Social Security Reform in the US
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I don't trust goverment to manage my money.There track record is pretty bad.red said:this is exactly what I don't understand - if one of the big selling points is that they will invest in tbills- surely to god (note lower case) the social security administration can do that
langeweile said:I don't trust goverment to manage my money.There track record is pretty bad.
you don't trust them to manage your money, but you do trust them with nuclear weapons?
I don't see the connection between those two. One is a necessary evil (nukes) the other is a money grab.red said:you don't trust them to manage your money, but you do trust them with nuclear weapons?
Ya. If they want some privatization that works; let the SS administation manage the private accounts and give it a bit more leaway in the types of investments it makes. Safer, Less cost, greater assurance that no scams are involved, and could put in a hege for insurance (self underwritten or private) to spread losses if they occur. There are many other options than the extreme being proposed.red said:this is exactly what I don't understand - if one of the big selling points is that they will invest in tbills- surely to god (note lower case) the social security administration can do that
The ONLY good thing I can say about Bush is that once these third rails are crossed that future administration may have a chance to get the management and investment aspects right.
I just don't understand the mistrust / fear associated with allowing people to invest money that they have made. Bush's proposal would give me the CHOICE to let the government "invest" the money for me or let me do it. Why is this freedom of choice so threatening to so many people?
NPR reported this morning that if this proposal were adopted you would receive a 3% real return on your money if you opted OUT of personal accounts; the OMB is predicting that real returns on private accounts would be about 4.6%. This would not affect anyone retired or 55 or older. I know I think my investments over the next 20 years can do much better than 3% real return.
I think there are two issues here for Democrats, first is they like to oppose anything that Bush supports and can be used to whip up fear (lowering SS benefits), second, and more troubling, is the old Democrat elitist view that people who earn money are too stupid to manage it. Both these will get the party in trouble this summer.
OTB
NPR reported this morning that if this proposal were adopted you would receive a 3% real return on your money if you opted OUT of personal accounts; the OMB is predicting that real returns on private accounts would be about 4.6%. This would not affect anyone retired or 55 or older. I know I think my investments over the next 20 years can do much better than 3% real return.
I think there are two issues here for Democrats, first is they like to oppose anything that Bush supports and can be used to whip up fear (lowering SS benefits), second, and more troubling, is the old Democrat elitist view that people who earn money are too stupid to manage it. Both these will get the party in trouble this summer.
OTB
The "D's" are in a real dilemma with this. Especially since they are trying to be the partie of the "young generation". The price for inaction will be paid by the very same young people they are trying to get.
Maybe Bush's plan is not the best and needs some adjustment, but nobody is deniying that the system will be in trouble. While the "D's" can score some short term political points in the loing run they need to come up with a plan on their own.
I believe Canada had to face the same dilemma a few years back.
Maybe Bush's plan is not the best and needs some adjustment, but nobody is deniying that the system will be in trouble. While the "D's" can score some short term political points in the loing run they need to come up with a plan on their own.
I believe Canada had to face the same dilemma a few years back.
That act represents a real dilemma for me.lenharper said:Hey Lang
Judging by your quote at the bottom of your postings am I to assume that you are not in favour of the Patriot Act?
Some of the provisions I find necessary others are a bit over the top. It is a very diffcult balancing act between preserving individual freedom and fighting terrorists.
Imagine more people being killed due to a lack of strong meassures to protect our country? Would you want to stand in front of the survivors and explain to them why you have failed to protect them?
It is because you, as an American, don't grasp the full gist of socialism, which is a throwback to the feudal paternalism of old europe. In this system, one is entirely helpless, depending on everything coming from the fatherly hand of the prince, who quite naturally, and by divine right, knows better than his subjects. To such a feudal prince, subjects are merely children. In contrast, America by design is a free Republic in which citizens are responsible for managing their own affairs. See your own comment about the elitism of the blue blood Democrat faction, of which Billary is the most outstanding example.
Remember, one who managed his own retirement portfolio can't be simply cut off by the prince for being a bad boy - the socialist's nightmare, lack of total control over the life, and death, of the children.
Remember, one who managed his own retirement portfolio can't be simply cut off by the prince for being a bad boy - the socialist's nightmare, lack of total control over the life, and death, of the children.
onthebottom said:I just don't understand the mistrust / fear associated with allowing people to invest money that they have made. Bush's proposal would give me the CHOICE to let the government "invest" the money for me or let me do it. Why is this freedom of choice so threatening to so many people?
[...]
the old Democrat elitist view that people who earn money are too stupid to manage it.
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Actually, the system is quite solvent compared to the rest of the government. The projected Social Security 5 decades from now (in today's dollars) is projected to be 175 billion. That is slightly less than the 2001 Bush tax cut, which cost an estimated 180 billion in revenue. Bush said that was a modest loss for the Treasury. If that is true, why is 175 billion decades from now a crisis?onthebottom said:Looks like the vote counting has begun. Many have been made to look silly in predicting the POTUS will back down or not get what he wants. I can't help laughing every time I hear the party of "save social security first" talk about how solvent the system is.
That deficit could be eliminated by either increasing the taxed portion of income from 90,000 to 200,000, OR raising the payroll tax from 12.4 percent to 14.9 percent. Not exactly the catastrophic tax increase we have been led to believe. I hate taxes as much as anyone else, but it would be worth it to maintain retirement security.
However you cut it, Bush's proposal would hurt Social Security. Less money would be coming into the system, and the "crisis" would happen a lot sooner. And by the way, we already have personal accounts. They are known as IRAs and 401ks.
OTB,
I notice that the balance sheet you refer to was written in December, before the President released any details of his plan (and he still hasn't released all the details). I would have to see more details also on the assumptions the authors are using to really comment more on their projections.
I do notice that they acknowledge that transistional borrowing would be significant, so they appear to be making intellectually honest arguments, something you rarely hear from the White House.
Even if they are correct about the long term, why replace Social Security with private accounts when we already have them (401s, IRAs)? I think it is important for everyone to have BOTH the Social Security safety net and a 401. And why incur such large transistion costs? If we wanted to borrow, we could prop up the existing program with a lot less borrowing than the President's plan. And, like I said earlier, a 2.5 percent tax increase could sustain Social Security indefinitely.
I notice that the balance sheet you refer to was written in December, before the President released any details of his plan (and he still hasn't released all the details). I would have to see more details also on the assumptions the authors are using to really comment more on their projections.
I do notice that they acknowledge that transistional borrowing would be significant, so they appear to be making intellectually honest arguments, something you rarely hear from the White House.
Even if they are correct about the long term, why replace Social Security with private accounts when we already have them (401s, IRAs)? I think it is important for everyone to have BOTH the Social Security safety net and a 401. And why incur such large transistion costs? If we wanted to borrow, we could prop up the existing program with a lot less borrowing than the President's plan. And, like I said earlier, a 2.5 percent tax increase could sustain Social Security indefinitely.
It also scares me whenever I hear George Bush use the word "reform".
Medicare reform will be a colossal boondoggle. Only after the bill passed did Bush acknowledge the depth of spending involved. It wouldn't be so bad if at least the new Medicare was about helping people, but instead, the largest chunk of money goes in grants to drug companies for research. The drug companies, by the way, are already the most profitable industry in world history.
Education reform is a disaster. The bill promised new funding for everything, but is instead a large unfunded mandate. It is forcing incredible amounts of spending onto states and school districts. It is one of the biggest reasons why localities across the country are struggling (and yes, I know Erie County shot itself in the foot, as I am sure some of you are thinking).
Whenever Bush has used the word "reform" so far, it has meant destroy or weaken. So, yes, I am very concerned about a Social Security reform advocated by this President. He has zero credibilility.
Medicare reform will be a colossal boondoggle. Only after the bill passed did Bush acknowledge the depth of spending involved. It wouldn't be so bad if at least the new Medicare was about helping people, but instead, the largest chunk of money goes in grants to drug companies for research. The drug companies, by the way, are already the most profitable industry in world history.
Education reform is a disaster. The bill promised new funding for everything, but is instead a large unfunded mandate. It is forcing incredible amounts of spending onto states and school districts. It is one of the biggest reasons why localities across the country are struggling (and yes, I know Erie County shot itself in the foot, as I am sure some of you are thinking).
Whenever Bush has used the word "reform" so far, it has meant destroy or weaken. So, yes, I am very concerned about a Social Security reform advocated by this President. He has zero credibilility.
I fear that OTB is judging privatization based upon how he, and people like him, would fair. OTB, I would venture, is wealthier, more educated, more sophisticated, and better able to find ways to fend for himself that the avergage (or less than average Joe). Good for him!!! I really like listening to his point of view.
BUT, while the notion that people can better do for themselves - and learn how to better do for themselves - is laudable - and more ways to instill such things should be found - something like this change is so important and so sophistcated that notion of acceptable risks is the last part of the analysis. You should only get there after you have explored all other alternatives. And even after you have found that this is the only workable alternative, you still have to understand that no risk is ever really eliminated. The least change in the basic structure is the best way to proceed. The problem with modifying the present structure, is that the people most affected are alive, well, and want to pass the costs and risks of the present system - which does need reform - on to future generations. Politicians have a hard time with selfishness and fear by the voters now. If is better to promise a better system later and tell them that it makes sence by lessening the finacial burden by paying for the transition now. The way to pay for the problem is to increase the retirement age, stop the borrowing by the Federal government with US debt instruments, and means test SS payments after some specifed minimum guarantee.
Then after you have premitted the SS administration to get away from US debt instruments, you consider incentives to increase the savings rate. Probably another type of IRA - and particualarly if they do away with tax on interest and dividedends, consider a tax subsidized IRA with more subsidization going to lower wage earners. THe more money you have (make) right now the better able you are albe (up to a point) to shelter it; this has to be considered.
BUT, while the notion that people can better do for themselves - and learn how to better do for themselves - is laudable - and more ways to instill such things should be found - something like this change is so important and so sophistcated that notion of acceptable risks is the last part of the analysis. You should only get there after you have explored all other alternatives. And even after you have found that this is the only workable alternative, you still have to understand that no risk is ever really eliminated. The least change in the basic structure is the best way to proceed. The problem with modifying the present structure, is that the people most affected are alive, well, and want to pass the costs and risks of the present system - which does need reform - on to future generations. Politicians have a hard time with selfishness and fear by the voters now. If is better to promise a better system later and tell them that it makes sence by lessening the finacial burden by paying for the transition now. The way to pay for the problem is to increase the retirement age, stop the borrowing by the Federal government with US debt instruments, and means test SS payments after some specifed minimum guarantee.
Then after you have premitted the SS administration to get away from US debt instruments, you consider incentives to increase the savings rate. Probably another type of IRA - and particualarly if they do away with tax on interest and dividedends, consider a tax subsidized IRA with more subsidization going to lower wage earners. THe more money you have (make) right now the better able you are albe (up to a point) to shelter it; this has to be considered.
The less educated, ignorant and unwashed masses aren't being forced to participate!
islandboy said:I fear that OTB is judging privatization based upon how he, and people like him, would fair. OTB, I would venture, is wealthier, more educated, more sophisticated, and better able to find ways to fend for himself that the avergage (or less than average Joe). Good for him!!! I really like listening to his point of view.
Peeping Tom said:The less educated, ignorant and unwashed masses aren't being forced to participate!
Yes they are. If the program's finances are negatively impacted, then that could impact everyone. That should be obvious.
I think the point is that the program is broke in the long term and one solution (and only one of many) is to allow people to partly withdraw from the system (privatization). The system would be shorter on payments now but much shorter on liabilities later when the system is actually in danger. Look at the balance sheet post in this thread; if you don't know the difference between an income statement and a balance sheet you will be ill prepared to have this dialogue (not saying this is you). The system is very cash flow positive now but is incurring liabilities to future generations it will not be able to pay. The privatization view is that you pay now to transition to the new system and you greatly reduce future liabilities. It also makes people less dependant on the government, which you can tell by my signature line, I would favor.irlandais9000 said:Yes they are. If the program's finances are negatively impacted, then that could impact everyone. That should be obvious.
OTB
onthebottom said:I think the point is that the program is broke in the long term and one solution (and only one of many) is to allow people to partly withdraw from the system (privatization). The system would be shorter on payments now but much shorter on liabilities later when the system is actually in danger. Look at the balance sheet post in this thread; if you don't know the difference between an income statement and a balance sheet you will be ill prepared to have this dialogue (not saying this is you). The system is very cash flow positive now but is incurring liabilities to future generations it will not be able to pay. The privatization view is that you pay now to transition to the new system and you greatly reduce future liabilities. It also makes people less dependant on the government, which you can tell by my signature line, I would favor.
OTB
Yes I understand. I am glad that you note it is only one way to solve the very real problems you point out. I do understand the difference between income and balance sheets. But, as I noted, fix and decrease benefits now boosts income and reserves to pay the reduced benefits later. That is the first thing that should be done. Those who benefit most now, should start paying. Those who do not need is should contribute more to the problem through means testing.
By the way, Peeping Tom, what the hell were you trying to say? You make no sense.
Your post implied that in general, those favoring privatization tend to have the wherewithall to make sound investment judgement. From this, my retort was that those lacking such skills did not have to participate - the implication seemed that average joe would lose. That is how I interpreted your post.
islandboy said:By the way, Peeping Tom, what the hell were you trying to say? You make no sense.
