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The deeper problem is why all these promises of entitlements have been made. Vote buying. As long as politicians continue to buy votes with the promise of "free" money we are doomed. As long as the entitlement crowd votes for politicians that promise these freebies nothing will change. And, as liberals have decided that a select few should pay for the majority who demand these entitlements we will destroy the country.
Of course immigration could ease this to a large extent. Tom lays out the situation very well as usual. That the nation and economy will go through a transition is fairly apparent to those who follow along. But the nation and economy has gone through transitions before. I am actually quite hopeful. Sure they may be way too many 60's cover bands in the near future. But that is survivable. What we cannot do is freakout as the commentator and most of the political establishment seems to be doing. We are America, We meet our challenges, We adapt what we don't do until very recently is put our head in the sand and start whining.
"We are poised on the eve of a dramatic increase in the number of people retiring from the workforce. The change will not be gradual."
We heard this same load of carp in the 2001 recession. "Come 2009 there will be a shortage of workers due to retirements!" We see how well that worked out. Social Security pays a pittance. Defined-benefit retirement plans are all but gone, and 401(k)'s are devastated. There are those lucky oldsters that have all three. The rest of us? We'll work until we die on the line.
These next ten years are when it will become painfully evident that the Ponzi that is 60+ years of Democratic social programs begins to unravel. The politicians in Washington have been able to mask this reality up until now because, quite frankly, an extremely large pool of workers (baby boomers) have been paying to support a fairly small pool of retirees (their parents). Now, a fairly small pool of workers (Gen-X, baby busters, etc.) will be paying to support an extremely large pool of retirees (baby boomers). It's going to get real ugly before it's all over.....:(
As folks age their spending tends to be for food, health care, and housing-many own their housing and have all the household items they need already. When older workers can not find jobs with adequite health care and salary they will spend very little on anything besides these 3 items. When older or middle aged people feel their long term health care is in doubt, they won't spend anything at all. Take away the assurance of health care and given the number of Americans of post middle age, the economy will simply cease to function.
More people would have retired by now (as was predicted in 2001) if they hadn't suffered large losses in their retirement portfolios, ptf. But they can't work forever, not full-time at least.
In 1983, Social Security's actuaries made their annual study of SS's ability to meet all needed payouts for the next 75 years. They saw that there would be a shortfall when the Baby Boomers retired starting in about 40 years. Alan Greenspan and the Congress averted that shortfall by slightly raising the withholding tax and the income cap from which it is deducted. Congress can quickly and easily make the same kind of change now to protect SS for the next 75 years. Politicians are wrong as can be to pretend that we need to make adjustments to what recipients are entitled by law to receive.
"These next ten years are when it will become painfully evident that the Ponzi that is 60+ years of Democratic social programs begins to unravel"........Utterly false. Whether retirement age is slightly raised, or the cap is removed, Congress will act in plenty of time to ensure this most popular of all American institutions. As it is, it's fully funded for the next 25 years. Lifting the cap would ensure it for one hundred years. SS is NOT a ponzi scheme either. First of all, no one's getting rich off their benefits; secondly, there is no fraud or cover-up going on with it. Both are necessary for it to be labeled a "ponzi scheme".
Remember the words of Al Gore a few years ago: "We have put Social Security in a lock box". Must have been a lousy lock box as it has been raided for every other pet spending spree since. Granted, entitlement schemes should have never been started, but they were. The blame for this mess is not so much social security as it is the over all spending habits of the government. People who are now retiring have put thousands of their dollars into this scheme. There were better options, but no opting out. Now the piper must be paid.
Uncapping social security is a 12% increase in the effective tax rate of earners. I'm self employed. This would raise my self employment contribution act taxes (same as social security) by 12%. Obama wants to tax my business at 39.6% (even higher with deduction phase outs). Minnesota wants 5%. After all my risk, id be left with 40% to pay my sales taxes and property taxes. Forget it. Ill sell my business and do what my brother did: escape from America, move to Singapore, dump my US citizenship, and start a new business in a country not plagued with the disease of entitlements that users don't have to pay for. Just watch the brain drain from the US if Congress ever uncaps social security. Watch gdp growth shrink even more too as risk takers throw in the towel. Better idea: phase out entitlements and let people take care of themselves.
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