Wednesday, December 28, 2005

RIP VAN WINKLE'S NIGHTMARE?

VIA Orbusmax & The Seattle Times:

http://seattletimes.nwsource.com/html/nationworld/2002705907_spending27.html

Stephen Ohlemacher of The Associated Press reports "Three growing entitlement programs consumed nearly half of all federal spending in 2004... Social Security, Medicare and Medicaid accounted for more than $1 trillion in the 2004 budget year... Overall federal spending was $2.2 trillion"...

Not exactly news, unless you've been stranded on a desert island... Or maybe You're Rip Van Winkle...

Imagine that. Rip fell asleep before the revolution and awoke to better times. If he fell asleep before the social revolution and woke up today, he would awaken in a land where the safety net's average cost per worker is about $7,000 a year.

That's $3.50 an hour of the $16 an hour Mr. Average makes just to cover the needs of the elderly and the medical needs of the poor.

That's only the Federal share...

And the number is growing...

Oh, I'm sure he would be impressed by all the benefits of the system and its attempts to provide at least something for almost everyone. The entitlement state was created to meet real needs. But seeing what footing the bill costs society on many levels might leave ol' Rip wondering if we're crossing a line where diminishing marginal utility dictates further increases of an input no longer produce meaningful increases of desired outputs.

Dream or nightmare? I suppose that depends on whether you are payor, payee, or the well-paid bureaucratic middleman...

Comments:
As a middle-of-career-aged man I always have been irked by the SS contributions, knowing full well I won't get squat out of it. On the other hand I watched my grandparents live for decades with nothing more than that and scant pensions. If not for SS they would have been in trouble.

But times are different now. I support the way Bush approched it - putting a safety net for those in need and privatizing the rest. Really he should scrap the rest. Of course nothing he put forth or anything else along those lines will ever get implemented until our budgetary backs are against the wall.
 
I have always favored a system that would let me opt out of SS completely. I would even let them keep what I have invested to date. In the next few years, I could rack up enough (at a much better interest rate) that I could still retire at 65, and have control of my assets, probably with some left over for my kids to inherit.
What we have now if a system where the retirement age will ratchet up, and the benefits ratchet down, and when you die, the government keeps the difference (which is an illusion, since they have already spent it).
I have never understood why Ponzi/Pyramid schemes are legal for government, but not for anyone else.
 
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