Question: Sequestration - the fear of cuts in military spending

[Tide1986]

I find it disturbing that for the sake of economic growth, we need population growth. This is a policy that sooner or later will be disastrous. Last time that I looked, drove around in what used to be country, we have more than enough people.

If it weren't for the taxes needed to support social/safety net programs, less growth would be needed. It's one of those unintended consequences of wanting to feel like a do-gooder.

 

[Bodhisattva]

I find it disturbing that for the sake of economic growth, we need population growth. This is a policy that sooner or later will be disastrous. Last time that I looked, drove around in what used to be country, we have more than enough people.

To add to others have said, that's the way the government has set up our social safety net - the dumbest way possible. Look as SS; it's an inter-generational wealth transfer. The young pay for the old. Now the elderly live longer on the public dole and the young are shrinking as a percentage of the population. The government's financial house of cards is collapsing. A much better way to go is to have everyone responsible for their own security. The money that I pay into SS should be mine - and invested so as to get 40+ years market returns. Everyone who is even modestly productive retires comfortably and is insulated from things they can't control like population swings.

 

[Bamaro]

To add to others have said, that's the way the government has set up our social safety net - the dumbest way possible. Look as SS; it's an inter-generational wealth transfer. The young pay for the old. Now the elderly live longer on the public dole and the young are shrinking as a percentage of the population. The government's financial house of cards is collapsing. A much better way to go is to have everyone responsible for their own security. The money that I pay into SS should be mine - and invested so as to get 40+ years market returns. Everyone who is even modestly productive retires comfortably and is insulated from things they can't control like population swings.

The answer to SS is very simple. Since it is unsustainable in its present form, it must be changed. Either raise the revenues directly through the FICA tax or reduce benefits or a combination of both. The last option is the only practical one.

 

[Bodhisattva]

The answer to SS is very simple. Since it is unsustainable in its present form, it must be changed. Either raise the revenues directly through the FICA tax or reduce benefits or a combination of both. The last option is the only practical one.

Your solutions do nothing to address the horrible return one gets on SS. Market-based reforms need to be made. In addition to getting many times the return, large bureaucracies can be eliminated, which has its fiscal benefits as well.

 

[jabcmb]

I think some cuts to military spending are OK. One of the SECDEF's (Weinberger?) said ANY organization can cut it's budget 5%. The U.S. has historically cut military spending too much, too fast in times of relative peace and that is what I would guard against. Extreme military budget cuts have repeatedly left us vulnerable to exploitation by an enemy, and the enemy repeatedly obliged us with a wakeup call. With today's weapons, such a wakeup call might be difficult to overcome.

The thing we should fear more is the current deficit in military leadership at the GO level, but that's another topic.

 

[Bamaro]

Your solutions do nothing to address the horrible return one gets on SS. Market-based reforms need to be made. In addition to getting many times the return, large bureaucracies can be eliminated, which has its fiscal benefits as well.

True but the low returns are associated with safety of principal. SS should never be viewed as a complete retirement package. It should only cover the bare necessities. Anything over that must be covered by pensions or 401k's etc. And if you look at the average 401k over the past 12 years, its returns are very poor if any at all.

 

[Tide1986]

The answer to SS is very simple. Since it is unsustainable in its present form, it must be changed. Either raise the revenues directly through the FICA tax or reduce benefits or a combination of both. The last option is the only practical one.

And will the need for more tax revenue ever be quenched? Sometimes, one must simply learn to live on the revenue one has. I have no desire to empower the federal government with more revenue.

 

[Tide1986]

SS should never be viewed as a complete retirement package.

Truth

Do you think SS is actually managed with this in mind?

 

[Bodhisattva]

True but the low returns are associated with safety of principal. SS should never be viewed as a complete retirement package. It should only cover the bare necessities. Anything over that must be covered by pensions or 401k's etc. And if you look at the average 401k over the past 12 years, its returns are very poor if any at all.

I absolutely agree with you that SS should not be one's sole retirement plan. My point is that SS has a negative return. That's not safety of principal; that's a dumb program. 12.4% of one's compensation is forcibly taken for the 40 + year of one's working life. That's a massive amount of money that is not being used properly. Even the safest market-based returns (put into something like a 529 set-up) would allow the overwhelming majority of the population to retire very comfortably. With little effort one could retire a millionaire on SS.

Edit: Also, hiding the problems of SS by raising taxes or delaying the benefits does not address the fundamental problem of the program. Why should government stupidity get bailed out at the expense of its citizens? The government shows time and time again that it will take your money and waste it. Why give the government more?

 

[selmaborntidefan]

Let's see.....federal entitlements are 62% of government spending......and defense is 25%......and the solution is "cut defense?"


(Incidentally, I don't mind a defense cut, but I think they simply ought to cut EVERYTHING across the board - period).

 

[Tidewater]

I find it disturbing that for the sake of economic growth, we need population growth. This is a policy that sooner or later will be disastrous. Last time that I looked, drove around in what used to be country, we have more than enough people.

I would question the premise that we need population growth for the sake of economic growth. We need population growth to keep the unbelievably generous social safety net promises the Federal government has made.
Steyn's argument is that European countries must have strong population growth to keep their social safety net promises, and it just so happens that the immigrants they bring in (largely muslim immigrants) come with substantial social baggage. At least in our case the immigrants come from westernized, nominally Christian societies. Still some cultural baggage (see Mexico City, Bogota and Buenos Aires for examples), but a lot less baggage than the Europeans have bought into.

 

[Bamaro]

I absolutely agree with you that SS should not be one's sole retirement plan. My point is that SS has a negative return. That's not safety of principal; that's a dumb program. 12.4% of one's compensation is forcibly taken for the 40 + year of one's working life. That's a massive amount of money that is not being used properly. Even the safest market-based returns (put into something like a 529 set-up) would allow the overwhelming majority of the population to retire very comfortably. With little effort one could retire a millionaire on SS.

Edit: Also, hiding the problems of SS by raising taxes or delaying the benefits does not address the fundamental problem of the program. Why should government stupidity get bailed out at the expense of its citizens? The government shows time and time again that it will take your money and waste it. Why give the government more?

The problem with SS now is that as an investment (up to now) it has had a very good return to retirees. The payouts are totally out of wack with the investment return.

Even the safest market-based returns (put into something like a 529 set-up) would allow the overwhelming majority of the population to retire very comfortably.

Over the last 12 years those returns have been very meager if any at all.

 

[RhodeIslandRed]

The answer to SS is very simple. Since it is unsustainable in its present form, it must be changed. Either raise the revenues directly through the FICA tax or reduce benefits or a combination of both. The last option is the only practical one.

The simplest and most nontransparent way is to inflate the dollar away. Supposedly there are 16 workers supporting each retiree. By 2027 it will be closer to 3 to 1 when the bulk of baby boomers retire.

 

[Bodhisattva]

Over the last 12 years those returns have been very meager if any at all.

Still much, much better than the government plan.

I set up a 529 for my daughter with very modest investments ($100/paycheck), knowing that she has 17/18 years to accumulate returns. She's six years old and in today's money she has about 2.5 years of a public university's tuition covered. The returns have been less than stellar thanks to government meddling in the economy, but they have been far, far better than anything like SS.

Anyone with the most basic knowledge of investing would take the market path over the government path.

 

[Bodhisattva]

The problem with SS now is that as an investment (up to now) it has had a very good return to retirees. The payouts are totally out of wack with the investment return.

The rate of return for SS started out great because most people died before they could collect and the population was weighted to the young. The rate of return for SS turned negative in the late 1990s. The current rate of return is -1% (and getting worse). Government is making every individual squander at least hundreds of thousands of dollars in retirement money. Only in government could something that fails be championed.

 

[bamacon]

The rate of return for SS started out great because most people died before they could collect and the population was weighted to the young. The rate of return for SS turned negative in the late 1990s. The current rate of return is -1% (and getting worse). Government is making every individual squander at least hundreds of thousands of dollars in retirement money. Only in government could something that fails be championed.

In other words we need to die much faster

 

[Bamaro]

In other words we need to die much faster

Or collect full SS much later

 

[Bodhisattva]

In other words we need to die much faster

Heh. But, yeah, something's got to give. The government (and its supporters) are determined to have a massive program that loses money. So, to make a failure work, we either have to be taxed more, get less money back, or die sooner. That's the trinity of suck. Thanks Big Brother.

 

[Bodhisattva]

Or collect full SS much later

Why is that a good idea?

 

[Bamaro]

Why is that a good idea?

Solvency