US Social Security - Is President Bush A Robin Hood After All?

The Organization for Economic Cooperation and Development issued a report Monday that pointed out that even though the US proposals will yield a system that reaches the poor in a more redistributive way than many other countries, the average pay outs of the government pensions are rather low at around 51% of a retiree's previously earned salary as compared to over 70% in other OECD countries.

Only New Zealand and Ireland outperform the US in reaching its poorest nationals because they have simple flat-rate state pensions. The rather low proposed US pensions payouts will safeguard the wider economy from serious risks that economists have warned of for ages, yet it also shows just how serious the issue of funding pensions has become.

Some people are not quite convinced that all has been done to avert a disaster. IF nothing would be done, the system would prove insolvent by estimated dates between 2018 and 2040, and this would pose considerable dangers for the wider economy. "I believe that 2018 is in fact the time when the difficulties will begin [if nothing is done]. The reason is that the government securities held by the Social Security system are not any kind of actual asset", says George Reisman, an economist professor who issued an article on the subject for the Mises Institute, which subscribes to the Austrian Theory of Economics (www.mises.org)

He adds that government securities as such are not the only investments held by the country's institutional investor base, but pretty much a claim against the US Government to pay money that it does not possess. At a time that a negative gap comes into being, the US government will simply have to raise taxes taxes, borrow more from the public, or inflate the money supply to make ends meet.

"Probably, just as has been the case many times since the system was established seventy years ago, social security payroll taxes will be increased one or more times again between now and 2018, and that will provide the funds", says Reisman.

Yet President Bush opted for as few tax increases as possible. In what is described as a rather Democrat-style move, the US leader has chosen to recast the 70-year-old retirement program under a 'progressive indexation' design. This means that the lowest income earners are not becoming any worse off but that the people with middle and high incomes will suffer a severe setback in income soon after they retire. Talk of the system becoming an 'empty shell' for the better off is resultantly fashionable.

The plans make US Social Security is one of the least generous public pension systems in advanced countries, providing an employee on average earnings a pension after tax of 51 per cent of pre-retirement income, according to a comparative study by the Organisation for Economic Co-operation and Development issued this Monday.

The average employee in an advanced country can expect a government pension of 70 per cent of his or her after-tax earnings at retirement compared with 39 per cent for an equivalent US citizen.

The sustainability of pension systems is a large issue worldwide and countries around the globe are generally drawing up rather similar systems to cope putting the burden with the private sector and with the workers themselves. The OECD says there is more variety in the pay outs and distributions of the systems per country, with improving fiscal sustainability overshadowing the attention they devote to pension adequacy.

Angelique van Engelen is an international writer, specialing in content creation. If you are interested in tailor made articles, content, brochures, features or news, contact her via angeliqueve@contentclix.com

---

Wars, Oil and Trade Conflicts of the Human Race

Many in the World Media are quick to judge the... Read More

Dole, Kemp, Trusting People

Many in the peanut gallery of society are so quick... Read More

Netanyahu: Too Late For A Fight-back?

The resignation from cabinet yesterday, Sunday, by the Israeli minister... Read More

Great Melting Pot Indeed

An interesting conversation that I thought I must share with... Read More

Simple Middle East Peace Plan

I. WARS ARE BASIC CONFLICTS OVER LAND. II. BOUNDARIES. THE... Read More

Workmens Compensation Lawyers, Lets Raise Minimum Wage; No Lets Not, Say We Did, We Have

The debate to raise minimum wage in California is totally... Read More

Self Destruct Strategies in UAV Construction

All UAVs Need a Self Destruct BLOS DeviceWhat do you... Read More

Suicide Prevention in Prisons

Prison guards and corrections professionals are hard at work insuring... Read More

Government Backed Fraud in Academia

Contrary to the Hobbesian prediction of anarchy (freedom) and brutish... Read More

Why Dont We Listen To Entrepreneurs?

I just got done reading a series of articles dating... Read More

Intellectual Property: The ECJ Extends the Use of Trade Marks to Goods and Services

The European Court of Justice ("ECJ") ruled in Praktiker Bau-... Read More

Oil Pipelines and Rates of Flow

How much oil can travel through a pipeline? It depends... Read More

Problems in the Media

I am noticing an increasing and alarming rate to which... Read More

What Did You Do In The War Daddy?

This is the first of a series of four articles... Read More

Doorstops and Paperweights

Ted Stevens (R-Alaska), chairman of the Senate Commerce Committee, has... Read More

The Lemon Dance: Why Government Doesn?t Work

Former Senator, Daniel Moynihan, accurately summed up the situation when... Read More

Lawyers and Franchising

It is amazing how the Federal Trade Commission has destroyed... Read More

George Bush--A New World Order

When this president's father was in the Oval Office, he... Read More

Mental Masturbation of FTC Franchise Rule Report

Please read through this quick thought and discussion as if... Read More

Upcoming Palestinian Elections Might Put Extremists In Power

The Palestinian Fatah Movement is doing whatever it can to... Read More

North Korea and Diplomatic Solutions; Random Thoughts Part II

North Korea and diplomatic games; something has to give and... Read More

The US Government; Under Sarbaines Oxley

Sarbaines Oxley was probably the easiest way to destroy free... Read More

How Can We Elect Good Leaders?

Absolute power corrupts absolutely. Men desire power. Give power to... Read More

Delta

As you know Delta Airlines is close to bankruptcy. Their... Read More

The European Bank for the Retardation of Development

In typical bureaucratese, the pensive EBRD analyst ventures with the... Read More

Government Workers and Lawyers Revolving Door Rule Needed

We need more oversight and transparency in government. We need... Read More

Ifs and VATs of Taxation in Macedonia - Should VAT be Applied in Macedonia?

To be justified, taxes should satisfy a few conditions:Above all,... Read More

Mexico; Look What We Did

The number-one question people ask us is, "What possessed you... Read More

How Can You Have True Freedom if They Control Every Aspect of Your Life?

Freedom is in the eyes of the beholder. In Communist... Read More

Toll Ways Hurt The Flow of Transportation

The United States has never done a full study on... Read More

Nurturing Global Disequilibrium

This brings to our consciousness, issues concerning the ever rising... Read More

Reelect President Bush for the 2nd term: Evidence & Proofs

Why President Bush should have his second term? The arguments... Read More

Economics and Politics of Regional Droughts

It cities across America water is an issue, the flow... Read More