Right, right, things are starting to get better.

Do you think that things would be getting better at your or my house if we enacted similar economic principals?

So, we've spent years putting things on the credit card and with loans. We've got the house, the cars the 60" flat panel and the quad four laptop. All the cool latest and greatest things. We're young and will be able to work for many years to pay for all this stuff.

Stuff gets old. The house needs some work the cars are breaking down too often. The TV's too small, and the computer is too slow. We've only chipped away a fraction of what we owe for all this stuff that's now wearing out, but, oh well, we can just tack on a little more to upgrade our "infrastructure".

Oh no, the air conditioning system in this newer, bigger house needs to be replaced. Damn, don't have any money. Going to have to borrow a little more. Have to you know. Well we might as well remodel the bathrooms and the kitchen. Kids must go to college to make it in our country today. Just borrow a little more.

Wow, the house is looking pretty good. Cars are new and we can be lazy infront of a 80" flat panel. The kids are learning to party hardy in college. Life is good, but it rolls along like it or not. Stuff gets old. The house the cars the small TV's and slow computers. Kids change majors.

Life rolls along. We get old. We can't work forever. We can't earn enough to pay back what we borrowed. Now what? Bailout.

Who is going to bailout the USA? No one.

Thigs will be starting to turn around and get better when we can elect people who will spend the money that we pay in for this country to run as responsibly as we should be in our own homes. The more we bank on future earnings, the further we will get from "starting to turn around and get better".

 

TL;DR

Analogy that doesn't apply to US economy.

 

Wittom,

I agree with what you say. Certainly we spend more than we make and are crumbling under our house of debt.

That being said, people expect things to be fixed in a snap and it doesn't work that way. We have made efforts to fix things and there are signs of improvement.

There is waste everywhere that can be fixed. We have started to rebuild Iraq in the middle of problems. Let then pay for it, not us.

Does anyone think privatizing Social Security would have been a good idea with the market drop? Some of the GOP wants to end Social Security, Medicare and Unemployment. Really think that is a good idea? Maybe for the rich!

 

Of course it would be better off. SS is a ponzi scheme in it's present state and is, in essence, bankrupt.

Privatization is another name for 401k. See the difference?

 

Things are getting better? Really? I guess this is substitute teacher-speak for when the unemployment rate ticks up. As it did in August.

 

The losses would have been unimaginable if Social Security had been privatized.

The trust fund has money to pay for decades and with some tweaks it can go on for an infinite time.

401k plans are good for those than can afford to invest in them but many do not have the means to do so and SS is their only future. Most people have seen their 401k investments evaporate especially if they worked for deregulated companies like Enron that the Bush's were buddies with!!!

 

I don't think you understand what a 401 k is, no offense.

I put no money into mine.

With your Enron comment you are obviously just a Bush hater. There was a lot more to the Enron story than what Tommy Brokaw told you.

If you actually believe SS would be worse off being privatized, you are officially an Obamabot.

 

I entered the workforce as a high school student in 1978 and full time in 1984. If my social security contribution plus my employer's contribution were invested at the average return for the stock market, I'd be retired and living on the interest. Oh, and I'd have a $1,000,000+ nest egg to give to my kids when I die.

With Social Security, I might get to retire in 2035, at which point I'll get a few thousand per month for a decade or so, and leave next to nothing to my kids. Wow. What a deal.

One of my good friends works for the Army Corp of Engineers, and has for decades. He opted out of Social Security a long long time ago (some government employees had the choice) and he is WAY better off.

 

If you knew anything, you would know that Enron was a heavily regulated corporation... Along with all other corporations. Only major business owners understand just how much regulation and limits are placed on one.

 

I find it funny that HEAVILY regulated industries are able to get away with the things they do. Enron cooked the books, ripped the people of CA off with "power shortages" and destroyed people's retirements with one quick swoop.

As far as how much people get on their return on SS, they get all of the money they invest with a good rate of return with a couple years of receiving benefits. Do the math! In order to put a million plus into SS, one would have to pay $20k for 40+ years in SS taxes. This on top of FICA, fed taxes and local taxes. You would have one sick income.

Also I have a good understanding of business...I have an MBA with concentrations in marketing and economics.

Yes there are regulations on businesses and those that follow them are doing things right but it is more and more on the honor system as there aren't enough people to investigate the bad guys.

 

Oh BTW the maximum SS tax for 2010 is $13k and represents about a 6% tax. This by no means represents the average person earning $40k a year.

Also most 401k plans match your contribution up to 6% of income or so. I haven't seen any that just put money away for you. That would be a pension which many companies don't do anymore.

 

SS is a total of 12.4% up to $106,800 of earnings if you are on a W-2. It is a little more than that if you are self employed. Medicare is an additional 3.3%. I have paid in for 52 years and I gaurantee, had I invested what was paid in, it would pay more than my SS benefits will be.

 

K-Mac: Ever heard of compound interest?

Just checking. I'll be happy to explain it to you if you think you can grasp the concept.

Oh, and you are aware that employers match your Social Security witholding, right? That is money your employer could pay YOU (and you could invest it by yourself) if the government did not take it instead.

 

I understand compound interest and the market very well.

In addition, I am sure there are a few people that could make their own investments and be smart enough to save it for their retirement.

In fact, the top earners are likely going to pay in more than they get back. I figured as top earner, if you were lucky enough to collect SS for 20 years, you would get approx $500k back, while paying in about $675k (including the employer portion). For those that don't live to collect, it is a rotten investment!

That said, most people live hand to mouth and if you gave them that extra money, it would be gone like the rest of their check.

Still at the end of the day, it really isn't a bad investment, for the majority of people. The standard payback is about 2 years benefits for the common person. This funds SS benefits and disability. Many disability recipients never paid a dime into the system.

As for employers handing that money over to employees, I kind of doubt most would but for the benefit of the doubt, people would spend it and have nothing to retire on.

The reality is that many people make minimum wage for their whole lives and it is rather tough to put much aside if you are only making $15k a year.

In addition for the extra 3% you get Medicare which is a windfall for most retirees. Most of the benefits of the plan are paid out in the last 2 years of life. Good luck being 80+ years old and getting health insurance elsewhere without paying a king's ransom.

Are these plans perfect? No. But they are what they are. They are a safety net that most people come out on the winning end on. For those that don't...yes it is a tax and like most things, the wealthier people are going to have to pay.

You cannot tax the poorest people. They have nothing to give.

Taking 35% of someone's income that is $150k is a whole lot less painful than 35% of someone's income that is $15k. Does it penalize success? Yes. Is it fair? Not exactly, but the guy making $150k still has almost $100k left over. You can support a family on the $100k left a lot easier than $10k.

 

KMac. I have an MBA as well. So what; that doesnt mean you understand 1 single thing about the free market. Some of the most screwed up business perspectives I've ever met came out of the MBA/PhD programs. Several people I know have the liberal/socialist view on business and it makes no sense whatsoever.

I read your statements in your earlier posts. In all seriousness, did you sleep through Econ I?

FYI: I work for the largest steel and steel products company in America. There is 0 union representation within our company and management is 100% for employee creativity and innovation. All hourly employees are paid based on production; no union rights, none of that crap. When people know they're valued and their innovation is what drives the companies success and ultimately their paycheck, amazing things happen. Is it any wonder that we're #1? I think not. Apply that logic to your union mentality which is similar to our competitors. They are absolutely taking a bath in debt and union obligations right now. Their unions are absolutely choking the companies to death. I hate to see these companies falter and good people lose their jobs, but it will only strengthen us when we get their business