The Debt Limit Debate

[Maui]

ladajo,

I don't know you're political point of view.. are you being facetious? If not, sounds like you are dangerously close to suggesting an aristocracy there.

My grandpa served his entire career in the Navy... you are now going to suggest he shouldn't have the right to vote?

[GIThruster]

Actually, the notion that only those who contribute to society should get a vote is not an aristocracy, but rather a meritocracy. It is to say a vote or say in society is won only through individual merit. This is what Heinlein was after in Starship Troopers. It's been argued whether he was really recommending such a thing, stating this is where we're headed or being facetious but one thing is clear--the model in Starship Troopers is that one only gets a vote by becoming a "citizen" who takes responsibility and earns that position through some sort of service or merit.

A real argument between democracy and meritocracy would be a very long discussion with no clear winners and I think here we'd find people on both sides. Clearly though, our democracy will not last many more generations. It is already being looted from within and without. the real concern about meritocracy is whether or not it would/could legitimately offer a place of merit to any/all members of society or if it would degenerate into an aristocracy. If you make something like military service and paying taxes the only entry points for citizenship, it's hard to see how that would disenfranchise a large segment of the populous.

The poor you will always have with you. People who choose to "occupy" city parks rather than earn a living--are they really the sort who need to be voting?

You decide.

Clearly, Paul Verhoeven takes a satirical view and portrays the meritocracy as still easily swayed by propaganda, and his statements about ST are that he paints as fascist but is in no way fascist himself. If you don't understand why the news inserts have a comical sense to them, you don't understand Verhoeven's genius.

[williatw]

If you make something like military service and paying taxes the only entry points for citizenship, it's hard to see how that would disenfranchise a large segment of the populous.

The poor you will always have with you. People who choose to "occupy" city parks rather than earn a living--are they really the sort who need to be voting?

You decide.

Most of our current debt problem is entitlements, mostly SS and Medicare (& Medicaid). Most of the recipients were/are taxpayers most of their adult lives, would probably be considered middle class not poor. Don't know what percentage of Medicare/SS recipients are military veterans, but I am sure a lot of the men anyway are. It didn't stop them from voting to receive many times more benefits than they paid into the system in taxes.

[ladajo]

ladajo,

I don't know you're political point of view.. are you being facetious? If not, sounds like you are dangerously close to suggesting an aristocracy there.

My grandpa served his entire career in the Navy... you are now going to suggest he shouldn't have the right to vote?

Public Service is not anything like Welfare Recipient.
There are some here who have suggested that military or government service should be the decider on right to vote. That is not me though.

I am considering that if you take welfare or other similar 'entitilement' support, that you give up your voting rights to get it. If you stop taking it, you get your voting rights back.

My problem is that the elective system has become corrupted with levels of government dole that are ridiculous. I also believe that anyone who does not understand that votes are being bought in this manner are sticking their heads in the sand.

I am not even going to talk about "bussing" yet either.

In the overall, I am fearing that we have gone to far down the road, and too much of the population has become addicted to "free stuff".
I have been to Haiti and other places and seen and dealt first hand with where the "free stuff" addiction can take a people. If we do not stop now and fix it, the zombie apocalypse is coming.
We are frighteningly close to the tipping point where more folks recieve aid than folks that contribute. And the bulk of those that contribute are finding it harder and harder to do so.

Where do you think this is all headed? Do you think it is sustainable?

[ladajo]

Most of our current debt problem is entitlements, mostly SS and Medicare (& Medicaid). Most of the recipients were/are taxpayers most of their adult lives, would probably be considered middle class not poor.

Well, I think you need to dig a little deeper on that one.

For a starter, how much does a lower middle class or "poor" person contribute to SS/Medicaid, and how much do they get out?

What do you think this chart really says?

[paperburn1]

A quick solution would be a virus outbreak that took out old people

[ladajo]

This article also provides some interesting insights in the data.

http://www.cbsnews.com/8301-505146_162- ... ity-taxes/

Focus on the charts. What are they telling you?

Now ask yourself how the charts would look for someone with 50% the income, or 25% the income, or even 10%?

Now for fun, ask yourself what they would look like for someone with double the income, or triple?

Finally, ask yourself, what are the minimum benefits someone would get? How do they qualify for that minimum?

I think there is a lot about how Social Security and Medicare/caid works that you do not understand. Especially in the who pays what, and the benefits subsequently derived for them.

[williatw]

Most of our current debt problem is entitlements, mostly SS and Medicare (& Medicaid). Most of the recipients were/are taxpayers most of their adult lives, would probably be considered middle class not poor.

Well, I think you need to dig a little deeper on that one.

For a starter, how much does a lower middle class or "poor" person contribute to SS/Medicaid, and how much do they get out?

What do you think this chart really says?

Does your chart compare total SS taxes paid vs payouts over an average lifetime? Does it include Medicare taxes paid vs benefits received over an average lifetime?

[ladajo]

Maybe you should read this as well:

http://www.factcheck.org/2011/02/democr ... s-red-ink/

Ask yourself when you are done who pays for that $37 Billion Dollar Loan, and how?

[paperburn1]

A quick solution would be a virus outbreak that took out old people

That was sarcasm by the way , but one of the marks of a civilisation is how it takes care of its elders and those that can not fend for themselves. I think our real problem is those that chose not to fend for themselves. And the idea that we must take care of them anyway. Sometimes to paraphrase John Wayne. " some people just don't need helping"
The only real problem is how do you sort out those that do from those that do not.

[williatw]

Maybe you should read this as well:

http://www.factcheck.org/2011/02/democr ... s-red-ink/

Ask yourself when you are done who pays for that $37 Billion Dollar Loan, and how?

Thanks for the links. I should have said will receive much more in benefits than they paid in taxes, not "many times" more.

From your link: If you retired last year as an average wage-earning man, for example, you could expect a lifetime benefit worth $417,000 in today's dollars on $345,000 in taxes. If you were a woman with the same work history, you could expect to collect $464,000 on the same taxes.


Actually that doesn't seem as bad as I thought, 72K more in benefits (for the men, 119K for the women) including medicare that you paid into. Not good maybe, but not as hopless as I thought, thanks again for the information. Seems like you could tweak that by raising retirement age a few years and yes bumping up taxes.

[GIThruster]

I recently asked my neighbors’ little girl what she wanted to be when she grows up. She said she wanted to be President some day. Both of her parents, are liberal Democrats, were standing there, so I asked her, ‘If you were President what would be the first thing you would do?’

She replied, ‘I’d give food and houses to all the homeless people.’

Her parents beamed with pride.

’Wow…what a worthy goal.’ I told her, ‘But you don’t have to wait until you’re President to do that! You can come over to my house and mow the lawn, pull weeds, and sweep my yard, and I’ll pay you $50. Then I’ll take you over to the grocery store where the homeless guy hangs out, and you can give him the $50 to use toward food and a new house.‘

She thought that over for a few seconds, then she looked me straight in the eye and asked, ’ Why doesn’t the homeless guy come over and do the work, and you can just pay him the $50? ‘

I said, ‘Welcome to Conservatism.’ Her parents still aren’t speaking to me.

[ladajo]

One final point;

Also remember that the entire system is percentage based. And percentages over time is called "compounding". For those that are math challenged you can substitute the word "compounding" with the word "exponential".

So with that in mind, the dude that makes $100K per year and contributes, earns a "benefit level" which at end of life (say 80 years old) can be converted into hard simple numbers. Dollars in, Dollars out. We will also assume that upon retirement and initiating benefits, that he has no other income (after all that could potentially reduce benefits).
Without running high fidelity numbers, the mechanics are he contributes (we'll say) 6% of income to SS every year for (say) 40 years. (We will retire him at 60yrs old and give him 20yrs on entitlement.
40yrs x $100,000/yr = $6,000,000 and 6% is $240,000. His employer must match this, so total system input is $480,000.

Now lets look at a dude who earns $20K/year.
40yrs x $20,000/yr = $800,000 @ 6% is $48,000 from him + employer = $96,000

So right off the bat you see that it is a 5 times difference in contribution, based on 5 times the earnings delta. All looks good, so far.

Now lets look at what they get out.

Let us say both were born in 1960, single, and male.
From here: http://www.aarp.org/work/social-securit ... alculator/

We get:
$100K Dude: $2,512/month. Now extend for 20 years: 2,512 x 12 x 20 = $602880 in Social Security benefits, or 126% his + employer input ($480K).

20K Dude: $991/month. Extended for 20 years: $237,840, or $248% his + employer input.

So, disregarding the source of the mystery $$ to cover the 25% return on investment for $100K dude and 148% ROI for $20K dude (insert here government debt covered by loans to be paid by taxpayers with income tax, which are tiered with the bulk of money coming from higher income earners), you can clearly see the redistribution of wealth, and incentive for poorer folks to keep voting for those that give them more for less.

I really can't find a comparable model in the real business world where two guys investing in the same thing come off where the guy putting in less money gets a return rate 6 times (25% return vice 148%) more than the guy who puts in 5 times ($20K verses $100K) more money.

[ladajo]

And to help you answer the question about who gets to collect and how:

http://www.ssa.gov/retire2/credits1.htm

It does not take a lot of effort to qualify.

$4160 per year for 10 years.
$1160 per year for 40 years.

Let's run those two numbers to see ROI. (just for fun).

$4160 x 10 = $41,600 (lifetime). Using previous model that is $41,600 / 40 years (start at 20, stop at 60) for $1,040/yr avg income.

$1160/yr for 40 years gives: $46,400 total income with $1160/yr avg.

And the gonculator says: http://www.ssa.gov/retire2/AnypiaApplet.html
We will adjust to be born in 1950, work from 1970 until 2010. Retiring at age 62 (2012).

$1,040 avg annual income (working 40 years): $297/month benefits. Extended for 20 yrs: $71,280.
It cost him 6% of $41,600, which is $2,496. The ROI would be: 14.27 times the input. (And remember that I am including employer match contribution in that) The actual out of pocket ROI would be double, or 28.64.

Our $1,160 per year avg lifetime (working for the 1970s earning 4160/yr): $345/month in benefits. Extended 20years: $82,800.
It cost $2,496 (6%) of $41,600 total lifetime earnings.
ROI: $82,800/ ($2,496 + $2,496) = 16.58 times return.

Where do you think those ridiculous return rates get funded from?

[GIThruster]

Most of our current debt problem is entitlements, mostly SS and Medicare (& Medicaid). Most of the recipients were/are taxpayers most of their adult lives, would probably be considered middle class not poor. Don't know what percentage of Medicare/SS recipients are military veterans, but I am sure a lot of the men anyway are. It didn't stop them from voting to receive many times more benefits than they paid into the system in taxes.

That is the standard Conservative party line and I would note there's plenty of room for exceptions to the general statement. You need to look at how entitlement recipients actually live. Many of them are hard working citizens who deserve a leg up. If you've never had friends who needed that sort of help, and don't know anyone who is in that sort of situation, you're not well suited to make generalizations about entitlement recipients.

For instance, Social Security will not be solvent much longer. Most of our fiscal problems concern when the baby-boomers start to retire and SS costs explode. Bush tried to fight for some SS reform but the Dems were having none of it. So that is still on the stove waiting to boil over and it certainly will. The trouble is, we now have 60% higher debt as a nation as compared to when Bush tried to fix the SS problem, so now the cost to the nation is going to be felt much more deeply. Also our loan status has been downgraded and we're fast approaching the point where as a nation, we will not be considered a good risk. We'll be downgraded further, we'll pay more for our loans and we'll sink faster into more debt. We're fast approaching a downward spiral. One can argue pretty easily that ALL THESE PEOPLE in the SS system are deserving of their future benefits. You might argue that the wealthy could do without theirs, but even if you decide to refuse SS benefits to a largish portion of people at the top of the economic ladder--something that would take a Constitutional amendment to get past the Supreme Court who would certainly find such unconstitutional--you still don't have enough money to pay all these people.

Notice, we're not here talking about paying inner city folk you don't like to buy $300 pairs of Nike's or a supposed third DVR. We're talking about paying for Grandma's Depends and a little cat food. We're lalking about people on set incomes being evicted and when Grampa's 30 year old Ford F150 breaks he can't pay to fix it. There's no reason to paint entitlement recipients as unworthy unless they are unworthy. The troubles we're here facing are problems we have with everyone who isn't fairly wealthy.