Actually, yes, Mitch, we are. However, we actually decided to, you know, sit down and look at numbers and stuff, and what do you know? In the last ten years, the "solvency" period for Social Security has grown by 20 years using the median projection. That takes us to 2042 (at least), which is through the glut of Baby Boom retirees. Even at that, merely cutting benefits by approximately 25%, raising the $87,000 cap, or altering the retirement date would solve the problem.

This is not a crisis as defined by Websters. Issue that needs to be addressed? Sure. But not one that requires a radical restructuring of the Social Secuirity program to the tune of $2 trillion, cuts of benefits in the 35-40% range, and gambling up to 95% of worker contributions in the market.

Indeed, if Social Security is in a crisis, Medicare (and health care in general) is at an apocalyptic meltdown stage. Funny, haven't noticed the President doing anything there....

I think W will win this one.
When I get into it with SS reform opponents they first try to make the point that SS as it stands is a good deal for workers. When I show in detail how SS is ripping off average workers (I have an impeccable working class background) I'm told I'm selfish and want want to throw old folks out on the street. The words "social contract" are used like a magical incantation by people who have a simplistic understanding of what the term means.
Now that we all believe that SS will take from workers more $ than it returns to them the constituency required to keep SS reform from happening is no longer in place. W's political instincts are right on in this case.

First, Jeff, with all due respect I said "big-league" leftybloggers. I mean it as a backhanded compliment; the Twin Cities leftybloggers (the ones that aren't batshit insane, anyway) are a generally OK bunch. The big leaguers, the Kosses and Atriosses and Willises? Pffft.

Second: The whole "Crisis? What Crisis?" flap has a lot more to do with the solution than any crisis; it's the "P" word, privatization, that has the left in a tizzy; if word gets out that entitlements can be successfully privatized, the left will lose its stock in trade.

Third: If the President proposed a means of privatizing medicare, Paul Krugman would suddenly deny there was a crisis.

I humbly point you to my own post on the subject. As I noted, Milton and Rose Friedman came to the same conclusions in 1979.

Regardless of whether there is a crisis, the privatization plan has some potentially serious flaws. Presumably a privatization plan would result in an influx of cash in the financial markets in the next couple years, inflating prices, and drastic reductions in overall capitalzation as boomers withdraw in retirement. It seems that this could severely distort the market since the payments in and out are essentially mandatory.

To sum it up simply...if every baby boomer had been allowed to invest HALF of their ss obligation into half stocks and half bonds would we be having this problem?

And secondly, how many 20 somethings like me if they could invest half my ss obligation into my 401k today would do so?

Jeff, I'd love to keep propping up the current system if it made economic sense. Problem is, it doesn't. This money goes to whatever they want to spend it on now instead of going to what it is supposed to. If 6.5% would be mandatory to private accounts everyone would have a nice retirment nest egg to use for themselves or to pass on to heirs, and you'd still have 6.5% from your place of employment to cover all those who are on disability or whatever with plenty of leftovers to waste on whatever a majority of Congress deems necessary.

Good post Mitch, you’re quite correct the Dem’s do seem to be doing a 180 on this one. Largely because the only “solution” they’ve been able to get behind is (yet) another tax increase. Although to his credit, Senator Kerry did come out in favor of changing how we calculate benefits (e.g. going from wage-indexing to price-indexing) as the administration seems to support as one way of mitigating the problem. Don’t be surprised when Kerry flip-flops on that one as well.

As far as Medicare goes, I actually agree it’s a bigger problem. The administration wrongly IMO went along with Democrats on creating a prescription drug benefit although the $534 Billion plan (while higher than the original $300 Billion that Senate Dems managed to bid up with a filibuster threat) isn’t as bad as the $700 or the $900 Billion alternative proposals, they did manage to (a) introduce means-testing through Medicare and (b) get healthcare savings accounts. We can mitigate much of the damage done by Medicare and Social Security by expanding means-testing and phasing in a higher retirement age for both programs. We can also build on the reforms introduced by the Bush administration to have more competition.

Clinton was wrong too. What's your point? Two wrongs make a right?

Right now, somewhere in America there's a young couple with two kids. They're making, with two incomes, $52,725/year, the family median income. Out of that income they have to pay for two cars, rent, utilities, insurance, etc. Anything left over they save for a downpayment on a house, or maybe for the kids' education. They pay FICA taxes of $6541, over $500/month.
The governement takes that money and, instead of investing it, writes a check to a retired millionaire real estate investor, who uses it pay part of his country club dues.
And the democrats want to keep this joke of a system going? Party of the little guy, indeed.

Employees pay only 6.2% in SS or $3,269 from Terry's example, the employer pays the other half. How would a Republican plan where the SS withholding is still mandatory but privately directed be easier on this couple as they try to save for that house? Furthermore why should the retired millionaires benefits be any different from the couple's future benefits? Afterall the millionaire surely paid in plenty to SS.

Psst...Nick. Terry's raising strawmen. Do you really think the GOP is interested in helping the poor at the expense of the rich?

As for my solution, it's simple: blow the $87K cap. Means-test at some very high level. Done. Crisis averted. No need for privatizing, just some minor fixes and done. Of couse, that isn't a "crisis," but...there is no crisis!

Nick-
12.4% is the amount paid by employee & employer both. It's as much a part of an employee's compensation as health benefits, vacation time, or a retirement plan. More so, since an employer in most states doesn't have to give you health benefits, vacation time, or a retirement plan but has to pay that ^?@*& 6.2% from dollar one to dollar 87,000. That limit, by the way, is wage indexed, not price indexed. If they change SS so the payout benefit is linked to prices instead of wages it's another rip off. The ceiling will get higher at a faster rate than the payout.
Jeff-
Strawman my butt. According to that AARP the first age demographic where poverty rate is lower than the +65 group is 35-44 years ( research.aarp.org/econ/fs79_income98.pdf ). All those people on welfare-to-work programs are being taxed 12.4% of their wages. If you blow the $87k cap or means index the payout you've just put millions of more workers in the group that knows that they will pay far more into SS than they'll ever receive. What will that do to SS's already strained political legitmacy? You're trying to turn SS into something it's never been, a welfare program. Show me that SS is a good deal for the majority of workers, not retirees.

Terry - If you are going to include the employer's half of SS withholding than you would have gross-up the wages $3,269 to $55,994. In your example you claimed the employer component was withheld from the salary of $52,725. It is not.

Furthermore, I have serious doubts that the employee's wages would go up 6.2% if they did away witht SS withholding. That would likely just be a windfall to the owners of the company.

So call it 55984. Is it a good deal then?
You may have doubts that the employer would add the 6.4% to the employee's salary but I don't. Employers care about total cost per employee per accounting year, not what shows up on your w2 form. The more they pay, the more qualified applicants they get.
Here's the problem: When everybody could expect to get more out of SS than they put in it was easy to get a consensus from retired folk's and workers that SS was a great plan. Now that it's become apparent that younger workers are going to put in more than they get, and do so during a time when it's getting harder to find employment that comes with a retirement plan, there's going to be a problem. Raising the retirement age, lifting the 87k salary cap, or means testing it all result in younger workers putting more in and getting less out.
I'd like someone to explain to me why SS is a good deal, not for people retiring now or in the next decade or two, but for the average worker. "Saving" an unjust system by making it more unjust isn't a solution.

Crisis? Bah.

Here's a little thought experiment for you, Mitch. Take your salary. Say that you know that every year, your salary is going to go up, higher than the median increase in wages, high enough to take into account productivity growth. Now, imagine that maybe in 40 years, your salary will be cut to 75% of your highest salary, which will still be higher than what it is today.

A crisis? Time to batten down the hatches? Hardly. Inconvenient, yes, but no reason to go around screaming like your head is cut off. In fact, a lot of people would say that guaranteed increases for about 40 years and a smaller but guaranteed check sounds just great.

You seem to forget two things: First, that the date for insolvency keeps on moving further and further into the future as time goes by. Second, that these estimates have been historically pessimistic.

Next time, play "gotcha" when the facts are on your side.

For the edification of all, a CBO whitepaper on the present, past, and projected future of Social Security financing.
http://www.cbo.gov/showdoc.cfm?index=5530&sequence=0&from=0#anchor
By the way, MN Politics Guru, your argument that the economy will grow us out of this crisis makes you sound like W defending his deficit spending :)