RE: Some Facts.

[ridgeway <riridgew@nyx.net>]

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What this debate needs is some published reference from
experts that people can go and read and learn some details.
If you want some expert published references, here are a 
few for, most should be available in local Big 
State U library:
    [1] _Retooling Social Security for the 21st Century_,
by C. Eugene Steuerle & Jon M. Bakija, Urban Institute
Press, 1994, Table A.9 on Lifetime Internal Rates of Return
(IRR's) by cohort, see also Table A.8 Lifetime Benefit-to-
Tax Ratios by cohort, Table A.7 Lifetime Net Transfers of
Lifetime Earned Income under OASI by cohort, Table 5.8
Lifetime Combined OASI and Medicare net Transfers (in
constant 1993 dollars) by cohort. The data analysis of this
reference is excellent and quantifies with hard numbers the
descriptions given in words below from references [2], [3],
and [4]. Steuerle & Bakija also provide a very good summary
of the net effect of the entire sweep over time of the
evolution of Social Security with this from page 112:
  ---------------start Steuerle quote------------------
   "Since the system is set up mainly on a 'pay-
   as-you-go' basis, benefit payments to retirees
   are dependent on tax revenues raised from
   the working population.  The growth in transfers
   going to those who have retired since 1940
   could be financed only by rapidly accelerating
   payroll tax rates on the working population.
   In effect, the system has been able to keep
   rates rising fast enough to provide more than
   a generous quid pro quo for almost all workers
   who have reached retirement age up to now.
   Those retiring in the future, however, will
   have contributed vast amounts over their
   lifetimes to support the transfers going   
   to those who retired before them.
   Meanwhile, the ratio of retirees to workers will
   increase dramatically.  As a result of these two
   factors, payroll taxes would have to rise
   astronomically if they were to continue
   to finance net subsidies for all participants,
   including high-income persons."
  -----------------end Steuerle quote-----------------
[2] From the Social Security Administration itself their
publication: _1994-1996 Advisory Council on Social
Security_, Vol I (Ed Gramlich, Chair), go read page 40, the
Section on on "Internal Rates of Return", and read the
section on "Money's Worth Ratios under the Alternative
Proposals" on pages 46-48.  For example, consider this on
"Contribution/Benefit Ratios" from page 12:
 ---------------start SS Council quote-----------------
   "The third area of concern for the Council
    arises from the fact that from now on many
    young workers and workers of future generations
    under present law will be paying over their
    working lifetimes employee and employer taxes
    that add to considerably more than the present
    value of their anticipated benefits. This is
    the inevitable result of a pay-as-you-go system
    such as the United States has had, and an aging    
    population."
 -----------------end SS Council quote------------------

3] _An Updated Money's-Worth Analysis of Social Security
Retirement Benefits_ by Robert J. Myers (former Chief 
Actuary of the Social Security Administration 1947-1970) 
and Bruce D. Schobel, in _Transactions_ of the
Society of Actuaries, Vol. 44, 1992, page 247.
>From this article we find the following:
 -----------------start Myers quote-------------------
  "...In summary, the vast majority of workers who
  retired in the past received and are receiving,
  benefits of far greater value than the taxes
  that they paid.  This situation will change in
  the future, especially if tax rates rise to a
  level sufficient to support the program over
  the long run.  Many workers who retire in the
  future will not get their money's worth when
  the combined employer-employee taxes are considered."
 ------------------end Myers quote-----------------------
Mr. Myers has appeared in this debate; regretfully, he
seems to want to play the role of philosopher rather
than discuss actuarial facts.

[4] _Social Security: Prospects for Real Reform_, Peter J.
Ferrara, CATO Institute, 1985, "Rates of Return Promised by
Social Security to Today's Young Workers", for example from
page 13, we find a very concise and most accurate
description of the net impact of Social Security:
 --------------start Ferrara quote----------------------
   "Those who retired in the early years of Social
   Security received high, above-market returns
   through the program on the limited social security
   taxes they paid during their working years.
   Although today's retirees are receiving less of
   a good deal, they are still enjoying above-market
   returns.  But those now entering the work force
   will receive unacceptably low, below-market returns,
   negative in many cases, even in the unlikely event
   that they receive all the program's currently   
   promised benefits."
 ---------------end Ferrara quote-----------------------

[5] _Social Security: A Critque of Radical Reform
Proposals_, Charles W. Meyer (former economist for the
Social Security Administration), 1987, Lexington Books,
Chapter 3 "Inter-Cohort and Intra-Cohort Redistribution
under Social Security".  This provides yet another source
of hard numbers to support the narrative summary
descriptions given above and the hard numbers given by the
more recent and more detailed calcuations of reference [1].

[6] _The Crisis in Social Security: Economic &
Political Origins_, by Carolyn L. Weaver, Duke Press, 1982.
This well written and well documented reference shows that
SS was known to be severly flawed, in the long run, way back
in the early 1980's.  Carolyn Weaver is recognized by
Republicans and Democrats as an expert in Social Security,
she served on the Gramlich commission mentioned in reference
[2] above. Here are some pearls of wisdom from Carolyn L.
Weaver in her book, Chapter 9, The Nature of Crisis, page
187-188.
---------------------start Weaver quote------------------
   "As discussed in Chapter 6, the implicit return on tax
payments is very high for people who retire early in the
life of a pay-as-you-go system and tends to decline as the
program matures. That is, benefit levels rise with economic
growth, but as workers spend an increasing share of their
time in covered employment, paying taxes over an increasing
proportion of their working lives, the return they earn on
taxes declines. Ultimately a 'steady state' is reached when
workers spend their entire working lives under the system.
At this time the return earned falls to its long-run
sustainable rate, which is equal to the growth rate of the
taxable wage base.  Whether or not Social Security provides
a reasonable return is therefore determined by: (1) the time
of retirement (the earlier in the life of the program, the
better); and (2) the rate of growth of the taxable wage base
relative to the market return on investments.
   The nature and relative magnitude of this form of income
redistribution is relatively noncontoversial --- at least
when discussing the history of the program.  According to
Robert Myers [former chief actuary for SSA], for example,
individuals retiring in the early decades in the life of
Social Security probably paid for no more than 10-20
percent of their benefits, relative to what they might
have been able to purchase privately, with the very first
married retirees 'purchasing' less than 1-2 percent of their
expected life-time benefits.  For recent retirees (1975),
this 'purchased' rate was estimated to have risen to 34
percent.  Reporting quite similar results, Colin Campbell
estimated that the cost-benefit ratio for married retirees
in the 1960s was still in the vicinity of 15-20 percent.  In
the most recent such study Freiden, Leimer, and Hoffman
utilized actual earnings histories of workers retiring
between 1967 and 1970, finding that the average real return
still exceeded 14 percent, substantially higher than after-
tax real rates available to the typical worker.  In the
words of Robert Ball, past commissioner of Social Security,
the program has been a 'trememdous bargain.'
   But what about the future?  How can young workers expect
to fare?  Given population and labor-force growth rates near
zero and near universal coverage, the sustainable rate of
return under Social Security is expected to be in the
vicinity of only 1-2 percent, the rate of productivity
growth.  Any further deterioration in economic or
demographic trends, of course, would lead to an ever lower
rate.  To the extent this is exceeded by the rate of
interest in the economy, as determined by the productivity
of investment, young workers are made worse off than if they
had invested their tax payments in private capital markets.
Only if workers were able to count on an average return at
least equivalent to that privately available and count on a
continuation of the system,could the system be considered
intergenerationally 'fair'. In this case the high early
returns would not have been earned at the expense of later,
possibly unborn generations. Myers' estimate, however, if
the employee is assumed to pay the full employer-employee
tax, the average young worker today will not get his money's
worth from Social Security."
----------------------end Weaver quote---------------------

[7] "Intergenerational Redistribution Under Social Security,"
_Humanomics_, Vol.14, No. 1, January 1998 by University
of Delware Economist William Harris.  He argues that nothing 
can save 40-something Baby Boomers from getting a raw deal 
at retirement because they're mired at the bottom of a massive 
pyramid or Ponzi scheme.
   see  http://www.dejanews.com/getdoc.xp?AN=412496183
for more details from the poster who put on usenet what looks 
like a news wire service summary.
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These references from published experts show conclusively
that Social Security is a government enforced
intergenerational Ponzi Scheme.  If someone claims SS is not
a Ponzi scheme, ask for proof, ask for expert published data
that calculates such things as the Lifetime-Internal-Rates-
of-Return over generations (i.e. cohorts) entering into SS,
ask for the "Contribution/Benefits Ratios" as discussed in
by the Advisory Council on Social Security quoted above (the
Gramlich Commission report) --- you read, you learn, you ask
questions, then you will see what a scam SS (and Medicare)
has become.  It's just plain common sense, there is no such 
thing as a free lunch --- the politicians bribed the 
electorate with SS (and Medicare) benefits in excess of 
what that generation of voters would pay into the systems; 
however, sadly the bill will come due on later generations 
--- to be paid for by those who were not yet born when all 
the goodies were being handed out.  What one generation 
does to itself is their business, but selling future 
generations into indentured servitude is just plain wrong!!!!
The long-term solution, is, in brief, to means test existing 
Social Security, reduce the COLAs (Cost of Living Adjustments),
increase the retirement age to mirror the increased life
expentancy, etc. and privatize SS for future generations
entering the workforce by using Roth IRAs (Individual
Retirement Accounts --- that politicans can NOT get to!!!).
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