binary solo said:
So why show the graphs then as they are not comparable, it's misleading. Also Social security IS a universal savings scheme, the problem is successive left and right govts have raided it and just left meaningless IOUs, which they've never paid back. "In the United States, Social Security is primarily the Old-Age, Survivors, and Disability Insurance (OASDI) federal program.[1] The original Social Security Act (1935)[2] and the current version of the Act, as amended,[3] encompass several social welfare and social insurance programs. Social Security is funded through payroll taxes called Federal Insurance Contributions Act tax (FICA) or Self Employed Contributions Act Tax (SECA). Tax deposits are collected by the Internal Revenue Service (IRS) and are formally entrusted to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund which make up the Social Security Trust Funds.[4] With a few exceptions, all salaried income, up to an amount specifically determined by law (see tax rate table below) has an FICA or SECA tax collected on it. All income over said amount is not taxed, for 2014 the maximum amount of taxable earnings is $117,000." See bold, specific amounts are taken from taxes to contribute to the social security fund. That, by definition, is savings, as long as you don't touch it. It's like me taking $100 from my paycheck and putting it into a savings account, but every month I take the money out again to pay bills because I haven't managed my budget properly. I still run a savings account and contribute into it, but I'm doing a shit job with it because I can't control my day to day spending. The problem is not Social security, it's constant overspending by the govt. Social security can be fixed by actually securing it from the sticky fingers of politicians, it does not need to be dumped with total privatisation. The Age pension is directly comparable to Social security because it is universal, it's not just for the poor and the useless. So that's more misinformation from Cato. It provides a minimum income for ALL Australian retirees, and is reduced at a rate of 0.5:1 if you continue to earn an income over a certain amount after you have retired. Tweeks can be made to Social security to put in that sort of income testing provision without dumping the thing completely and going to full privatisation. Social security is meant to make investments in the private sector to grow in size, it's not meant to sit as a lump of money waiting to be used up. Also there is a comparable system to Aussie supperannuation, that's 401 savings plans. These are savings plans invested directly into the private sector (shares, fixed term interest, property etc), and managed by investment fund managers. 401s are even normally subject to automatic enrollment on commencement of employment, though employees can opt out. So that is a slight difference to Aussie, where there is no opt out, I think. So here is Cato being misleading about the US retirement funding situation, for a purpose other than objectively seeking to improve the system. |
I think you are trying way too hard to look for a bias that isn't there, or at least not to the extent that you are trying to make it seem (obviously everyone has a bias.) The graphs were shown to express the status of the two systems. One has actual savings that are increasing in value, the other has none and rather has a deficit ,because - as you agreed with the author, the U.S Govenerment has ravaged them and replaced them with IOU's. Just adding a 401k mandate would not work because of how large the Social Security tax is (I pay almost as much in Social Security tax as I do in my federal income tax, about 6% and 10%, with the latter returning to me yearly.) So obviously there would have to be huge cuts in the way of Social Security to make way for personal accounts that the government can't ravage. Is The Age Pension funded by income taxes in Australia? If so, that is another huge difference from Social Security (which is supposed to be funded by payroll taxes.)
"There are two serious problems with America’s Social Security system. Almost everyone knows about the first problem, which is that the system is bankrupt, withhuge unfunded liabilities of about $30 trillion."
"The other crisis is that the system gives workers a lousy level of retirement income compared to the amount of taxes they pay during their working years. Younger workers are particularly disadvantaged, as are African-Americans because of lower life expectancy." - Cato Blogger
"rate of 0.5:1 if you continue to earn an income over a certain amount after you have retired. "
Is it only that they are receiving income after they have retired which reduces the payments of Age Pension?
From Forbes.
That’s their version of Social Security and it pays up to about $28,000 a year to people roughly 65 and older.
Unlike Social Security, the Age Pension is means-tested; benefits are reduced for Australians with high incomes or substantial assets, using a sliding scale. About 56% of people get the full pension; the rest get a reduced version.
Seems to me that it is much more than that, particularly with Forbes' wording of "means-tested."
They also go on to say in reference to the Super.
This is the lynchpin to Australia’s retirement system. With The Super, employers are required to contribute into tax-advantaged retirement plans, like 401( k )s, 9.25% of earnings for virtually all employees age 18 to 70. That percentage will gradually rise to 12% by 2020. Employees choose where to invest the money.
Unlike 401( k )s, loans from the Saver aren’t permitted and pre-retirement withdrawals are generally forbidden.
If this Cato blogger were as "hyper-capitalist" as you say, would it not be better for him to say that all retirement should be voluntary and not mandated? That is what I'd consider "hyper-capitalist" at least if we are using the modern definition of capitalism.