Asymmetrical Information

Payroll taxes do not go to support welfare programs. They go to support a pension plan and a health insurance plan.

If payments into the system vary by income than the payments to the people will vary by income. Thus Social Security and Medicare would become welfare plans and lose popular support.

gee thanks, cause neither jacob, megan, or the regular readers understood that

this is the problem with having leftists read your blogs... they just can't do basic math

Only slightly off topic--I think I've managed to dig up some historical evidence to support Wes Clark's theory that the progressive income tax was one of the founding principles of our nation.

http://www.interglobal.org/weblog/archives/003086.html#003086

Jake: "Payroll taxes do not go to support welfare programs. They go to support a pension plan and a health insurance plan."

It would be a pension plan IF the payouts varied proportionally to the "contributions". My impression is that if A pays twice as much FICA over his lifetime as B, A gets more in SS payments, but nowhere near twice as much. Which makes it part pension & part welfare.

As for Medicare, as I understand it, once one qualifies, payouts depend only on need. Working part-time, minimum wage, 3 months a year for 10 years qualifies. Sounds like welfare to me.

Then there's SSSI (Social Security Supplemental Income), which is quite plainly welfare.

I remember as a young actuary having to absorb the notion that social security was an example of the concept of "social insurance". It wasn't really a tax since it was tied to your benefit (the beauty being that everyone had a stake in it and didn't look at it as welfare) Also, it wasn't like real insurance since the benefits could be adjusted based on the needs of society. To obtain our acquiesence, we were told that the social security taxes weren't really taxes, but "premiums"; in other words it was still our money and it was being invested, not confiscated.

That always seemed like a lot of hooey to me. It's nothing more than a gigantic ponzi scheme in which younger workers pay for benefits of older workers, with the older workers getting back more as a group than they ever paid in. Unless we keep importing new workers, the whole house of cards will eventually collapse.

By the way, don't fall for the argument that system shortfalls are caused by surprising improvements in mortality. Mortality improvements have been documented for decades and are easily modeled by the Social Security actuaries. If it weren't a ponzi scheme, we wouldn't need to be worried about mortality improvements.

So, here we are. Not only will the "assets in the fund (they are really liabilities) run out in 15 years or so, the CASH FLOWS from these assets will turn negative far sooner.

So what do the defenders of the system do? They start referring to the social security tax as a tax it really is (not a premium) and start complaining about how unfair it is. Next thing you know, we'll be talking about means testing the benefits, and when it eventually collapses, it will be our children who get screwed.

So do not fall for these hollow arguments by liberal defenders of the current system. Hold their feet to the fire. Let their children know that they are being ripped off.

In the meantime, how about a nice free prescription drug benefit for seniors? After all, the kids are still too young and stupid to realise the long-term implications......

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