Registered: Jun 2001
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posted
Someone please tell me if this is wrong.. it's what I "heard" years ago...
Originally, wasn't Social Security supposed to be the sort of system that what you pay in is what you get out? And there was a large population paying in, and so a president (I seem to remember Reagan), started spending that money like mad, leaving the mess he created of the SS system for someone else to clean up.
And if that is the case, and the government screwed up the system, shouldn't they pay back the money they stole from the SS system, and we go back to a "you get back what you put in" sort of system?? And how about they do this without laying off government employees, but rather with things like senator/congressman pay cuts, buying bargain green beans for the white house, and shopping at home depot for their hammers?
posted
Just do what I do. Consider that portion of your paycheck gone forever. Assume you will not get social secuirty when you retire, and save with 401ks and IRAs.
Posts: 3134 | Registered: Mar 2005
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posted
There are a number of things wrong with social security which have fairly easy fixes: 1) The excess funds are invested in government bonds. Think about what this means. You pay social security taxes. A certain amount of that money is more than they currently need. This excess is used by the government to fund other diverse programs. The money which is borrowed by those other programs is paid back with interest> Where does the money to pay off the loan and interest come from? More taxes! So essentially the government gets an interest-free loan of your money (excess social security), lends itself money to fund programs by essentially raising your taxes without telling you (your SS money being lent out) and then you get to pay back both the principal and interest through taxes.
2) The retirement age is set based upon... random whim, really.
3) The benefits are indexed to wages rather than cost of living.
The easy fixes for these issues are as follows: make a law setting the markets in which SS money may be invested- perhaps corporate bonds or domestic stocks or some other economy-fueling market. Index retirement age to life expectation and increases in benefits to inflation or cost of living indices. Give a guaranteed fixed retirement age to people over 50 so they can plan ahead.
Voila! Social Security is fixed!
Posts: 4548 | Registered: May 2001
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posted
You missed one: Social Security tax is highly regressive, cutting off at a certain, fairly low, income, and harming the ability to save for retirement of those who will need it most.
Solution: remove the income ceiling on the tax and reduce the rate so that the overall amount taxed remains about the same.
Posts: 15770 | Registered: Dec 2001
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posted
fugu, would you mind explaining your last post? What do you mean by regressive, and what's an income ceiling in regards to this? I'm pretty clueless about the way it works..
posted
An earner only pays the approximately 6% (well, its actually over 12%, but the employer pays half making it seem smaller) on the wages he earns up to a certain amount. It goes up each year, I forget what it is now, but I think about $90k.
edit: oh, and regressive just means that people who make less pay a higher percentage of their wages than people who make more.
quote: You missed one: Social Security tax is highly regressive, cutting off at a certain, fairly low, income, and harming the ability to save for retirement of those who will need it most.
Solution: remove the income ceiling on the tax and reduce the rate so that the overall amount taxed remains about the same
In other words shift the burden of social security to the rich. Remove the last argument that Social Security is a individually funded retirement plan and not a wealth transfer just like welfare. "From each according to his ability, to each according to his need.."
Posts: 127 | Registered: Feb 2005
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posted
Given that the last illusion that its some sort of retirement thing might as well be a toothpick under a mountain, I see no particular reason to leave it there.
The way social security is actually used is to provide a sustenance for people troubled by circumstance. The current system only serves to undermine that actual use.
Better to do that efficiently than to do it badly, since we're already doing it.
And stop with the hyperbole, providing a pretty minimal stipend to people no longer able to work so that they can live their lives without starving to death or losing their home is hardly a particularly socialist thing to do.
Posts: 15770 | Registered: Dec 2001
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posted
Despite the sarcasm of my last post, I am too. (I'm sure our reasons are very different. )
I am always in favor of calling a spade a spade. Social Security is a safety net for people that reach retirement with less than enough money to cover their needs. If I could opt our of the system in return for a small income tax increase that would be used to fund Social Security for the truly needy I would do so. On the other hand if we are going to continue to call this a retirment plan for everyone, we should make it so by adding personal accounts we can control.
Posts: 127 | Registered: Feb 2005
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quote:The way social security is actually used is to provide a sustenance for people troubled by circumstance. The current system only serves to undermine that actual use.
What a rare circumstance. I think we are in complete agreement.
Posts: 127 | Registered: Feb 2005
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posted
Yes people who go into medicine should have no interest in making money. They should sacrifice everything for the greater good.
If you take away the profit incentive, the speed at which we inovate in medicine or any other field would slow to a crawl. I am not suggesting that money is the only motivation, but I am suggesting that it is an essential one.
Posts: 127 | Registered: Feb 2005
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posted
The "high profits are needed for research" is absolute nonsense. Drug companies spend more than twice as much on advertising as they do on research. Which is most of the "research" that US customers overpay for.
Basic drugs research is carried out at universities and government&trustfund-supported institutes such as ScrippsOceanographic or Salk by postgraduate students financed primarily on government grants.
What Research&Development that drug companies actually do are: Clinical(secondary)trials specificly for FDA approval; R&D of manufacturing processes; R&D on isomeric forms of the drug for easier manufacturing&purification -- eg adding three peptides to BGH so the hormone doesn't tangle&clump and clog the filters -- and to either get around someone else's monopoly or to maintain the profitability of their own monopoly; And repackaging their drug -- eg putting it into a 24-hour capsule -- to maintain their monopoly beyond the years provided by the law for the original patent.
The actual efficacy&safety of patented drugs is both dubious and overhyped due to confidentiality agreements censoring researchers and laws allowing prescriptions for non-approved uses.
posted
I have said this before in other threads, I'll say it again and once more add the disclaimer that I'm no apologist for pharmaceutical companies, I know first hand the kind of outrageous spending that goes on, having worked for one.
However, the US drug prices are not just a whim of the pharmaceutical company. It is actually more expensive to sell drugs in the US than it is in other countries. It's due to a little thing called the FDA which so highly regulates drug manufacture, shipping, and storage that it's highly expensive to make and move drugs across the country. Most pharmaceutical companies spend a lot of their money on regulatory staff whose sole job is to make sure they don't run afoul of FDA regulations.
Sell drugs to a foreign country, and they don't have to worry about paying top dollar for temperature controlled warehouses with the right amount of security and tracking procedures in case there is a recall. You do have to do those things in the US. By the time the drug reaches the retail market, that regulatory cost has to be passed along.
It makes our drugs expensive, yes. It also makes them safe and reliable. Everything has a cost.
Posts: 14428 | Registered: Aug 2001
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quote:Yes people who go into medicine should have no interest in making money. They should sacrifice everything for the greater good.
Money should not be the primary motivation. I know you winked, but I want to be clear that what you said is very significantly different from what I said.
Belle, that's a good point, but you make it sound as though no countries other than the US regulate distribution and storage of drugs. In Canada's case, for example, we do have such regulations, but the government essentially eats the cost differential because we have a public system.
Posts: 10886 | Registered: Feb 2000
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quote: but the government essentially eats the cost differential because we have a public system.
As long as it is the government paying and not the people than no problem.
quote:Money should not be the primary motivation.
I agree. However, if doctors and other medical profesionals made say as much as construction workers, would that effect the quality of our medical care? Income potential cannot be ignored as an incentive for inteligent people to enter health care. If we had to rely on only those few truly selfless individuals to take care of us when ill I would hate to see the line at the doctor's office.
Posts: 127 | Registered: Feb 2005
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posted
Of course, its overly simplistic to say that the government only gets its money from the people. While this is literally true of the currency representation, the government (in part by its mere presence) creates considerable value in the economy and the currency.
Posts: 15770 | Registered: Dec 2001
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posted
Thank you for the smiley tutorial. I should have gone with
In my defense, I lean libertarian and nearly all of my few posts have been about the benefits of smaller government. I understand now that I will need a much higher post count before my sarcasm can be implied. Posts: 127 | Registered: Feb 2005
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posted
Other countries do have regulatory agencies, but none to the extent of the FDA.
I can't stress enough how much money and manpower and effort goes into staying within regulatory compliance in the US. Nothing in any other country compares, and we sold internationally, and even had an international sales department. It had three people in it. To handle everything internationally, all sales, all marketing, all regulatory issues. In contrast, our in-house domestic sales regulatory department had six people on staff. Our marketing staff was only five people, so regulatory trumped marketing.
Posts: 14428 | Registered: Aug 2001
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Right. We pay higher taxes than you because we have things like public health care. Not sure where you got the idea that I was insinuating something else.
Posts: 10886 | Registered: Feb 2000
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posted
Which is no point whatsoever, holden. UStaxpayers already pay for basic drug research through the federal government's National Institure of Health, the Center for Disease Control, etc. And UStaxpayers WAY overpay for any R&D done by drug companies: directly through tax write-offs; and indirectly through WAY overpriced drugs paid for by the military's CHAMPUS, VeteransAdministration, CivilService benefits, etc, Medicaid, and soon Medicare.
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