Education reform: Social Security meets Higher Ed

I recently returned from a working trip in DC and on the way back, I had a very intriguing conversation with an accountant who I will call Joe. The bulk of our conversation was me trying to explain to Joe the serious need and benefits of making college more affordable and accessible. While making college more affordable is good, Joe played a very good devil’s advocate by making me point out that in the end, I really think higher education should be free. He agreed with me but the problem came up with having to pay for it. Joe had an idea that I think should be fleshed out.

Simply put, Joe’s idea involves reforming social security and using the savings to fully fund higher education. But we should first put this issue in context. Social Security was created in 1935 under President Franklin D. Roosevelt. The bulk of what we usually think of as social security does in fact go to provide retirement benefits to elderly people who are in retirement, but there are earmarks for the widowed, disabled, and unemployed.

Throughout a worker’s career, the Social Security Administration keeps track of his or her earnings. The amount of the monthly benefit to which the worker is entitled depends upon that earnings record and upon the age at which the retiree chooses to begin receiving benefits. For the entire history of Social Security, benefits have been paid almost entirely by using revenue from payroll taxes. It is essentially a pay-as-you-go system.

Unfortunately, by about 2018, years or so, payroll taxes will not be enough to cover the Social Security benefits and the system will begin to withdraw money from the Social Security Trust Fund. The Trust Fund is estimated to be depleted by 2042 or 2052.

It should be noted that Social Security, along with Medicare and Medicaid, are entitlement programs, which means they are generally free from political interference. Potential beneficiaries of entitlement programs have a legal right, (whenever they meet eligibility conditions) that are specified by the standing law that authorizes the program. And because it is difficult to know in advance who will meet entitlement requirements from year to year, it makes it that more difficult for the government to plan for the total costs of the program when appropriations bills are marked up.

And with baby boomers coming into retirement age, there is considerable strain being put on the Social Security System. This is because now there are 3.3 workers per beneficiary and as baby boomers draw down these benefits, there will be fewer workers to support them. This, combined with the fact that the Social Security Trust Fund will have to be tapped in the near future is causing many, including President Bush, to make calls for social security reform.

This brings me back to my conversation with Joe. He told me that the death of social security will come when a means test is implemented. Right now, if you pay into social security, you get benefits regardless of your income or assets. A means test (there are various ways this could be implemented) would essentially set a threshold, probably sliding, by which the more money a person made, they would either be ineligible to receive benefits or otherwise be able to collect decreasing amounts of benefits. Conversely, the less money a retiree made the more benefits they would be able to collect. If enacted, this could conceivably preserve the financial integrity of the program while making sure that those who need it the most actually receive the benefits. On face value, it sounds good to me. If you are sitting on 4 million from your income and assets, your social security income isn’t exactly going to make or break you.

But here is the problem, according to Joe and a report by the American Academy of Actuaries, means testing would compromise two important principles that have sustained the political support for social security, universality and earned right. Universality means that regardless of how much money you make, social security will be there for you. Therefore, any perceived threat to social security would affect all current and future beneficiaries. The earned right principle would be jeopardized because if more wealthy workers are paying into a system that they won’t be able to collect on (or collect a disproportionately smaller share) their contributions, it essentially becomes a tax, and we all know taxes are every politician’s death kiss.

But if we could find a means test that was politically feasible, Joe said that we could use these savings to fully fund higher education. Now I don’t know how much it would cost to fully fund higher education but I do know that Social Security alone cost taxpayers in FY 2006, $544 billion. And I am sure that our ability to fund higher education is a whole lot less than half a trillion dollars. Joe mentioned that these savings could be transferred to the public in the form of a tax credit. I am not sure how this would work, or what method would be best, but the principle I think is sound. If people with higher education end up making more money over the course of their lifetimes, they will probably be able to make good use of their money such that they won’t need to rely on social security by the time they are ready to retire. Sounds like a win win to me.

What do you think?

Stay up fam,

Categories:
Education Reform
Social Security
Retirement
Higher Education

2007 State of the Union: A Translation

Here is my real-time analysis of G. W. Bush’s 2007 State of the Union address. This is a shortcut for anyone that did not watch the speech on TV or listen to it.

First, an omission. He did not say a word about Hurricane Katrina. That made me so upset that I nearly shed tears.

Madame Speaker…

This actually started well. Hearing this reminds me of how historic it is for Rep. Nancy Pelosi to be the Speaker of the House, the most powerful woman ever in the United States Congress. I wonder if Mr. Bush was sincere in his words to her during his opening remarks.

Decisions are hard, and courage is needed…The will to face difficult challenges…Congress has changed, but not our responsibilities…

These guarded statements are said to try and disarm his opposition within the Democratically-controlled Congress. What these statements basically mean is, “I will give lip service to working together, but expect nothing different out of me and my administration.”

3 Economic Reforms that deserve to be priorities…Balance the Federal Budget…We can do so without raising taxes…What we need is spending discipline in Washington…Earmarks…Entitlements…Commitments of Conscience…Fix Medicare and Medicaid, and save Social Security…

This was the first “meat” of the speech. He spit typical conservative banter about “fiscal responsibility,” and it is simply banter because this administration has been arguably the most fiscally irresponsible administrations in history. A key example of this irresponsibility: Iraq. The “we can do so without raising taxes” part is consistent with Bush’s insistence on cutting taxes while we are at “war,” something that has never happened before.

The stuff on “earmarks” is a joke because those will not go away any time soon since Republicans and Democrats use them all the time.

Conservatives use the term “entitlements” to deceive people. They need to do this so that they can make you feel bad about the government doing things for you. They play up this farce so that people feel bad taking things from the government that they select & elect. Funny how there was no mention of corporate entitlements in the form of war profiteering or the Bankruptcy Bill a.k.a. the worst piece of legislation since the Patriot Act (which a certain person voted for, and that really bothers me).

The future of opportunity requires that all of our citizens have affordable and available health care…For all other Americans, private health insurance provides the best option…Standard Health Insurance Tax Deduction…Changing the tax code is a vital and necessary step to making health care available to all Americans

I don’t even know why this man fronts like he wants all Americans to have health insurance. If so, he would at least put a dent in the 40+ million people who don’t. He and his friends still think it is a bad idea to realize Universal Health Care through what’s called a Single-payer system. Basically, single-payer means that only one party negotiates for the price of health insurance and services: the government. Every citizen would then have their health costs covered through what they pay in taxes. This would result in higher taxes for the citizens, but those increased costs probably would not add up to the amount that people overpay for health services every day, month, and year. The idea of trying to get everyone to go private is as ridiculous as the privatize social security plan that he had a while back (and still has). This is also consistent with the way that the “war” in Iraq has been privatized. These pro-business, anti-citizen types always think private is the answer so that they can take money away from public institutions and services.

Extending hope and opportunity in this country requires an immigration policy that is worthy of America

I won’t say much on this. I think that Bush’s guest worker idea sounds a whole lot like new school indentured servitude. For those that don’t know, this was the precursor to slavery in this country. I do not think that the parallel is coincidental.

Reduce gasoline usage by 20% in the next 10 years…

How??? His mandatory fuel standard statement was weak at best, especially in the midst of his administration and its energy policy.

Global climate change…

He can’t say global warming because that does not exist. So rather than being a flip-flopper (we know how much he hates those), he has decided to use a different term: global climate change. This is his backwards way of admitting that there is a problem. I guess a small first step is better than no step at all. Is the next step for him to watch this?

To win the war on terror, we must take the fight to the enemy…

This was the opening statement to his surprisingly long section on Iraq, Iran, and foreign policy. There was too much B.S. here to sift through. Take a look at some of our analysis to get an idea of the truth. Suffice it to say that this strategy is questionable at best.

Darfur…Fight AIDS on the continent of Africa…Dikembe Mutumbo…

He really mentioned Darfur? That’s a surprise. Too bad he didn’t refer to it as a genocide. Again, I guess a small step is better than no step at all.

It is sad, but the “fighting AIDS in Africa” phrase is being rendered absolutely meaningless. It gets paid so much lip service that people forget that there are actually humans living on the continent of Africa who exist for reasons other than making someone feel good being a philanthropist.

One Love. One II.

Categories
Politics
Foreign Policy
State of the Union
Taxes
Darfur
So-called “War on Terror”

The Weekly Dream: The Right to Privacy

Whatever you have spoken in the darkness shall be heard and listened to in the light, and what you have whispered in [people's] ears and behind closed doors will be proclaimed upon the housetops.
-Luke 12:3

This semester, I am taking a class called “The Law of Privacy.” It is an interesting class dealing with how far should the government and intrude into the lives and rights of individuals. I was surprised to learn that there are two types of privacy: Informational and decisional privacy. Informational deals with information about you released to the public (e.g. credit bureaus). Decisional privacy deals with those hot button issues like abortion, sexual orientation, etc. As one could imagine, technology plays a central role in privacy law. With the advent of the internet, Blogs, Profile sites, Smartphones, GPS, reality television and the like, it seems that you have to go to the moon to get some privacy.

In this Information Age, we are constantly bombarded with information. And it is a constant race to stay current. However, a large part of this is sifting through the ruff to get to the diamonds. When I turn on my computer, I come across numerous things I do not care about, mainly gossip. I do not care who is dating whom, who is cheating on whom, He said/She said. I have enough problems. However, the gossip and reality shows are a thriving industry. What is the preoccupation with sensationalism? Is it because the lives of these people are boring or are they trying to escape a dry, crusty reality? However, this will not help the situation. The result is that people know a lot of things that do not matter, instead of what they need to know. In addition to the voyeurism forced down our throats by the media, the government, under the auspices of National Security, has made it easy for any one to find out anything about you (read: wiretaps, credit reports, identity theft). Indeed, privacy is a scarce and undervalued commodity.

Why is Privacy Important?

Privacy, by definition, necessitates selective exclusion. In this exclusion, relationships are fostered and intimacy develops because there is a comfort and a safe place. Social theorists have claimed that there is a correlation between privacy and individuality. More privacy fosters more individuality and diversity. Less breeds a bland mainstream. Why? Because in the absence of privacy, there is the threat of disapproval, ostracism and rejection if you do not uphold “acceptable behaviors and values”.

In a family, when the sphere of privacy shrinks to the point where parents and children can no longer occupy the same space, then the children leave home-often to make decisions and mistakes without the criticism and stricture of the family. This can cause tension, but this is when parents should learn to “let go”, respect the privacy of their grown children and trust they will make good decisions.

The greatest thinkers and religious figures treasured being alone with their thoughts and their intimates. Henry David Thoreau wrote “Civil Disobedience” in seclusion. Jesus would often leave the multitudes and His disciples to pray and gain insight. Moses would went up the mountain and came back with the Ten Commandments. The Israelites, alone in the wilderness emerged as a cohesive nation. Privacy in the form of the retreat is at its essence spiritual. When you are alone, you can reflect and truly define yourself. In the presence of others, you can contrast what you are not.

To me, privacy means the absence of distraction. It is placing a restriction on how much outsiders have access to. When there are no distractions, then there is intense focus. In Kung-fu movies, the hero always goes into seclusion to train and then he faces his foe. Why? Because he must conquer himself before he can achieve his mission. Privacy is not an end unto itself, but it is to recharge so that we can come back and function at a higher level. Privacy is essential to the realization of potential.

These days, people willingly surrender their privacy. A constant debate I have is whether websites like the Facebook or MySpace is an invasion of privacy. I feel it is, but others say that it is a consensual invasion. And true, these sites are consensual, but perhaps these individuals do not know any better. Perhaps people do not examine the ramifications of providing an internet all-access pass. Especially since employers have begun to background check these sites to monitor potential hires and employees.

Privacy can be imposed on individuals. For example, we cannot appear in public nude. So where do we draw the line?

Is Anything Sacred?

In this age of “All-access”, nothing is sacred and it is hurting our relationships. Privacy is the highest respect one can be paid in society. It fosters the self and imagination. As Garlin, Dumi and Brandon have artfully expressed, technology is a tool and should be used to amplify good, not stupidity ( i.e. Vh1’s Flavor of Love). It is hard enough to find truth in the world, and the presence of noisome voices do not make it any easier. Let’s set boundaries as to how far we will let people, technology, and the government encroach upon our lives.

In the Bible, it says seek first the Kingdom of God. And the Kingdom of God is within each of us. However, how can we find the Kingdom on the inside with all the noise on the outside?

Make time to reflect, to build intimacy with the Creator and loved ones, with no distractions.

Respect the privacy of others.

Hold fast to the truth, and let go of the ruff.

Truth and Peace,
Steven M. DeVougas

Question of the Week: What are the ramifications of decreased privacy?

Can I die?$?

In the Washington Post today, there was an article that discussed Bush federal budget proposal that included a cut in the $255 Social Security funeral benefit. How did our priorities get so mixed up where you can’t afford to die?.

I don’t have the immediate answer right now but I am working on it. The funeral benefit program was started in 1939 and was designed to help families deal with funeral expenses. The amount was set at $255 in 1952 and, until 1981, the payment was made directly to funeral homes, they said.

You might wonder how in the world this affects you, right? Well, if you have family members whose only income is derived from Social Security and they pass away, then your family will have to work together to pay for the funeral. In 1999, the average cost of funerals was nearly $6,000 so if your family is low-income, then I am sure $6,000 is not readily available and you will have to bring it down a couple thousand dollars. So let’s say you can get a funeral for $2,000, your family will still be looking for any assistance it can. And if you could get $255 from Social Security, it won’t do much, but it will do something.

The article went on to say “Congressional aides said Jo Anne Barnhart, the Social Security Commissioner, had told them during a closed-door briefing on Monday that the $255 one-time death benefit has become an administrative burden, since it is not paid in all cases.” That’s like saying we shouldn’t give out tax refunds since not everyone gets their check. Whatever influence I can muster through my voice, I will speak up for the people whose concerns often fall on deaf ears. It amazes me how helping the poor is described as administrative burdens but tax cuts for the rich are touted as the remedy for everything from curing AIDS to cutting the deficit.
If you do nothing else, speak truth to power when you see injustice. Start a blog, email your Congressman, talk to your family, because it may not do much ($6,000)in and of itself, but it will do something ($255).

Stay up fam,

Brandon

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Today’s Irresponsible Cuts

The Senate bill to cut $40 billion dollars out of the budget takes a third of that $40 billion from students. I’m imagining that this is how the debate went:

BushCo & Republican Majority:
“We need some money. Like $40 billion. Where are we gonna get it?”

Democratic Minority & people with brains:
“Rich people? Corporate cronies that already give gifts? Why not cash in on those relationships in a way that benefits real people?

BushCo & Republican Majority:
“You guys are stupid. Let’s rob students. That will be much easier.”

Unchecked power in our three-headed political hydra leads to ridiculous results for the lives of the citizens. This example is no different. In the bill, students will be forced to pay higher interest rates on their already increasingly expensive student loans, and banks will get less government subsidies to provide these loans [at lower rates].

This is a HUGE deal. To make this more clear, lets put things in perspective.

- The majority of students in college are there with the help of some form of financial aid
- Student Loan debt can now be used as a reason to withold social security moneys

Now, let’s get stupid about this: American busines leaders are saying that our students are not able to compete on the international stage due to the shortcomings or our educational system (e.g. a speech from Bill Gates, linked here. The government [usually] listens to big busness and rich people, so who better to listen to than the richest man in the world who runs the biggest software company in the world? If No Child Left Behind wasn’t B.S., maybe we wouldn’t have this problem). As a result, the goverment should be doing everything in its power to strengthen its public education institutions on the primary, secondary, and collegiate levels. Well, how do you strengthen a college? Not by placing barriers to entry to it!!!! If I want something to be better, I don’t cut off it’s resources. What’s is the strongest resource of any college: it’s students.

Maybe I’m crazy because there are certain things I view as untochable as far as cuts in spending go:

- Education
- Health Care
- Legal Protection

Since I feel this way, I can’t be a fan of this budget bill, which cut other social programs that help the poor, including Medicaid and Welfare.

House Approves Patriot Act Extension

The House has approved extensions to the Patriot Act. The Patriot Act is not one of those pieces of legislation that is just there to make Congress look like they are “earning” their pay. It is actually the most sinister act of the Bush administration. I said it. To me, this is worse than the Iraq war, worse than G.W.’s vacations, worse than his Social Security plan, worse than his “war-time” tax cuts, worse than it all.

This is arguably the largest infringement on civil liberties since the Jim Crow laws of the late 1800s. My feelings for this are too many to enumerate here, but they can be summed up quite simply and concisely.

If a piece of legislation is positive and has merit, why would we set a sunset to provisions of that legislation? This works for both sides of the argument. If the Voting Rights Act of 1965* was legitimate and indicative of how the people and the government truly felt, why did it have an expiration date? Laws are not perishable goods – well, good ones should not be. The only reason you enact something temporarily is because you do not totally agree with or like it and are pandering to some other party, or that you know it is wrong. The Voting Rights Act is in the “pandering” bucket. The Patriot Act is in the “wrong” bucket.

* Please note that the Voting Rights Act of 1965 does have certain important provisions that will need to be extended/made permanent over the next few years. However, contrary to popular opinion, even in the relatively unlikely event that those specific provisions are not extended, people will not lose their right to vote as a result. I hate when people don’t do their homework. SuperSpades cannot be ignorant.

Debt Security

The New York Times has a story talking about how Student Debt is now Collectible by Social Security.

Since the overwhelming majority of college graduates leave school with both a diploma and debt, something must be done. This can possibly add to the litany of reasons for individuals to be more proactive in the acquisition of funds for education. This can be done in a few ways, three of which I will list here:

1. Work (part/full-time or work-study) during school
2. Actively and continuously pursue scholarship and grant monies
3. INVEST

B posted about how other government/corporate safety nets are disappearing like Michael Jackson’s melanin, and this is another example. The notion of future uncertainty can often inspire immediate action. If you don’t incur debt, you don’t have to repay debt. That way, maybe the little bit of Social Security or corporate sponsored pension that may/may not exist will not be vulnerable. Think of it as a G.W. style pre-emptive defensive maneuver.