What liberals think we should know about SS privatization

[ScreamingEagle]

Last night a guy knocked on my door to get my signature on a referendum against Social Security privatization. More or less the way he stated the issue was that "Bush was out to destroy our Social Security by putting it in the stock market". When I stated that I thought the stock market would probably get us better returns he gave me an evil look and immediately left, handing me a flyer which said:

WHAT YOU SHOULD KNOW ABOUT SOCIAL SECURITY PRIVATIZATION

Privatizing Social Security would cut guaranteed benefits by 30 percent even for workers who don't choose private accounts.
The average retiree would lose $152,000 in benefits in the 20 years after retirement. (The Century Foundation, Center on Budget and Policy Priorities, Center for Economic and Policy Research)

Risky privatized accounts won't make up for the benefit cuts.
For people who choose private accounts, the government would take back 50 cents for every $1 in the account. That's on top of the 30 percent benefit cut. (Center on Budget and Policy Priorities, Economic Policy Institute)

Privatization would leave many retirees in poverty. Taxpayers and family members would have to provide them with the help that now comes from Social Security's guaranteed benefits.

Privatization would explode the deficit, saddling our children with $2 trillion in debt in the first 10 years alone, mainly borrowed from foreign countries such as China and Japan. (Center on Budget and Policy Priorities)

Privatization would open Social Security up to corruption, waste, and Enron-ization because politicians would decide which Wall Street firms make billions in inflated fees off our private accounts.

We have time to strengthen Social Security the right way
rather than slashing guaranteed retirement benefits. First, we must require Congress to pay back the money borrowed from the trust fund. We could end the "wealthy wage exemption" so CEOs pay the same Social Security taxes on their salaries as we pay on ours. We could repeal the Bush tax cuts for the top 1 percent of taxpayers. And we could help working families build private pensions and savings on top of Social Security.

AFL-CIO * [B]www.aflcio.org/socialsecurity[/B] * February 2005

 

[Merlin1047]

Last night a guy knocked on my door to get my signature on a referendum against Social Security privatization. More or less the way he stated the issue was that "Bush was out to destroy our Social Security by putting it in the stock market". When I stated that I thought the stock market would probably get us better returns he gave me an evil look and immediately left, handing me a flyer which said:

Frankly I'm not sure what to think about GW's plan to privatize social security. I'm beginning to have some serious questions about whether or not it's set up to benefit the taxpayer, but I need to do some more reading. The problem is that it's hard to separate the hype and propoganda from the facts.

But I loved this passage from the flyer you received. It's typical lib pablum:
"rather than slashing guaranteed retirement benefits. First, we must require Congress to pay back the money borrowed from the trust fund."

The trust fund exists in name only. There is nothing actually IN the trust fund, because government spends the money before it even gets there. Note that they want "Congress" to pay back money stolen from the mythical trust fund. Well now, I'm all for that!!! Let's line up those Congressmen and Senators and freeze their bank accounts, seize their assets and sell their wives and children into indentured servitude until "Congress" repays all that money they stole.

But the truth is that having "Congress pay back the money . . ." is actually code for "let's raise taxes on working suckers until they squeal". Make "Congress pay it back", my eye. If that ever actually happened, I'd pay to watch it.

 

[Huckleburry]

The think tank that the flyer cited is one that represents the interests of poor and working class families. It is a big group that has been around the block for a while. I am usually a little skeptical of economic reports publish by think tanks because they are rarely objective. This is not to say that the economists are purposely deciveing us. There methods are consistent and their research sound. Unfortunately, economics is an inexact science and the assumptions we make about the market often dictates the outcome.

SS privatization could be a good thing in the very long run (30+ years). It depends on how we structure it and how the funds are run and managed. For instance, spider accounts would be much less costly then managed accounts but they could expose the markets to unusual risk levels created by the weight of that much money moving around the market. In addition, the current privatization plan requires retirees to use "their" money to purchase annuities upon retirement. These are not transferable and disappear when the holder dies (so much for "your" money). In addition, the government takes back the amount that performed along with SS fund. Thus, the first 3 percent of your account is taken right off the top. Such a hit means that your portfolio will have to take on much more risk to ensure that you have the needed funds when you retire (think 7-10 percent gains). I am going into finance and would love to stop paying SS and saving it myself. However, if and only if that money were truly mine upon my retirement. No taxes, no forced annuities, no regulations. Also I know what I am doing and have a financial manger who really knows what he is doing. I would worry about folks who don not understand the market because they could potentially loose their lives savings. Moreover, even a properly managed portfolio is not immune to sudden downturns in the market as we saw in the 30's 70's and 90's. That is almost a major down turn a generation.

To fix SS we need to raise the retirement age. Allow the trust fund to operate freely, and peg it to the CPI rather than raw inflation or wage rates.

 

[ScreamingEagle]

The think tank that the flyer cited is one that represents the interests of poor and working class families. It is a big group that has been around the block for a while. I am usually a little skeptical of economic reports publish by think tanks because they are rarely objective. This is not to say that the economists are purposely deciveing us. There methods are consistent and their research sound. Unfortunately, economics is an inexact science and the assumptions we make about the market often dictates the outcome. .

Good point. It seems that there is always some group that can support a particular outlook. During the election campaign both parties were quoting Nobel Prize economists which supported opposing outlooks. It makes one wonder what is really true anymore. I guess the facts can be twisted anyway you want to fit whatever the given premise happens to be.

SS privatization could be a good thing in the very long run (30+ years). It depends on how we structure it and how the funds are run and managed. For instance, spider accounts would be much less costly then managed accounts but they could expose the markets to unusual risk levels created by the weight of that much money moving around the market. In addition, the current privatization plan requires retirees to use "their" money to purchase annuities upon retirement. These are not transferable and disappear when the holder dies (so much for "your" money). In addition, the government takes back the amount that performed along with SS fund. Thus, the first 3 percent of your account is taken right off the top. Such a hit means that your portfolio will have to take on much more risk to ensure that you have the needed funds when you retire (think 7-10 percent gains). I am going into finance and would love to stop paying SS and saving it myself. However, if and only if that money were truly mine upon my retirement. No taxes, no forced annuities, no regulations. Also I know what I am doing and have a financial manger who really knows what he is doing. I would worry about folks who don not understand the market because they could potentially loose their lives savings. Moreover, even a properly managed portfolio is not immune to sudden downturns in the market as we saw in the 30's 70's and 90's. That is almost a major down turn a generation.

To fix SS we need to raise the retirement age. Allow the trust fund to operate freely, and peg it to the CPI rather than raw inflation or wage rates.

How high should we raise the retirement age?

I'm beginning to have doubts about this new "privatization of funds" like both you and Merlin. It doesn't seem very "private" when the government still gets to slice and dice the funds anyway they choose.

Why don't we just phase away SS altogether?

 

[archangel]

Even President GW Bush is having second thoughts on SSA Privatization..I truly believe as I have stated in past posts that it is a bad idea..It now appears as if the President sees the light..Maybe he should stop listening to Allan Greenspan, the political hack of the century..Senator Harry Reid of Nevada said today on CNN(I know they suck!) that the SSA is solvent for the next fifty years if nothing is done at all...well he went on to say it could be worked on minus the privitization clause..I rarely agree with Harry,however I agree with him on this one... :scratch:

 

[ScreamingEagle]

Even President GW Bush is having second thoughts on SSA Privatization..I truly believe as I have stated in past posts that it is a bad idea..It now appears as if the President sees the light..Maybe he should stop listening to Allan Greenspan, the political hack of the century..Senator Harry Reid of Nevada said today on CNN(I know they suck!) that the SSA is solvent for the next fifty years if nothing is done at all...well he went on to say it could be worked on minus the privitization clause..I rarely agree with Harry,however I agree with him on this one... :scratch:

<----Harry Reid


http://www.seniorjournal.com/NEWS/SocialSecurity/4-03-23SSbroke2042.htm

Trustees Report 2004

No Change in Solvency of Social Security - Broke by 2042

March 23, 2004 - The 2004 Social Security Trustees Report released today shows little change in the projected financial status of the Social Security program over last year. And again this year, the Social Security Board of Trustees states that, absent changes, Social Security&#8217;s currently scheduled benefits are not sustainable over the long term and the Trust Fund will be broke in 2042.

In the 2004 Annual Report to Congress, the Trustees announced:

The projected point at which tax revenues will fall below program costs comes in 2018 -- the same as the estimate in last year&#8217;s report.

The projected point at which the Trust Funds will be exhausted comes in 2042 -- also the same as the estimate in last year&#8217;s report.

The projected actuarial deficit over the 75-year long-range period is 1.89 percent of taxable payroll.

Over the 75-year period, the Trust Funds require additional revenue equivalent to $3.7 trillion in today&#8217;s dollars to pay all scheduled benefits. This unfunded obligation grew $200 billion from last year.

&#8220;I want to assure those already receiving Social Security benefits &#8211; as well as those who are close to retirement &#8211; that your benefits are secure,&#8221; said Jo Anne Barnhart, Commissioner of Social Security. &#8220;Reaching agreement on an appropriate solution to Social Security&#8217;s long-term financing challenges will require Congress and the President working together in a bipartisan manner.&#8221;

Other highlights of the Trustees Report include:

Income to the combined Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds amounted to $632 billion in 2003.

During the year, an estimated 154 million people had earnings covered by Social Security and paid payroll taxes.

The Trust Funds paid benefits of more than $470 billion in calendar year 2003. There were 47 million beneficiaries at the end of the calendar year.

The cost of $4.6 billion to administer the program continues to be a very low 0.7 percent of total income.

Total expenditures from the combined OASDI Trust Funds amounted to $479 billion in 2003.

The assets of the combined OASDI Trust Funds increased by $153 billion in 2003 to a total of $1.5 trillion.

Interest earned on the invested assets of the combined Trust Funds was $85 billion in 2003. The combined Trust Fund assets earned interest at an effective annual rate of 6.0 percent.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: John W. Snow, Secretary of the Treasury and Managing Trustee; Jo Anne Barnhart, Commissioner of Social Security; Tommy G. Thompson, Secretary of Health and Human Services; and Elaine L. Chao, Secretary of Labor. The other two members, appointed by the President and confirmed by the Senate, are John L. Palmer and Thomas R. Saving.

The 2004 Trustees Report is posted at http://www.socialsecurity.gov/OACT/TR/TR04/.

 

[Deornwulf]

I have a simple solution to the whole SS problem. Just let me keep my damn money and decide what to do with it myself. I have grave doubts with the government's ability to guarantee me an income when I retire anyway so I might as well take the responsibility on myself.

 

[Huckleburry]

Greenspan is the most dedicated public servent in the world today. Calling him a political hack because he dares dissagree with your favored politicians is, frankly, bullshit. The man could be making millions in the private sector but instead chooses to take a salary of a measly couple hundred grand a year and subject himself to half wit polticiancs who failed econ 101. He told the gov't to get the deficit undercontrol because it was starting to crowd out other investment. He is right. He has been doing war with the other central bankers (without help from home) and has been largley winning. Calling Greenspan a hack is discrediting akin to calling a guy who lost his leg in Iraq a traitor.

The reason we should not scrap SS is because it provides confidence in the market. In addition it is human. The richest country in the history of the world should not leave its elderly to starve on the street, regardless of past decions, yes this means that as a society we shoulder a weighty burden however it is a weight we should be willing to bear. SS can be reformed. Privitization can work. Like most things in ecnomics timing is everything and now is not the right time in regards to SS. We need to bring the deficit under control and then propose a privitizaiton scheme that truely privitizes the system, strengthens the market, and insures a brighter not bleaker future for todays young workers.
Cheers
Huck

 

[rtwngAvngr]

SS can be reformed. Privitization can work. Like most things in ecnomics timing is everything and now is not the right time in regards to SS.

Ok. So there IS a problem. Privatization CAN work. Now, it' just not the right time.

You're a funny, happy, smiling clown.

 

[Huckleburry]

Right Wing,
If you read my posts you would know a few things. First, I know there is a problem with SS. Second I am opposed to this Privitization because it does not solve the problem and because it is not really private. Third; I have not made an argument about SS because I am waiting for one of the folks from the right to make an ECONOMIC argument on SS. This would involve real economics and real argument rather than just sputtering buzz words like Ponzi Scheme and GDP. I know what those things mean. So parrot the ball is in your court. Convince me.

 

[cptpwichita]

Why wait when it can be done now!This makes no sense,you don't wait for the roof to collapse before you fix it!Why is it my problem if someone else made poor life choices (got pregnant,got addicted to drugs,didn't develop any job skills,refused to save or invest any money for the future,maxed out their credit cards buying chinese made trinkets,etc.),where in our constitution does it say the federal government has the power to institute massive income redistribution projects by politicians in an attempt to aquire political power thru vote buying programs.You hear people constantly refer to us as a democracy but we are not a democracy we are a representative republic based on rule of law and individual responsibility.a democracy will almost always fail because once it is discovered that you can put people in office to take from others by force and redistribute wealth it is the beginning of the end.

 

[rtwngAvngr]

Right Wing,
If you read my posts you would know a few things.

Actually, most of the time I feel reading your words actually ROBS one of understanding.

First, I know there is a problem with SS.

What's wrong with it? Just give me a brief concise statement of your understanding. This is called "sayback".

Second I am opposed to this Privitization

"Privi"tization is the system we have now; the whole thing's going down the crapper.

because it does not solve the problem and because it is not really private.

The proposal isn't finished yet. Get on board and make sure it REALLY IS private, and DOES solve the problem. Or you could be an obstructionist hamhead, like your congressional leadership.

Third; I have not made an argument about SS because I am waiting for one of the folks from the right to make an ECONOMIC argument on SS. This would involve real economics and real argument rather than just sputtering buzz words like Ponzi Scheme and GDP. I know what those things mean. So parrot the ball is in your court. Convince me.

A ponzi scheme is a real construct. See my sig. But forget the first part of the definition, as the government does not bother to lie about it. Why do you need numbers to understand such a simple concept? Are you learning impaired?