A Question About Social Security Privitization

[Darryl G. Thomas]

OK. I've been told this is "my money". If it is "my money", why must I be forced into investing in the Stock Market? Why can't I just put it in the bank? Or spend it? After all, it's my money.

[Darryl G. Thomas]

And furthermore...

There's No Accounting for the New Social Security Plan

By Allan Sloan

Tuesday, December 14, 2004; Page E03

One of the reasons that an outsider like me has so much fun writing about Washington is that the politicians in our nation's capital talk one way but act another. They want corporations to provide the public with numbers that bear some resemblance to reality, but they've never bothered to clean up their own budget numbers.

The federal budget is a bizarre mess, with unique bookkeeping practices that make it almost impossible for an outsider -- or even most insiders -- to figure out what's really going on. If corporations produced numbers like these, jail cells would be filled with CEOs. But Washington doesn't impose laws like Sarbanes-Oxley reform legislation on itself. It does whatever it wants.

So I love the debate about proposals to "reform" federal budget accounting to ignore the impact of proposed Social Security personal accounts. As you know, the argument is that letting people set up personal accounts is actually a federal investment, not an expense, because the accounts let government save money in the long run by reducing future Social Security expenditures.

If the rest of the government actually reported its finances in a reasonable and honest way, I'd be sympathetic to this argument, even though I'm no fan of individual accounts as currently proposed. But I see no signs of incipient intellectual budget honesty emerging. Instead, the push is on to make the deficit look smaller whether or not it really is smaller. And I see no reason to exclude the added borrowing that would be caused by personal accounts, while at the same time allowing the government to confiscate the existing Social Security surplus to make the rest of the budget look better.

Here are the numbers. In fiscal 2004, which ended in September, Social Security took in $155 billion more than it spent -- $69 billion in cash, which the Treasury took in return for issuing $69 billion of new Treasury IOUs, and $86 billion in interest on its trust fund, paid by the Treasury with new IOUs. Even though Social Security is theoretically "off-budget," this surplus was subtracted from the deficit run up by the rest of the government. Hence we have a reported deficit of $413 billion rather than $568 billion.

Even though the Treasury ended up owing the Social Security trust fund $155 billion more than it did 12 months earlier, that obligation isn't reflected in the so-called "unified budget," and no one except a few cranks like me thinks it mattered any.

And wait, it gets worse. The Treasury owes about $2 trillion to so-called "on-budget trust funds," such as federal civilian and military employee retirement accounts. In fiscal 2004, it paid $68 billion of interest to these trust funds by giving them new Treasury securities. The Treasury showed a $68 billion interest expense, and the funds showed $68 billion of revenue. Net effect of the government's newly issued IOUs on the deficit: zero. The government's obligations are $68 billion more than they were, but that didn't show up in the deficit.

In any sort of reasonably honest bookkeeping system, that $223 billion -- the $155 billion to the Social Security trust fund and the $68 billion to the on-budget trust funds -- would have been reflected in the deficit figures, because those IOUs increase the government's obligations. Issuing Treasury IOUs to the trust funds is the functional equivalent of selling $223 billion of Treasury IOUs to investors and depositing cash in the trust funds. But selling bonds and making cash expenditures is considered an expense, while using bonds in lieu of cash isn't an expense. It's ludicrous.

This brings us back to personal Social Security accounts. Every dollar that goes into those accounts rather than into the Treasury is an extra dollar that Uncle Sam has to borrow. So if we're going to keep up cash accounting for the government, let's be consistent. If you want to consider personal accounts as an investment that doesn't increase the deficit, you have to treat the Treasury IOUs issued to federal trust funds as an expense and add them to the deficit. Then taxpayers will have an idea of what's really going on.

I'm not holding my breath until this happens, though. Washington, after all, is the land of do as I say. Do as I do? That's not for the government, just for us suckers out in the hinterlands who pay the bills.

PAUL KRUGMAN THE NEW YORK TIMES
The phony crisis of Social Security

December 9, 2004

Privatizing Social Security – replacing the current system, in whole or in part, with personal investment accounts – won't do anything to strengthen the system's finances. If anything, it will make things worse.

Nonetheless, the politics of privatization depend crucially on convincing the public that the system is in imminent danger of collapse, that we must destroy Social Security in order to save it.

I'll have a lot to say about all this when I return on my regular schedule in January. But right now it seems important to take a break from my break, and debunk the hype about a Social Security crisis.

There's nothing strange or mysterious about how Social Security works: it's just a government program supported by a dedicated tax on payroll earnings, just as highway maintenance is supported by a dedicated tax on gasoline.

Right now the revenues from the payroll tax exceed the amount paid out in benefits. This is deliberate, the result of a payroll tax increase – recommended by none other than Alan Greenspan – two decades ago. His justification at the time for raising a tax that falls mainly on lower-and middle-income families, even though Ronald Reagan had just cut the taxes that fall mainly on the very well-off, was that the extra revenue was needed to build up a trust fund. This could be drawn on to pay benefits once the baby boomers began to retire.

The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem.

But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of GDP. That's less than 3 percent of federal spending – less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts – roughly equal to the fraction of those cuts that goes to people with incomes of more than $500,000 a year.

Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come.

It's true that the federal government as a whole faces a very large financial shortfall. That shortfall, however, has much more to do with tax cuts – cuts that Bush nonetheless insists on making permanent – than it does with Social Security.

But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one.

My favorite example of their three-card-monte logic goes like this: first, they insist that the Social Security system's current surplus and the trust fund it has been accumulating with that surplus are meaningless. Social Security, they say, isn't really an independent entity – it's just part of the federal government.

If the trust fund is meaningless, by the way, that Greenspan-sponsored tax increase in the 1980s was nothing but an exercise in class warfare: taxes on working-class Americans went up, taxes on the affluent went down, and the workers have nothing to show for their sacrifice.

But never mind: the same people who claim that Social Security isn't an independent entity when it runs surpluses also insist that late next decade, when the benefit payments start to exceed the payroll tax receipts, this will represent a crisis – you see, Social Security has its own dedicated financing, and therefore must stand on its own.

There's no honest way anyone can hold both these positions, but very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success.

For Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it.

Krugman can be reached via e-mail at krugman@nytimes.com.

[Coda]

I was under the impression that discussion was just beginning on SS. I would suspect that there will be a variety of investment choices - from very secure to moderatly risky. I doubt you'll be forced to put it in the stock market.

Regardless, your retirement strategy should have a balanced portfolio. If the govt puts a portion of your $ into the stock market, simply shift some of your other investments into safer vehicles.

I agree with the first sentence of Ed's post - it won't fix the systems finances. Doing nothing - status quo - will guarantee that the young will not have a solvent SS at retirement.

There needs to be a way of making the system more equitable. When there are many many boomers retired and a smaller workforce supporting the system, the math don't work.

But creating a personal savings account will ensure that there are some funds for that person who is working once they retire.

You also may get your wish in that you may be able to tap into the fund early....just remember when the well is dry, the well is dry. Just like the current system.

[Monte Smith]

Originally Posted by Darryl G. Thomas

OK. I've been told this is "my money". If it is "my money", why must I be forced into investing in the Stock Market? Why can't I just put it in the bank? Or spend it? After all, it's my money.

Hey, if you want to question the entire premise of Roosevelt's current worker pays for current retiree Social Security system, my generation'll have that argument. The demographics and the 1930's era presumptions of that program won't serve us too well.

But when Bush tells you it is your money, it IS your money. That the government is keeping, thank you very much. The rather modest (in fact, insufficient) reform that Bush is proposing is that you be allowed a small sliver of control. You can take up to 2% of your total FICA contributions and put it into a governmennt-run account exposed to risk, until you have $5000 available and then MAYBE you can put it into a private investment (pending government approval). As radical programs go, this one is meek.

Coda, Monte, did you 'nad-nuzzlers even bother to read the Krugman column?

Precondition for further participation in this thread: you aren't allowed to engage in crisis-mongering unless you come up with an effective counter-argument to Krugman's assertion that the "crisis" of Social Security is hot air.

Yeah, you douchebags.


If you don't read Krugman, you ain't shit.


Now get with the program. And wash it down with some Dowd tears.

I can't stand Dowd.

What's the difference between Dowd and Krugman? Dowd is a bit more shrill and pouty, but their message is the same.

[Brian Olewnick]

Ed, let's say Krugman is correct and, even more, that there's absolutely nothing but sunny skies ahead for the Social Security program. Shouldn't individuals have the option of setting up for their retirement (or not) as they see fit, in or out of SS?

[edit: I mean this in the case of the program operating efficiently, ie, you receive the same money you put in, plus interest, not that current workers must put in to fund the outflow to retirees. Getting to that point would obviously require a transition period]

[BFrank]

It's nice for people who have the ability and foresight to save for retirement. Not only that, but also have the financial savvy to save responsibly and smartly.

I challenge anyone to ask 10 people at their office how they are saving for retirement - either on their own or in their 401K - and have at least 7 of them give you a reasonable answer. I work in a financial institution, and I'm not sure how many of my coworkers even participate in our 401K plan (with 6% matching!)

Social Security is a safety blanket for the "rest of us" who will desperately need it in their old age.

[Brian Olewnick]

Sure, but no proposal under consideration forces anyone to opt out of the SS program.

[BFrank]

[Gary Sisco]

This subject is the biggest con ever launched in human history, but since no one ever lost money underestimating the stupidity of the American people (as a great American capitalist once rightly observed), one that will probably go over, in the end. Or up your end. However you choose to look at it.

Bronwyn's medications alone last year came to 12 large. How much do you suppose she'd need to have in her "savings account" to generate 12 large plus annual increases? Six years ago, her bill was 5500 bux. How much do you suppose it will be six years from now?

No capitalist or supporter has ever been able to explain to me why legal drugs are many times more expensive than illegal drugs.

[Darryl G. Thomas]

Monte,

My point s this: If I'm allowed to set aside a percentage of FICA, why must I invest it in the Stock Market (which I believe is a requirement of the plan being discussed)?

As for the Sloan article, I just found it interesting. To be honest, my head's spinning listening to the pro and con arguments over Bush's proposal

[Brian Olewnick]

I think one of the options would be to invest in Gov't bonds, ones that pay a higher rate than SS currently gets.

[Gary Sisco]

What's interesting to me is that the idea is predicated on a mandatory infusion of venture capital from the people to Wall Street. And of course brokers get paid (plus the all-important "bonuses"), whether the investor gains or loses.

And no one has an answer to what happens if one should "retire" during a recession or worse.

Never mind that Social Security isn't and was never meant to be an "investment." It's intended to be *social insurance.* And there would be no problems in the system at all if any of the following apparently undiscussable in Washington solutions were implemented:

1) Congress being strictly disallowed from raiding the trust fund for any non-SS/Medicare reasons. Meaning, none. Nada. Zero. Which is the law, after all.

2) Remove the income cap -- the most regressive and least fair aspect of the system. This would result in enormous amounts of money entering the system, and in a fair way, since everyone pays in the same percentage of income. Where are all the flat taxers on this one? Nowhere to be seen, of course, because most of them happen to very much enjoy the cap themselves. Flat taxes are for the lower middle class and poor. Hey, it's only "fair."

But, no.... The only "solutions" that are even entertained in circles that matter are 1) Huge increases in the FICA witholdings -- for everyone but themselves, who all enjoy the cap; or 2) a huge reduction in benefits, which, again, wouldn't affect themselves in any significant way, as they aren't and won't be dependent on the system in any case. Most likely, they'll do both at the same time *and* continue to raid the trust fund *and* enjoy the cap for themselves and their kind.

People who doubt that deficits matter by the way should try remembering that the alleged balanced books of the 90s were "balanced" only by including SS/Medicare revenues as general revenues, which is a bookkeeping shellgame at best, and a practice that would be a very serious felony for any business (to count dedicated revenue as general revenue when it's clearly not). So the real fact of the matter is that the deficits of today are much larger than the mindboggling-as-they-are numbers actually are, because today's numbers start at a "zero" point that was already many billions of dollars in the red and go from there further into the red.

But, again. No one ever lost money underestimating the stupidity of the American people. Most of them can't even tell you what social security is or how it is intended to work in the first place, but all of them nevertheless have an "opinion" about it, if asked -- normally one they parrot from some talking head on the radio or bube tube (the most apt name for that technology).

[Gary Sisco]

The fact that there is a "crisis" inherent to the system itself (if it were ever followed, which it never has been) is another bogus premise. Again, scare tactics, nothing more.

1) Social security isn't for the "elderly." It's for anyone of any age who contributes, and their spouses and their children. No one is permanently ablebodied and anyone can find themselves suddenly handicapped. Ask any capper.

2) Not all of the enormous boomer generation is going to be living long enough to collect. Indeed, the way they've chosen to live, many will die long before they become eligible and many others will die long before any alleged "life expectancy." Like any other generation, except this one is fatter and lazier and in worse shape, overall.

3) Not all of those who do draw benefits are going to be running up enormous medical tabs. Some will. Others won't. Again, the reasoning behind this is no different than it is in any insurance plan. No insurance company operates on the assumption that every driver is going to total every automobile. Nor does any fire insurance company operate under the assumption that every house will burn down.

The great one, though, is the idea that it is somehow unfair for people to enjoy "more in benefits than they contributed to the system." First of all, all of them won't, for reasons already stated, like in any other insurance plan. Second, who would buy, say, a private insurance plan that would only pay out what they'd already paid in? If you go to the hospital, do you expect your insurance company to pay the hospital only the amount you've paid in premiums and nothing more? Would you buy auto insurance that paid out only what you've paid in? Why not? Isn't it "unfair" to receive more than you've paid into the plan?

[Monte Smith]

Originally Posted by Darryl G. Thomas

Monte,

My point s this: If I'm allowed to set aside a percentage of FICA, why must I invest it in the Stock Market (which I believe is a requirement of the plan being discussed)?

Brian has answered this above, but you are right. If it is your money, you should be allowed to spend it on hippy crack at a Phish show if you so choose.

Unfortunately, the government isn't going to allow that and they are the ones who seized your money at the pay period. If Bush's proposals come to fruition, you will be given only a handful of options for what to do with your money and the Phish Phund won't be among them. Currently, and it could change, the prevailing idea points to you taking 2% of your FICA contribution and putting it into investment options that closely mirror the existing government Thrift program options...an aggressive mutual fund, a "safe" mutual fund, a mix of funds and bonds, straight bonds. That sort of stuff. Or there is the option, as B.O. also pointed out, of keeping your SS just the way it is.

That I don't see as so controversial. No one is panicking about the prospect of losing 2% of their lifetime FICA contributions at the Great Market Crash of 2039 individually. What is more controversial is that SS is in jeopardy (some who are not Krugman say) and so it doesn't bolster the program for existing retirees to take 2% of available monies (the "trust fund") out of the program. Here it is nice to have Paul Krugman's word that the program is hunky-dory in the short term. So we do have the funds available to make this small reform and still take care of the adult diaper, Old Country Buffet set.

The people who believe that there is a demographic problem with SS believe that this reform will be inadequate. To truly meet the demand of tomorrow's promised outlays (and that is a number in the many trillions which includes also Medicare and Medicaid), you'd have to add additional reforms like means testing or benefit reductions or tax increases. All painful options.

[tippy]

I don't see why they don't just raise it. It never seemed but a few dollars in the first place and it's one of very few deductions that you can actually see directly what it's for. But if they think it's a fix (ha ha) to hand out money to people who either don't how to save in the first place or can't make it with what they do make...well, yeah, give me mine now please. It's turning SS into another tax break in the end. Why should somebody have to pay for another person anyway. We're economically interconnected only until it's time to take home the money. Bah humbug.

[groover]

Ms. Ivins, as always, has an interesting view on the subject. She brings up the issue of privatization costs as a significant factor.
------------------------------------------------------------------
Social Security suicide


Molly Ivins - Creators Syndicate

12.14.04 - AUSTIN, Texas -- Relatively recent writings on Social Security, both to reform and not reform, convince me of two things. One is that we should be looking for maximum skepticism in our sources on this subject. And the second is that anybody who starts with dismissive, condescending and absolutist views isn't worth reading or listening to on this subject. So that leaves out politicians.

There's a lot of fake objectivity out there, too. I personally think the Bush proposal for privatizing Social Security is loony, radical and unnecessary, but that's not an argument, it's a conclusion. It's the people who aren't willing to make the case that you have to watch out for.

Also, beware hidden assumptions -- as in, "Everybody knows Social Security is (a) in trouble, (b) bankrupt or (c) will expire next week." In fact, "everybody knows" very little on this subject because the arguments about the system's future are built on complex, long-term economic models that can easily be thrown off by a single year. And if there's one thing the economy does with some regularity, it is confound expert predictions. Demographic changes, population growth and many other variables also influence how the models are drawn.

A second problem is that reporters of all kinds and stripes are notoriously weak on math. The Nation's Calvin Trillin says his trouble stems from his failure to convince his math teachers that many of his answers were meant in an ironic sense. I sometimes have to call John Pope of the New Orleans Times-Picayune just to make sure that going from 40 percent to 60 percent is still an improvement of 20 percentage points, and also a 50 percent improvement.

This debate is landmined with Phony Fun Facts. One notorious scare tactic is to note that when Social Security began, there were 42 workers for each retiree. Now, there are three workers per retiree. And in 25 years, there will be only two. Ergo, we're doomed. Actually, at the "frightening" current rate of three workers per retiree, the system is producing a surplus and being skimmed to finance the rest of the federal budget. Alas, Al Gore's famous "lockbox" got lost along with a lot of hanging chads in Florida.

Q: Can we at least agree that we have a problem? A: No.

The argument in favor of "no" has two parts. One involves the incredible shrinking doom date. As Kevin Drum of Washington Monthly points out, the Social Security trustees, always operating on a properly gloomy forecast, have been predicting disaster for the system for years, but the projected point at which it will go bust keeps moving.

In 1994, the system was supposed to go bust in 2029, a mere 35 years from the date of prediction. Now, it's supposed to go bust in 2042, 38 years down the road.

According to the Congressional Budget Office, using a more realistic model, the trust fund will run out in 2052, and even then it will cover 81 percent of the promised benefits. To fully fund this shortfall would require additional revenue of 0.54 percent of GDP, less than we are currently spending in Iraq. Or, as Paul Krugman noted in The New York Times, about one quarter of the revenue lost each year by President Bush's tax cuts, "roughly equal to the fraction of those cuts that goes to people with incomes of $500,000 a year."

The second argument involves the motives of those who are arguing for privatization. If there is a problem with Social Security, the obvious solution would be to raise taxes, cut benefits or some combination of both. Of course, I'm in favor of cutting benefits to the wealthy -- Ross Perot doesn't need the payout, and he's such a patriot, he's probably giving it back already.

Or, we could have a peppy discussion of how to raise what kind of taxes, if necessary -- especially since the tax as it is structured is a terrible burden on the poor and middle class. It actually cuts OFF at $87,900 a year.

But that's not the Bush scheme here. The Bushies don't want to mend it, they want to end it -- and they are quite upfront about it.

This is not some leftist conspiracy theory: Grover Norquist of The Club for Growth has been open about it for years. What we have here is a happy convergence of ideology (the Market Can Solve All Problems) and greed. The greed is from the financial industry, which stands to pick up an incalculable sum in profits -- and, of course, the financial industry contributes generously to Guess Who. Just the Bush plan of partial privatization would cost about $1.5 trillion in transition costs over 10 years, and Bush wants to borrow that money.

Next week, the White House will launch a giant public relations campaign, just as it did with the campaign to sell us on the Iraq war, with a lot of phony information to convince us all this lunacy is good for us. Social Security is of particular concern to women, since we live longer and have fewer earnings to rely on in retirement.

It's kind of hard not to be stunned by the irresponsibility of this scheme. To just blithely borrow the money to destroy a successful social program is, well, loony, bizarre and irresponsible.

(c) 2004 Creators Syndicate

[Gary Sisco]

It's by far and away a larger chunk than most people pay for income taxes is why, Tip. It's the most regressive tax, ever, as it is. Raising it would be the last nail in the coffin, because, as is always the case, the people who will need it the most over the long run will object the most over the short -- *because* it's so regressive.

That's why I say, remove the cap. Let everyone pay what a working guy pays, percentagewise, no matter how high their income is. What would be unfair about that?

I notice none of our privatizing wags have answered any hard argument with one of their own. More tongue flapping is all.

I truly do love the mandatory public investment for private profit nature of the idea, however. An amazing con job. Talk about Keynesian economics. Shit. Keynes could never have thought of that one on his best day. Wall Street capitalists all of a sudden would find themselves awash in unprecedented *and mandatory* public funds for investment in private corporations, with most of the mandatory funds being removed involuntarily from the paychecks of precisely the Americans least able to afford either the regressive tax or the risk of having their medical future gambled by brokers who no longer have to worry about that pesky "invisible hand" that might withold its dollars from crackpot investment in stupid times -- and who will be paid, regardless, every time a transaction takes place (millions and millions of times).

What a deal. The mafia must shit themselves in absolute admiration for these guys and their balls.

[Brian Olewnick]

Why make it mandatory on either side, government or private? If you don't provide for yourself and have no loved ones or charities to do so, you die. You're going to eventually anyway. You'd think with the ever-growing proportion of born-again nutsos, they'd be looking forward to getting to that lovely afterlife as quickly as possible, so that eliminates, what, 2/3 of the population. The secular remainder can figure out a mutual support system for each other that leaves the Raptured alone.

[Gary Sisco]

So we should do without insurance as well and just save up, Brian?

Bronwyn's surgery and rehab tab came to more than a third of a million yankee dollars, in dollars 16 years ago. How much would it be, now? What kind of savings account would that require?

Or perhaps we should just let those who can't afford the care, die. It's a lot cheaper and would certainly bring medical care "costs" (read: profits) down, significantly.

It'd also be a boon to the funeral industry.

[Gary Sisco]

Or we could just abolish Medicare, the only reason she's still alive post-surgery/rehab. Who can "provide for themselves" an annual tab of plus or minus 30 large/year for homehealth care without which she'd die within weeks or months (in other words, many years ago, now) plus another 12 large (plus annual increases of extraordinary percentages) for medications alone, three of which she can't stop taking and still live.

But, hell, like I've said, and like she's said many times, it'd be a whole lot cheaper for everyone concerned if people like her were just left out on the ice to die. Or a (very cheap) 9mm round to the back of the head.

[Gary Sisco]

I know, I know. It's hard to answer when things are put in such personal terms.

But then medical care (never mind money to eat with) is always personal for the one *receiving the care* now, innit?

[Brian Olewnick]

No, I think medical insurance is a great idea; I'm just baffled that people who think they're going to heaven don't hasten the process. Bear in mind, I'm "arguing" from an ideal state, not the one we find ourselves in now. With the one we're in now, it's obviously beneficial--to the extent it functions efficiently--to Bronwyn's well-being and any movement to a system that I happen to think would be better (not that we're moving in that direction) would involve a huge amount of transition time, easily measured in decades. But I don't think it's difficult to imagine a more efficient system that relies more on insurance in various forms than the current one. It would also entail, I would think, a shift in attitude toward caring for loved ones where considering that eventuality would be part of one's life from the beginning as opposed to a vague knowledge that someone or something else would solve your problem down the line. I have no problem whatsoever with people, millions of people, pooling their resources together in order to care for each other and to establish a "safety net". I just prefer that it's done voluntarily.

[Brian Olewnick]

The problem of getting from "here" to "there" within a political system makes me dubious about any good results from this process. Even if one assumes the best intentions and the "right" goal, its somewhat analogous to those sliding block problems. You have to get block A over to the opposite side but that involves a huge number of moves where things get chaotic, where the block's going in the opposite direction, etc. When these counter-intuitive actions take time and you're dealing with politicians in two-, four- or six-year terms, the likelihood of any sustained push in a given direction is nil. Notice that Bush, whatever one thinks of his plan, only initiated it in his last term. Who knows what will happen when his successor takes office, not to mention changes in the make-up of Congress?

It seems more likely to me that change will result from the actions of citizens on their own, over time working out ways to supplement the SS/Medicare system, making it obsolete in practice some 30-40 years from now. I don't think anyone argues--I certainly don't--for making wholesale changes that would negatively effect current participants such as Bronwyn (except--as impossible as this may be--getting the current system to do what it's supposed to with a level of efficency at least on par with your corner grocery).

[Gary Sisco]

Well, yeah, Brian, clearly both have to be supplemented with one's savings or some other insurance program, if only because SS was never intended to be one's only retirement income (although it is, now, for many, since pensions for the working class are long a thing of the past, no matter how long they work for someone or how loyal -- IBM and other companies, indeed, are making a specific practice of letting people go months before they become eligible for retirement benefits from the corporation -- thousands have been let go that way, here). And Medicare doesn't pay for anywhere near all of one's possible medical needs -- in particular, the most important ones, and increasingly, the most expensive ones, like prescription drugs, for example, the main thing that has led to an increased lifespan in the US (which I predict will begin declining with our generation factored in -- and for political reasons, more than biological ones). It *does*, however, take care of one's ass -- at any age -- should there be a catastrophic need, which, again, anyone can have, at any time. They are rarely planned, after all. That's why I always correct people when they say they have no catastrophic insurance plan. They do. Everyone who works (legally) in the US has one, citizen or not. It's called Medicare.

Which can and is supplemented voluntarily if one pays an extra premium (as Bronwyn does, since Medicare by itself does not cover, say, a nursing home, for more than a few weeks, and Medicaid only covers one once Medicare has been exhausted *and* one's assets as well, all of them).

My objection to privatization is this absurd savings account idea. First of all, it assumes that one has income enough to have a surplus that is saveable. That is far from always the case, and further all the time, for many. Second, even the idea as it exists places an absurdly small limit on the amount that may be saved (with tax benefits -- obviously one can save on one's own, granting a sufficient income) -- so small per year that in the event it wouldn't pay for a day's toothpaste in any hospital in America. (My best friend was charged $17.00 by a local hospital in 1984 for a plastic disposable razor that he never touched or used.) Third, most people don't worry much about minor medical bills and paying for them.

It's the major ones that very, very few could even conceive of being able to pay for, out of pocket, savings, or even assets, that most people worry about. I don't have any sort of private health insurance, for example, and won't, being self-employed and also not being part of any group. (Call up some insurance companies and ask about premium rates for one man, aged 50. Get ready to have a massive cardiac arrest.) Allegedly, the VA covers my (extremely) primary medical needs, but, since one needs to make appointments months in advance, it's rather a joke. Okay, so I'll plan my next illness or injury months in advance. Give it up, already, gubmint. What it amounts to in the end is saying ah once a year and getting your blood cholesterol checked. The only reason I participate in it at all, given all of that, is because, at my income level, the VA provides my prescription needs for free (meaning free for me, of course -- at least if we forget the contract they made with me for my service and all of the taxes I've paid to fund the VA in the first place). Since those come to more than $10 US every day, I am of course thankful for that, at least.

On the other hand, I'm weaning myself from all of their meds, so ...

Nearly anyone can pay out of pocket just to go see a doc for minor primary care. My personal doc charges an average of, oh, $40 for a visit. I don't need any kind of insurance, private or public, to pay for that kind of thing. Almost any working guy or gal can cover shit like that.

The two things most objectionable, however, in the "debate," to me, are that 1) it would more than anyone else benefit brokers, and 2) the people who propose privatization most forcefully all enjoy totally socialized (indeed, communized) medicine themselves, paid for by all of us, who don't enjoy it. And I've never once heard one of them complain about their absolutely publicly paid for open-heart surgery or pacemaker or whatever. (My mom's pacemaker surgery and implantation alone cost $27,000, cost of the pacemaker itself not included). In short, as usual in the US, socialism for the rich; the market for the poor.

And to add insult to injury, they're normally more than rich enough (eg, Cheney) to pay for their own fucking medical bills. But why should they if there are so many chumps willing to be schtupped?

[Brian Olewnick]

re: things like the $17 plastic razor. It's been brought somewhat under control in recent years, but some of the reasons for skyrocketing medical costs from the 70s-90s were programs like Medicare and Medicaid themselves. There was so little control on what they'd reimburse the providers that they and their materials suppliers, not suprisingly, hiked their prices to absurd levels. ie, if Medicaid is going to reimburse you $17 for a 17 cent razor, why not charge $17? Too late to do anything about it now, of course, but these are the kind of abuses that wouldn't have occurred under any private company hoping to stay in business (not that a different series of abuses couldn't have happened).