“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Saturday, June 18, 2011

How to Fix Social Security

  • Number one is to eliminate everyone that never paid into the system. Social Security was a pension scheme for workers. It was never intended as a lifetime welfare program. It was intended to help a worker after he retired, not pay a drug addict a check from the age of twenty-five till the day he overdoses. Other programs can be set up for welfare payments. It should not be the burden of people who had their payrolls taxed for retirement.
  • All savings from payroll and wages should be tax exempt. It makes no sense to discourage capital formation and savings which helps create jobs and tax payments into the system.
  • Eliminate the earning restrictions on retried people. Why discourage payments into the social security system? In fact the opposite should be done. Eliminate federal taxes from those working after retirement age. They would continue to pay into social security but in exchange for them deferring social security payments they would be able to work with a federal tax holiday. What would be wrong with productive workers deferring retirement until the age of 75?
  • Lastly, eliminate the upper cap on taxable income. People work and plan on their net take-home pay. No one plans to increase their income so that they no longer pay social security taxes. People wish to maximize their income for many reasons and do not regard the upper income cap. Eliminating the upper income cap  brings the system into solvency.


  1. And, the number one answer is:

    Get People Back To Work!

    If they raise the cap to $150,000.00 it'll take care of most problems out to some ridiculous horizon.

  2. Make all pineappleheads ineligible (you know those people never did any productive work, anyway.)

    Apply any payments that would have gone to pineapplehead expatriots living in Hawaii to welfare programs for undocumented aliens in California.

  3. .

    What would be wrong with productive workers deferring retirement until the age of 75?

    I assume this is line with the rest of the paragraph indicating workers should be allowed to continue to work if they want too, an equitable proposition.

    The Ryan budget plan suggests moving the "minimum" retirement age to 70. This results in a regressive tax on the lower income brackets. There are numerous studies showing that those in the higher income brackets tend to live longer because of better healthcare, lifestyle choices, etc.

    Not included in your list was a change to the way cost of living increases are calculated. Today, cost-of-living adjustments are tied to the rise in the prevaling wage rate. By changing the formula to reflect the actual changes in CSI, SS could be solid out to that rediculous horizon Ruf mentioned.

    Remember that after 2031 the pig is through the python and most of the 'Baby Boomers' are through the system and demographic trends (workers to recipients) reverse.

    The SS problem is miniscule and manageable compared to Medicare.


  4. Also, I've posted, on this blog, predictions from different years, and they are all over the map.

    These people have shown absolutely no ability to predict from year to year, much less, over many years.

  5. Eliminate the FICA system.

    Have all taxes flow to the General Fund.

    Have the Congress develop the welfare programs the country requires. In plain sight.

  6. Medicare is Overcharged, Mercilessly, compared to, say, The Canadian Healthcare System, or the French Healthcare System, by the pharmaceutical industry.

    If our lawmakers would make it illegal for Phizer to charge Grandpa more for his medicine than, say, the Fwench Gvmint it would make a huge difference in Medicare's solvency.

  7. Social Security is welfare.

    FICA taxes are just taxes.

    The FICA revenues are not "dedicated". There is no "lock box".

  8. .

    Good point Ruf.

    All this talk about 'lock-boxes', trust funds, etc. just confuses the issue.

    All that went by the wayside 30 years ago when they stated putting FICA collections in the general fund.

    I've heard the average worker takes out in benefits about three times what he puts in in taxes. SS is a welfare program. Might as well call it what it is.


  9. .

    Sorry, rat.

    You slipped the same point in before me.

    I should try to be less verbose.


  10. However, if they had let me put in the same amount At Interest as I put in Social Security I would collect a Lot more.

    When they say I'll take out more than I put in they're not taking the compounding of my money into consideration. A moot point, but disingenuous.

  11. I don't like the word "welfare," but it's a pretty lousy "retirement plan," also.

  12. Anyway, it is what it is, and it is what we've got. We can't, at this date, change it very much, and, thankfully, we don't have to. A few tweaks as we go along and SS is fine.

    Medicare is a "little" bit more challenging, but it's, also, pretty fixable.

    That $10 Trillion Debt to the Public (re: Chinese, and Saudis) and that $1.3 Trillion Deficit is Right Now.

    The Main thing is to remember that the main thing is the main thing.

  13. .

    However, if they had let me put in the same amount At Interest as I put in Social Security I would collect a Lot more.

    The question has always been, "But would you?"

    There is always some crisis when you are young. I even took out a loan against my 401k once when I was young and stupider.

    For 'most people' (my assumption) the answer would be no if the program was voluntary.

    If you make it mandatory and give people a menu of choices to choose from it has a nice ring to it but there are still issues that have to be addressed.

    Who would manage the fund, the government or some private institution, a bank (like Lehman's) or an insurance company (like AIG). Obviously, there would be major restrictions on how the money could be invested; however, over time, would those restricions be relaxed? I think I read the other day that between 2 and 3 trillion have been paid into the system so far. A lot of money. A lot of people are going to want to dip their beak.

    As to the menu itself, the last few years have shown us there are few "safe" investments. Stocks? The brokerage houses would love the windfall. But if the government picks stocks because they are conservative, they are still picking winners and losers something I don't think anyone wants. Likewise, even with the most conservative of stocks we've seen you can lose half your investment in a few months.

    Real estate, reits, etc. are obviously off the table as being too risky.

    Bonds? Many of the same problems that that can affect stocks.

    Treasuries? Not at zero percent interest. It would have to be treasuries at some fixed interest rate. And how is that rate determined? Right now you would be coming out ahead. However, during the seventies or later this decade (if projections are right) you could be losing out due to high interest rates.

    In the end, even with privatization, the government would be the payer of last resort. It is not going to let people in a government mandated program go broke because of the actions of companies like Lehman or AIG. Likewise, even if it's the person's responsibility to manage his own account, the government is not going to let him starve if he goes bust.

    You will still have government welfare whether it is called SS or something else.

    Since it will not affect me either way, I haven't formed an opinion on privatization other than that it would be complicated and tough to come up with an answer everyone can agree on. That's why the elderly who tend to be risk adverse are so leery about 'privatization".


  14. Oh, I absolutely agree with everything you just wrote.

    My point was just that the "I'll take out 3 times what I put in" meme is disingenuous in that it's not considering the interest on the money.

    I actually supported Bush's privatization scheme, but looking back on it I think I was being a bit partisan, and hasty. I would probably vote against it today. Maybe :)

  15. Also, when folks start with the "3 times" banter, you might point out that up to this time Social Security has run a $2.6 Trillion Surplus.

    It's hard to build a $2.6 Trillion Surplus when people are taking out more than they're putting in.

  16. That's the demographic curve of the "Baby Boomers" being exemplified, rufus.

  17. Yeah, thing is, we know that that Surplus isn't going to be allowed to "draw down" very much.

    The minute SS starts to pay out more than it brings in the cries to "fix the system" reach a crescendo (as in, Now.)

  18. Anyways,

    it's all pretty thin soup. We have some big-assed problems right now, and, that isn't really one of them.

    In times of crisis the powers that be will attempt, usually successfully, to distract the population from the real problems (which, usually, involve those very, self-same "powers that be.")

    The time-honored method is war. Problem is, right now the American public is a little war-weary. In Europe you could always "blame the Jews." We just don't have enough Jews over here to make that work very well.

    So about all we can do, right now, is form into teams and throw rocks at each other.

    The Pubs can scream, and cry "commie" at the Dems, and the Dems can piss, and moan about the ignorant "bible-thumpers;" but, other than that, we're just about out of bullets.

    Somebody might have to, actually, try to think the damned thing through.

  19. Mr. Karzai made his comments in an address to the Afghanistan Youth International Conference that was peppered with attacks on the NATO-led military coalition.

    “You remember a few years ago I was saying thank you to the foreigners for their help; every minute we were thanking them,” he said. “Now I have stopped saying that, except when Spanta forced me to say thank you,” referring to his national security adviser, Rangin Spanta, who was present.

    “They’re here for their own purposes, for their own goals, and they’re using our soil for that,” Mr. Karzai said.

  20. Mr Karzai is right, about US staying in Afghanistan for our own purposes.

  21. I'd kind of like to look at those "Purposes," again, please.

    I think more than a few other people agree with me.

  22. I know what Bernanke is thinking; he's thinking that, with this slowdown, gas prices will fall, and "activity" will pick back up.

    To "some" extent, he's right. But, once you've accepted this scenario all kinds of questions start to arise. They're so obvious that a lazy person, such as myself, probably wouldn't even bother going through the litany.

  23. With all of that brouhaha, yesterday, about plunging oil prices RBOB futures only fell a penny.

    I'm guessing, right now, that National Gasoline Prices aren't going to fall much below $3.60 (unless the economy gets a Whole Lot Worse.)

    Will a drop to $3.60, or even $3.30 or $3.40, be enough to bring the economy back?

  24. The report says opiate use increased 35% worldwide from 1998 to 2008.

    When the Taliban ruled Afghanistan the UN reported that opiate production was greatly inhibited.

    The US now has control of the poppy growing region, irrigated with US built and funded infrastructure from back in the days before the fall of Communism.

    Demand is up 35%, from the Taliban baseline.

    the traffic in opium was the dirty underside of an evolving global trading economy. In America as in Europe, pretty much everything was deemed fair in the pursuit of profits. Such was the outlook at Russell & Company, a Boston concern whose clipper ships made it the leader in the lucrative American trade in Chinese tea and silk.

    In 1823 a 24yearold Yankee, Warren Delano, sailed to Canton, where he did so well that within seven years he was a senior partner in Russell & Company. Delano's problem, as with all traders, European and American, was that China had much to sell but declined to buy. The Manchu emperors believed that the Middle Kingdom already possessed everything worth having, and hence needed no barbarian manufactures.

    The British struck upon an ingenious way to reduce a huge trade deficit. Their merchants bribed Chinese officials to allow entry of chests of opium from Britishruled India, though its importation had long been banned by imperial decree. Imports soared, and nearly every American company followed suit, acquiring "black dirt" in Turkey or as agents for Indian producers.

    Writing home, Delano said he could not pretend to justify the opium trade on moral grounds, "but as a merchant I insist it has been . . . fair, honorable and legitimate," and no more objectionable than the importation of wines and spirits to the U.S.

    Warren Delano, the grandfather of FDR

  25. Afghanistan is, as of March, 2010, the greatest illicit opium producer in the entire world, ahead of Burma (Myanmar) and the "Golden Triangle". Afghanistan is the main producer of opium in "Golden Crescent". Opium production in Afghanistan has been on the rise since U.S. occupation started in 2001. Based on UNODC data, there has been more opium poppy cultivation in each of the past four growing seasons (2004–2007) than in any one year during Taliban rule. Also, more land is now used for opium in Afghanistan than for coca cultivation in Latin America. In 2007, 92% of the opiates on the world market originated in Afghanistan

  26. The United Nations Office on Drugs and Crime estimates the total value of the global opium and heroin market to be valued at $64.82 billion.

    Source: United Nations, ” 2005 World Drug Report,”

    Now in Afghanistan, where 92% of the opiates on the market are produced ... This amounts to an export value of about $4 billion.

    A $64 billion global retail market.

    That's a $60 billion USD spread.

  27. As seen from Russia:

    A high concentration of NATO troops in Afghanistan seems to be peacefully coexisting with the world’s highest concentration of opium poppy plantations, which both calls into question the antiterrorist mission and makes it possible to expect that the mission will have disastrous humanitarian consequences.

    This came in a statement by the Head of the Russian Federal Drug Control Service Victor Ivanov.

    According to expert estimates, one Al-Qaeda fighter is opposed by 2,000 foreign servicemen in Afghanistan.

    Voicee of Russia

  28. (Reuters) - Russia accused the United States on Sunday of conniving with Afghanistan's drug producers by refusing to destroy opium crops, the second time in a week Moscow has taken a swipe at the West over drug policy.

    U.S. Marines have advanced into one of the main opium-growing regions of Afghanistan's Helmand Province since February, but have told villagers there they will not destroy the opium crop that is blossoming this month.

    "We believe such statements are contrary to the decisions taken on Afghan narco-problems within the U.N. and other international forums," said a statement from the Russian Foreign Ministry released by the embassy in Kabul.

    "The touching' concern about the Afghan farmers actually means, if not directly, then certainly indirectly, conniving (with) drug producers," it said.

    Last week, Russian U.N. ambassador Vitaly Churkin told the Security Council that U.S. and NATO commanders should continue to eradicate opium poppy fields.

    NATO rejected the criticism ...

  29. (Reuters) - Afghanistan-grown poppies fuel a $65 billion heroin and opium market that feeds 15 million addicts, with Europe, Russia and Iran consuming half the supply, a U.N. report showed Wednesday.

    Afghanistan produces 92 percent of the world's opium, a thick paste from poppy used to make heroin, and the equivalent of 3,500 tons of opium is trafficked out of Afghanistan every year, said the U.N. Office on Drugs and Crime report.

    About two thirds of that is turned into heroin before it leaves the Central Asian country, while the rest is trafficked as opium, said the study.

    Less than 2 percent of that opium and heroin is seized by authorities before it leaves Afghanistan,

    with 40 percent of the heroin trafficked out of the country through Pakistan, 30 percent into Iran and about 25 percent through Central Asia.

  30. I'll guarantee you, there are numerous families in the U.S. that have, on the one hand, lost sons guarding the product, and, on the other hand, have had sons imprisoned for selling/using the same product.

    We're batshit crazy.

  31. "Why has the Russian government's good-will decision to make a corridor available for the transportation of personnel and NATO civilian cargo by rail and air from Europe to Afghanistan not received an appropriate reaction from NATO,”
    Ivanov asked during a visit with his Italian counterparts in Rome.

    Ivanov added that NATO is responsible for controlling the heroin situation in the country.

    Russia, which has witnessed a dramatic surge in heroin-related deaths since US forces opened military operations in Afghanistan almost 10 years ago, has repeatedly requested that the fight against opium producers be given top priority.

    In October, Ivanov told the Carnegie Moscow Center that although the amount of opium harvested in 2010 was half of the amount produced the previous year, it is still twenty times higher than it was in 2001 under the Taliban.

    He attributed last year’s decline in production to “climate factors” and opium crop disease rather than eradication efforts. He based his conclusion on the fact that the number of acres planted—123,000 acres—had not changed since the previous year.

  32. There are certain pictures that will live, forever, in your memory. I was in the back of a 5-Ton, on my way to the airport at Danang, going home, and there was a little girl, 7, or 8, I guess, out in the garbage dump, picking through our scraps, and trash. I'll never forget it. My last, and strongest, memory of Vietnam.

    The picture of a U.S. Marine, in a bunker, overlooking the poppy fields, is the one picture of Afghanistan that I think will be with me, also, till the day I die.

    We are, truly, befuddled.

  33. BBC-
    In the US, there are around 800,000 heroin addicts. In the UK, between 200,000 and 300,000.

    In Russia, there are now two and a half million.

    Why? What makes Russia so different? Perhaps it has something to do with the climate. In a country that spends half the year in gloom, depression is a big problem.

    But by far the biggest reason is geography. Take a look at a map of the world and draw a line north from Afghanistan.

  34. The same day that senators bemoaned the tax credits given to the ethanol industry, the Department of Energy, in conjunction with contestant co-sponsor General Motors announced that the overall winner of the EcoCAR: The NeXt Challenge was an extended-range electric vehicle using E85 designed and built by a team of Virginia Tech University. They awarded second place to another E85 EREV from Ohio State. For the DOE, ethanol was a huge winner.

    The contest is important as it is a joint government and industry challenge to re-engineer a GM-donated vehicle to minimize the vehicle’s fuel consumption and emissions, while maintaining its utility, safety, and performance. The Virginia Tech team achieved the equivalent of nearly 82 miles per gallon—a 70 percent improvement in fuel efficiency over the stock vehicle. They did it using 85 percent ethanol as the conventional fuel.

    Too Bad This Stuff ain't made in Saudi Arabia.

  35. .

    ...mission will have disastrous humanitarian consequences.

    This came in a statement by the Head of the Russian Federal Drug Control Service Victor Ivanov.

    According to expert estimates, one Al-Qaeda fighter is opposed by 2,000 foreign servicemen in Afghanistan...

    Good points all.

    We went into Afghanistan supposedly to get OBL and al Queda.
    OBL has been got and estimates are there are only 30-100 al Queda there now. This is what we used to call close enough for government work.

    And what is our cost each and every day for each of those al Queda?

    As for the opium, one more example of US hypocrisy. Just as in Libya, where the people we kill with the bombing are not victims but merely collateral damage, he people whose lives are ruined or who are killed by the Afghan opium are also collateral damage in our humanitarian drive towards...towards... well I guess that has never been explained except with euphemisms.


  36. In January, WTI and Tapis Crude (same grade, sold in Hong Kong) were the same price.

    In March Tapis was selling for $15.00/bbl more than WTI.

    Today, the spread is $28.00.

    This is another one of those things, kiddos, that won't last.

    We've caught a lucky break in the Middle part of the United States. But, this, too, shall pass.

    Whether by rail, or truck, or imported Burmese donkeys, that Canadian Oil WILL start to find its way to the West Coast, and onto tankers.

  37. .

    Was watching a congressional hearing a few weeks ago talking about the Iraq war and where we are going with it. The Chairman of the committee was obviously a proponent of the war and anxious to keep at least some US forces there.

    The last two witnesses were some chick, big wig in the Iraq embassy, (forget her title) and some other honcho from State.

    At any rate, the hearing is over but the chairman wants to throw up a softball question so he asks the chick and the other guy, "Do you think our efforts in Iraq have been worth it and if so please tell us some of the reasons you think so." And then says, either one of you can answer.

    So the chick jumps in and starts talking about all the good things we are currently doing there. But the chairman stops her and says, "I know but to enlighten our audiance just list some of the ways it has advanced our national interests."

    She starts mumbling stuff that was rambling and incoherant kind of like Weiner's first denial, making a fool of herself. The guy from State had to jump in and spout the same old bull about how we established a democracy there that is likely to spread thoughout the ME.

    Truly embarrassing. And pretty sad when you high ranking embassy personnell can't explain why you went into the country, what you accomplished, and why your should still stay there.

    Bureaucrats. You gotta love em.


  38. If you took Metro North home last night, perhaps you witnessed an altercation between a fellow passenger and a train official? A conductor asked a rider, former BNP “graduate intern” Hermon Raju, to please refrain from audibly cursing, to which she responded with a variety of (rhetorical?) questions including, “Do you know what schools I’ve been to?” “Do you know how well-educated I am?” demanded someone “stop this train,” and once again made it clear, “I’m not a crazy person, I’m a very well educated person.” Raju also said she’d never give Metro North her money again and considering she rides it “to and from work and to my parents’ house,” the loss of revenue might seriously hurt the MTA.

    A minute later, there was an announcement asking all passengers not to use profanity on the train, “especially those people who went to Harvard or Yale or are from Westport.”

    Do You, eh, Do You?

    Ah, the parents must be soooo proud. :)

  39. .

    Libya and the Potemkin Alliance

    Since Sept. 11, 2001, U.S. military spending has more than doubled, but that of NATO’s 27 other members has declined 15 percent. U.S. military spending is three times larger than the combined spending of those other members. Hence Gates warned that “there will be dwindling appetite and patience in” America for expending “increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defense.” Already, U.S. officers in Afghanistan sometimes refer to the NATO command there — officially, the International Security Assistance Force (ISAF) — as “I Saw Americans Fighting.”

    Is NATO a Defense Alliance or Mischief Maker?


  40. .

    SEN. REID: The War Powers Act has no application to what’s going on in Libya.

    MR. LEHRER: None?

    SEN. REID: I don’t believe so. You know, we did an authorization for Afghanistan. We did one for Iraq. But we have no troops on the ground there, and this thing’s going to be over before you know it anyway, so I think it’s not necessary.


  41. .

    Arab League chief Amr Moussa said the NATO mandate is not about bringing down Gadhafi’s regime and a political solution is urgently needed.

    “The situation has gone beyond what was expected. It is only natural that we speed up the search for a political solution and achieving a cease-fire,” he said.

    The situation has gone beyond what you expected?



  42. .

    NATO says it mistakenly struck Libyan rebel convoy in airstrike near eastern oil town

    TRIPOLI, Libya — NATO said Saturday it mistakenly struck a column of Libyan rebel vehicles in an airstrike near an eastern oil town two days earlier and expressed regret for any casualties that might have resulted.

    Thursday’s airstrike was similar to one on April 7 in which NATO hit a convoy of rebel tanks, killing at least five fighters, as the rebels were closing in on Brega. NATO officials said at the time they did not know the rebels had any tanks, a statement that raised eyebrows as footage of the rebels with tanks had been on YouTube for weeks.

    Heck of a way to run a railroad


  43. .

    Libya’s Health Ministry released new casualty figures that put the number of civilians purportedly killed in NATO airstrikes through June 7 at 856. The figure could not be independently verified, and previous government-announced tolls from individual strikes have proven to be exaggerated.

    Lungescu rejected the casualty figures.

    “We are saving countless lives every day across the country,” she said. “We are conducting operations with utmost care and precision to avoid civilian casualties. Civilian casualties figures mentioned by the Libyan regime are pure propaganda.”