NationStates Jolt Archive

As the debate rages on with Social security.. i have one other little tid bit of information to pose to you.....

One of the largest arguments made by the left is that any form of privitziation puts in jepordy the retirement savings of people who are unable to manage their own savings responsibly....

But the privitization plan is an optional one. So those people unable to manage their own funds never have to opt into the private account system. Why then is there a problem with the risks at hand. For those people opting in.. they already feel they can manage their money far better then the government (especially since under the current system we receive only a 1% return on our SS investments) while by any measure we can be received a 6 to 7% return over a 40 year period on our investment. And those who cannot manage their money.. simply leave it up to the government and receive their usual 1 % return...

And it seems as though all the republicans are comming up with the ideas for SS... now yet another republican .. Governor Shaw has suggested a government subsized savings account ouside of Social security to Add on to instead of carving out of SS. ( Yet another brilliant idea)... so when are the democrats going to offer solutions ? instead of casting doubt ...

"they already feel they can manage their money far better then the government"
What if they feel that way but they can't? Or if they lose it through no fault of their own.

When it comes to the accounts, do they have to invest what they put in? if so then I say let them put their money in an account, but not mandatory to invest it.

The only people who say that Democrats are making no suggestions are people who are reading very selectively. True, the Republicans have been making a lot more noise about the privatization carveout, but this is because it is a very hard sell, and one that would not be passed if considered rationally (thus we see the heavy dose of scare tactics. Consider these findings from an AARP poll of 1,500 Americans 30 and older: "43 percent of American adults support private accounts, while 50 percent oppose them. But 48 percent of the supporters defect when told how much the transition could cost. Opposition rises from 50 to 62 percent when people are asked to weigh the risks of investing in the market. 67 percent do not favor accounts if they’d have to pay management fees." This means that, while people like the idea of the private accounts, the majority realize it is not a wise move once they are informed of the actual costs and risks of said accounts).

Democratic suggestions include things like benefit or payroll tax restructuring. You can read all about it in the party platform (which, being opposed to privatization or benefit reduction, pretty much dictates that the changes will be a) a payroll tax hike or b) an age-of-retirement restructure intended to give incentives for folks to work another couple years). Of course, that would require you to go to democrats.org. It's on page 30 of the platform.

The only people who say that Democrats are making no suggestions are people who are reading very selectively. True, the Republicans have been making a lot more noise about the privatization carveout, but this is because it is a very hard sell, and one that would not be passed if considered rationally (thus we see the heavy dose of scare tactics. Consider these findings from an AARP poll of 1,500 Americans 30 and older: "43 percent of American adults support private accounts, while 50 percent oppose them. But 48 percent of the supporters defect when told how much the transition could cost. Opposition rises from 50 to 62 percent when people are asked to weigh the risks of investing in the market. 67 percent do not favor accounts if they’d have to pay management fees." This means that, while people like the idea of the private accounts, the majority realize it is not a wise move once they are informed of the actual costs and risks of said accounts).

A "managed" private account via an Index Fund has almost no management fee and rewards 5%-10%. Government = 1%. People "change" their mind because of scare tactics used by the "question" that is being posed to them.

Democratic suggestions include things like benefit or payroll tax restructuring. You can read all about it in the party platform (which, being opposed to privatization or benefit reduction, pretty much dictates that the changes will be a) a payroll tax hike or b) an age-of-retirement restructure intended to give incentives for folks to work another couple years). Of course, that would require you to go to democrats.org. It's on page 30 of the platform.

IE, the Democrats suggestion is "the system is failing, lets raise taxes and pray it works! Don't worry we can raise taxes again in another 10 years to keep on holding up a failing system!" oh and lets not forget the "We'll give you less than what you put in unless you work for as long as we tell you to" "solution" as well.

Alright! If there's almost no management fee for private accounts, why does the current carveout plan itself account for between $1.5 and $2 trillion in additional expenses as a result of the changeover?

To address your second rebuttal, tax increase is not the only way out of this crisis. If the benefit schedule were revised to increase benefits for delayed retirement, that would also fix the problem by encouraging later retirement. This means the delayed retiree would 1) pay more into the system 2) reduce the total withdrawn by reducing the number of years on SS and 3) allow the money they've put in to draw interest longer. On years expected in retiremen alone (roughly 20), the SSA could afford up to a 5% benefit hike per year. Moreover, we're working on longterm estimates. If those estimates turn out to be incorrect, and it becomes a question of whether to raise tax or to cut benefits or scrap the program entirely, an increase in tax is not a bad solution. The truth is we don't know anything. The Echo Boomers could turn out to be breeders. We might have an immigration flux. Who knows?

As a side note, the people who are in line for a tremendous boning under this scheme are widows (or widowers) and single women workers. The full name of Social Security is Old-Age and Survivors and Disability Insuance (OASDI). Under a privatized scheme, in which the guaranteed benefit is eliminated and replaced with a figure more closely linked, survivors (widows) would be left out in the cold by the relatively early death of their breadwinner because there's less left in the kitty. Victims of disability would also suffer because their shorter term of employment likewise means less in the bank. Unmarried women take it on the chin because they're still, on national average, earning what, $0.75 on the dollar? Meaning 75% the savings. If you want to address these problems, it's going to eat into the revenue of the accounts. So again, it becomes a question of what's more important: Providing this sort of universal baseline support, or squeezing an extra 3% out of 4% of your payroll tax?

Add to this the fact that the privatized moneys will not truly be privatized (these moneys will not be able to be handed down as inheritance, because the "private" accounts will be underwritten by insurers upon retirement to ensure an even disbursement of the funds until death, thus those who die early will soak the loss incurred by those who exceed their life expectancy), and a lot of the shine comes off the carveout plan.

And it ain't just Dems who realize this is a bad idea. Snowe and Collins, the GOP senators from Maine don't like it. Sen. Kyl (R-AZ) says the proposed timeline doesn't work. And then there's objections from a rep. in NH, a rep. in NC. These are just the ones I can recall off the cuff.

Why privatise it if it will cost so much to do so? Isn't the whole point of this to take the fiscal burden off the government?

ummmmm, what would happen if you get a huge market crash? Or mutal fund wipe?

If there is another hugh market crash what makes you think social security would remain secure in the first place.. There are no garantees or obligations for congress to pay out social security... Next year they could cancel the program and all that you paid into it would be gone. In fact Private accounts are more secure then the Federal program since the federal government can't reneg on those funds and sieze them.

ummmmm, what would happen if you get a huge market crash? Or mutal fund wipe?

In addition to my previous post .. do you know that the major pension funds of most large unions are heavily invested in Mutual funds for buying power ? If there was a mutual fund whipe out the majority of retirement plans would be lost anyway, and with eminent cuts in the current social security program reguardless of private accounts social security is an unrealistic means by which to surivive anyway.

Why privatise it if it will cost so much to do so? Isn't the whole point of this to take the fiscal burden off the government?

no thats not the point.. the point is to garantee some level of benifits to young people today. With the current trend in the Social security program today we face atleast a 1/3 cut in benifits with the system actually running deficits in future years. The government has to bear the burden at some point reguardless of what path is chosen (this is the simple math). Either it invests 2 trilliion dollars today to allow for the set up private accounts (which will earn upward of 6 to 7% on the investment as opposed to the 1% currently earned on the traditional) assuring some level of benifits in addition to the inadvertable cuts in benifits ... or face the staggering cuts in benifits and a requirement of the Federal government to make up the difference of money comming in and money going out possibly costing 10 trillion (worst case senario).

If there is another hugh market crash what makes you think social security would remain secure in the first place.. There are no garantees or obligations for congress to pay out social security... Next year they could cancel the program and all that you paid into it would be gone. In fact Private accounts are more secure then the Federal program since the federal government can't reneg on those funds and sieze them.

Has the government ever not paid it since it was introduced?

Has the government ever not paid it since it was introduced?

Has the government up to this point have to face a massive deficit running in the system by which only 3 to 1 people now pay into the program.. expected to drop to 2 to 1 in the next 20 years ?

The simple truth is.. had it never not paid.. the system would be dead now, and the fact that the benifits are not protected is a great risk to face as we look down the throat of eventual bankrupsy of the system (bankrupsy meaning the assets no longer are sufficent to cover the liablities)

What most people don't realize is that, even if you are getting maximum Social Security payments, and there is no crisis, you DON'T have enough to live comfortably on.

Social Security is supposed to assist you when you're retired--not be your chief source of making money.

Investing in private accounts is the only way an individual can safely create a NICE stash of money for himself later on. G W. Bush simply wants to make it the ONLY way for people to get a stash of money.

Wow. This board is making me think conservatively.

(You can be bipartisan AND bisexual, I guess.) :p

What most people don't realize is that, even if you are getting maximum Social Security payments, and there is no crisis, you DON'T have enough to live comfortably on.

Social Security is supposed to assist you when you're retired--not be your chief source of making money.

Investing in private accounts is the only way an individual can safely create a NICE stash of money for himself later on. G W. Bush simply wants to make it the ONLY way for people to get a stash of money.

Wow. This board is making me think conservatively.

(You can be bipartisan AND bisexual, I guess.) :p
How is that an argument AGAINST social security? Just because Social Security isn't enough to live comfortably on, we should eliminate it? In this society, every little bit counts.

Anyone else notice how this issue suddenly exists now? Its the greatest crisis of our time...excepting all the others. This is utter tripe. Misdirection, fear-mongering, scare tactics, personal attacks and smear campaigns. Its all here. Political hackery at its finest. Its not since the Iraq war that I've seen such attmepts to mismanage the public debate.

This Social Security issue isn't even ABOUT social security; its not about the social safety net that helps ensure that our most vunerable demographics have something to live on. Its a political game. Its purely political bull; and how many people have fallen, hook, line and sinker for this? How many people are now firmly entrenched along parisan lines for something they couldn't care less about 4 months ago?

I'm not impressed by these astonishingly poor and flawed arguments for the dismantling of our social infrastructure. The people who give them are more often than not confused about their own arguments. The very fact that no "plan" has been put up for public inspection yet by the president should tell you something...This isn't a PLAN at all! It changes every few weeks. "Personal accounts, no wait, private accounts, no wait..."

Give me a break. The last time the administration did something like this we got the medicare perscription drug plan...that's what, a trillion dollars in the red already? I thought Republicans were supposed to pursue fiscally responsible plans...not shit away our nation's future into the hands of lobbying groups.

No plan here; just a political gambit for the sake of industry lobbyists. Way to support them, you political shills. You won't even see the profits of this 3 trillion dollar destruction of our nation's elderly...yet you support them anyway. Jeff Ganon anyone?

How is that an argument AGAINST social security? Just because Social Security isn't enough to live comfortably on, we should eliminate it? In this society, every little bit counts.

Are we eliminating it ? NO.... its an extra option given to people to exercise... those who know how to manage money and feel they can do it better then the federal government and want a return higher then 1% (which is outragous by any means) can invest up to 1/3 of their social security taxes.... either way 2/3 is still going into social security... Your right every little bit does count.. and at the end of the day.. your more likely to end up with more bits in private accounts then in the federal one

Anyone else notice how this issue suddenly exists now? Its the greatest crisis of our time...excepting all the others. This is utter tripe. Misdirection, fear-mongering, scare tactics, personal attacks and smear campaigns. Its all here. Political hackery at its finest. Its not since the Iraq war that I've seen such attmepts to mismanage the public debate.

This Social Security issue isn't even ABOUT social security; its not about the social safety net that helps ensure that our most vunerable demographics have something to live on. Its a political game. Its purely political bull; and how many people have fallen, hook, line and sinker for this? How many people are now firmly entrenched along parisan lines for something they couldn't care less about 4 months ago?

I'm not impressed by these astonishingly poor and flawed arguments for the dismantling of our social infrastructure. The people who give them are more often than not confused about their own arguments. The very fact that no "plan" has been put up for public inspection yet by the president should tell you something...This isn't a PLAN at all! It changes every few weeks. "Personal accounts, no wait, private accounts, no wait..."

Give me a break. The last time the administration did something like this we got the medicare perscription drug plan...that's what, a trillion dollars in the red already? I thought Republicans were supposed to pursue fiscally responsible plans...not shit away our nation's future into the hands of lobbying groups.

No plan here; just a political gambit for the sake of industry lobbyists. Way to support them, you political shills. You won't even see the profits of this 3 trillion dollar destruction of our nation's elderly...yet you support them anyway. Jeff Ganon anyone?

you didn't know about it 4 months ago because you didn't inform yourself... i've been thinking about social security for the past 4 years knowing damn well (as i can clearly do the math myself) that i woudln't get a dime of social security when i retire... and if you actually followed politics you'd know social security was an issue in Clintons time too..as he wanted to make similar changes centered around private accounts while social security was in a surplus.. of course his party shut it down as fast as they could

"they already feel they can manage their money far better then the government"
What if they feel that way but they can't? Or if they lose it through no fault of their own.
So you suggest that because there are people too stupid to take care of themselves that nobody should have the freedom to take care of themself?

We should all just take what the government hands out to us and shut up?

Sorry, no.

So you suggest that because there are people too stupid to take care of themselves that nobody should have the freedom to take care of themself?

We should all just take what the government hands out to us and shut up?

Sorry, no.

Social security is there to make sure the people who were "too stupid" to take care of themselves don't starve to death when they can't work any more, nothing is stopping you from putting money into the market now.

Social security is there to make sure the people who were "too stupid" to take care of themselves don't starve to death when they can't work any more, nothing is stopping you from putting money into the market now.

But I'm still paying the government for a program that I don't want. I would rather keep all of my money and plan my own retirement.

But I'm still paying the government for a program that I don't want. I would rather keep all of my money and plan my own retirement.

There's plenty of programs that shouldn't be funded, social security is not one of them.

you didn't know about it 4 months ago because you didn't inform yourself... i've been thinking about social security for the past 4 years knowing damn well (as i can clearly do the math myself) that i woudln't get a dime of social security when i retire... and if you actually followed politics you'd know social security was an issue in Clintons time too..as he wanted to make similar changes centered around private accounts while social security was in a surplus.. of course his party shut it down as fast as they could

If I actually followed politics? You're right; if its one thing I need to do, its follow politics MORE...Sure this issues been simmering on the back burner since its creation; its a government program after all. Look at news coverage, look at policy journals. It simply DIDN'T exist before now; maybe 1 story every 18 months popped up about it and died immediately.

So Clinton was toying with the idea of being an economic disaster too? Interesting...so? His party was right then for shutting down the policy, just as they are right now for opposing this attempt. And that was when there was a bloody SURPLUS in government spending...The timing of this one couldn't possibly be worse.

If I actually followed politics? You're right; if its one thing I need to do, its follow politics MORE...Sure this issues been simmering on the back burner since its creation; its a government program after all. Look at news coverage, look at policy journals. It simply DIDN'T exist before now; maybe 1 story every 18 months popped up about it and died immediately.

So Clinton was toying with the idea of being an economic disaster too? Interesting...so? His party was right then for shutting down the policy, just as they are right now for opposing this attempt. And that was when there was a bloody SURPLUS in government spending...The timing of this one couldn't possibly be worse.

i didn't realize averting a 10 trillion dollar collapse of the system was a move to destroy the economy...

i didn't realize averting a 10 trillion dollar collapse of the system was a move to destroy the economy...

Oh please...See? Scare tactic. Tell me, did it hurt when you pulled that number out? Or should I assume that shills are used to that feeling by now?

Oooh, 10 TRILLION dollars, that's like, a big number or something. I better get scared and listen to a government that's overspent and under reported every major spending plan to date.

i didn't realize averting a 10 trillion dollar collapse of the system was a move to destroy the economy...
Because spending 2 trillion to bring about the collapse faster is obviously the way to go.

On the money, RoT. The costs of the privatization carveout (most immediately felt in the changeover and in the obligation to pay benefits to current retirees while diverting taxes out of SSA Trusts) are $2 trillion in the first decade, but are projected to hit $4.9 trillion by 2028. Following out the recommendations of the Prez's Commission to Strengthen Social Security, the pressure of paying benefits with reduced payroll taxes will move d-day from 2042 to 2031. At that point, benefits must be reduced or the government must incur additional debt to cover its checks. www.cbpp.org has the pdf.

Quite frankly, I don't think any of you have any idea what you're nattering on about! I become eligible for optional Social Security this coming May. Give me a few months on it and I'll let you know what I think. :p

Social security is there to make sure the people who were "too stupid" to take care of themselves don't starve to death when they can't work any more, nothing is stopping you from putting money into the market now.
So let me get this straight, the government is confiscating my money and paying me a piss poor return, just so it can subsidize some dumbass too stupid to take care of themself? And you think that's fair??