Democrats & Liberals: Archives

Why does President Bush say this Social Security scheme is his gift to my generation? If this is his gift to me, why is he using my credit card?

A couple of trillion dollar charge on our credit card, why can’t he use his own generations credit card to pay for his gift to us?

Think if we could do our gift shopping like he does, everybody I know would get the best of everything (along with the bill).

Why does it need to be individual accounts?

Why can’t it be one big pool account or fund?

Wouldn’t one large and broad fund eliminate all the brokers’ fees and still accomplish the goal?

Oh, I get it now, that’s why it must be individual accounts, windfall to the brokers. Smart.

Wisevil, if it were one large fund, the government would still be on the hook to guarantee the fund’s adequacy for retiree, disabled, and survivor benefits. By making them individual, each person is on their own if they end up broke or short by 10 years of adequate funds to stave off poverty at the end of their life.

Social Security was a communist plan to take over American don’t you know like Medicare and Medicaid. Bush is committed to ending these last vestiges of cold war victories for the Russians and truly return America to a dog eat dog, sink or swim, make riches or beg from religious charities American capitialism.

David:
“Social Security was a communist plan to take over American don’t you know like Medicare and Medicaid. Bush is committed to ending these last vestiges of cold war victories for the Russians and truly return America to a dog eat dog, sink or swim, make riches or beg from religious charities American capitialism.”

Doesn’t such a sarcastic depiction undermine persuasion, debate, and compromise? ;^)

The timing of this is particularly interesting. People retiring at 65 yrs old this year will have been born in 1940 — right before World War II, and right at the end of the Great Depression. So they won’t remember what happened to all those “conservative” stock/bond investments in the late 1920s….

Wall Street pays off better than the public Social Security fund. That’s a given. But it also carries risks. Bush wants the best of both worlds. I suspect we’ll end up with the worst of both — risk without reward.

Questions for both sides…

For the left:
How is it a “scam” if the government doesn’t see the money? If I understand correctly, the accounts and investments are voluntary and they only take a small percentage.

For the right:
If the whole purpose of this is to let the people keep their money so the government can’t get their mitts on it, why are we making people pay in the first place? Why spend money setting all this up, when you can just lower the payments and benefits for those who are still paying?

I’m asking out of pure inquisitiveness. I’m 39 days into my new years resolution not to argue on the Internet anymore… Still been reading alot on WB, though.

It’s funny. Some Bush supporters believe Bush has shown leadership by ‘grabbing the third rail’ of politics, Social Security, but it’s more like Bush has pissed on that third rail. I don’t know when I’ve ever seen a more foolish, half-baked, ill-conceived, dunder-headed initiative.

Unfortunately for the Dems, the Social Security issue seems sure to die an ignominious death. Several Republican senators have already signaled they will not go along with it, so the Bush Social Security fiasco will disappear in Senate Committee, if not sooner.

The Dems can only pray it makes it to the floor of the House for a vote.

Several right-wing columnists have accused Dems of ‘not offering an alternative.’ Hyuk. Oh, the Dems have an alternative, all right. It’s called the midterm elections of 2006.

The real issues for effectively addressing Social Security remain the same: cut the annual & long-term deficits, increase employment, and in the very long term, address the demographic problem through immigration.

I don’t think most in America want pure capitalism. It is cruel to those who aren’t rich. Capitalism needs to be softened by programs like Social Security, Medicare and Medicaid.

Pure Capitalism will never win over the hearts and minds of those in other countries. I guess that doesn’t matter if you have the most powerful Military complex in the world.

I guess it doesn’t matter if we, the people, don’t like capitalism either if they can win the vote every four years by “hook or crook”.

A Bushman, Joshua Bolten, the budget director, explained on Cspan today, how much more income we as a country will get in the next 10 years because of the tax cuts.

Bolten acknowledged that changing the wage indexing to price indexing for Social Security will cut benefits down to 22% from 40 some per cent of wages over time.

Let’s see, we as a country are going to have oodles of income, but we as elderly people who have paid in thousands of dollars into our FICA Social Security account year after year for up to 49 years, get our benefits cut. They say it will take up too much of the budget. Is there something wrong with this picture?

Raising taxes in 2052 would take care of the probem, but they say that would hurt the economy. I can see that less taxes on business would allow business to be more competetive. But why would taxing those who are raking in the big bucks from a tax free business affect the profits of our economy? And do we care if it hurts the economy if it is going to hurt us? Dog eat dog capitalism, remember?

The big thing they use against the baby boomers is that “according to projections” we are going to live longer. That may be debatable and may be a scam used to create the needed “crisis” to change Social Security. They say because we will live longer we will use more of the Social Security money so we have to have our benefits cut.

I typed the following up to get a general idea of how many more will not be able to draw Social Security the more the age of retirement is raised. These may not be exact but very close and roughly show how many will die before drawing much Social Security and other data:

Out of 100 people born including male, female, blacks and whites, 82 are still alive at age 62-63. 62 is the youngest you can retire, but your benefits are reduced.

Of the 82 who are still alive at 62-63:
77 are still alive at age 66-67 (5 less of those 82 people will draw Social Security if they wait until 67 to retire ) 67 is the age you will be able to retire soon at full benefits.

70 are still alive at age 70-71 (12 less of those 82 people will draw Social Security if they wait until 70 to retire ) You get extra money for benefits if you work until you are 70.

59 are still alive at age 75-76 (23 of those 82 people will die between 62 and 75-76 years of age.)

44 are still alive at age 80-81 (38 of those 82 people will die between 62 and 80-81 years of age.)

32 are still alive at age 83-84 (50 of those 82 people will die between 62 and 83-84 years of age.)

14 are still alive at age 90-91 (68 of those 82 people will die between 62 and 90-91 years of age.)

8 are still alive at age 93-94 (74 of those 82 people will die between 62 and 93-94 years of age.)

1 is still alive at age 99-100 (81 of those 82 people will die between 62 and 99-100 years of age.)

These figures are rounded off. They are from the National Vital Statistics Reports by the U.S Department of Health and Human Services Nov. 4, 2004. pg 10.

I don’t trust these figures even though they come from the government. Social Security was told to push privatization. So these figures may have been skewed. I don’t trust the projections either.

I have noticed in real life people are dying younger. Especially those born after 1930. Not just my family and friends, but also in the obituaries. We have all been exposed to more radiation, microwaves, chemicals and a dangerous sun and many have smoked.

The following site will give you the answers to almost any question you have about Social Security. It needs to be updated. At this time, there arre enough paying in until 2020 and then we will start using the surplus and it will last until 2052 “according to projections”. Then we will still have 73-75% enough being paid in to take care of the retires then. That is without any changes. It wouldn’t take much to pay in enough to get that up to 100% in over 40 years:

http://www.tcf.org/Publications/RetirementSecurity/SocialSecurityBasicsRev2005.pdf

For those who don’t know, the baby boomers were born 1946-1964. They will enter the Social Security system starting in 2008. I suppose the last baby boomers will enter the Social Security system in 2024. That is eighteen years of the baby boomers going in. There will be 34 of the 82 people who went into the Social Security system living eighteen years later.

Bush says America will be a wonderful place to do business. That may be true, but it may be an grim place to live for the elderly. Maybe some of us can go overseas and get a job in China being a nanny or something.

And to think our ancestors got really upset when they raised the tax on tea.

The other impinging issue is health care. With 40 plus million Americans without adquate health insurance, and growing as health care costs continue to rise faster than inflation, most of these will not be able to afford the life prolonging health care that will be needed as they approach and enter retirement years.

I am not a trained economician, so, if I can contemplate this factor into the SS equation, I am sure the OMB and Bush Administration can and has too! Which raises the question, why is there such a glaring omission of such a huge SS cost reducing factor by the Administration and OMB? In fact, why isn’t the Congressional Budget Office factoring this in?

How about the Medicaid cuts in the President’s 2006 budget? And the inevitable bankrupting of Medicare which is far more assuredly on the nearer horizon than any deficits for SS?

There is one huge, huge, con job going on here, and I am amazed that more economists are not raising hell over these issues.

David,
A few bonds people are starting to make some noise, re the recent quote I cited, appearances on broadcasts, etc.

There is, to use one of the most popular phrases from 2004, a ‘tipping point.’ Somewhere in the fog ahead- no one knows just where- we may find ourselves “subsumed in a vortex of criticality.” It may be close, it may be far ahead, but that point is out there. If deficit spending continues, and the accumulated debt continues to grow, that point could be reached. Whether the Fed wants it or not, the spectre of excessive debt will force long bond interest rates to increase. Foreign investors will demand higher rates if they’re to continue buying US debt.

It’s a mystery. How could the Republican Congress & the Bush Administration run this risk? It’s not a secret. Well, regardless of the reason, it most certainly is appallingly irresponsible. Why keep driving in the direction of the ‘tipping point’?

TheTraveler - my point exactly. We should get rid of the system. Now is the best time to start phasing it out, starting with reduced benefits for the rich and eventually killing it off entirely. We’ll be careful not to screw over poor people who have already paid into the system, though.

Ann, if you’re worried about the accuracy of the statistics you have, you should use the figures from the CDC that I found for you earlier. I don’t understand why you continue on insisting that people are dying younger than the statistics indicate. Do you live in the city? Are there a lot of minorities around? There are plenty of reasons why people in your town/city/state might not be living up to the national average.

On the other hand, maybe there IS a cover-up! Maybe the Chimp-in-Chief is holding the CDC at gunpoint and threatening to pull their funding if they don’t lie in their reports! Dobson, Gingrich, Ashcroft, Enron, and Nixon’s ghost are probably all in on it. Darned Right-Wing-Conspiracy people.

Ghandi,

On the other hand, maybe there IS a cover-up! Maybe the Chimp-in-Chief is holding the CDC at gunpoint and threatening to pull their funding if they don’t lie in their reports! Dobson, Gingrich, Ashcroft, Enron, and Nixon’s ghost are probably all in on it. Darned Right-Wing-Conspiracy people.

Sarcasm is more effective when there have not been multiple instances of exactly what you are implying is ridiculous.

The union of concerned scientists published reports of multiple instances where the bush administration has distorted science for politial ends, and based the filling of scientific positions on political reliability. In reference to your specific example, the CDC was forced to change statistics on condom effectiveness, in order to support the administration’s abstinence only policy. (for the whole report, see here )

Now my point is not to say that the CDC data on population have been politicized, but the fundamental philosophy of the Bush administration seems to be to push policy, then find “facts” to back it up. When did the government become an advertising agency to convice people to buy conservative policies, rather than a representative organization interested in the truth?

If Bush is willing to put patently false information on the CDC website to push abstinence, why not altered mortality figures to push social security privatization, which is much more important to him? The administration suffers from a fundamental lack of credibility.

Unfortunately for the Dems, the Social Security issue seems sure to die an ignominious death.

phx8, do you know what you’re suggesting? Hillary Health Care Redux! As tempting a scenario that could very well come to pass, the alternative is just as appealing.

Bush is feeling very confident and cocky right now in his ‘no bad news’ bubble. The last person to bring him unwanted truth (Powell), was shown the door - twice! The Democrats crowing over a Social Security non-starter, will set a bad precedent and expose him as mortal.

If the textbook deception failed on Social Security, has the blinders finally been removed from the eyes of the American people?

Finally, some more of you are waking up to what I (and some others )figured out several years ago about all the funny money types and what they were up to.

If some smart moderate type Dems, Repubs, and mod. Non-partisans don’t get together soon to straighten out huge trade deficits,letting Asian central banks buy up our country while exporting jobs but just about nothing else. etc. We may just have to impeach this delusional idiot Emperor and his crowd. For sure, we must find key ways to go against his crowd, the corp benefactors, and funny moneys crowd —intent on sending the country to its tipping point for their own self-interests.

____________________
Govt. benefits usage must be directed to 20 years here as citizens and those who paid in for 20 years. And, Govt. benefits usage such as Medicare, etc. for any longtime citizens must be means-tested.
_____________________

$9B lost in accting errors in Iraq!!!
They built a billion dollar Embassy in Iraq and a number of bases there.
_____________________
Also, agree that want organic food, clean water supplies, and country of origin listed on all foods.

Bert,
One can devoutly hope that the blinders have been
removed from the eyes of the American people!
If not, perhaps another year in Bushworld will do
the trick. Oh, the monumental gall, cant, and
hypocracy of this crowd of elitists and plutocrats! Don’t even mention Gonzales, the
torturer-in-chief.

Bert,
“Hillary Health Care Redux.” Very apt comparison. I don’t know how much opportunity Dems will have to crow, tho. Republican congressman won’t touch this thing with ten-foot pole. It will disappear soon in a House committee, I suspect.

Really, I can’t believe the Bush administration’s sheer ineptitude on this Social Security issue. It’s all goal, an idea without a plan… or rather, a shabby, seemingly rushed, & ill-considered plan. Are these people for real? I just don’t understand why his followers consider Bush a great leader. You’d think heads would roll over this.

The overall strategy for pushing the Social Security privatization is similar to the one for whipping up support to invade Iraq. Why are people noticing the sheer foolishness of the Bush Social Security Plan?

For starters, Americans are not known for their knowledge of geography or history. Iraq is far away, and unless a person is unfortunate enough to have to go there, or paid well enough to go there, Iraq just doesn’t matter. For most Americans, there is no real cost, no burden, no sacrifice. It involves numbers like $100 billion, numbers no one can really grasp. It’s a philosophical dispute between chicken hawks and liberals; slap a ‘support the troops’ sticker on the SUV, you’ve done your part…

Social Security, however, is a pocketbook issue. It’s more tangible than a war in a faraway place. While most people don’t understand how Social Security works, they do know they’ve paid into it, & they want it…

You all are so much more entertaining when you are out of power.

There are now five states that are not under Social Security and have their own plans: California, Nevada, Maine, Ohio, and Colorado. In the Colorado plan they now have over $14 billion in assets. Local govern-ment entities such as police and fire depart-ments have long handled their own retirement plans.

Why is “privatization” the best alternative for Social Security reform?

There are three main reasons why partial privatization is the best alternative to the failing government-funded system.

1)Market-based investment returns have historically been much higher than those of Social Security, which means that retirees can enjoy greater benefits in their golden years.

2)Partial Privatization does not rely entirely on an unstable “pay-as-you-go” pyramid scheme where current taxpayers subsidize current retirees rather than save for their own retirements. Partial Privatization instead allows workers to own and control his own retirement savings account.

3)Increased private investment and savings will provide the economy with new sources of capital, which fuels growth and job creation.

How do we know privatization works?

Countries such as Chile, Great Britain, Australia, and even Sweden have made the change to either partially or totally privatized pension programs. Results have met or exceeded expectations, with retirees under these plans seeing greatly increased benefits and earnings. In the US, three counties in Texas opted out of the SS system in 1981 (see link below) and designed their own privatized pension plan. County employees now enjoy retirement benefits three times greater than what Social Security would have paid. Private retirement savings plans such as IRAs or 401(k) and 403(b) plans routinely outperform Social Security.

http://www.cnsnews.com/ViewNation.asp?Page=\Nation\archive\200502\NAT20050203a.html

Kirk, I don’t know where you get your info, but you should start looking at the source more critically. I know for a fact that Californians pay into and receive Social Security benefits, and I suspect they do in Nevada, Maine, Ohio, and Colorado too.

Market-based investment returns have historically been much higher than those of Social Security

Over what period of time? Tell me Kirk, do you have any idea why President Bush said, “We will make sure there are good options to protect your investments from sudden market swings on the eve of your retirement.”

And I’d love to hear a conservative’s thoughts on how that will be accomplished - and what it would cost.

Partial Privatization instead allows workers to own and control his own retirement savings account.

Since all the Republicans are “outing” themselves here, why don’t you also just come out and say you’re another conservative wanting to dismantle Social Security?

Increased private investment and savings will provide the economy with new sources of capital, which fuels growth and job creation.

Where have I heard that before… Oh, yeah! That was the rationale for the trickle-down theory of tax cuts for the rich. How come that never worked as advertized?

Countries such as… Britain… made the change to either partially or totally privatized pension programs. Results have met or exceeded expectations…

…In some alternate time-space continuum, maybe. Here’s an interesting article on Britain’s partial privatization failure - or the “bloody mess” as they call it,

…at least 75 percent of those with private investment accounts will not have enough savings to provide “adequate pensions”.

Many Britons were sold badly designed retirement plans on false pretenses. Companies guilty of “mis-selling” were eventually forced to pay about $20 billion in compensation. Fraud aside, the fees paid to financial managers have been a major problem: “Reductions in yield resulting from providers’ charges,” the Pensions Commission says, “can absorb 20-30 percent of an individual’s pension savings.”

So, no one on the right wants to defend and promote the “risk-free” aspects of Bush’s private investment scam? It looks like there’s consensus from the left that the whole idea of high-gain/no-risk is nonsense. And from the right, that Social Security should have a stake driven through its heart.

high-gain/no-risk is nonsense

To elaborate on this a little bit: Bush said something to the effect that people who suffer losses near retirement will be protected. This is inevitably going to reduce returns, one way or another.

If this isn’t obvious, let’s suppose that there is a risky investment that is going for a $1 a share. Then some alleged dogooder, let’s call him George, comes along and says that he doesn’t want people to lose their shirt, so he’ll guarantee that investors will get at least $1 one year from now. So what happens? The price goes up. The people who were already holding the investment (maybe George’s friends) make a quick windfall, but the people who buy it afterwards are getting no benefit whatsoever from the “guarantee”.

AP - nice response to Kirk.
Woody - you made a very good point. It really is the investment holders who stand to benefit from this scheme.
Reminds me of the old vaudeville joke where the punchline goes: Sure, you lost your money, but the broker made his commission and the house got its cut - so two out of three ain’t bad!

Those who want to defend Bush’s privitization scheme should ask themselves why he has had to try so hard to sell it. Let’s face it, things that are Good sell themselves. Lemons on the other hand, require an extraodinary amount of salesmanship and outright lying - and it’s glaringly obvious that with this scheme, we’ve been getting plenty of both.

No, Social Security needs to be fixed, not done away with.

One way to do this would be to end the free ride given to those who earn more than $90,000 per year. There is no logic behind the reason that people who earn $900,000 per year only have to pay 1/10th the percentage that people earning under $90,000 do.

On the other end of this equation is the fact that there also is no logical reason that people who honestly don’t need Social Security benefits still get to collect them.
I realize that some will start shouting that if those people paid into it then they have the right to get something back out, but that is like saying that because they pay taxes to keep the fire department going, they should demand that a truck come out once a month to spray down their property.

Social Security from its very beginning was a tax so that America could avoid the scary and downright Dickensian situation that was occuring to old folks in England during the Depression. We need it now as much as we ever did.
Sick old people shouldn’t have to live in misery. Children must be taken care of in the tragic event that they lose their parents.
And people with disabilities should be allowed to live a life of dignity.
Isn’t that idea something we should be want to preserve - Left, Right, and Center?

Super rich people will argue that “I paid into the system, so I should collect from it,” but we all know that makes no sense.

I’ve had some misgivings about investments into the stockmarkets. I’ve done the numbers myself and unless your pushing large quantities of money around nothing gets accomplished other then the middle man achieving his “fee”. Even though I consider myself right-of most of the people who post here I have to say that I don’t like the idea of investment accounts. Now don’t get me wrong I think that Social Security is a dead end way of providing for the poor, old and disabled and needs reform sooner rather then later or we stand to loose what we have left of those very benefits. what does this mean exactly? Well I believe given my knowledge of the system, finances and managing the trusts of 3 different dearly departed family members I still can’t see how to fix the current problem that social security faces. Besides instituting a greater federal tax, and effectively just increasing the ammount of fraud that takes place, nothing will save the current system from the growth rate that is still rising. You can’t take sides in this matter and say “bad bush” or “good social security” because no plan will have the effectiveness of social security except a higher priced version of it where even more is taken out of the average worker’s pay and they recieve their benefits even later in life. In order to reform social security (which needs to be done) we must first redefine the tax code and make it fair to everyone from businesses, businessmen, and the rich to the disabled, the poor, and the retired. Recycling wealth is a poor way to make up for the current economic cycle. Yes under the current system there are poor and there are rich, but there should still be poor people and rich people in a new system because that is the mark of a free-willed and open society.

I’m going to say a few things most of you will think of as heartless and cruel but I only say this because I’ve seen and experienced the side affects with my own eyes.

Those who have retired should not hope, and ultimately should not depend, on collecting money from those who are working. I saw my grandfather and currently my father cut spending and live life with the bare minimum of niceties in order to enjoy their retired years, but also investing their own money in banks and friend’s companies so any investment they made they could blame on their selves if they lost anything.

Job training programs should replace a massive percentage of the wealth distributed by Social Security. The New Deal and it’s successors had one thing right and that was the introduction of new jobs through job training programs, and government worker programs. The creation and existance of large governmental organizations can be limited by a simple regime of “watching where we put our feet as we step forward”.

These are just two suggestions that I have, but the main point I wanted to make was that people should stop criticizing an administration purely for deciding to do something that is long over due and instead let your congressman or senator know how you think it could be done better. The best way that this system will be fixed, helped along or reformed is through the average American not the partisan whinning and bickering over who is right and who’s pocket Bush Jr. “might” be in.

AP,

Kirk, I don’t know where you get your info, but you should start looking at the source more critically. I know for a fact that Californians pay into and receive Social Security benefits, and I suspect they do in Nevada, Maine, Ohio, and Colorado too.

Sorry, I cut off part of the quote. It should have said that for State Government and School District Employees there are five states….

However, I now find that there are actually 14 states not 5. See the information below from the Coalition to Preserve Retirement Security. CPRS is a coalition of organizations fighting to prevent state, local and school district employees being forced to participate in Social Security.

Fourteen states cover substantial numbers of their public employees under independent plans which would be jeopardized by mandatory Social Security: Texas, Louisiana, Missouri, California, Ohio, Colorado, Illinois, Massachusetts, Kentucky, Minnesota, Nevada, Connecticut, Maine and Alaska. From 20 percent to 100 percent of the public employees in each of these states are not covered by Social Security. Firefighters and police officers in nearly every state are covered by independent plans rather than Social Security. Nationwide, about 5 million public employees are covered by state or local plans in lieu of Social Security.

The link below will take you to their membership page that covers member organizations from Alaska to Florida.

http://www.retirementsecurity.org/public/department25.cfm

Over what period of time?

Over most any period of five years or more that you want to look at. Since 1928 stocks have consistently outperformed treasuries. The performance of stock compared to treasuries is greater over extended periods. However, even on 1-year periods stock have beaten treasuries 49 times (62%) out of the 79 one year periods returning an 11.51% growth compared to 5.14%.

5-year periods stocks outperformed treasuries 60 out of 73 times or 82% of the time.

7-year periods stocks outperformed treasuries 64 out of 71 times or 90% of the time

10-year periods stocks outperformed treasuries 64 out of 68 times or 94% of the time

12-year periods stocks outperformed treasuries 64 out of 66 times or 97% of the time

15-year periods stocks outperformed treasuries 63 out of 63 times or 100% of the time

You can verify my numbers if you want to. The data is available at the following link.

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Since all the Republicans are “outing” themselves here, why don’t you also just come out and say you’re another conservative wanting to dismantle Social Security?

I am a conservative but I don’t want to dismantle SS. I want to see people get a higher rate of return from their FICA Taxes. Why are you against people getting a higher rate of return? Why do you want people to have a lower standard of living in retirement than they could have?

Where have I heard that before… Oh, yeah! That was the rationale for the trickle-down theory of tax cuts for the rich. How come that never worked as advertized?

If you will look at Bureau of Economic Analysis and Bureau of Labor Statistics data, you will see that manufacturing in the US peaked in September 2000 and unemployment hit its low in Oct 2000. One full quarter before Bush took office. The Clinton Tax Increase had put the brakes on the economy. The economy is now rebounding thanks to the Bush Tax Cuts.

So, no one on the right wants to defend and promote the “risk-free” aspects of Bush’s private investment scam?

You know, I have read the SOU Address and for the life of me I cannot find anywhere the “risk-free” statement. However, I will definitely defend the partial privatization plans. It is ridiculous to bump along with rates of return that barely beat inflation when we could have much more. Why are you so against America? Don’t you think we can come up with a plan that is better than the current system. Many current state, local and school district employees do. They have formed a coalition to fight being forced into a system headed for bankruptcy.

Woody,

Bush said something to the effect that people who suffer losses near retirement will be protected.

No, that is not what he said was “We’ll make sure there are good options to protect your investments from sudden market swings on the eve of your retirement.” That means moving investments from stock funds to bond funds as you near retirement, just as any good financial planner will tell you to do with your IRA or 401K. In no way does it even hint at guaranteeing investments.

Adrienne,

Those who want to defend Bush’s privatization scheme should ask themselves why he has had to try so hard to sell it.

That is a very good question considering the fact that Democratic Senators Harry Reid, Bob Kerry, Daniel Patrick Moynahan, John Breaux, Chuck Robb, and Democratic Representative Charlie Stenholm all supported privatization in the recent past. Even Bill Clinton considered putting SS money into the market. So, why all the screaming now? Is it because the left hates Bush so much that they are willing to deprive US citizens an opportunity at a higher standard of living in retirement just to keep him from claiming the issue? Why do those on the left let politics stand in the way of moving the country forward?

Kirk, why, despite repeated attempts to correct such misconeption, do you insist on incorrectly defining the current SS program as a retirement program. It must be because if you can convince others that SS is just a retirement investment, you can convince them they are getting a raw deal.

The fact is, the SS program is a bit of a retirement system, but, so, so much more. It is an insurance program. Show me how a person making 10$ an hour can save enough even in great stock market years, in a 10 year period to provide for his wife and children until they graduate if the wage earner dies or is disabled?

And what of the low wage earner who puts away in a retirement program either PSA or 401K and retires and ends up living 30 years after retirement? After those stock market earnings on small principle inputs are reduced by inflation over a lifetime of work, a low wage earner could outlive his/her savings plus earnings. Not so under the current SS program because it insures each person against outliving their contributions.

A poll this week shows the American people ain’t buying the President’s PSA’s, even if it is on route to bankruptcy 4 decades from now. Give it up, the American people have caught on. The only real beneficiaries of the PSA’s will be the wealthy who get out of underwriting other American’s insurance against poverty and the brokerage and investment firms who stand to make a killing in fees on such a huge influx of new investments, even if only 20% of Americans elect to engage in the PSA’s.

Americans may have been slow about Bush’s foreign policy, but, they are pretty quick to catch on when they see folks coming after their wallets and the survivor benefits SS offers, which PSA’s won’t.

If you will look at Bureau of Economic Analysis and Bureau of Labor Statistics data, you will see that manufacturing in the US peaked in September 2000 and unemployment hit its low in Oct 2000. One full quarter before Bush took office. The Clinton Tax Increase had put the brakes on the economy. The economy is now rebounding thanks to the Bush Tax Cuts.

So let me get this straight: Clinton passes tax increases in the early 90’s. In 2000, there is unprecedented prosperity. (The DJIA more than tripled during his administration.) By some twisted reasoning, this means that Clinton “put the brakes on the economy”. You aren’t just drinking the GOP Kool Aid, you’re injecting it into your veins!

(Now don’t turn around and argue that the GOP Congress gets for the boom of the 90’s. You can’t simultaneously blame Clinton for a poor economy and credit the GOP for a good one. Unless you are completely indifferent to logic…)

David,

Why, despite repeated attempts to correct such misconeption, do you insist on incorrectly stating that the insurance aspect of SS would be killed by individual accounts? It must be that if you can scare people enough they will not worry about the returns they are not getting. As the president has stated “…by starting personal retirement accounts gradually, and raising the yearly limits on contributions over time, eventually permitting all workers to set aside four percentage points of their payroll taxes in their accounts.”

That is FOUR PERCENT of FICA Taxes. Not 1005, not 50% not even 5%, but 4%. That means the other 8.4% of FICA Taxes remain to fund the insurance aspect of SS.

All you have to do is look at the SS Board of Trustees Report to see that SS is much more than an insurance policy as you claim.

Fourty-six million Amrican receive Social Security benefits, including 32 million retirees, 7 million survivors, and 7 million disabled workers.

That is less than one third that are using the insurance for survivors or disabled workers. There are several things that can affect the survivor benefits paid to your spouse or dependent children.

If your spouse is caring for a dependent child under the age of 16 they can collect 75% of your benefit.

If you have unmarried children under the age of 18 they can collect 75% of your benefit.

However, there is a maximum family benefit of between 150% and 180% of your benefit.

If your spouse or child works $1 dollar of benefits are deducted for every $2 dollars they earn.

If your spouse remarries before age 60 they loose all survivor benefits.

Using the online survivor benefit calculator, I calculated expected survivor benefits for the spouse of a worker 45 years old earning $40,000 per year with dependent children under 16 years old. If that worker dies their survivors would receive the following.
Spouse $895 per month
Dependent child $895.00 per month
Family Max $2217.20 per month

If that worker’s dependent child is say 13 when the worker dies, the spouse and dependent child would receive $1790.00 per month for 3 years. That is a total of $64,440 dollars.

That 45 year old worker earning $40,000 per year is paying $413 per month in FICA Taxes. If they were allowed to invest 4% in individual accounts that would leave $280 per month to provide for the insurance aspect of SS.

Recalculating benefits based $38,400 ($40,000 – 4% in individual accounts) gives the following benefits.

Spouse $870 per month
Dependent Child $870 per month
Family Max $$2217.20

In addition to the above benefits the 4% of FICA Taxes placed into individual accounts for the past 20 years (assuming they started work at 25) would have grown to roughly $100,000. A huge additional benefit for the survivors.

The $100,000 was calculated based on the compounded growth of the stock market since 1985 (past 20 years). I used $800 dollars as the starting point (1/2 of the yearly 4%) and added a flat $1600 per year after that. So, the $100,000 may be skewed one way or the other based on monthly market fluctuations. However, the general principle is correct and any deviation would not be more than say $10,000 either direction.

How can anyone be against that unless they simply need to deny Bush a political victory? Again the participation in individual accounts will be on a voluntary basis. If you do not want the added return on your money don’t opt in.

Woody,

Go ahead and look at the data from these sites. You will see that the run-up to the economy Clinton and the left so want to take credit for started in 1981. Now lets see what happened around that time frame that is similar to the current situation? Could it be the Reagan Tax Cuts?

No, surely putting more money in consumers pockets to spend, invest and use to create jobs couldn’t be it. Only taxing them with the biggest tax increase in history could spur the economy.

Woody,

Here is some interesting reading for you that will support my contention that the Clinton Tax Increases slammed the brakes on the economy.

http://www.ncpa.org/~ncpa/pi/taxes/taxbook/taxbook1.html

Kirk said: “Why, despite repeated attempts to correct such misconeption, do you insist on incorrectly stating that the insurance aspect of SS would be killed by individual accounts? It must be that if you can scare people enough they will not worry about the returns they are not getting.”

It is simple logic, Kirk. PSA’s now have a 4.6 Trillion dollar addition to our national debt. Given that the current national debt is 7.6 Trillion, and Bush and the GOP Congress will add another 1.6 Trillion to debt, that puts the national debt in the ballpark of 13.5 Trillion dollars. This is sum even the most conservative think tanks state is unsustainable for our economy.

Hence, what will have to go when that national debt approaches that staggering amount? You Got it. Social Security and Medicare. The logic is inescapeable, Kirk. The PSA’s by driving up the national debt will force the end of SS altogether due to horrendously immoral fiscal management by this President and Congress.

David,

PSA’s now have a 4.6 Trillion dollar addition to our national debt

I will give you the facts on this once again like I did in your post on Bush Selling a Brooklyn Bridge. The information come directly from the non-partisan Congressional Budget Office web-site.

Long-Term Analysis of Plan 2 of the President’s Commission to Strengthen Social Security

July 21, 2004
(Updated September 30, 2004)(1)

Bill Summary

The President’s Commission to Strengthen Social Security (CSSS) described three reform plans. This analysis considers Plan 2.(2) The plan would introduce individual accounts (IAs) and switch from wage indexing of initial benefits to price indexing. It would also introduce a new minimum benefit for workers with many years of low earnings, increase the survivor benefit for some widows and widowers, and transfer some funds from the federal government’s general fund to the Social Security trust funds. More information can be found in the analysis of each provision.(3)
Participation in IAs would be voluntary, but there is an unambiguous incentive for individuals to participate. In this analysis, CBO assumes 100 percent participation.

So, the estimated 2 Trillion-Dollar cost of PSA’s over the next 10 year by the CBO is based on 100% participation. This is an unrealistic expectation if based on nothing else but the posts here. However, if you look at 401K participation rates of roughly 65% by eligible workers (where by the way employers typically match a portion of the contribution) you must expect the rate of workers electing to contribute 4% of their FICA Payroll Tax will be much less than 100%. Therefore the estimates of $2 Trillion by CBO are greatly overstated. As are your estimates above of $4.6 Trillion.

The PSA’s by driving up the national debt will force the end of SS altogether due to horrendously immoral fiscal management by this President and Congress.

David, face the music. There is no “Trust Fund” it is all in Treasury Bills which are Government IOU’s. The government will have to borrow money to pay the IOU’s starting in 2018. How will they do that? With more IOU’s. So, in effect the individual accounts will not add to the deficit at all as the money will already have to be borrowed anyway.

And to blame everything on this President and Congress only shows your prejudice against him. Congresses is the only branch that can appropriate funds, not the President. Congress for year has been moving FICA Taxes to the General Fund through Treasury Bills. Even if Presiden Bush and Congress halted the practice when he took office the SS shortfall would have happened anyway it would have just been moved out past 2018.

David,

I notice that you have ignored the fact that I have proven that even with the 4% individual account, survivors would be taken care of in the event of the death of a worker. Not only would they be taken care of through SS benefits, but in my example above they would have an extra $100,000 or so that they would never have received from SS.

David:

It is simple logic, Kirk. PSA’s now have a 4.6 Trillion dollar addition to our national debt. Given that the current national debt is 7.6 Trillion, and Bush and the GOP Congress will add another 1.6 Trillion to debt, that puts the national debt in the ballpark of 13.5 Trillion dollars. This is sum even the most conservative think tanks state is unsustainable for our economy.

Hence, what will have to go when that national debt approaches that staggering amount? You Got it. Social Security and Medicare. The logic is inescapeable, Kirk. The PSA’s by driving up the national debt will force the end of SS altogether due to horrendously immoral fiscal management by this President and Congress.

1. I think you are making a fatal flaw of mixing your politics and your economics. There is no evidence that Democrats or Republicans out perform each other in the economy. (Or you can make the case both ways).

2. Second, the budget deficit is at a very managable amount. Budget deficits must be measured in nominal terms. Reagan had the highest deficit in modern history of over 6%. Bush’s in modest by comparison of between 3% and 4%.

3.Since the Nominal growth rate of the economy(Real growth plus inflation)is around 6% and using the rule of 72, the economy doubles about every 12 years. This means the federal debt can double every 12 years and it “feels” the same. That means if 12 years from now our federal debt is 15 trillion, it will have the same impact as todays debt.

4. Your fears fail to take into account the huge amount of future liability Bush’s plan takes off of the back of the government. The balance sheet balances. We owe more in federal debt, but we owe less in federal promises.

5. There is no question that our children will have far greater benefits that we have if they stay in the program. Even a modest increat in return over 40 years is staggering in positive benefit.

This debate is just a political debate and not an economic one. If this passes Democrats loose their FDR legacy. This debate isn’t about our children’s future as it should be, but about the future of the Democratic party.

Craig

Gandhi, the figures I gave on the post above are from the CDC that you gave me. I typed the charts up to clarify the figures and simplify them because we are considering early retirement. CDC is the center for disease control. I think they are all in the same building.

http://www.cdc.gov/nchs/data/nvsr/nvsr53/nvsr53_06.pdf

As you can see 5 people who wait until 67 to retire will die between 62 and 67, but if they retire at 62 they will draw it for awhile.

I thought others would like to see the averages. At age 84, there are only 34 left alive out of those 82 people that were still living at 62. It isn’t as if they will all go into the system all at once. As some start drawing Social Security others leave the system as they die.

Gandhi, we live in the rural part of the country. Small town. The ones I am talking about that seem to die young are white and they die from heart attacks, cancer and strokes and strange things.

Yesterday there were a lot of republicans on tv. They read from the same script. They say “Social Security will have less going in than coming out in 2018 (Wrong, it is 2020) and it will be “bankrupt in 2042 (That is untrue, Social Security will still be able to pay 75% after 2052 and the rest can be made up by taxes.) The repubs say it is a pay as you go system. They don’t mention that we have paid in extra since 1983 to fund the baby boomers. They don’t mention the TRUST FUND.

If you read the introduction on the website of vital statistics the death figures are not exact. Part of the figures came from Medicare, other places and from projections.

I would believe the figures more if they came from the actual count of certified death certificates. And why don’t they?

I posted that one person of the 82 lives to be 100 years of age. Actually it is 1.4, but I was rounding off.

This is a great website with interesting and commonsense postings. Thanks for having it.

I still stick by my earlier definition of “bankruptcy”: a system that is running a negative net cash flow with no sellable assets. If SS has to pay 75% in benifits instead of 100%, then it is still a “functioning” system, but it is also bankrupt. People just don’t like to hear that word because they think it means that the system has failed. K-mart went into bankruptcy, but it’s still running as a company, and could emerge from bankruptcy if it generates a positive net cash flow again.

Mr. Noville of Aarp was on Cspan today. He suggested that the government put the surplus money that is being paid into Social Security now, in a total stock market index fund.

That is an excellent idea. It would be safer in the market than with our government spending it, because the more they spend the more the taxpayer will have to pay back when the boomers need it. It is clear the Republicans don’t want to pay back what they already owe Social Security.

The money wouldn’t be put in The market all at once, but each week, so they would be buying at different prices when the market is down and when it is up.

The money won’t be needed from the stocks until 2020 so it will have time to grow.

This would force the politicians to find another way to deal with the tax cuts.

It has never made sense to me that we are still paying in each week to Social Security and they are spending it as fast as we are putting it in all the while they are saying they can’t pay it back! At least investing it would stop that evil deed.

It isn’t a perfect solution, but it is the best one I have heard yet.

He also suggested raising the Social Security cap so 90% of the workers are paying in. It has always been 90% until lately. It would raise the wage cap to $140,000 from $90,000.

It is hard to beat the index with funds and stocks. Wouldn’t it be great if index fund made enough so the 2050 problem was solved too?

I can hear the Republicans screaming now.

Ganhi, Social Security has a sellable assett. Our bonds that are backed by the government. Social Security isn’t bankrupt, but the taxes may have to be raised on the no tax crowd when we start retiring.

“Election by election. State by state. Precinct by precinct. Door by door. Vote by vote.”

We’re going to take this country back for the people who built it.”

— Howard Dean, DNC Chairman

Yesterday on his radio show, Bush urged those for privatization to write to their representatives now.

Those who are against privatization need to write their representatives, too.

Here are links to help write to your representatives in congress and the senate.

Write your Representative. or Link to Representatives and
Contact Your Senator.

Ann,

It isn’t a perfect solution, but it is the best one I have heard yet.

Then you obviously have not been listening even to your own arguments becasue this is basically what you have been arguing against.

The only difference is that with individual accounts individuals decide which funds their money goes into where as the AARP proposal you mention would be government directed. Not to mention the fact that under the individual account plan each worker would have the option of deciding if they want their money in the market or in the current system. Under this AARP plan the workers would have no say, everyone’s money would be invested in the market.

Now that it is proposed by someone other than Bush it is a good idea. Ann, you have shown your true colors.

“Election by election. State by state. Precinct by precinct. Door by door. Vote by vote.”

We’re going to take this country back for the people who built it.”

YEEEEEEEEEEEEEEEEEEEEEEEEEEEEEAAAAAAHHHHHH

I still get confused if this is a Republican Blog or a Democrat Blog because some of you sound like Republicans. I guess some Republicans like to post with Democrats. Huh?

I have posted on other blogs that it is ridiculous to keep letting the government have our Social Security money each week to spend. The reason I feel that way is because the Bushies have made it clear that they don’t want to pay it all back as needed. They say it will hurt the economy to pay it back.

Aarp is not democratic as far as I know. Other pension funds put group assets into the market.

It isn’t taking away the money that will go to Social Security. This will be Social Security money invested in index funds that will be returned to the Social Security trust fund as retirees need it.

If the money is setting in an index fund, the government can’t spend it. You have to admit that is a good idea.

The profits won’t be eaten up by the individual account fees. Be glad Kirk. This will shore up Social Security. We won’t have to borrow the money and drive up the deficit to do it.

I still worry about the safety of the market. But the index funds will be bought (I assume) each week, and so the administrators will buy the funds at whatever the price is each week and it will average out.

It may be that for those who don’t want to chance the market that we could all vote and put the percentage of those who want in the market and leave the others in the bonds. If 60% don’t want in, fine leave them in bonds. The 40% that want in the market can still do it. Then those who stay in bonds will still get part of the profit because some of us who voted to go into the index fund will die before retirement.

I have suggested this before. Think of Social Security as bonds. You don’t make a lot of money on bonds but they are very stable, usually. Social Security has you covered for disability, your children are taken care of if you die and you will have a lifetime income when you retire. That is worth a lot for the peace of mind. Take your other money and invest it. I have bought index funds myself. lol

The Democrats are coming home and they are going to fight for the working class. There is a God.

Ann,

Are you now taking money from the Bush Administration to promote his SS plans?

Again you do realize that this is what he is proposing. You have now even moved closer to the presidents plan by saying let people decide how much of the FICA Tax goes into the market. All you need to do now is take that one final step and agree that individuals should control their own money instead of the government.

You see, if the money is in an account under your name you are the with control of it. If it is in an account controled by the government what keeps them from raiding that account like they have the “trust fund”?

As for the account fees, they are minimal as you know if you have purchased index funds yourself. Do you think that there would not be fees associated with managing one large account for the government?

Ann, the total stock market fund idea has the same problem as the privatization scam: sometimes the market goes up, sometimes it goes down. Might as well just take it to Vegas and bet it all on black.

Clinton was also trying to figure some way to get the surplus earning a higher return, but kept running into that problem, and also the problem of the federal government being a huge player in the market.

AP,

sometimes the market goes up, sometimes it goes down

So, since the market MIGHT go down we should leave the money where the returns do not even beat inflation? That make perfecly good economic sense to me.

Once again, while the market does show short term swings, historically increases at a much faster rate than Treasuries.

Over most any period of five years or more that you want to look at. Since 1928 stocks have consistently outperformed treasuries. The performance of stock compared to treasuries is greater over extended periods. However, even on 1-year periods stock have beaten treasuries 49 times (62%) out of the 79 one year periods returning an 11.51% growth compared to 5.14%.

5-year periods stocks outperformed treasuries 60 out of 73 times or 82% of the time.

7-year periods stocks outperformed treasuries 64 out of 71 times or 90% of the time

10-year periods stocks outperformed treasuries 64 out of 68 times or 94% of the time

12-year periods stocks outperformed treasuries 64 out of 66 times or 97% of the time

15-year periods stocks outperformed treasuries 63 out of 63 times or 100% of the time

You can verify my numbers if you want to. The data is available at the following link.

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

The “the market might go down” excuse for keeping the money in the so called “trust fund” where Congress can continue to spend it at will is a very LAME excuse.

Why do you want to deprive future retirees of a better standard of living?

Privatization will increase the deficit and will take away benefits from Social Security. They want to cut the benefits in half, then give people a choice of going into private accounts or staying with what is left. That is a bad choice to have to make.

Having an account for each person would cost more than having it in a group account.

The Bushies say those over 55 won’t be affected, but they have been wrong so many times. They were wrong about medicare even projecting just one year. We all need to help each other out with saving Social Security.

The only reason Bush wants to privatize is to keep from paying back what they owe Social Security that is in bonds. They plan to totally privatize it at the end. They say repaying the bonds will hurt the economy and will take up too much of the budget.

Group investing would put the money all back into the Social Security TRUST Fund as funds are sold. Privatization wouldn’t do that.

If half of those paying in want the Social Security money to stay in bonds and half think the Social Security money should go into the market, then put all of the surplus in total index funds here and internationally in safe countries until it reaches 50-50.

If they would dedicate the 401k fund taxes and reinstate and dedicate the estate taxes to the Trust fund starting now, that could help with money to put in the index funds. Then if they would start paying back the trust fund now that could be put into the investment too.

I am just trying to help the under 55 crowd. Finding a safe and profitable place to go with the surplus is hard.

There would have to be an excellent manager hired to decide when to take the funds out in risky times. (I know that would cost, but not as much as private account fees or taking big losses.) And they would have to spread the investments so that it would not shake the market if they cashed in a lot of the funds.

Actually having the surplus money in the market would add some stability to the market.

After thinking about it, no one should get more than the others. The ones who vote to stay in bonds should get the same according to their Social Security credits as the ones who vote to invest the new Social Security surplus monies.

Voting would just be to give a percentage of how much to invest and how much to leave in bonds.

Flip Flop. I know this isn’t what I posted yesterday, but after thinking about it, that is the only way it should be done.

(A wise woman changes her mind, a fool never does.)

There is a lot of things to consider.

Most pension funds invest in bonds and funds both.

Most financial advisors say you need to cut back from funds to more bonds as you get closer to retirement. Some go by age. If you are 60 you should have 60% in bonds and 40% in funds.

The benefit could be that it could increase the trust funds over 15 years and mainly get the new surplus out of the hands of Bush. Since the Republicans are hell bent on cutting benefits and raising the working age, index fund investing may be the way to stop that from happening.

I would rather invest it all in bonds overseas in safe countries, but no one seems to think that is a good idea. If we did invest in bonds overseas, then it would be the foreigners paying back social security as we cashed the bonds in as needed during retirement instead of the taxpayer paying again for what we have already paid for once by paying extra into Social Security Fica. We could have buy their bonds for that country’s retirement funds, but then at the end the taxpayer of each country will be paying the money for the bonds so it would be a wash.

It just doesn’t make sense to keep paying in a surplus if they are going to cut benefits anyway and the taxpayer is still going to have to foot the bill.

Since posting about group investing,I did some research on market crashes. It was so easy how the market crashed that it made me wish I wasn’t in the market even in an index fund. lol

Sometimes they don’t crash, they just go down a little every day or every week like in the Bubble era. But it is still ruinious.

Sometimes the market doesn’t do do anything for 20 years.

There is always the chance a large group of wealthy investors could pull out of the market like they did during the bubble and wipe out the surplus investment. That money didn’t just disappear, it went into the pockets of those who got out first.

Another way would be to have a Social Security bank and make personal loans with our new surplus. But Greenspan and the banks would frown on that.

Using the new surplus to finance something safe and wonderful would be good, but what would that be?

If the market is going to do so good, then that means the economy will be heavy with money, so why don’t they pay back the surplus early? Oh, I forgot, there is no place to go with the new money for Social Security except treasury bonds if we don’t invest. It is a circle.

If we put the surplus in a lockbox and it didn’t draw interest then inflation would eat it up.

They could leave the bonds where they are, still drawing interest, and pay the current retirees out of the federal budget. Oh, but the deficit is too big. The no tax crowd would have to raise taxes.

Guess what? There is not a good,logical answer!

Clinton had the best idea. Pay off the deficit, then, when the surplus is needed, it won’t be such a burden to the taxpayer to pay back the bonds then. It would be hard to pay on the deficit and the bonds all at the same time.

Our government has seen this problem coming for a long time and Clinton had it on the right track.

We do need to have the Democrats draw up a contract that the Social Security is owed and will be paid back. Some of the Republicans are saying they don’t legally have to pay Social Security back. That is so wrong!

We need a legal contract that if we invest in the market, the government can’t raid those funds. They have a contract like that for their TSP account.

The market can only go down so much a day so it would never crash in one day unless that has changed?

Is your mind spinning,yet? Mine is. I give up. You all figure it out.

Ann,

You say Privatization will increase the deficit and will take away benefits from Social Security

But that the AARP plan is a good plan. I think you totally misunderstand what so called “privitization” is. It is nearly identical to what you say the AARP plan is except rather thanhave it in one big account each worker who elects to participate has his own account.

Ann,

Then if they would start paying back the trust fund now that could be put into the investment too.

Which programs do you propose they cut in order to repay the trust fund? The reason that the trust fund is full of Treasury Bills is because they use the money to support current beneficiaries and current government programs. If you want to repay the trust fund now programs have to go.

Most financial advisors say you need to cut back from funds to more bonds as you get closer to retirement. Some go by age. If you are 60 you should have 60% in bonds and 40% in funds.

Exactly what individual accounts would allow each of us who elect to participate to do.

Since the Republicans are hell bent on cutting benefits and raising the working age, index fund investing may be the way to stop that from happening.

You need to go back and look at who voted to raise the retirement age and tax SS benefits.

Which programs do you propose they cut in order to repay the trust fund? The reason that the trust fund is full of Treasury Bills is because they use the money to support current beneficiaries and current government programs. If you want to repay the trust fund now programs have to go.

The money that is in treasury bills is the surplus we started paying into Fica in 1983 to prepay part of the baby boomer retirement.

Greenspan and Reagan were the initiators of the “fix” for Social Security then. I have read that once Greenspan’s committee came up with the solution that the democrats co-operated with the republicans. Greenspan said it would fix it forever.

Something else, since the surplus is being used to pay the government programs that means there is not enough taxes being paid into the general federal fund. It also raises the tax rate of those who work a lot. If it isn’t paid back, then it is a sneaky transfer of taxes to the workers from business. The trickle up effect.

You need to cut back from funds to more bonds as you get closer to retirement…..
“Exactly what individual accounts would allow each of us who elect to participate to do.”

But many will lose money in even “safe index funds” they can go down 15% compared to 20% of the more risky stocks. The best thing about index funds is the low fees since the fees add up to a lot over time. If the market goes down 60%, the average index funds would only go down 45%.

Kirk, they are not going to let you buy riskier funds that could make a lot of money. They are going to have index funds and bonds. We have enough bonds now. Google the government pension funds. It is called the Thrift Savings Plan. It would be similar to that.

We, the taxpayer match them 5 to 10% on the money they put in the thrift accounts. Barclays run the fund. They have averaged 6% someone said, but didn’t give a length of time they made that much.

They plan to totally do away with the disabilty and dependent child payments when they gradually privatize the whole system.

If you become paralysed 2 years after the partial privatization you would probably get almost a third less from disabilty. If you would die you would only have $4000 = profit, in your private account. Your children would get almost a third less in benefits until they are 18.

I came up with the $4000, by using someone making $50,000 and multiplying it by 4% which would be $2000 a year.

Compare that to a monthly check of 42% of his wages. I know two people who are paralyzed, an ex-son in law for one. It happened to him in a car wreck at age 30. The other lost something off of his pickup and stopped to pick it up and was hit by a car. He was 25. They both have children who get a check each month also.

In the privatization of now, you would get 28% of your wages if you become disabled. In the future full privatization you would get 14% of your wages. Do the math. Would you be better off privatizing or keeping Social Security in these cases?

I would be willing to bet they will do away with the bosse’s matching funds in full privatization, especially if they go to a flat tax.

The tax savings would be minimal if you think the two paralyzed men would be on welfare if not drawing social security. Social Security gives you dignity in times of disabilty and retirement.

Bush is pushing hard for the up to 30 something age group to back him. When I was that age, I knew so much more than my parents. I couldn’t lose in the market because I knew just how to do it. As people get older they see the wisdom of their parents and of having a safety net for old age and disabilty.

Most of those up to 30 something don’t realize that Social Security will take care of their young children if they die and keep them off of welfare or from being at the financial mercy of an evil step father.

They plan to stop the standard of living increase on the younger ones so the benefit will be the same 40 years from now as it is now. That is part of the privatization plan. They plan to do it by changing the indexing. The amount you pay in will stay the same, but the benefits will go down each year. It is not fair. I want everyone to have the benefits of now.

We should be working together to stop them. These are not moderate republicans. They are radical idiots working only for the rich.

The only thing more frightening than the surplus funds being in the market is to see those greedy gop spoiled brats in control of our surplus for retirement and disabilty. That is the main reason I would want the surplus in the market, because they will not pay it back if they can get by with it.

You can go to link text and read detailed pros and cons on Social Security investing.

It is being reported that we get 5.8% on our surplus Baby Boomer Social Security that is in bonds. The Bushies have been saying 1.8% or 2%. That changes the picture doesn’t it?

link”>http://domain.com/link”>link text

Ann,

You incorrectly state that the insurance aspect of SS would be killed by individual accounts? As the president has stated “…by starting personal retirement accounts gradually, and raising the yearly limits on contributions over time, eventually permitting all workers to set aside four percentage points of their payroll taxes in their accounts.”

That is FOUR PERCENT of FICA Taxes. Not 100%, not 50% not even 5%, but 4%. That means the other 8.4% of FICA Taxes remain to fund the insurance aspect of SS.

Fourty-six million American receive Social Security benefits, including 32 million retirees, 7 million survivors, and 7 million disabled workers.

That is less than one third that are using the insurance for survivors or disabled workers. There are several things that can affect the survivor benefits paid to your spouse or dependent children.

The below is taken directly from the SS Web Site.

If your spouse is caring for a dependent child under the age of 16 they can collect 75% of your benefit.

If you have unmarried children under the age of 18 they can collect 75% of your benefit.

However, there is a maximum family benefit of between 150% and 180% of your benefit.

If your spouse or child works $1 dollar of benefits are deducted for every $2 dollars they earn.

If your spouse remarries before age 60 they loose all survivor benefits.

Using the online survivor benefit calculator on the SS site, I calculated expected survivor benefits for the spouse of a worker 45 years old earning $40,000 per year with dependent children under 16 years old.

If that worker dies their survivors would receive the following.
Spouse $895 per month
Dependent child $895.00 per month
Family Max $2217.20 per month

If that worker’s dependent child is say 13 when the worker dies, the spouse and dependent child would receive $1790.00 per month for 3 years. That is a total of $64,440 dollars.

That 45 year old worker earning $40,000 per year is paying $413 per month in FICA Taxes. If they were allowed to invest 4% in individual accounts that would leave $280 per month to provide for the insurance aspect of SS.

Recalculating benefits based using the online survivor benefit calculator on the SS site, $38,400 ($40,000 – 4% in individual accounts) gives the following benefits.

Spouse $870 per month
Dependent Child $870 per month
Family Max $$2217.20

In addition to the above benefits the 4% of FICA Taxes placed into individual accounts for the past 20 years (assuming they started work at 25) would have grown to roughly $100,000. A huge additional benefit for the survivors.

The $100,000 was calculated based on the compounded growth of the stock market since 1985 (past 20 years). I used $800 dollars as the starting point (1/2 of the yearly 4%) and added a flat $1600 per year after that. So, the $100,000 may be skewed one way or the other based on monthly market fluctuations and incoming deposits. However, the general principle is correct and any deviation would not be more than say $10,000 either direction.

The SS Administration states that the return expected on FICA benefits withing the current system is 2%.

They plan to stop the standard of living increase on the younger ones so the benefit will be the same 40 years from now as it is now. That is part of the privatization plan. They plan to do it by changing the indexing. The amount you pay in will stay the same, but the benefits will go down each year. It is not fair. I want everyone to have the benefits of now.

This simply is not true. You can go to Fact Check to get the truth on this.

A Kerry ad claims “Bush has a plan to cut Social Security benefits by 30 to 45 percent.” That’s false. Bush has proposed no such plan, and the proposal Kerry refers to would only slow down the growth of benefits, and only for future retirees. It was one of three possible “reform models” detailed by a bipartisan commission in 2001.

Even for future retirees, benefits will grow under the “reform model” the Kerry ad refers to. That model would reduce the rate at which the starting point for future benefits is expected to grow, by increasing starting benefits to keep pace with rising prices, rather than with rising wages as has been the case since 1977.

In other words, the starting point of benefits paid to future retirees would be unchanged in terms of purchasing power from those paid currently.

Also, the proposed price-indexing wouldn’t affect annual cost-of-living adjustments for retirees once they begin receiving benefits, only the level at which benefits are set in the first year they are paid. After the first year, benefits would continue to be increased yearly to maintain purchasing power.

http://www.factcheck.org/article283.html

kirk,

You say That is FOUR PERCENT of FICA Taxes. Not 100%, not 50% not even 5%, but 4%. That means the other 8.4% of FICA Taxes remain to fund the insurance aspect of SS.

That 4% you take to invest is almost one third of the Fica contribution. Since the contribution is 12.4%, 4% would be about 32% invested and about 67% put in the the Fica Trust Fund, As Social Security is phrased out, then the investment will be more and the benefits less.

I said “They plan to stop the standard of living increase on the younger ones so the benefit will be the same 40 years from now as it is now. That is part of the privatization plan. They plan to do it by changing the indexing. The amount you pay in will stay the same, but the benefits will go down each year.

“This simply is not true. You can go to Fact Check to get the truth on this.”

I went to Fact Check and they say that it will cut benefits:

“….The CBO found that under Plan 2, first-year benefits paid to retirees born in the 1980s would be 30 percent lower for middle- and upper-income persons than under a wage-indexed system. (The reduction would be less for low-income persons.) The figure would reach 45 percent only for future retirees born in this decade, most of whom are yet unborn.”

What Fact Check disagreed with was the way it was said. They felt like the retirees now would think they would get their benefits cut by 45 percent. Maybe I should have said the amount of your beginning benefit will be the same as those who retire in 2005 if you retire in 2045.

Here is an excerpt from the Economic Policy Institute.

Here is an example of what they say would happen if price indexing had been put in for those retiring in 2005:

“……..with a price indexation formula, retiree benefits would have been cut substantially. Under the current wage indexation, the Social Security benefit for a person with average earnings over one’s lifetime and retiring in 2005 would be $15,336 per year, replacing 42% of the average worker’s income. If, however, price indexing had been used instead of wage indexing, that same 2005 retiree would receive only $6,180 per year, replacing just 17% of income. In other words, as the figure shows, a change from wage indexation to price indexation would have meant a 60% cut in Social Security benefits for today’s retirees.

Cost of living increases won’t make up for the cut in starting benefits. Each year the starting benefit will be worth at least 3% less because it would start and stay at 2005 levels. Multiply that times 40 years and you don’t have a benefit that will buy a bottle of beer!!! If you get a 3% cost of living, that will just keep it at the same low price. Each year it will be the same amount of money as those who retire in 2005, but worth 3% less each year due to the cost of the standard of living.

The plan is to make Social Security so bad, no one wants it. The Republicans want the indexing changed. Bush is favoring changing the index. They may change it now that so many have wised up to it.

Google wage and price indexing and read up on indexing if you don’t believe me. There are many writings about how it would cut Social Security benefits.

Those who invest one third and put only two thirds of the Fica contribution in the fund will get one third less benefits. If you take almost one third out of Social Security contributions to invest, then there will not be the money in the fund to give you full benefits if you would become disabled. Remember, they have to pay the full benefits of the retirees, the dependent children and the disabled of those over 55 plus those who don’t take out a third to invest. They have to do it without the one third that is carved out. They won’t have the money to pay full benefits to the investing crowd with the two thirds that is left. What you take out to invest will cut your benefits. You have to depend on your investments to replace the other third. You may have more from investing at 70, if you don’t get disabled, but if you live to be 100 you could outlive your money. Especially, after a market crash or two.

Ann,

What Fact Check disagreed with was the way it was said. They felt like the retirees now would think they would get their benefits cut by 45 percent. Maybe I should have said the amount of your beginning benefit will be the same as those who retire in 2005 if you retire in 2045.

Reread Fact Check.

What they say is it will reduce the rate of growth of the starting benefit. How is growth a cut? What you say about being the same as 2005 is partially correct, but you should say their buying power would be the same as the 2005 benefits.

You see what they propose to do is take the current 2005 benefit and index from there based on price increases instead of the current wage increse index. What that does is adjust the benefits based on increases in consumer prices so that the benefits of those retiring in the future would have the same buying power as those who retire in 2005.

The way the system works now indexed to wage increases cause benefits increases to far outpace price increases which in turn puts a much greater burden on the “trust fund”

Those who invest one third and put only two thirds of the Fica contribution in the fund will get one third less benefits.

Exactly. Benefits would be reduced for those electing to participate as it should be. However, the growth of the individual accounts will more than make up for the reduction in benefits.

I personally would be sign a legally binding agreement with SS tomorrow stating that they can have every penny I have put into the system, and that I would give up all claims to any benefits, if they would let me have all 12.4% FICA Taxes to invest as I see fit in the future.

Kirk, you may understand it better if you would use this Social Security Calculator.

It shows how much less someone born today will get from Social Security when they retire with the change of indexing.

Each year the indexing makes it worth less.

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Here is a quote from a famous Republican:

Throughout the years, Social Security has proven to be one of the most successful and popular programs ever established by the Federal Government.

With the enactment of the Social Security Amendments of 1983, the Social Security system’s financial soundness has been assured, both in this decade and for many decades to come.

Our young people can feel secure in the knowledge that Social Security will be there to assist them in providing for their families just as it has done since the first benefits were paid in 1940.

I urge all Americans to reflect on the significance of the Social Security Act signed 50 years ago and to celebrate its accomplishments. Ronald Reagan 1983

Kirk says I personally would sign a legally binding agreement with SS tomorrow stating that they can have every penny I have put into the system, and that I would give up all claims to any benefits, if they would let me have all 12.4% FICA Taxes to invest as I see fit in the future.

You would be better off to get a personal loan now while interest is low and buy the stocks you want.

There is no guarantee in the market and if Privatization goes through stock funds will make money at first, then become a bubble. Study the 2000 era of bubble bursting. I believe the market went down 49% and it still needs to go up 10% before it will be even in the tech area.

What would happen if a group of greedy, wealthy people or enemy foreigners bought into the market now, then sell as fast as they can after a huge amount of the Social Security was invested?

“When interest rates go up stocks die” is a saying on WallStreet. They are saying now that interest rates will go up because inflation is getting worse. So you might be better off to borrow the money now, and wait until it goes down.

Don’t worry about selling out your parents and grandparents and the rest of those who depend on Social Security.

Good luck Kirk

It can be done risk free with a real economic return that is 12 to 18 times greater than what we get out of the system currently. This return would allow us to defease the entire $11 trillion in Trust Fund shortfalls within 10 years thru the privatization plan.

If you would like to see how it works, please visit our website and download a copy of “The Fix For Social Security” (http://www.businessbankruptcyconsultants.com/). Warning, the policy paper is not for intellectual lightweights. You have to understand some basic financial terms and the laws of mathematics to understand where this is headed.

“Oh ye of little faith. Before you have even asked I have answered thee. Ask and ye shall receive..”