Applying a value to Mr. Ball's 9 principals?

[Ken Diamond <kd@bmwinc.com>]

I believe that in the value of trying to represent the truth as
completely as possible. I will attempt to do that to Mr. Ball's
principals.

>    1. The program is nearly universal in coverage - 96 out of
>       100 jobs are covered.

It's through comparison to the last four jobs that the nature of the
Social Security system become apparent. The primary workers who have
been allowed to exclude themselves from the system are state and local
government workers. Because their contributions are 1)owned
(collectively but in proportion to contributions)and not redistributed
2)invested so that their retirement value includes earnings over their
working life, the return ratio they receive in retirement is completely
out of line with what they would have received in Social Security. I
have seen several city workers who earned at approximately the top level
of income subject to Social Security tax retire in the last few year in
their mid fifties(years). Their pensions were also in the mid-fifties
($1000's). Perhaps someone can tell me the net-present actuarial value
of such an annuity for these young retirees. 

This demonstrates how a funded system not burdened with redistribution
for our politically determined nationaly social welfare obligations
compares to those forced into participation in Social Security. Why
should some workers be exempted from the burden that most Americans
can't escape? Since most all government workers are well paid, this
group would offer almost no addition to the income transfers that occur
to those who had low-earnings. Worse yet, some of these workers will
receive SS benefits based on marginal work in covered employment which
means they not only avoid paying for redistribution, they become
beneficiaries of it.

Read the statements on this site from organizations representing these
workers and you will find them advocating continuation of the system's
redistributive nature along with their continued exclusion from sharing
in it's costs. 

>    2. Benefits are paid as an earned right, with eligibility
>       for benefits and the benefit rate based on an individual's
>       past earnings.
> 
>    3. Benefits are wage-related.

The connection between the entitlement to benefits and past earning's is
tenuous because of principle #5 below and because of familial benefits
that require no corresponding tax contributions. The fact that there is
some relationship to earnings is a meaningless statement. That would be
true if the correlation was 99% or 1%. What matters is the precise
nature of the relationship and that is obscured by the complexity of
combining earned and paid-for benefits with those given because social
welfare ideals.

>    4. The system is contributory and self-financed, with contributions
>       from wages specifically ear-marked for Social Security.

Saying a system is self-financed obscures that it is financed by
taxpayers and that they have extremely varied relationships to how the
system treats them. It's not the system that's important, it's the
people in it and how they fare.

>    5. The benefit formula is redistributive, paying lower-income
>       workers a higher percentage of their pre-retirement earnings
>       than higher income workers.
> 
>    6. Benefits are not means-tested.

The taxation of benefits can be thought of as means-testing. Even if
they are collected in relationship to the income tax, they are returned
to the trust fund. The actual effect being between the trust fund and
the otherwise entitled beneficiary, calling it mean-testing is
appropriate. 
 
>    7. Initial benefits are wage-indexed, reflecting improvements
>       in productivity and thus in the general standard of living.
> 
>    8. Once they begin, Social Security benefits are inflation
>       protected, with annual cost of living adjustments tied to
>       the Consumer Price Index.
> 
>    9. Participation in Social Security is compulsory.

This is in contradiction what he stated in his first his first
principle. It's compulsory for all but a priveliged minority who profits
greatly by their exclusion and will use whatever political power they
have to keep from sharing in the burden. In addition to them all those
receiving their income from sources that are not subject to Social
Security taxes are afforded an exclusion. Many call Social Security the
greatest social welfare program ever created. Why should anyone be
excluded from paying for it?