We all know that Barack Obama is looking for new and creative ways to go after Hillary Clinton — he’s said so himself. He has apparently decided that one of them is Social Security. You can read all about his latest strategy on this at the Daily Howler, who over the years has done some of the best reporting and debunking on Social Security of anyone out there. Here’s the Howler’s basic assessment:
Clinton is right on this silly non-issue, as Democrats all seemed to know in 2005 [when Bush was pushing to privatize the program]. But so what? Now, we read that Obama is going to push the issue as a referendum on Clinton’s bad character! And make no mistake: A plutocrat press corps will praise Obama for both parts of this approach. They’ll praise him for attacking Clinton’s character-a long-time, favorite focus of theirs. And they’ll praise him for pimping the “problem” of Social Security, as plutocrat think tanks have so long done-as they themselves did, without mercy, in their two-year-long War Against Gore.
The Howler has much more, and his whole thing is worth a read. But the point of this post is to get just this one thing clear: Social Security is not on the verge of collapse. It just isn’t, and anyone who tells you differently is intentionally misleading you. We’ve been through all of this before, and quite recently, with President Bush’s now-largely-forgotten plan to turn Social Security into a bonanza for Wall Street. What killed that plan? The fact that, finally, the media caught on to the fact that what Bush was saying about Social Security’s state of fiscal crisis was not true.
So now, Barack Obama seems to be trotting out Social Security’s “solvency” as a “problem” that needs to be “fixed.” And he thinks he can score some points against Hillary Clinton for her refusal to state how she would solve the “problem.”
But the problem with Obama’s problem is that it isn’t really a problem at all — at least, not the sort of short-term, crisis-like, must-be-fixed-now problem that he seems to want us to think it is. Just to refresh our recollection, here is the state of affairs based on the Social Security Trustees’ 2007 report if we do nothing:
The Trustees’ report indicates that the problems in Social Security should be less difficult to address than those in Medicare. Social Security will be able to pay 100 percent of promised benefits until 2041 (the year in which the Trustees predict the trust fund will be exhausted) and 75 percent of promised benefits after that (declining to 70 percent in 2081). The data in the Trustees’ report portray a program that has a substantial long-term funding shortfall that must be addressed, but not a program with a devastating structural crisis.
That strikes me as a pretty fair-minded assessment. Yes, there’s an issue out there that needs to be addressed, and addressing it sooner rather than later will make it easier to handle. But good heavens, the current projections say we’ll be able to pay full benefits until 2041 even if we do nothing, and 70% of promised benefits in 2081, when most people alive today will be dead. Obviously, projections made today about what’s going to happen in 2081 are practically worthless, so this whole idea that we should be terrified about the state of Social Security because of something that might (or might not) happen decades from now strikes me as more than a trifle bizarre. (Plus, don’t forget that the Trustees’ projections are notoriously conservative — back in 2004, the Congressional Budget Office issued a different set of projections that predicted full benefits for an additional decade, and thereafter the ability to pay 80% rather than 70% of promised benefits.)
I’d say the country has got problems that require resolution before 2041. I’d like my candidate to focus on those problems first.
This article from the NY Times magazine, published in early 2005 when Bush’s privatization plan was in full swing, remains one of the best sources I know of for a solid overview of the history and workings of the Social Security program (like, it actually explains in a comprehensible way what the “Social Security trust fund” is). So here’s a suggestion: read the article today (it’s long, but it’s worth it), and then watch the Democratic candidates’ debate tonight on MSNBC (9 pm). And listen for whether what the candidates are saying about Social Security matches up with reality.
Social Security isn’t a crisis, and Mr. Bush’s proposals should be ignored, even though:
<
p>
<
p>
Global Warming, is a crisis, and it too is long term, and Mr. Gore’s proposals ought be heeded.
<
p>
Do distinguish.
For one thing we’re reaching a point of no return with global warming, and I haven’t heard anybody say that with Social Security. For another, global warming is already starting to affect us, with more powerful weather patterns, climate change (the seasons have been getting screwy), widespread catastrophic events happening all over the world. For still yet another, changing fiscal policies is relatively easier to do than changing the entire world’s economy and habits. We need to change more or less the entire industrialized and industrializing world in order to make an impact- by reducing the use of coal and other fossil fuels, by developing new and cheaper alternative energies, by changing the layout of entire regions that are based on the car, etc. etc. That takes a long time.
<
p>
But Social Security is a fiscal situation in one country. And while not easy to “fix,” won’t take the sheer amount of energy, resources and effort that global warming will. So, we need to be working on solutions today for global warming, and social security is not a problem until years from now, and we won’t really know what our fiscal situation will be.
death of planet vs. modest reduction in benefits for certain retirees … I’d say we’re talking about different worst-case scenarios.
Both are crises, yet because one is potentially more harmful, the other ought be ignored. Strange logic.
<
p>
BTW, “Death of a Planet” Ooogitty..boogity…well, it is nearly halloween…
<
p>
That’s not what I said. I said that I think social security can be fixed down the line, whereas global warming cannot. And the effort it would take to fix global warming is way out of the scale of the effort it takes to fix social security. But most importantly, we’re reaching the point of no return on global warming, but I haven’t heard anybody say that’s the case with social security. It’s a difference in urgency and priority.
http://www.msnbc.msn…
<
p>
http://www.factcheck…
<
p>
Baltimore Sun. http://weblogs.balti…
<
p>
Now in my best-of-all outcomes, I hope the politicians dilly dally along until I’ve retired, then all the wipper-snappers pay my SS benefits via higher taxes. That’s rather selfish but that’s what will happen if politicians continue to delay.
To be fair the actual comparison would be:
<
p>
“Death Of Planet” VS “Complete Colapse of Monetary System” but who’s keeping score. It should be a good show either way. Get your popcorn early and pull up a seat đŸ™‚
<
p>
It’s safe to say that global weather and the effect, or lack thereof, of CO2, etc…to the climate is complicated. Agree? We don’t really know what our future weather situation will be.
<
p>
Similarly, the calculation of SS funding in the futuSocial security is complicated.
<
p>
I’m simply saying that both future problems ought be considered now, as in sooner-is-better-than-later.
<
p>
Most privately managed retirement money have yielded well over 10% YTD, 2007. Yet, the commentary here says i) ignore the social security problem because it isn’t a problem for many years until it is a problem ii) don’t let individuals invest their SS money into private accounts because Wall Street may profit iii) oogity boogity, death of a planet.
We do know that there has been a drastic increase of CO2 and other fossil fuels which historically (and by historically I mean over the course of hundreds of thousands of years) has correlated to increased temperatures. And we can predict that at the current rate of change, we’re going to see the elimination of the polar ice caps which will result in massive worldwide flooding.
<
p>
We don’t know what the weather will be 2 months from now. Find me the meteorologist who can give me an accurate weather report 2 months in advance and I’ll switch to that person’s weather station today. But we do know what the overall climate will be.
<
p>
Moving on… I have to agree that, “it’s complicated.” In fact, I’d love to have a president who could tell Americans that there are some issues which are really complicated and aren’t a black and white issue. And I’m all in favor of preventing bad fiscal consequences down the line. But let’s get real about where we are today.
<
p>
We have real crises to deal with: the war in Iraq, the CURRENT changes to our global climate system, our budget deficit, the erosion of our civil liberties, fixing a broken educational system to train kids to compete in the world marketplace, and more. Social security, while it could be a problem decades from now, is really one of the few massive government programs that seems to work in its current form. I don’t think anybody here is in favor of ignoring a problem simply because it’s not current or hip or whatever. I think that we’re making a decision that we have more pressing problems than “fixing” a system that works fine for now and will for decades to come.
the effect, or lack thereof, of CO2
<
p>
The ability of CO2 to trap infrared radiation is basic physics. Anyone who questions that is ignorant, a fool, or crazy.
<
p>
Here are a couple links.
<
p>
The rest of the climate system (feedbacks, etc.) is very complicated, so there is lots of uncertainty, and we can beat each other over the head with data all day long. But the uncertainty is not centered around no impact; it’s definitely toward the hotter side. It’s just a question of how much.
<
p>
As for SS vs. CO2, I’m with you. I’m working to reduce the emissions associated with my life, and I hereby pledge to support means-tested SS benefits, including my own. Or whatever fix will avoid insolvency while protecting those who are currently paying in and will need the money.
<
p>
The S&P 500 dropped 20.4% in one day in 1987. I mention that only because it’s about as irrelevant to the discussion as your YTD yield.
Since you brough up Black Tuesday i thought it would be refreshing to note that effective immedietly the NYSE will no longer impose trading curbs that were imposed to slow declines such as 1987. Hmm .. Should be entertaining if you enjoy watching the shills on CNBC squirm ..
<
p>
http://www.buffalone…
<
p>
True that the S&P dropped 20% in one day in 1987. The S&P also sprang right back and has consistently outperformed government bonds during any single 12 month period of your choosing.
<
p>
My assertion that the equity markets were in excess of 10% YTD, is typical, not exceptional. It’s also typical, that your payroll tax money
invested in government bondsnot invested in ANYTHING, will yield you less for your retirement than if you took the same monies and put them into the S&P index funds.<
p>
“The S&P dropped 20.4% in one day in 1987” Oggity boogity…private SS bad…oggity boogity.
<
p>
That may have been what you meant, but it was not what you said. You threw out a factoid. I made it quite explicit that my factoid was also largely irrelevant to the discussion. So your oogity boogity business is irrelevant. Also, while an 8-10% return may be typical, it is not guaranteed.
<
p>
You might find this article interesting. It nicely summarizes the risk issue. Here’s the money quote, so to speak:
<
p>
<
p>
Social Security is about security. It is precisely at times when the markets go south (and they do, from time to time) that many will rely most heavily on things like social security.
<
p>
And what about this:
<
p>
1. Do you consider 20 months (July 1989) to count as “sprang right back”?
2. Are you mad? Here is historical yield data for US bonds. 30 year bonds run around 6.5% on average since 1990. The S&P 500 dropped 40% from March 2000 to March 2003.
<
p>
Did you say something you didn’t mean?
<
p>
I am fine with privatized accounts. They’re called 401(k). I am fine with SS reform. I am not fine with SS reform that has undue exposure to risk.
If you’re familiar with 401K and/or have one yourself, ask yourself this. Do you invest solely in long-term US bonds?
<
p>
PRIT doesn’t invest solely in US bonds; teachers pension doesn’t invest solely in US Bonds; no major Corporation invests solely in US bonds….Why? Because it’s risky and irresponsible to invest.
<
p>
“Social security is about security”. Yet, in the current system, inflation is slowly eating the monthly SS payment, and the CPI adjustment isn’t keeping pace.
<
p>
So, you’d deprive current workers the right to deal with this problem by compelling them to leave their money with the “secure” system which underperforms private money. Real compassion.
<
p>
Because via SS I already do. I have a baseline insurance policy in case my pretty extensive market exposure heads seriously south. And I’m OK with that.
<
p>
And let’s back up. I jumped into this debate to contest the factual accuracy/relevance of some of your statements. Do you stand by your statements that The S&P also sprang right back and has consistently outperformed government bonds during any single 12 month period of your choosing.?
<
p>
I can’t debate policy with you when you make up facts. BTW: I can find several 12 month periods in the last 40 years where 30 year bonds beat the S&P. I’m not arguing that you shouldn’t invest in the S&P; I’m just pointing out that you are making stuff up.
<
p>
Toward the larger issue, if you feel we have to fix SS in order to be logically consistent with addressing global warming (a false premise, but I’ll spot you), fine: Means-test my SS benefits.
You probably know that you have no property interest in your SS investment, but when reach a certain age (which gov can change) you’ll receive a certain amount (which may change) and part of it will be taxed. And that might change.
<
p>
And you are correct. There are and have been short periods where the government bond investment outperformed the S&P and my statement to the contrary was incorrect.
<
p>
Over the long run, any fund manager should rightfully invest in some equities, and SS is a long run investement. It “investing” solely in LT treasuries is wise?!
<
p>
Toward the larger issue, going back to my original post, the premise of this entire thread is that the SS problem isn’t a problem that ought be addressed. That is just wrong.
I think the word crisis is generally overused in socio-political discussions as it is. SS paying out 70% 70 years from now using conservative estimates does not a crisis make.
<
p>
Problem? Maybe. Concern? You betcha. Worth tweaking now if such a small tweak now has a larger impact later? ‘Course.
<
p>
Crisis? Nawp.
Ok, we can find some common ground and move on.
<
p>
I think SS reform should be addressed. Let’s start with the next admin (the current one did a fine job of ensuring the status quo). The main issues are medium-term (next ~50 year) solvency and long-term structural change. SS is ultimately a front-loaded pyramid scheme, and it would be nice to move away from that.
<
p>
So I agree with you there. But the dynamics and the timing are much different than global warming.
Here’s an “oggity boogity” for you…
<
p>
President Bush claimed the Social Security system is in crisis. Yet his solution was to specify that a substantial portion of the revenues coming in to pay CURRENT liabilities could be diverted and invested elsewhere. This would create a massive deficit in the program, a deficit which does not currently exist. Bush specified no policy to deal with this major problem, either in terms of tax increases or benefit cuts.
<
p>
So to solve a “crisis” (with the quotes), Bush proposed a policy that would place the Social Security in actual crisis (without the quotes).
<
p>
Apparently this makes sense to you. Please explain.
First, “it would be irresponsible to do nothing” said DEMOCRAT Charlie Rankel, a politician with few good solutions, but at least smart enough to recognize a problem when he sees one.
<
p>
And second, yes, allowing private citizens a property-right in their contributions to the SS system would have and will create a short run (13 years) deficit in the system. As risk of a deficit increases, Congress would have to decide to i) raise taxes ii) means test iii) extend the retirement age iv) fund the deficit with current tax dollars; v) combination of all three.
<
p>
You’re probably aware that when the 65 year retirement age was originally set, 65 was very close to the end of a person’s life and that SS was a supplemental retirement stipend. There are very, very good arguments that 65, 66, or 67 is too young to provide social security benefits.
<
p>
This balance of reforms (i.e. taxation, means testing, retirement age reset) are all problems the Congress refuses to honestly address, principally because of the risk of backlash from the AARP and the elderly vote.
<
p>
So, is giving the same Americans a property-right interest to their money sufficient a reason to incur a short-run deficit that will ‘inspire’ politicians to address some of the tougher questions? Yes, absolutely. IMHO.
It’s true that the life expectancy was lower when SS was created. But be careful… generally, life expectancy is the life expectancy of newborns. What was the life expectancy once someone reached age 21 as compared to today? I suspect the differential was much closer. After all, nowadays:
<
p> * accidental death * wartime death * infant mortality * death due to childhood disease
<
p>
have all been substantially reduced. A huge population dying before their 21st birthday sank the mean in 1935 relative to 2005.
<
p>
I have no idea what the numbers were in 1935 or in 2005 w.r.t. life expectancy of people who are 21 years old, but I suspect that the differential is much smaller than life expectancy of newborns in 1935 and 2005.
<
p>
Also, remember that SS is essentially poverty insurance for the old, the injured, and the widowed. It’s not a pension program. It’s not sufficient to retire comfortably. To that end, investors have plenty of incentive to treat their other investment “property right.”
<
p>
I don’t know the comparative life expectancies, but consider this: in 1935, there were few (as a percentage) 65 year olds in the population. Now 20% of the population is 65 or older.
<
p>
It’s interesting that you dismiss this is simply as a “short-run deficit”, when diverting a portion (I think Bush had mentioned 25%?) of the current SS money out of the system would create a deficit of HUNDREDS OF BILLIONS (even trillions) of dollars. I know Bush has shown great skill in creating giant dificits, but this would hardly be a “short-term” deficit. This would be a full-out, knock-’em-dead crisis.
<
p>
Instead, we could consider doing what Congress did in ’78 and ’83, which is to look closely at things like the retirement age, benefits, tax rates, etc. and have small tweaks in the system that will allow for the solvency of the program. It wouldn’t take too much.
<
p>
It certainly wouldn’t require create a massive, very much long-term deficit that privitization would create.
<
p>
Not sure where you’re getting your numbers re: deficit, but regardless, the most Draconian numbers estimate the “cost” to the SS System over 10 years at $712 billion which would have to be funded from taxes or borrowing.
<
p>
http://www.whitehous…
<
p>
Of course, even the term “cost” is misleading, because the cost to the system is a benefit to the taxpayer who’ll have invested in, a retirement account for his or her benefit.
<
p>
So if “diverting out of the system” means allowing people a real property interest then divert away! The question is will the diversion put at risk any benefits being paid. And, under the Bush proposal, not one person under the age of 55 would have his or her benefits affected.
<
p>
BTW, Daniel Patrick Moynihan, Robert Kerry, Chuck Robb, Tim Penny all supported the SS Personal Accounts–democrats all.
<
p>
Also, here you go, from Bill Clinton:
<
p>
<
p>
Finally, regardless whether you like or dislike the private account solution, the first step is to admit that there’s a problem worth spending current legislative energy.
One difference is that the social security estimates keep turning out to be pessimistic. In other words, every year the date at which the trust fund will run out is moved to a later date. This implies that we are overestimating the seriousness of the social security problem. On the other hand, we keep getting reports that global warming is happening faster than we expected it to. Our estimates of when the ice caps will melt keep getting earlier.
<
p>
Social security is not a crisis because we have at least 3 decades before current (pessimistic) estimates expect it to have any problems. Global warming is a crisis because we have probably about 10 years before it starts seriously affecting everybody’s life.
<
p>
Furthermore, no matter how bad things get with social security, we can always fix the problem by raising taxes. That isn’t popular, but if we wait too long, it just means raising taxes more. There are various points with global warming where there will be no way to fix the problem. If the polar ice caps melt, we cannot refreeze them. The majority of the world’s population lives in places that will be flooded. We don’t know how to fix the problems that global warming is expected to cause. We don’t even know how bad things could get. We will probably have to move several billion people and change what crops are grown on millions of acres of farmlands. Native plants and animals will no longer be well-adapted to where they live, so we are likely to get mass extinctions. It seems that many diseases thrive under global warming conditions. The data keep being worse than we expected it to be, and we don’t know how bad it will get. The worst case scenario is turning Earth into a clone of Venus, although nobody expects things to get that bad.
<
p>
The predictability and severity of the two problems are not even close.
It was NEVER meant to be a person’s entire retirement income – it was meant to supplement the PENSIONS which they got from the businesses where they worked! It was a SAFETY NET, not a damn TRAMPOLINE!
pensions from businesses where people worked? Sure SS has to be only a safety net and we need to incent more personal savings for retirement–but we can’t forget the business community (for the most part) has turned their back on this responsiblity.
Exactly — Social Security was meant to be a safety net. It was not supposed to be an investment scheme. That’s why we have 401Ks, etc.
Frank, IMHO, business took the growth of Social Security – relaxing regs about additional earnings, etc., – as PERMISSION to cease pensions. Hoya – you are 100% right – NOW -but there’s about a 15 year gap between when business phased pensions out and phased in 401k’s, legalized IRA’s, etc. THOSE people are going to be hit hard.
PP, you make an interesting point, but I’m not sure about this “15 year gap”. After all, it’s not as if all businesses phased out private pensions all at the same time. It was gradual, and over many different industries.
<
p>
But to the extent you are correct, it should be noted that the people getting the best deal from Social Security were the first and second generations of recipients, because they paid in relatively lower amounts to the system and recieve, in return, relatively higher amounts from the system. So maybe this helps to blunt the impact of some of the problem you note.
IIRC, factories (esp. in Central Mass. where I grew up) had decent penion plans until the mid/late-1960’s. Then, they began to be phased out, if not dropped altogether. I’m thinking Nortons, Wyman-Gordon, US Steel, etc. In the late 1970’s, companies – mainly white-collar ones – began to offer 401k’s. Tht’s the ‘gap’ I’m speaking of.
<
p>
Now, to a certain extent, 401k’s are VERY much better than the old defined benefit plan – just ask the Polaroid employees who lost pretty much everything. But there WAS a ‘gap’ between the phasing out of pensions and the creation/commonplaceness of IRA’s and 401k’s. And a lot of those folks AREN’T in that first tier of beneficiaries, but much later. They’re mostly in their fifties now, they ALREADY have to wait until 66 or 67 to get full benefits, and they’ll be a problem in the future.
Now, to a certain extent, 401k’s are VERY much better than the old defined benefit plan – just ask the Polaroid employees who lost pretty much everything.
<
p>
You’re telling us that the FedGov’s Pension Benefit Guaranty Corp, which began under the Republicans, was and remains pretty much a fraud.
<
p>
Silly me for believing differently.
But a deficit crisis – the Federal Government has been using excess Social Security funds each year to fund the General Treasury. And Bush has done that in spades, running deficits generally over $500B per year, and using the excess Social Security funds to diminish that number, and thereby justify his tax cuts for the wealthy.
<
p>
As the demographics change in the next few years so that the worker/retiree ratio decreases, those excess funds will not be available – hence the reported deficit will be back in the $500B range. And when it comes time that Social Security needs some of that $2T “borrowed” from its Trust Fund it will not be there, long gone to the wealthy in tax savings.
<
p>
All efforts to “save” Social Security are a ruse to get our eyes off the ball.
Are you suggesting that the US government intends to default on its debt?
<
p>
Clearly the US Treasuries market is still pricing in an expectation that the US government will actually repay its debt. Why do so many people think that the government will voluntarily default? If you really think the government is going to default, you should short sell long-term government bonds. You’ll be able to buy them back at default-based prices in 10-15 years.
<
p>
It’s a good thing the financial markets didn’t take Gearge Bush seriously when he pulled his publicity stunt of pointing at a bunch of US treasuries and calling them worthless IOU’s. That was an act of treason.
They just … default. But, what’s the definition of a default of the SS system?
<
p>
Suppose as a 20 something year old, I “invest” in a system that promises to pay to me a sum certain based on my contributions when I reach 65. Then, the lawmakers decides that i) well, we have to means test so that “rich” recipients don’t get as much or ii) we have to extend the retirement age to, say, 67 or 70; or iii) we’re going to tax all of your social security.
<
p>
Sounds like some sort of default to me.
The government can change the tax code in any way they want to, whenever they feel like it. They could decide tomorrow that personal income tax rates will be 90% for everyone with no deductions. The only reason they can’t is that they would lose their next election. The same thing goes for reducing social security benefits too drastically. Your argument has nothing to do with social security.
<
p>
Social Security is not an investment. It is an insurance system that guarantees you will not be living in poverty when you get old. Do you expect to get a positive return on auto insurance? Homeowner’s insurance? Life insurance? Health insurance? Why would poverty insurance be different?
<
p>
If you want an investment, put some money into an IRA. If you don’t want poverty insurance, I’ve heard you can opt out of social security. I haven’t looked into how that works. If you look into it and post the information in a diary, it would be a useful public service to some members of this community who don’t seem to want to be part of social security.
<
p>
If George Bush’s statement that the SS systems was a bunch of worthless IOUs, then what was Bill Clinton’s statement?
<
p>
<
p>
The Republican calling them worthless; the Democrat calling them not real economic assets. Treason!
The issue of getting rid of the cap on payroll taxes is about as obvious a move as getting rid of separating “capital gains” from all other forms of income: they’re both issues of basic tax fairness: the rich should not pay a lower tax rate than the rest of the country. the payroll tax is blatantly regressive, and that should be ended.
<
p>
Doing so has the added bonus of increasing the funding to Social Security, improving the security of the program in the long run, and taking any silliness of “privatization” and “collapse of the system” off the table and stops it from being brought up over and over again by the right. Fix the funding mechanism and restore tax fairness, we all win.
…I believe that Bill Clinton floated the idea that some SS funds should be invested in conserative private market funds to increase the return on the SS Trust Fund. I think responsible Dems should consider that.
<
p>
THIS IS NOT “PRIVATIZATION” OF SS WHICH BUSH PUSHED FOR (but never formally proposed because of the strong opposition he got). Bush’s plan was to essentially move towards breaking up the pooled dollars of the SS trust fund and let each person direct their contributions into investment funds. It would no longer be insurance for all, but personal IRAs where the rich and luckier investors benefited most. Clinton wanted to get a better return on the entire trust fund as a way to grow out of the long-term projected short fall. We’re not talking speculative boom/bust investments, but conserative funds that still get better returns than the Treasury Bonds that the Trust Fund is force to buy (and essentially fund our debt.)
<
p>
I have personal experience the highlights this benefit. In one of my first “real” jobs, my company contributed into a pension plan for me–didn’t cost me a dime. When I left after 8 years they said the pension would be worth about $160 dollars a month by the time I retired in 40 or so years. But half way through that 40 year period, I learned that it will now be worth about $500 a month. Now I also get the notice from the Social Security Administration telling me that–after 25 years of me and my employer contributing a combined 15% of my salary into SS, that I’ll be elible for about $2,000 a month (which I belive is the max) in today’s dollars. So how is it that I’ll get $500 a month from a company that made modest contributions into a pension plan for me, for just eight years and I get only $2,000 a month from SS after having paid 15% of my lifetime salary into SS? Simple, the pension fund was invested and the SS trust funds are forced to buy treasury bonds to finance our national debt.
<
p>
There is a world of difference between investing a part of the entire SS Trust Fund into the private market (in conserative funds) to increase the returns of the entire fund for everyone to benefit and Bush’s stupid plan.
There’s no difference. In 1999, Clinton proposed diverting money into personal accounts at a then cost of $480 billion. The accounts were to have been known as Universal Savings Accounts.
<
p>
The only diff is 10 years have passed and the messenger.
One, all of the proposals for Social Security privatization have provided for yet another retirement account. We already have more than a few of them, including IRAs, 401Ks, Kehoe plans (I don’t know what they call them now) for the self-employed. Why yet another form of retirement account? Just raise the contribution limits on the existing accounts.
<
p>
Two, who would this benefit? Follow the money. Unless the employers are required to match private SS plan contributions, their payroll taxes will be reduced, resulting in a tax reduction for employers.
<
p>
And, who is going to manage these accounts? Obviously, investment houses on Wall Street, many of which charge exhorbitant management fees.
<
p>
And who might this injure? The investor, of course. Apparently, many were children in the 1970s, when the stock market stagnated for well over a decade (thank you, Richard Nixon) and in 1987 when the stock market plummeted (thank you St. Ronald, he of Reagan).
<
p>
Going up a bit, somebody mentioned pensions. It may be well to recognize that the FedGov’s Pension Benefit Guarenty Corporation insures defined benefit pensions. Not exactly private sector, is it? It has been consistently reported that the premiums charged by the PBGC are significantly lower what is required to actually insure the pensions. More corporate welfare by the FedGov.
<
p>
The proposal to raise IRA, 401(k), etc… has met with continued opposition, mainly from the Dem side of the aisle for decades:
<
p>
http://www.cbpp.org/…
…I’ll merely point out that your link makes no reference to shudder Democrats, but it does quote material from Merrill Lynch, one of the Wall Street firms to which I was referring, and which will profit from “retirement savings accounts.”
<
p>
It really would be nice if you were to address the points that I was making. You didn’t.
<
p>
I am actually beginning to wonder whom you are shilling for.
Apparently some people here believe that the only people who would be paying income taxes to redeem the under-valued bonds issued by the SS trust fund are young taxpayers. I’m sorry to disabuse you of that assumption. But the fact is that the elderly retired pay income taxes on their corporate pensions, their IRA redemptions (except for Roth IRAs, for which they have already paid fed income tax), their 401K redemptions, their Kehoe plans, and so forth.
<
p>
So they will be paying income tax to help redeem the undervalued bonds in the SS trust fund. It isn’t just the whiners in the younger generation.
…Let’s do it the way it is done in the far east. Extended families are the basis for their social security. They pay for the education of the young’ens in the expectatation that, when the young’ens become productive, they will not only pay for their childrens’s education, but also for the old-age maintenance of the elderly within the family.
<
p>
Sounds good to me. We wouldn’t have paid well over US$50K over the last 20 years to the town of Wellesley to support education for other peoples’s kids. Whose kids don’t want to support us in our old age.
<
p>
Whatever. Either there is an inter-generational social contract, or there is not. Apparently the kiddies want to forget that.