Democrats & Liberals Archives

Some Things Dubya May Be Right About

In the spirit of the season, I offer a couple of contentious issues our much maligned President may actually be (gulp) kinda sorta right about.

Social Security – I’m not going to get into the argument of how severe the crisis is. That is all a matter of which shell you think the bean is under. Where I find myself agreeing with Bush is that the current system is out of date.

Defined benefit retirement plans, in which the worker is entitled to a fixed amount of money in the future, are passé. Unless the employer makes the most conservative (and low-paying) of investments, there is no way to know how much money they are going to have to give to their retirees decades in the future. It’s a guess disguised as a promise.

The federal government, admittedly, has a lot more resources to back up that promise than any private employer. But the same problem remains: no one can predict the future. That is why defined contribution plans make more sense. You set aside some money, maybe your employer or Uncle Sam kick in some more money, and you hope for the best. The government could still guarantee some minimum payment (probably smaller than the current one), but above that the sky’s the limit.

Education Reform – Our current system isn’t horrible, but it could be better. One of the biggest problems is that the teachers’ union has too much power. Vouchers would be one, rather extreme, way to put more power in the hands of the parents. If Democrats have a better plan, they should propose it. This would be a great way for Barack Obama to show he has some cojones: Obama vs. the NEA. I take Obama in ten rounds.

That is my humble attempt to increase the peace across the aisles. As Tiny Tim said, “God bless us, every one!” (Substitute deity or deities of your choice.)

Posted by Woody Mena at December 25, 2006 8:27 AM
Comments
Comment #200344

Woody
I agree. Very Good

Posted by: KAP at December 25, 2006 10:07 AM
Comment #200346

Woody,

SS could be saved and solvent if…big IF…our government would pay the same interest for the monies it borrows from the ‘trust fund’, that it pays to communist nations (China) for the monies borrowed from them.

Correct. Public education needs reform, but throwing religion at it is not the likely best answer, so no vouchers please. The NEA has outlived its usefulness, so weakening it may be the last best hope. The better answer to the education problem is probably as simple as getting the right people interested in finding solutions. Our intellectual community should be able to come up with positive answers, if they’d just get off their asses and go to work on the problem.

Apathy is our greatest enemy…

Posted by: Marysdude at December 25, 2006 11:25 AM
Comment #200347

By the way…Happy Holidays to you all!

Posted by: Marysdude at December 25, 2006 11:26 AM
Comment #200350

marysdude,

I’m no accounting whiz, but I’m pretty sure that it is impossible to pay yourself interest.

I don’t think there is any question whether the wealthiest nation on earth has the means to “save” its Social Security system, but that is the wrong paradigm. It would be better to think of it as optimizing the return on our investments.

Posted by: Woody Mena at December 25, 2006 12:01 PM
Comment #200352

Woody, I don’t agree with you at all.

Soc. Sec. needs to be reformed to function as it was originally intended to - as a safety net for those beset by misfortune or whose work lives precluded saving sufficiently for a non-poverty ridden retirment period. The fix needs to be means testing, raising the retirement age to 70 for those fit enough to work that long and remain employable, and raise the FICA revenues modestly right away. That is all that is required to get the nation over the S.S. boomer bump.

Medicare and health care is by far the more dangerous, and confounding problem which threatens all safety nets, local, state, and federal, as well as the economic consumer sustainability as our population ages.

As for the NEA, fine, they can do better. But, the NEA is not the problem with America’s education system. The problem is America has thousands of educational systems all with differing standards and objectives and ulterior political motives. China, Japan, India, Malaysia, even Indonesia, you know those countries competing for our jobs, all have standardized and unified educational systems. And it is paying huge dividends to their domestic economies as well as their future competitiveness in the global marketplace. The NEA is not the problem. A horrendous ignorance of what education must be about to sustain the nation and her needs is the problem.

Posted by: David R. Remer at December 25, 2006 12:56 PM
Comment #200353

David,

We actually agree about some things here.

First of all, I agree that Medicaid and the health care system in general are more urgent problems than Social Security. But that doesn’t mean we shouldn’t look at SS, too. Can’t we fix both? SS is a lot simpler than medical care, so if we can’t agree a solution to the SS problem than we are really screwed as a country.

I also agree with you that the education system should be more standardized, but it goes against our tendency to believe that “local people should control local schools” (as Bush said). It is hard to imagine everyone agreeing on a national curriculum in the current cultural and political environment.

But that is neither here nor there with regard to the NEA. The problem now is that good teachers and bad teachers have the same job security and pay. No one would choose to run a business that way if they could help it.

Posted by: Woody Mena at December 25, 2006 2:09 PM
Comment #200356

In this bi-parisan spirit of “lets remove the dishonest, hyper-political hate speech….I’m joining you.

1) Social seurity, in not so many years inflows will no longer meet outflows and never will again. Once the surplus is eaten up we are all screwed. It is a BIG problem

2) Medicare: Another BIG problem.

3) Deficit Spending Another huge problem.

4) Ear Marks…Huge problem creating much corruption.

5) National Health Care Major Problem

6) Virtually zero control of our boarders. Huge problem.

7) Radical Islam determined to kill as many of us as they can…MAJOR problem, esp for those they kill.

Let me ask….once we get beyond the rehtoric….will the democratic congress do anything to resolve any of these?

I’ve heard Peolosi talk about ear marks….but only about making them transparent…not eliminating them. I’d like to see them eliminated. Transparent corruption is still corruption…dump ear marks completely. That will make things very transparent!

Social security will only be fixed if both sides are willing to sit down behind closed doors where they don’t BS about “Protecting Social Security” and they actually make the tough compromises both sides will have to make to fix it.

Same goes for Medicare and National Health care.

Quite frankly, I’m not hearing anything coming out of either party that sounds like or even rhymes with “Balanced Budget”, “Social Security Fix” “Medicare Fix”, “Eliminate Ear Marks”, etc.

I get the feeling the next two years will be a lot of talk and a lot of give aways running into the 08 election, but we are not likely to see the any of the big issues actually fixed. Maybe a band-aid at best..no fixes.

We need to keep talking about the real things that need to be done….pressure those in power to actually do something.

Posted by: stephen L at December 25, 2006 4:13 PM
Comment #200364

Marys

Stop with the interest thing. First of all, govern securities pay what they pay. If the Chinese government buys government securities they get the same rate as you do.

Also try to get a handle on who the government borrows from and who pays it. The U.S. government can promise to pay as much as it wants to SS. It can promise to pay 100% interest. But sometime in the near future IT will have to pay it back. At that time there will and cannot be any balance to draw on. The government is both the debtor and the creditor. It pays itself. The money will come from the taxpayers of that future year. That is the problem. We have too few future taxpayers in relation to future recipients. There is no way around that.

If I switch my wallet from my left to my right pocket and back again, I do not find any more money when I look inside.

You can make SS solvent if you want by making the future taxpayers pay fantastic amounts of money. I will be collecting SS at that time, so I speak for myself when I say that I think it is immoral for the old to take so much from the young.

David

I think you are making more sense. The problem is we may never get over the baby boom hump. I do not mean that the baby boomers will live forever, but everyone is living longer. You used to work 40 years and maybe have 5 years of retirement. Now you may work 30 years and have 30 or more years of retirement. We just cannot ever afford to support such a large number of non-productive people for so long.

I know it will sound cruel, but anybody who can go play golf or tennis can probably work. The idea of retirement is based on people’s bodies literally wearing out and death quickly following. Now that conditions have changed, our ideas of work will also need to follow.

Re education

We have some very good school systems in the U.S. and some very good courses of study. I am very fond of the IB programs. Success of school systems bears no relation to money spent per pupil. In fact, some of the biggest spenders (like DC) produce the worst results. We need to change the culture of education.

I can think of some particular ideas. Getting the educational establishment a little more shook up is a good start.

Posted by: Jack at December 25, 2006 6:31 PM
Comment #200367

>>The government is both the debtor and the creditor. It pays itself. The money will come from the taxpayers of that future year. That is the problem. We have too few future taxpayers in relation to future recipients. There is no way around that.

Posted by: Jack at December 25, 2006 06:31 PM

Jack,

Back a ways, LBJ opened the SS Trust to the general tax pool for a little extra cash to run the Viet Nam stupidity. After the ‘war’, Congress has had several oppertunities to replace that ‘borrowed’ money, but has chosen not to. Tax payers pay only a portion of that ‘trust’. Recipients pay the rest so they can use it later as supplimental retirement. What’s so difficult to call it what it is? It is borrowed money, and as such should require payment of interest. When the general budget is funded by income and other taxes by the general public, corporations, etc., I’ll quit calling it ‘borrowed’ from Social Security.

When Communist China buys our bonds and other debt, we become debtors to it. We pay interest on that debt. It follows logically that interest is being paid on one type of debt, but not the other.

Going private with a retirement program that has extended millions of lives, and made them more comfortable, has to be less acceptable than just paying back the ‘SS Fund’, and…with interest.

Posted by: Marysdude at December 25, 2006 8:04 PM
Comment #200368

Marys
You just do not understand the fundamental problem. The government can say anything it wants for accounting purposes. It is both sides of the equation. They can move money on their own books as they wish, but when the time comes for them to give money out, the only source of that money is the taxpayers AT THAT TIME.

SS is and always has been a transfer program. FDR called it an insurance program to sell it. Al Gore talked about a lock box to confuse the issue. There is no way the government can put that money aside for the future.

Maybe it will be clear to you when you answer this simple question. When the government “pays back the SS fund with interest” where will they get the money?

If you answer that correctly, maybe you can tell me where, even in theory, the government would put the money they would “save” today if they didn’t borrow the money.

Re Chinese purchases of USG securities. Please read about what kind of debt the USG issues. Which do not pay interest?

Posted by: Jack at December 25, 2006 8:41 PM
Comment #200370

>>Marys
You just do not understand the fundamental problem

Posted by: Jack at December 25, 2006 08:41 PM

Jack,

You just don’t understand the fundimental solution. Remove SS monies from the general fund and put it back into the ‘Trust’, with interest. Quit calling it ‘taxpayer’s’ money, when it is actually a fund set aside for supplimental retirement. Yes, taxpayers will have to pay up long enough to return those funds, which should never have been removed in the first place, but tough tit, sometimes the lion eats the mouse and sometimes the mouse eats the lion.

You don’t believe in the Social Security program, and are willing to see it evaporate, but I do believe in it, and would have it continue.

You want to quibble about semantics, while the problem gets bigger. Get this straight…SS monies do not belong in the general budget, that’s why it was called a ‘trust’.

Posted by: Marysdude at December 25, 2006 8:59 PM
Comment #200382

Joe, your comment regarding Islam and Europe was removed for not sticking to the topic of this article. Please review our policies for participation. Thanks.

Posted by: Watchblog Managing Editor at December 26, 2006 7:22 AM
Comment #200383

Jack, could it be you don’t think we will surpass the hump because you assume a never ending population growth? Population growth is controllable: it can even become stable - and if we commit to that, then we get over the boomer hump and can stabilize worker input and retirement subsidies.

Of course, with longevity comes the social responsibility to insure that the elderly continue to contribute to society and receive fair compensation for their contributions. The reason many tribal village economics were stable is because the elderly were not discarded but used to teach the young and for consultation as historians, both vital roles in any society.

Posted by: David R. Remer at December 26, 2006 7:28 AM
Comment #200385

marysdude,

Forgive my repeating myself, but you cannot pay
YOURSELF interest. Moving money from one government account to another accomplishes nothing.

In hindsight, it would have been a good idea to let the baby boomers divert some of their SS withholdings to interest-bearing goverment bonds. But instead the money was spent. (It’s gone now.) Maybe not a wise move, but we can’t turn back the clock.

Let me ask….once we get beyond the rehtoric….will the democratic congress do anything to resolve any of these?

stephen L,

You have a long list, but I’ll just address SS and education.

A lot of Democrats have vowed not to “privatize” SS, and the GOP probably aren’t too big on it now either. I think it’s just a matter of time. Once people of my generation (I was born in the 70’s) take power, it will seem like an obvious thing to do. Frankly, a lot of the older generation (with obvious exceptions) are stuck in the mid-20th century on this issue.

Of course, the current “crisis” will have to be addressed in some way. Probably a combination of tax increases and raising the retirement age.

As for education, I am hoping some “New New Democrat” will break from the pack and offer some fresh ideas. I don’t see Pelosi and friends doing anything groundbreaking there.

Posted by: Woody Mena at December 26, 2006 8:19 AM
Comment #200388

Woody said: “The problem now is that good teachers and bad teachers have the same job security and pay. No one would choose to run a business that way if they could help it.”

This is a free market function, Woody. The pay scale is so low compared to other industries, that schools have no choice but to hire poorer quality teachers along with high quality teachers willing to work for non-competitive salaries. My wife is an educator at an insurance company. She makes $75,000 per year.

Not only is her pay higher, but, the company supports a class room of students who want to be there, are willing to learn, and assume responsibility for their own education. She is safe in her classroom with security guards only seconds away. In other words, she works as a teacher in an environment that meets both her needs and those of her students who come to class incentivized.

How can public education compete for her services? That is the question which the NEA and the American people DO NOT WANT TO ASK. And until we as a nation begin to ask and answer that question, public education in America will continue to lose competitive advantage against those of other nations.

Posted by: David R. Remer at December 26, 2006 9:57 AM
Comment #200392

David

If population continued to grow quickly we WOULD get over the hump. Assuming stability or slower growth, we cannot because each worker is working less and retiring longer.

Think of the simple ratio. If you work 40 years and get ten years of retirement, you have a 4:1 ratio. You and society can afford that. If you work 30 years and have 30 years of retirement (easily common now) you have 1:1 ratio. It is unsustainable no matter what you do.

The village elder is not the model. Until recently, very few people lived long enough to become village elders. Most people died with their work boots on. We never before in human history have faced such a large number of non-working population.

Marys

Woody also tried to explain the problem.

I call them taxpayers because they are. The distinction you make for the trust fund is not valid, but ASSUME it is. Today’s taxpayers are paying less in taxes than they would because they are “taking” from the trust. They are getting the benefit today. When it comes time to “pay back” today’s taxpayers will again be the recipents and tomorrow’s taxpayers will be paying them. That is really unfair. You and I are currently benefiting and then we will benefit again and try to call that justice.

I want to let my children and grandchildren keep more of their money. I do not want my old dying hand to weigh down their futures. And I do not want to let anyone else do it either.

Posted by: Jack at December 26, 2006 10:35 AM
Comment #200401


The old dying hand of my parents and grandparents generation weighed down my future something terrible. If I had just thought to take them out into the woods and leave them, oh how brighter my future would be. My generation should walk off voluntarilly to save the future for our children. Problem solved.

Posted by: jlw at December 26, 2006 12:29 PM
Comment #200420

Any person who has to rely on social security to survive after retirement is not going to live well by any means. Unfortunately there are those who as a result of their environment, lack of education, health issues, mental issues, living in an impoverished area or for whatever myriad of reasons will need help when the time comes. I do feel that it is the responsibility of us as a nation of compassionate peoples to help our nieghbors in need. Even if it means giving up more.

I paid into SS my entire working career and will be eligible to collect in another eight years. However with the annual three percent increases I recieve on my current pension I can live comfortably without the aid of SS. I recieved an early retirement as the result of a state buyout four years ago. As I see it even though I have paid in my whole working life I do not need the added income. I wonder how many people are in my same situation. If the government were to enable means testing to exclude people such as myself from recieving the benefit would that not help to alleviate the disparity of funds problem?

I do not think that required private retirement accounts are a bad idea in general. How they would be instituted and governed are the biggest issues in my opinion. We will always need some sort of seperate trust fund to insure that those who simply can not for whatever reasons sustain a profitable lifestyle will be taken care of in their later years. Plus there will always be those who will need help their entire lives.

It is obvious that the system needs to be reworked and retooled. There will be a cost of course. That can not be avoided. We will all, individuals and businesses simply have to accept that fact. The trust fund should be proclaimed untouchable and sustained as a safety net only for those truly in need. It should be funded by all individual and corporate taxpayers regardless of income, no loopholes to get around it. I personally think that one should pay in an amount, in accoradance with ones ability. Of course that is debatable. It would need to be operated by a not for profit organization separate from governmental and corporate tampering. (no for profit lobbyists of any kind to be involved in the process)I see the latter as the biggest obstacle. It seems to be impossible now days to keep the profits of greed factor out of government. Our legislators do not seem to be able to make a move without first deciding how they can fanangle some profits and kickbacks to shore up the allready comfortable bank accounts of the wealthy.

After reading the above paragraphs I have had a realization that maybe one of the most important issues in this whole matter may be the removal of corruption from government. Until that is done there probably can be no real forward movement on any of these issues.

Posted by: Ildem at December 26, 2006 2:00 PM
Comment #200421

Saying,

Because “W” has not had the best interests of the american people in mind. Bush is a puppet of corporate america, plain and simple. He is controlled by the party regardless of his personal beliefs. And to be honest, after the last six years of corruption, the good intentions of the party is very, very debatable. It is the responsibility of the american people to keep such individuals in check at all times.

Posted by: ILdem at December 26, 2006 2:11 PM
Comment #200424

Here we go again. THERE IS NO SS CRISES.About 20 years ago we wisely started paying more into SS than was needed to pay for the program. This surplus ,intended to get the progam through the baby boom bubble, was used to purchase treasury bonds. The very conservative estimates of the SS trustees show solvency until 2042,at wich time many of the boomers will have passed on. Even then the estimates are that seventy-percent of the current benefits will still be payable. That is with no changes at all. That date gets pushed back even furthur with a few small changes like raising the income cap.
The rub is that at some point the treasury will be obligated to honor the accumulated bonds held by the trust. The US government has never failed to honor its notes before and will not this time either. Many on the right just hate the idea of actually paying their bills. Yes it will mean repealing the tax breakes for the wealthy,yes it should mean spending less on corporate loopholes and obcenely expensive weapons systems of little use,etc.These bonds will be honored. Any politician or party that tries to welch on them will dissapear into obscurity in a hurry.
The only people who keep crying about SS are those who are idealogically opposed to ant program that helps people, those that want to skip out out the bonds,or Wall Street gouls that want to get their hands on a chunk of it.Bush is all three.

Posted by: BillS at December 26, 2006 2:57 PM
Comment #200428

Saying

You obviously are a person of blind faith with regards to party affiliation. I do not wish to pursue such non-productive and aggresive banter. I am sure that he at some point has had some good intentions. Unfortunately he, his staff, and his legislature have not been good at the implementation of those intentions. This is my honest opinion be them right or wrong. And I of course am glad to allow you the right to yours.

Posted by: Ildem at December 26, 2006 3:46 PM
Comment #200429

Jack said: “If population continued to grow quickly we WOULD get over the hump. Assuming stability or slower growth, we cannot because each worker is working less and retiring longer.”

No, Jack. You only then create another boomer hump. The problem Jack is demographic. The only way to sustain the S.S. system in perpetuity is by insuring no to very slow population growth. Otherwise you get the peaks and troughs that caused the problem we now face, resulting from WWII dearth of babies and catch-up on lovemaking after the war was over. We have doubled our population since the end of WWII. It has not solved the problem, Jack. So, your prescription for more population growth is empirically and demonstrably false.

In addition, by importing low wage earners (ala illegals by the 10’s of millions), we are creating another wave of retirees who won’t be able to save for their retirements.

Your ratio argument also falls flat on empirical evidence, Jack. Most working folks enter the work force before they are 27, Jack. That insures a minimum of 40 years work life, and the 4 to 1 ratio you say is sustainable. But, even 4 to 1 is not sustainable without means testing benefits. The reason is that today’s dollars fund tomorrows living cost of living, and since tomorrow’s retirement cost of living is always going to outpace the value of today’s dollars including Treasury interest, even the 4 to 1 ratio does not work without means testing benefits OR zero inflation for the 40 years.

Add to this, the expanding work force experiencing real wage stagnation or reductions, the problem is compounded. Hence, it is imperative that the U.S. seek ways to distribute wealth in a fashion that supports a growing tide of workers who can afford to exceed the means testing of benefits.

Posted by: David R. Remer at December 26, 2006 3:48 PM
Comment #200433

Bills

I am in aggreement that there is no immeadiate crisis. However I see no harm in our legislature attempting to improve the system. Providing of course it can be done without exposing it to the profit mongers. I also believe that the workers of this country need to be better educated in regards to what thier needs will be at retirement. Most young people do not even give it a thought until well on into thier careers. Many just assume that they will be taken care of. I know a few people who have held mostly jobs that pay cash only. I do not believe that they realize there will be nothing there for them when they can no longer work because they have paid little or nothing into the system. And this is only because they do not know any better.

Posted by: Ildem at December 26, 2006 4:09 PM
Comment #200441

saying,

You should really read more carefully. I didn’t say anything in this post about Iraq. I don’t support Bush at all on that issue (beyond for the bare minimum of recognizing him as the president and commander-in-chief). If anything, I wish I had been more firmly on the anti-war side before.

I didn’t really have a change of heart on SS, either. I’ve always been more or less an agnostic on this issue, unlike the vast majority of liberal Democrats.

Never fear. Once the holiday spirit has dissipated, I will find plenty of things to bash Bush over. Of course, it is less fun when everyone else is doing it. ;)

Posted by: Woody Mena at December 26, 2006 5:01 PM
Comment #200443
In hindsight, it would have been a good idea to let the baby boomers divert some of their SS withholdings to interest-bearing goverment bonds. But instead the money was spent. (It’s gone now.) Maybe not a wise move, but we can’t turn back the clock.

I did a little research and discovered this comment I made was technically incorrect. In fact, the money was invested in government bonds.

HOWEVER, that fact doesn’t help a bit. In order for the government to pay interest on those bonds, it has to take the money from somewhere else. So it is ultimately just an accounting game.

The only thing that would have helped (in hindsight) would be if the money the baby boomers set aside was lent to private companies. Then those private companies would be ponying up the interest now, and bringing up more money into the system.

I think that explains, in a nutshell, why privatization is a good idea going forward, even you-know-who supports it.

Posted by: Woody Mena at December 26, 2006 5:39 PM
Comment #200448

Woody
Privatization is a poison pill. That is why Bushco likes it. Look into the Argentine experience with private accounts. Out side of helping cause the economic collapse they experienced now the benefits left are only a fraction of what was promised. If we had invested in private companies previously the likes of Enron/Centenial Savings and others, sharks would have stolen the funds years ago.The market is just not stable enough for that kind of investment. Sure you may do well or you may not. You are one person. It does not matter a whole lot to the country how you do. If you take your fortunes and multiply that by 100 million or so it matters very much how well you do. Know how many companies are listed on the Dow Jones that were there before the great deppression? Only one,GE. The rest are just gone. There is no reason that can not happen again.
Another thing that would help strengthen SS would be to start vigorious law enforcement. Every worker in the country should be paying into it. There is a huge underground economy. Failure to pay SS should be a serious offense. Looking at my SS statement reveals that I worked for a company for some time while I was younger that only paid in about half of what they were supposed too. That company no longer exist and I doubt there is much I can do about it.

Posted by: BillS at December 26, 2006 6:37 PM
Comment #200464

Woody, BillS makes a valid point. Privatization is fine for those who are equipped to voluntarily pay into their own accounts. But, that leaves more than 45 million Americans out of the loop. What happens when they retire? Just give them an alley and a cardboard box and thank them for their lifelong service in low paying jobs?

C’mon, Woody. If privatization is not voluntary, but mandated by the federal government, then isn’t the government on the hook to guarantee benefits? And isn’t that precisely where we are now?

Posted by: David R. Remer at December 26, 2006 11:38 PM
Comment #200479

Woody, you dont really think we should trust the private companies to be there when the bill comes due, just look at the corporations lining up to get out of the pension plans they instituted years ago. Could I just gamble mine in Vegas instead at least Ill have the fun of losing the finds myself instead of letting someone else do it for me.

Posted by: j2t2 at December 27, 2006 1:41 AM
Comment #200488
Woody, BillS makes a valid point. Privatization is fine for those who are equipped to voluntarily pay into their own accounts. But, that leaves more than 45 million Americans out of the loop. What happens when they retire? Just give them an alley and a cardboard box and thank them for their lifelong service in low paying jobs?

I don’t know where you get 45 million. As far as I know, every one in the US who has ever had a legit job or business has had to divert part of their income into Social Security. So it is not like the current system is a freebie. (Nothing is.) And if you carefully read what I wrote, I did allow for some element of economic redistribution.

The argument about letting people live in cardboard boxes is silly and emotional. That has nothing to do with how the retirement money is invested.

C’mon, Woody. If privatization is not voluntary, but mandated by the federal government, then isn’t the government on the hook to guarantee benefits? And isn’t that precisely where we are now?

It is true that if you guarantee a certain minimum level of benefits, then the government is on the hook. This is a valid point.

But that wouldn’t leave us “precisely where we are now”, by any stretch of the imagination. The guaranteed level of benefits could be lower than what is offered under the current system. Furthermore, as long as the stock market or other investments perform well enough the government won’t have to do anything extraordinary.

By the way, I am not claiming that the privatization is a solution to the impending “crisis” (however big it may be) when the baby boomers retire. It’s too late to address that now without tax increases or benefit cuts.

Woody, you dont really think we should trust the private companies to be there when the bill comes due, just look at the corporations lining up to get out of the pension plans they instituted years ago.

To clarify a bit, I am talking about stocks and bonds. There is admittedly risk involved, but there is also a risk in trusting your retirement to politicians who are not overly concerned with what is going to happen decades in the future.

Posted by: Woody Mena at December 27, 2006 6:52 AM
Comment #200721

David

We have to reorganize SS. You are doing it when you talk about means testing. I agree with you about that, BTW, but that shows what SS really is. It is not an insurance policy and it is not an earned benefit for the lower paid workers.

If I invested the money my employer and I paid in since I started working in an ordinary index fund, I would have more than half a million in my account today and I can still work for another 14 years. This would not be the result of clever investing, just an ordinary buy and hold index fund. A guy who started work in 1966 and made the median wage his whole life, would have more than a million in savings if he had taken his and his employers SS contribution and just done the index fund.

I think I could live reasonably off a million dollars. If you just put the whole pile into T-bills (nothing safer) you would still have an income of $50,000 a year and never touch the savings. You could leave that million to your family when you took the road to glory. For comparison, the highest SS benefit is only $24,000 and nobody gets nothin’ when you shuffle off this mortal coil.

I really do not mind subsidizing some of the poor, but I recognize that for me it is not an investment or insurance. It is a gift to the poor. I will never make back my investment in SS, even if I actually get to collect what is promised (which I doubt).

Still it will not make me feel any better in 2035 to rip off my kids to keep on paying me off.

Posted by: Jack at December 28, 2006 11:20 PM
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