A Curmudgeon's Notebook — Thoughts on values, education, engineering, politics, civility, . . . . . . . by Don Nordeen

The Nine Guiding Principles of Social Security

2010 November 15
Last update:  2010 Nov 30.  Click on History for changes and updates.

    Because of the importance of "The Nine Guiding Principles of Social Security" described by Mr. Robert M. Ball to any discussion of changes in Social Security to address the solvency issue, I have posted Mr. Ball's paper in the continuation of this post.

    The principles originated in a report by six members of the 1994-96 Advisory Council for Social Security.  Mr. Robert M. Ball, who was Commissioner of the SSA from 1962 to 1973 with other positions in the SSA back to 1952, was one of the six members.  The Nine Guiding Principles of Social Security by Mr. Ball were subsequently published by Century Foundation Press in 1998. 

    The Social Security Administration references the document at Oral History Collection, Robert M. Ball - Curriculum Vitae, but does not publish the document.  The references from the SSA website are

• “Straight Talk About Social Security, with Thomas N. Bethel, New York, NY, Century Foundation Press, 1998.  (Note: The Nine Guiding Principles of Social Security, pp. 59-64 reprinted in Insuring the Essentials: Bob Ball on Social Security.  Also reprinted in Insuring the Essentials are pp. 1-5, 33-39 and 41-58 clearing up misunderstandings about financing and the disadvantages of privatization schemes.”  
• "Insuring the Essentials: Bob Ball on Social Security, the Century Foundation Press, New York, NY, 2000."

A slightly different 1996 version, which is apparently the original Nine Basic Principles, is available at the SSA webpage, A Strategy to Maintain Benefits and Strengthen America's Family Protection Plan, which begins near the end of the webpage.  Search for "Nine Basic Principles". 

Don Nordeen
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• Key Words:  Social Security, Robert M. Ball, Robert Ball
  

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Extend federal tax cuts for several years

2010 November 13
Last edit:  2011 Jan 29.  Click on History for changes and updates.

    Everyone needs more stability and predictability on tax issues.  The current gridlock in Congress and with the White House seems to be based on ideology, rather than good public policy.  Class warfare helps no one. 

    The continuation of this post discusses a few ideas to use the expiration of the tax cuts to address long-standing issues in the tax policy.

Don Nordeen
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• Key Words:  Federal budget, Federal income taxes, Federal business taxes, pubic policy, economy, Arthur Laffer, Dr. Christina Romer, Congressional Budget Office

Comments on Social Security Proposal by Debt Commission Co-chairs

2010 November 12
Last edit:  2010 Dec 12.  Click on History for changes and updates.

    The continuation of post contains the Co-Chairs' Proposal with comments added.  With their proposal, the Co-Chairs have provided a significant service toward the challenges of reducing the deficits and national debt.  Objections to any aspect of the proposal should include recommendations for a better way.  This post provides both. 

    The initial set of comments are now complete. Please review my proposal Permanent Solvency for Social Security for the smallest change in Social Security OASI to make it permanently solvent.  Please check later for additional comments on the Co-Chairs' Proposal.  The date of any further edits will be noted and the latest edit will be shown in the second line.  Thanks. 

    The Co-Chairs' proposal addresses the solvency which ensures there will be no abrupt change in benefits for future beneficiaries.  The proposal makes no adjustment in benefits for current retirees and those nearing retirement.

    The proposal also adds a number of safety-net and welfare provisions for poor retirees.  Such are beyond Social Security Old Age and Survivors Insurance (OASI) as we know it today. 

    The solvency and new safety-net and welfare provisions are paid for primarily by (1) increasing the retirement age for full benefits — in effect a reduction in benefits, (2) increasing the maximum taxable earnings subject to Social Security tax, and (3) greatly increasing progressivity of OASI benefits. 

    The result is that the burden is disportionately placed on younger participants — particularly those with higher incomes who will pay more and get less.  This is inconsistent with the statements by many in Congress that Congress must stop imposing the unfunded liabilities and other costs on our children and grandchilden.  The problem of under-funding of OASI applies to all participants and requires a shared sacrifice.  If applied to all, the individual sacrifice will be small.  However, on the long term the average reduction in benefits will have to be on the order of 25% to ensure solvency. 

    As a nation, we should be sensitive to the safety-net and welfare considerations, but other ways to ensure appropriate safety nets are available and should be used.

    The major changes are inconsistent with OASI as we know it today and described by The Nine Guiding Principles of Social Security.

    The appendices provide additional discussion and specific comments on the Co-Chairs' proposal. 

    Read the continuation of this post for a broader discussion of the Co-Chairs' proposal followed by four appendices that provide additional information and more comprehensive comments.  Please add your comments.

Don Nordeen
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• Key Words:  entitlement, Co-chairs, CoChairs, Debt Commission, National Commission on Fiscal Responsibility and Reform, OASI, public policy, entitlement, national debt, private accounts , Social Security Administration, Social Security, trust fund

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Thoughts on the Core Principle, "Limited Government"

2010 October 28
Click on History for changes and updates.

    Achieving the objective of limited government will require thinking "outside the box".  And it will likely not be easy.  The continuation of this post provides some thoughts on why the role of government is growing and what changes are likely required to reign in the expansion of government. 

    Please add your comments on this important subject. 

Don Nordeen
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• Key Words:  Constitution, separation of powers, checks and balances, limited government

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Permanent Solvency for Social Security

2010 October 27
Last update:  2011 Jan 02.  Click on History for changes and updates.

    Please refer to other posts on the subject of Social Security, particularly the post, Social Security Reform.  

    In dealing with national problems, one of the challenges is to ensure that all good ideas are reviewed.  Business experience is that good ideas are everywhere, not just the ideas from the people who are in control or are professionals on the subject matter.  Better solutions for each problem are likely in the in-boxes of the politicians and the designated experts.  Social Security is probably no different. 

    Most of the proposals for addressing the shortfall in Social Security OASI funding are "inside the box" such as raising Social Security OASI taxes, raising retirement age for full benefits, etc.  All work within the system as currently defined and reflected in the formulas for calculating the various aspects of Social Security OASI revenues and benefits inherently retains the current assumptions and premises.  The formulas which are based on current law may have unintended consequences that contribute to the shortfall in funding. 

    I have approached Social Security OASI Solvency from a different perspective.  I began with the question, "How can Social Security be made permanently solvent with the smallest possible change?"  This leads to several key factors:  (1) involve the largest possible number of participants, which means all;  (2) make the change over the longest possible period of time, which means 75 years for the actuarial projection;  (3) use the power of compounding to produce favorable results; and (4) make annual adjustments to ensure ongoing projected solvency over 75 years.

    The results are a unique and provide the smallest possible reduction in benefits to make Social Security permanently solvent.  The reduction in benefits for a 20-year retirement span is 9% which is less than the adjustments in other proposals.  I have sent this material to the chief actuary of the Social Security Administration (receipt acknowledged by SSA), National Commission on Fiscal Responsibility and Reform (Debt Commission), offices of some members of the Debt Commission, and others.  Unfortunately, the proposal may be in the "black holes" of established organizations.

        The continuation of this post describes the ideas in the proposal.  The first paragraph contains a link to the working paper which develops and quantifies the ideas. 

    Your thoughts are welcome.  Please add them as comments.  Thanks. 

Don Nordeen
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• Key Words:  Social Security Administration, Social Security, OASI, public policy, entitlement, national debt, private accounts, trust fund
  

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References on Birthright Citizenship

2010 September 09
Last revision:  2011 Jan 08.  Click on History for changes and updates.

    For many reasons, and perhaps primarily because of the new Arizona immigration law, immigration has become a major part of political debate.  Obviously, there are many facets to immigration.  This post considers only the birthright citizenship aspect. 

    Any sovereign nation must have the authority to control its borders and immigration, and do so.  The public policy should be based on the national interest and therefore is the responsibility of Congress. 

    Most Americans including this writer favor legal immigration.  But it must be established by the legislature and enforced by the executive branch. 

    The continuation of this post provides many references concerning birthright citizenship.  Separate posts may deal with the public policy issues. 

Don Nordeen
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• Key Words:  birthright citizenship, immigration, constitution, public policy

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Concerns and Questions Regarding the Proposed Michigan Fair Tax

2010 July 22
Click on History for changes and updates.

    The Michigan Fair Tax proposal has been available for several years.  A petition drive to place the proposal (amendment to Michigan's Constitution) on the ballot failed to get the required number of signatures in 2008. 

    My interest is in having more complete information available on the Michigan Fair Tax website for candidates and the public.  It is a tax idea that should be on the table, but there are many concerns and unanswered questions.  Those include the names of sponsors and donors on the MFT website. 

    Since an amendment to the Michigan Constitution is required to adopt the Michigan Fair Tax, the language in any proposed amendment is critical and must be very carefully evaluated for the law of unintended consequences.  Errors and unintended consequences could be locked and only corrected by further amendment to the Constitution.  Likely, good governance would be to include in the proposed Constitutional amendment only the minimum necessary to authorize the legislative process to work out the details. 

    The continuation of this post provides a description of my research. 

Don Nordeen
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• Key Words:  Economy, Michigan, Public Policy, tax, tax policy, competitiveness

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Senator Harkin, Is Health Care a Right?

2010 March 24
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    The continuation of this post is my Letter to the Editor of the Des Moines Register on the important subject of whether or not health care is a right. 

Don Nordeen
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• Key Words:  Current Affairs, Health Care Issues, Public Policy Issues, health care, human rights, legislation, rights

 

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Laws and Regulation of Financial Institutions

2010 March 09
Click on History for changes and updates.

    The continuation of this post is my letter to Professor Elizabeth Warren, chairman of the TARP Oversight Committee, concerning legislation to prevent a repeat of the financial collapse in 2008.  My conclusion is that clear requirements in the law are needed.  Laws that provide discretion to bureaus have demonstrated that they cannot consistently provide the protections intended. 

    (added 2011 Nov 16)  See The Next Crisis – Ballooning National Debt? concerning Canadian national debt.  Canada began a debt reduction effort in the late 1990s. 

Don Nordeen
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• Key Words:  Economy, Financial Systems Policy, National Economy, Public Policy Issues, real estate collapse, Wall Street, Main Street, banks, banking, banking regulation, laws, regulations, credit default swaps, mortgage-backed securities, securities ratings

 

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Michigan Towns could become Ghost Towns

2010 March 03
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    The continuation of this post provides a link to a USA Today about manufacturing towns becoming ghost towns.  The article provides a link to USA Today's job forecast for 2010. 

Don Nordeen
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• Key Words:  Automotive Industry, Economy, Michigan, Public Policy, legislative agenda, reform

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