POL: State of the Union

[kingfc22]

Glad to see that the Democrats are willing to look into changing social security for those that are my age.http://dynamic2.gamespy.com/%7Efof/forums/images/smilies/rolleyes.gif They look like they couldn't give a shit about anybody under 30 because they have nothing to worry about. They already have all the money they need when they retire.

[WussGawd]

Glad to see that the Democrats are willing to look into changing social security for those that are my age.http://dynamic2.gamespy.com/%7Efof/forums/images/smilies/rolleyes.gif They look like they couldn't give a shit about anybody under 30 because they have nothing to worry about. They already have all the money they need when they retire.

Thanks for not paying attention.

www.thereisnocrisis.com

[Joe]

yes... because bloggers are all-knowing.

[sterlingice]

yes... because bloggers are all-knowing.
Don't you have a speech to be giving ;)

SI

[Joe]

Don't you have a speech to be giving ;)

SI


shit... that was tonight?? :(

[sterlingice]

shit... that was tonight?? :(
Don't worry, they used the George Bush robot as a stand in. No one's noticed the difference so far. The Cheney robot is a bit more obvious- he keeps looking bored.

SI

[Sharpieman]

Glad to see that the Democrats are willing to look into changing social security for those that are my age.http://dynamic2.gamespy.com/%7Efof/forums/images/smilies/rolleyes.gif They look like they couldn't give a shit about anybody under 30 because they have nothing to worry about. They already have all the money they need when they retire.
And you live in NORTHERN California?

[MrBug708]

I can't believe a NorCal resident would stereotype a NorCal resident...;)

[Axxon]

Don't worry, they used the George Bush robot as a stand in. No one's noticed the difference so far. The Cheney robot is a bit more obvious- he keeps looking bored.

SI

So that is what the bulge under the jacket was. the place to stick the key so you could wind him up?

[kingfc22]

And you live in NORTHERN California?
Yea, I'm one of the few "red" people in this "deep blue" state. And if you are referring to income, hah, my parents barely stay above water.

[Dutch]

Without getting into political bickering, obviously, the speech was extremely powerful and hit at the core of my political beliefs. I was very impressed.

I hope that those who voted for John Kerry will at least give the next four years a chance with Bush and offer support when it's deserved.

[Glengoyne]

I didn't hear Reid's counter on Social Security. I wanted to but missed it.

As for Pelosi's. I thought it was funny. She pretty much laid out the same plan that has been reiterated over and over by the Administration. In other words she simply stated the obvious. She didn't give any more details on how it should be done, than the Admin. She just threw in some inuendo, and said they weren't doing it right.

1) Train Iraqi's to take over their own security.
2) Rebuild Iraq's infrastructure.
3) Use Diplomacy to pressure Iraq's neighbors to behave better.

Is that is the best she can do? Hell a republican could have said that. What is wrong with Nancy? I was really hoping she'd marginalize herself even more than usual.

[Easy Mac]

I actually found the speech boring and felt he said absolutely nothing of substance... he spent his whole Soc. Sec. speech describing 401k and IRA's, but government controlled versions. Personally, I just want to get rid of the whole damn thing.

The other half was all Iraq. He didn't lay out an agenda or offer any ideas or plans (which he's done in the past), but just used it to recap whats happened in the past 5 days. 1 vote is not democracy at work, its the groundwork, but it doesn't prove it works. What proves that it works is how those in power react, not how they got there.

I now understand the state of the Iraq union, but what is the state of our union?

I was more interested in trying to figure out what the hell Cheney started chewing on around 9:40 and why Christopher Reeve's wife was there (unless she's against stem-cell research, it doesn't make sense).

[Farrah Whitworth-Rahn]

What is wrong with Nancy?
Maybe she saw something really scary before she spoke, and that's why the terrified look on her face never went away?

[sterlingice]

Now let's go to the response from one half of the country:

Without getting into political bickering, obviously, the speech was extremely powerful and hit at the core of my political beliefs. I was very impressed.

I hope that those who voted for John Kerry will at least give the next four years a chance with Bush and offer support when it's deserved.
And here's the other half:

I actually found the speech boring and felt he said absolutely nothing of substance... he spent his whole Soc. Sec. speech describing 401k and IRA's, but government controlled versions. Personally, I just want to get rid of the whole damn thing.

The other half was all Iraq. He didn't lay out an agenda or offer any ideas or plans (which he's done in the past), but just used it to recap whats happened in the past 5 days. 1 vote is not democracy at work, its the groundwork, but it doesn't prove it works. What proves that it works is how those in power react, not how they got there.

I now understand the state of the Iraq union, but what is the state of our union?

I was more interested in trying to figure out what the hell Cheney started chewing on around 9:40 and why Christopher Reeve's wife was there (unless she's against stem-cell research, it doesn't make sense).
One side finds it completely wonderful and calls for for working together which reads as "do as we say so" when it's said by the people in power while the other side said it was completely boring and full of crap and showed no compunction to work together.

Just another day.

SI

[ISiddiqui]

Why do people continue to think that Social Security will go under? So what if there are more retirees in the future? The general budget has stolen from Social Security surpluses to fund itself for the past decade+, why can't it go the other way?

[Arles]

The one thing that struck me was Reid's "Ground Hog Day" claim (ie, nothing new). I know people write these rebuttals before they see the speech, but that is a pretty amazing statement. I can't remember a time when a president called out the Saudis and Egyptions, made a commitment to the idea of a Palestinian state, took on social security reform, simplifying the tax code, setting up managed health care plans for small business and creating a legitimate health-savings account. That seems pretty aggressive and is certainly not a "Ground Hog Day" approach from a president.

[Flasch186]

what happened, i was sleeping...this flu is wackin me out.

[Dutch]

what happened, i was sleeping...this flu is wackin me out.

You missed a great speech by our President.

[Arles]

Why do people continue to think that Social Security will go under? So what if there are more retirees in the future? The general budget has stolen from Social Security surpluses to fund itself for the past decade+, why can't it go the other way?
Then what makes up for the shortfalls in the general budget? I don't think this is all the complex a concept. As we advance, people live longer lives. At some point, you are going to out-live the solvency of social security. Remember, this was a plan setup back when the life-expectancy for people was 67-68. In 2004, it is 77-78. In 2010, it may be 80+. That difference costs more money and you can't continue a process that operated under a presumption of people living 10+ years shorter than they do now without making some form of changes.

Those options are to personalize a portion, cut benefits or pay more taxes. No other manner can make up for the increased revenue needs.

[JPhillips]

Arles: You have a fundamental flaw in your argument. The average life expectancy for people that live to sixty-five has only gone up a couple of years. The big change in overall life expectancy has come from lower child mortality rates.

Also, remember that the privatization that Bush wants will do nothing to fix the solvency of the system. His advisors have admitted that benefits will have to be cut in order to balance the books.

Finally, there is no way that an economy based on the pessimistic projections for the Social Security trust fund will deliver 6-7% returns on your stock portfolio. And, if we have an economy that will produce those kinds of returns over the next 75 years, the trust fund is fine.

[SunDancer]

Arles: You have a fundamental flaw in your argument. The average life expectancy for people that live to sixty-five has only gone up a couple of years. The big change in overall life expectancy has come from lower child mortality rates.

Also, remember that the privatization that Bush wants will do nothing to fix the solvency of the system. His advisors have admitted that benefits will have to be cut in order to balance the books.

Finally, there is no way that an economy based on the pessimistic projections for the Social Security trust fund will deliver 6-7% returns on your stock portfolio. And, if we have an economy that will produce those kinds of returns over the next 75 years, the trust fund is fine.

I heard on the radio yesterday that some college study in Canada predicted the life expectany rate will grow to a 150 years old. Thats insane. Personally, I like to see Bush worry about health care more then Social Secruity.

[Arles]

Arles: You have a fundamental flaw in your argument. The average life expectancy for people that live to sixty-five has only gone up a couple of years. The big change in overall life expectancy has come from lower child mortality rates.
As of 2003, the Life expectancy of adults at the age of 65 was 18 years. In 1950, it was 13.6. If the current trend over the last decade continues, it will be at 19 years by 2010. So, while the number may not be a 10 year difference between 2010 and 1950, it will be close to 6. And it certainly won't get smaller as we get into 2020 and beyond.

Also, remember that the privatization that Bush wants will do nothing to fix the solvency of the system. His advisors have admitted that benefits will have to be cut in order to balance the books.
That's because the plan to weed people off social security over time and simply allow them to have enough saved in their personal plans to where minimal government-level SS benefits are needed.

Finally, there is no way that an economy based on the pessimistic projections for the Social Security trust fund will deliver 6-7% returns on your stock portfolio. And, if we have an economy that will produce those kinds of returns over the next 75 years, the trust fund is fine.
If it's really that pessimistic, then they fact they will be heavily invested in bonds (as many have stated) should lead to a 6-7% rate of return. The pessimism is more from a realistic standpoint that takes into account longer living people as well as a budget that will never decrease. In fact, if we "only" have a 3-4% increase it is called a cut by much of the left. These are factors that have to be taken into account in any legit projection.

[Arles]

I heard on the radio yesterday that some college study in Canada predicted the life expectany rate will grow to a 150 years old. Thats insane. Personally, I like to see Bush worry about health care more then Social Secruity.
Why not have him address both? (as he stated he would in tonight's speech)

[SunDancer]

Why not have him address both? (as he stated he would in tonight's speech)

That would be great. I did not watch the speech (was out with family and that), so I did not know what he said. But I just dont seem the excitement about health care that he has for SS, but just the typical lip-wording you usually get. I just think health care is something that is a bigger problem.

I like Bush, and I think he may be the strongest person in terms of being aggressive and getting things done. I am not sure that we really seen that in a while from a political.

[-Mojo Jojo-]

And why are we all obsessing about social security when medicare is the real problem?

[kingfc22]

And why are we all obsessing about social security when medicare is the real problem?
I thought we already discussed that people are living longer.http://dynamic2.gamespy.com/%7Efof/forums/images/smilies/tongue.gifhttp://dynamic2.gamespy.com/%7Efof/forums/images/smilies/wink.gif

[Mr. Wednesday]

As of 2003, the Life expectancy of adults at the age of 65 was 18 years. In 1950, it was 13.6. If the current trend over the last decade continues, it will be at 19 years by 2010. So, while the number may not be a 10 year difference between 2010 and 1950, it will be close to 6. And it certainly won't get smaller as we get into 2020 and beyond.I'm curious, suppose we aim to preserve a roughly constant life expectancy beyond the beginning of benefits (i.e. push the retirement age back)... how far back does that push the trouble point for Social Security?

As things stand, the change in life expectancy alone would have increased the draw on Social Security from 1950 by more than 30%. That's over a long time, but it's pretty significant in my mind.

[CentralMassHokie]

When the GAO and CBO both say that Social Security will be solvent now through at least 2052, without drawing from the trust fund that the current administration and congress have been using to help pay down the defecits that they've created, I don't really think it's the number one priority for the country.

Especially when you realize that everytime the GAO and CBO run the numbers, they project the insolvency point to be out another 5-10 years because they use ridiculously pessimistic views of economic growth and rate of return.

The good news is most of the country and most of congress gets this and the dismantling and privitization of social security will not gain traction and will die out. It might make it through the House, but certainly not the Senate. And I refuse to use the terms "reform" and "personalization" since they are not accurate to what is in the President's plan.

Oh, and as for life expectancy, the original plan for SS, devised in 1934, projected that by 1990 life expectancy would grow and seniors would make up 12.65% of the population. In 1990, seniors made up 12.49% of the population.

There's no issue here, other than the fact that the President wants to continue using the trust fund to pay down his defecit. It's not reform, it's stealing.

[Glengoyne]

My biggest issue with the Democrats "defense" of social security, is that it isn't in danger by anything the President is doing. They seem to be opposing it, just for the sake of opposing it.

1) "He's going to take away your benefits on the eve of your retirement". But Bush has said that there will be zero effect on those near retirement. The plan would be incrementally rolled in, over a number of years. Older workers would have a very minimal dependence on the private accounts, still receiving "most" of their retirement benefit from traditional social security. Younger workers would pay into their personal accounts longer, and therefore have a larger reserve in those accounts.

2) The Social Security Roulette or what ever they are claiming/Most people aren't sophisticated enough to manage their own accounts/All the money will be eaten up by hidden fees: By restricting choice to a small number of account options with brief descriptions of risk/reward ,sophisitcation really isn't a problem. Also the same goes for the roullete problem of putting youger workers retirement at risk. Even the conservative(historic average) stock market return of 3% over time constitutes an increase in the rate of return of the current system. Mix in a healthy dosage of bonds to protect from loss in down years, and there is no risk. This is why a number of Teacher's unions skip out on Social Security altogether. Those people along with state and Federal Government Employees are already using these privatized investment accounts. These systems are currently considered superior to Social Security, so why should the rest of us have to live with a substandard system? Bush promises that the fees will be controlled with legislation. This seems to be possible, as similar successful retirement programs are in place, and those fees are apparenlty reasonably constrained. If they weren't those retirement options wouldn't be considered superior to SS.

3) There is no crisis: Now here we have the best Dem argument to date. Recently the drop dead date for SS has been backed up by about 20 years. Some say that the growing economy will continually push the drop dead date backward in time. In other words they claim it will always look like SS will fail in 20 or so years, but it will never happen. I'm willing to go along with this, except for one thing. The private accounts would be a better system, providing a better return on my money. Plus, I could leave this money to my family if I die. Lets say I agree there is no problem, why should I have to stick with a lesser retirement option than several of my fellow citizens, some of whom can opt entirely out of Social Security, just to preserve FDR's legacy? To say it isn't going to fail isn't good enough. That is simply not a good enough excuse to ignore the shorcomings of the system.


I'm sure there will be/are more arguments, but I'm tired now. Part of me is wondering if the Democrats are looking to prevent change, just to keep the Republicans from notching their belt with real Social Security Reform that will be well received for years to come, thereby stealing one of the Dem's Sacred Cows. I guess it is also possible that they are merely protecting their sacred cow, though.



Just as an aside when adding the consideration of leaving these funds to one's family, I'm wondering if the Death/Estate tax would come into play. I'm not sure where it kicks in.

[Tekneek]

Isn't the tax code revolutionized every decade? It always manages to stay pretty complicated and full of loop-holes for those with the time and money to find them.

Social security has been in surplus before and that was not protected. If you can steal from it when it is in surplus, then you can steal from something else when it is in deficit. No problem there.

You've got some Democrat claiming there is a "social security guarantee." I am not aware of any such thing. I have no guarantee of "social security" payouts, regardless of how much I pay into it. Does anyone know of such a guarantee? Actual law that guarantees this to everyone who pays into it?

[WussGawd]

Without getting into political bickering, obviously, the speech was extremely powerful and hit at the core of my political beliefs. I was very impressed.

I hope that those who voted for John Kerry will at least give the next four years a chance with Bush and offer support when it's deserved.

Fat chance, pal.

Not when stage 1 of his plan is to dismantle the only think standing in from forcing the elderly to move in with their kids.

We saw what bipartisanship got us the first term. Shrub is going to have a hard time convincing Dems to go along with any of his ideas this go around.

[WussGawd]

My biggest issue with the Democrats "defense" of social security, is that it isn't in danger by anything the President is doing. They seem to be opposing it, just for the sake of opposing it.

1) "He's going to take away your benefits on the eve of your retirement". But Bush has said that there will be zero effect on those near retirement. The plan would be incrementally rolled in, over a number of years. Older workers would have a very minimal dependence on the private accounts, still receiving "most" of their retirement benefit from traditional social security. Younger workers would pay into their personal accounts longer, and therefore have a larger reserve in those accounts.

45% cuts. And the numbers keep changing. The 2018 date Bush cited in his speech was revised this week by the Republicans' to 2020.

And we already *have* voluntary private accounts. What do you think IRAs are?

I'd heartily recommend that you research the failures of Chile and the UK to privatize their social security programs. By the time brokerage fees are taken out of what are going to be small accounts, you're going to see that you won't make as much as you think.

Also, working in the brokerage business for a living, I can tell you that I see people wipe themselves out all the time. A lot of people will invest their money sensibly, but a lot won't. So what do you do for them when they reach retirement age? Let them starve?

The other thing to consider with private accounts is this. Some people, inevitably, even if they've saved diligently for retirement all their lives, outlive their nest egg. A lot more people than you think. Again, what do they do? Starve? Move into YOUR spare bedroom if they're your parents?

[JonInMiddleGA]

Move into YOUR spare bedroom if they're your parents?

What a novel idea, families being responsible for their own instead of looking to the government to take care of it. Why that's ... that's ... that's ... oh, wait,
I know ... that's more like how it used to be.

Note: Use of the phrase "more like" indicates only that it was more common, and does not suggest or imply that it was ever a 100% condition in the U.S.

[flere-imsaho]

sterlingice wins the thread.

[flere-imsaho]

Here's a serious question: Let's say Bush's plan goes through and we all start putting part of our SS money into private accounts. Doesn't this shorten the time until SS goes bankrupt? Since there's now even less going into SS, presently? How does Bush aim to solve that particular problem?

[DanGarion]

Here's a serious question: Let's say Bush's plan goes through and we all start putting part of our SS money into private accounts. Doesn't this shorten the time until SS goes bankrupt? Since there's now even less going into SS, presently? How does Bush aim to solve that particular problem?
My understanding was money continues to go into SS and then we are able to also put money in the private accounts as well. The private accounts are in additon to SS. But then how about those of us that already have 401ks, and pension plans, can we choose to put our already existing 401k monies into the personal account or do we have to keep all these things seperate.

Also one thing Bush stressed was to keep the system as it is with those that are government employees. I don't see them having issues with broker fees as WussGawd was pointing out would be an issue.

[flere-imsaho]

Wow. A government-owned 401k? Thanks, but I'll pass. I already have enough worries that by the time I retire the government will change the tax rules on 401ks and IRAs to fund whatever economic crisis they have at the time.

[Galaril]

What a novel idea, families being responsible for their own instead of looking to the government to take care of it. Why that's ... that's ... that's ... oh, wait,
I know ... that's more like how it used to be.

Note: Use of the phrase "more like" indicates only that it was more common, and does not suggest or imply that it was ever a 100% condition in the U.S.


Hey,
I have lived in Korea for over a decade and as you put it "families taking care of their own" sounds great. But, I have seen first hand(my wife is korean) that it just makes people lazier. Parents expect their kids to go out on the streets and start peddling (and alot do) to pay for their financial screw ups. I have always scratched my head when I here a story about people who's children can't get a decent education or even 3 squares because their parents are sucking them dry. I will say I think children do have a moral responsibility to see to their parnets welfare but when you institutionalize it where people have to do it then you are goin gto have tones of social problems.Another thing with people taking care of your own is at the other end no one wanting to get out of the house to work.Here many peoepl in in their mid to late 20's are living with and off mom and dad. They usually got college educations and job choices but they know they can procrastinate since society says families take care of their own. I know western and eastern cultures are vastly different and I am oversimplifying but from my experience idea is not the way we want to go.

[JPhillips]

This is taken from another website. All details are based on the background breifing given by Bartlett yesterday before the speech. Pay close attention to the annuity part. In this current plan you will have to buy an annuity and when you die what's left is owned by the government. There is nothing to leave your children.


So, here's the basic Bush piratization plan:

Cuts in guaranteed benefits to make the system solvent in perpetuity without any tax increases.

A "voluntary" system of accounts that lets you divert up to 4 percentage points of your payroll taxes, subject to smaller cap in early years. Initial investment choices would be based on the Thrift Savings Plan.

On top of guaranteed benefit cuts, there's a one for one benefit offset up to a 3 percent real rate of return, or the real rate of return on Treasury bonds (unclear if it's actually 3 percent or just expected to be 3 percent -- I assume the latter). In other words, your SS benefits are cut dollar for dollar up until you hit that magic limit then the extra is yours.

Opting out of the system essentially involves putting all of your money in bonds, insuring that you can't possibly exceed the actual rate of return on bonds).

Upon retirement, you're forced to buy an annuity such that your SS benefits plus the annuity purchased from your personal account at the minimum give you poverty line income. Unclear what happens if there isn't enough money to get you to the poverty line. The federal government would handle the annuities. The rest you can spend when you want.

If you retire and die the next day, as with any annuity the money reverts back to the issuer - in this case the feds. In other words, it isn't inheritable.

[duckman]

What website, JPhillips?

[Glengoyne]

45% cuts. And the numbers keep changing. The 2018 date Bush cited in his speech was revised this week by the Republicans' to 2020.

And we already *have* voluntary private accounts. What do you think IRAs are?

I'd heartily recommend that you research the failures of Chile and the UK to privatize their social security programs. By the time brokerage fees are taken out of what are going to be small accounts, you're going to see that you won't make as much as you think.

Also, working in the brokerage business for a living, I can tell you that I see people wipe themselves out all the time. A lot of people will invest their money sensibly, but a lot won't. So what do you do for them when they reach retirement age? Let them starve?

The other thing to consider with private accounts is this. Some people, inevitably, even if they've saved diligently for retirement all their lives, outlive their nest egg. A lot more people than you think. Again, what do they do? Starve? Move into YOUR spare bedroom if they're your parents?
Well as for already having Private accounts. Those are on top of what we are already putting away for Social Security. My understanding, and this could be wrong. It hasn't been made clear, at least not to me, whether this money is taken from the Social Security money we currently contribute, or if this is in addition to Social Security payments. IRAs are obviously the latter, and they do require a modicum of sophistication or financial savvy to invest in. I'm hoping the plan is to have 11 percent of our income go to Social Sec.(currently it is ~15%) while 4% is diverted to these funds.

As for the brokerage fees. These can be managed, and kept low enough that there is no risk of what you are suggesting. See the "Thrift Savings Plan" or the "Savings Thrift Plan" whichever it is. That program is apparenlty setup similarly, and it survives.

The risks of losing one's investment is pretty darn minimal, if not nonexistant. By limiting the investment options to a small number of conservative choices that essentially mix whole market funds and bonds, the proper amount of risk/reward can by ensured, and the sophisitcation to invest is essentially removed from the equation.

As for outliving the Nest Egg. These funds aren't the only retirement income related to Social Security. Social Security will still be in operation, so at very least that income would be coming from the accounts. No one is going to Starve.

[Glengoyne]

What website, JPhillips? I can't imagine why you would want to see the URL.
It certainly looks to present an unbiased interpretation of the facts.
http://dynamic2.gamespy.com/%7Efof/forums/images/smilies/rolleyes.gif <--I don't think that is my first use of rolleyes, but felt it was appropriate nonetheless.

[chinaski]

Not only do they want to privatize SS, there will be only certain government selected plans that you can "invest" in - that right there should be a HUGE red flag for anyone who thinks this shit is a good idea. Why is it so hard to understand that SS is not the problem? The real problem is the dipshits in office who borrow from SS and dont pay it back! Why dont we regulate what we can borrow?

To run the current SSA, it costs exactly 1$ dollar out of every $100 that it takes in. Tell me whats so wrong with that?

[johneh]

Why do people continue to think that Social Security will go under? So what if there are more retirees in the future? The general budget has stolen from Social Security surpluses to fund itself for the past decade+, why can't it go the other way?

Amen

The SS "shortfall" is no one's fault except the governments.
They have used SS for general funding for years. I don't think people realize how many Billions and Billions of surpluses that SS has run over the years - except those surpluses were pulled out and spent on other things by the government.

[Glengoyne]

Not only do they want to privatize SS, there will be only certain government selected plans that you can "invest" in - that right there should be a HUGE red flag for anyone who thinks this shit is a good idea. Why is it so hard to understand that SS is not the problem? The real problem is the dipshits in office who borrow from SS and dont pay it back! Why dont we regulate what we can borrow?

To run the current SSA, it costs exactly 1$ dollar out of every $100 that it takes in. Tell me whats so wrong with that?
I'm going to get a piss poor rate of return on the money I set aside for retirement. If it was set aside, and allowed to grow now, instead of paid to current recipients, then I would have less of a problem with it.

Basically with a private account, the larger rate of return people will see makes this idea very attractive to a lot of people. Just because Social Security may not ever go broke, doesn't mean we should stick with it in light of better options.

[chinaski]

I'm going to get a piss poor rate of return on the money I set aside for retirement. If it was set aside, and allowed to grow now, instead of paid to current recipients, then I would have less of a problem with it.

Basically with a private account, the larger rate of return people will see makes this idea very attractive to a lot of people. Just because Social Security may not ever go broke, doesn't mean we should stick with it in light of better options.
But that might be where you are being to generous with Bush's plan. You dont have any say what you get to do with your money, there are only a few different plans you will be allowed to put your money into. You think Halliburtons monopoly on our defense budget is bad, wait until you see what Republican controlled financial houses get exclusive rights to your tax free dollars. Why would I choose to put my money into a limited government controlled 401k??? SS is rock solid, the only thing wrong with it is the people who borrow from it.

There isnt a single economist alive that will tell you SS is a bigger problem than our national deficit, why isnt Bush acting all urgent about that? Our debt is the absolute for REAL crisis, yet he failed to even mention that one single time last night. Right now Bush is traveling cross country pushing this plan. I just heard him say if we dont act on "fixing" SS, that it will lead to major cuts in government programs - what bullshit! He himself just cut more social programs than any other president in history with his latest budget, and many more had their funding reduced to under the rise of inflation! WHY?! Because HE spent the money, it has ZERO to do with SS or anything else.

There are so many more pressing issues and it should be apparent this is a desperation move on Bush's part - hoping to cash in on some of that bogus capitol.

[JPhillips]

Duckman/Glen: Its from Atrios.blogspot.com. Yes, it is a liberal site, but what facts that were presented can you challenge. I deliberately took out most of the commentary to present only the facts of the plan as briefed to the press yesterday by Bartlett.

It was Bartlett that said the accounts will be used to buy annuities that go to the government when the beneficiary dies. It was Bartlett that said benefits would be cut to ensure solvency. (btw- I just saw Bush in Montana say that private accounts will get people as "close as possible" to the benefits promised under the current system.) It was Bartlett that said people will only collect benefits from the accounts that are over a 3% return rate. The rest goes to pay traditional SS benefits.

I could have also added info from the Lindsay Graham bill that shows that children born in 2000 will recieve less in SS plus private accounts than they would if we do nothing.
http://www.cbpp.org/2-2-05socsec2.htm
(See table 2 about halfway down)

I could have also added this from the Washington Post:

Under the White House Social Security plan, workers who opt to divert some of their payroll taxes into individual accounts would ultimately get to keep only the investment returns that exceed the rate of return that the money would have accrued in the traditional system.

The mechanism, detailed by a senior administration official before President Bush's State of the Union address, would hold down the cost of Bush's plan to introduce personal accounts to the Social Security system. But it could come as a surprise to lawmakers and voters who have thought of these accounts as akin to an individual retirement account or a 401(k) that they could use fully upon retirement.

"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children . . . or grandchildren," Bush said last night. "And best of all, the money in the account is yours, and the government can never take it away."

The plan is more complicated. Under the proposal, workers could invest as much as 4 percent of their wages subject to Social Security taxation in a limited assortment of stock, bond and mixed-investment funds. But the government would keep and administer that money. Upon retirement, workers would then be given any money that exceeded inflation-adjusted gains over 3 percent.

That money would augment a guaranteed Social Security benefit that would be reduced by a still-undetermined amount from the currently promised benefit.

In effect, the accounts would work more like a loan from the government, to be paid back upon retirement at an inflation-adjusted 3 percent interest rate -- the interest the money would have earned if it had been invested in Treasury bonds, said Peter R. Orszag, a Social Security analyst at the Brookings Institution and a former Clinton White House economist.

"I believe you should be able to set aside part of that money in your own retirement account so you can build a nest egg for your own future," Bush said in his speech.

Under the system, the gains may be minimal. The Social Security Administration, in projecting benefits under a partially privatized system, assumes a 4.6 percent rate of return above inflation. The Congressional Budget Office, Capitol Hill's official scorekeeper, assumes 3.3 percent gains.

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.


But yes, I suppose its easier to just ignore any info that you don't like.

[Dutch]

sterlingice wins the thread.

:) Isn't this the same thing as the Baath Party Information Director saying, "Saddam wins my vote!"

[flere-imsaho]

Did you read what he wrote? A pretty even-handed view of the situation, I thought.

[Tekneek]

This is a con. I'm not sure why so many people are wanting to do this, but it doesn't sound like anyone other than Uncle Sam is really going to make any money off of it.

[JPhillips]

Tekneek: Amen. This is really about trying to find a way to avoid paying back the treasury bills that the SS trust fund has accumulated. So in effect I, and millions of other middle-class Americans, have been paying too much in payroll taxes for the past twenty years so that I could subsidize the general budget. Now when it comes time to pay me back they want to change the system.

[flere-imsaho]

Here's my "solution" to Social Security:

1. Continue benefits for anyone who lived through the Great Depression. Let's be gracious and say that's anyone born in 1940 or earlier. Fund these benefits through the current tax setup, but lower this percentage as necessary until it ends up at 0% when the last person dies.

2. Instead of limiting 401ks to $13,000/year (or so), drive it to 30%. I.e. you can now put up to 30% of your annual income in a 401k (same goes for 403bs, which are the non-profit versions of 401ks).

3. Instead of limiting IRAs to $3000/year (or so), drive it to 30%, in conjunction with 401ks (this is to address people who work for small businesses, when many small businesses can't afford to offer 401ks). So, bottom-line, you can put any combination of up to 30% of your annual income in a 401k/403b and an IRA.

4. Spend time fixing Medicare/Medicaid.

[Glengoyne]

Duckman/Glen: Its from Atrios.blogspot.com. Yes, it is a liberal site, but what facts that were presented can you challenge....
It is the "spin" applied to "pieces" of the proposal that produced those "facts".

A lot of those are just pure fabrication, as the details of the proposed plan aren't there yet. The President says the accounts will be able to be passed on by inheritance. He is not going to opt for a plan where they are not. That would be pretty much moronic, and could be the death blow to his plans. This is part of his "ownership society" plan...I don't think government ownership of such accounts would fly. So I don't buy your bloggers take on it.

The three percent that keeps being thrown around. As I understand that part of the plan. You're actual social security benefit will be reduced by the amount earned by you're private account up to that 3% cap. You are still getting the full amount of your private account. It is just that the Social Security benefit you receive will be lower than if you didn't have the personal account. Overall you are still better off than with just Social Security alone, well assuming that the RoI of your total investment in the Private account exceeded the 3% cap. If it doesn't, then you are simply stuck with the same amount you would normally have received in Social Security. The blogger makes it seem like that money is simply stolen by the government.

As for your assertion that the whole thing is just a scheme to skip paying out benefits to all of us currently paying in. That is just ludicrous. No one anywhere is talking about cutting off the benefits of anyone involved in the system now. If you are paying into Social Sec now, you will get your appropriate share of benefits paid back to you. I've read the blogger's site that advocates that opinion, and he is a lot more partisan than intelligent.

[CentralMassHokie]

It is the "spin" applied to "pieces" of the proposal that produced those "facts".

A lot of those are just pure fabrication, as the details of the proposed plan aren't there yet. The President says the accounts will be able to be passed on by inheritance. He is not going to opt for a plan where they are not. That would be pretty much moronic, and could be the death blow to his plans. This is part of his "ownership society" plan...I don't think government ownership of such accounts would fly. So I don't buy your bloggers take on it.

The three percent that keeps being thrown around. As I understand that part of the plan. You're actual social security benefit will be reduced by the amount earned by you're private account up to that 3% cap. You are still getting the full amount of your private account. It is just that the Social Security benefit you receive will be lower than if you didn't have the personal account. Overall you are still better off than with just Social Security alone, well assuming that the RoI of your total investment in the Private account exceeded the 3% cap. If it doesn't, then you are simply stuck with the same amount you would normally have received in Social Security. The blogger makes it seem like that money is simply stolen by the government.

As for your assertion that the whole thing is just a scheme to skip paying out benefits to all of us currently paying in. That is just ludicrous. No one anywhere is talking about cutting off the benefits of anyone involved in the system now. If you are paying into Social Sec now, you will get your appropriate share of benefits paid back to you. I've read the blogger's site that advocates that opinion, and he is a lot more partisan than intelligent.

Unfortunately, I don't think this is at all how the President's plan will work, at least not as it's understood by economists and congresspeople on both sides of the aisle.

A big reason for the President's push for privatizing social security is that the current administration wants to be able to use the trust fund to pay down the defecit without having to worry about being the ones who brought back elderly poverty. That's why each and every deficit number from the current administration is calculated as if the trust fund counts against the deficit.

With privatization, they can raid the trust fund and then blame the wave of elderly poverty on the market.

There are a billion and one bad things about the plan as it's been outlined in any number of documents (including the leaked proposal from the Republican Congressional retreat).

Since there are also a billion and one things more important and critical to the country than fixing an unbroken social security program, hopefully this will die a swift death and the government can move onto more pressing issues.

[Glengoyne]

...
A big reason for the President's push for privatizing social security is that the current administration wants to be able to use the trust fund to pay down the defecit without having to worry about being the ones who brought back elderly poverty. That's why each and every deficit number from the current administration is calculated as if the trust fund counts against the deficit.

With privatization, they can raid the trust fund and then blame the wave of elderly poverty on the market.

...
Yes elderly poverty, that is what this is all about. The evil Republicans are at it again. They want to steal all the money from the soon to be elderly and repay the Government's debt. That makes sense.

I don't want to go over my quota for rolleyes for this thread, but I think I got my point across.

As for the "meat" of the above assertion. The revenue generated by Social Security is used to pay Social Security's obligations to retirees. Anything left over has pretty much always been used to reduce deficit spending. T-bills are issued to Social Security Trust and later redeemed. So what you describe is business as usual for the Government, and not some "scheme" dreamed up by this administration.

[JPhillips]

Glen: First, the story in the Washington Post that mentioned annuities and which my info was based on has been changed to remove annuities. I'll be generous and say that the Post story was wrong and Bush never intended to base the new system on annuities.

As to the 3%, what really needs investigating is whether or not you are guaranteed a minimum return. What if my account only makes 2%? Will SS cover the difference or will I be SOL? So far nothing has been said on that. I also think that having the first 3% go to the government is going to severely reduce suport for the program, but maybe I'm wrong.

I completely disagree that this isn't about the trust fund bonds. The 2018-2020 date that keeps getting thrown around is the date when the trust fund bonds will need to start being repaid. Several supporters of privatization have used that date as when SS goes broke. It will only go broke if the plan is to default on billions in T-bonds.

Also, the White House is now being very clear that the privatization plan will do nothing to alleviate the solvency problem over the next 75 years. The breifer yesterday admitted to benefit cuts being necessary to bring SS into solvency. While I can't say with certainty that benefits will be eliminated, I do know that big supporters of privatization, CATO and Stephon Moore, would love to eliminate the program all together.

But the best piece of eveidence is still the info on Lindsay Graham's plan. That shows that the current legislation will result in less money after privatization than before.

[Glengoyne]

...

As to the 3%, what really needs investigating is whether or not you are guaranteed a minimum return. What if my account only makes 2%? Will SS cover the difference or will I be SOL? So far nothing has been said on that. I also think that having the first 3% go to the government is going to severely reduce suport for the program, but maybe I'm wrong.
The info I have seen and heard related to the 3% "cap" says that the regular SS benefit would be reduced on a dollar for dollar basis up to the 3% of it's growth. That indicates to me, that if you earn less than 3%, say 2.5 percent...then your Regular Social Security benefit would be reduced dollar for dollar up to 2.5 percent. It doesn't "go to the government". That is just a manner of attacking the plan. It isn't the least bit true, but if you spin it properly people might buy it. It just doesn't stand up to scrutiny.



I completely disagree that this isn't about the trust fund bonds. The 2018-2020 date that keeps getting thrown around is the date when the trust fund bonds will need to start being repaid. Several supporters of privatization have used that date as when SS goes broke. It will only go broke if the plan is to default on billions in T-bonds.
No where is anyone talking about not paying these bonds back. The key to understanding that is where they say that people who have been paying into the system, will not lose their investment. It isn't tricky. You just have to believe that the administration isn't planning to rip off just about every member of society.



Also, the White House is now being very clear that the privatization plan will do nothing to alleviate the solvency problem over the next 75 years. The breifer yesterday admitted to benefit cuts being necessary to bring SS into solvency. While I can't say with certainty that benefits will be eliminated, I do know that big supporters of privatization, CATO and Stephon Moore, would love to eliminate the program all together.

Actually from where I sit, the White House isn't being very clear at all about that. I think they have been pretty much ignoring that aspect of the issue. It seems to me that any crisis is likely very far off in the distance, but that is no reason not to improve the program now.

[randal7]

Here's my "solution" to Social Security:

1. Continue benefits for anyone who lived through the Great Depression. Let's be gracious and say that's anyone born in 1940 or earlier. Fund these benefits through the current tax setup, but lower this percentage as necessary until it ends up at 0% when the last person dies.

2. Instead of limiting 401ks to $13,000/year (or so), drive it to 30%. I.e. you can now put up to 30% of your annual income in a 401k (same goes for 403bs, which are the non-profit versions of 401ks).

3. Instead of limiting IRAs to $3000/year (or so), drive it to 30%, in conjunction with 401ks (this is to address people who work for small businesses, when many small businesses can't afford to offer 401ks). So, bottom-line, you can put any combination of up to 30% of your annual income in a 401k/403b and an IRA.

4. Spend time fixing Medicare/Medicaid.
Good solution. I'd add one thing:

3.5: Stop raiding my paycheck for SS and let me invest the money myself.

Also, I think the pres's proposal is no change for anyone born before 1950.

[chinaski]

Did you guys know - even if you make a assload of cash from investing your "SS money" under Bush's plan, you only get to keep set amount and anything over that you lose to the government. great plan.


<nitf>Here is how the personal account system would work under the Bush plan:</nitf>

<nitf>If a worker set aside $1,000 a year for 43 years, and earned 4.6 percent annually on investments, the account would grow to $221,552 in today's dollars. That money would be the worker's upon retirement and would probably be paid out in increments of $15,952 a year, according to calculations by the Center for Budget and Policy Priorities, a liberal advocacy group. A White House calculation showed a smaller payout.</nitf>

<nitf>But guaranteed benefits over the worker's lifetime would be reduced by approximately $151,990 -- the amount the worker would have contributed to Social Security but instead contributed to his personal account, plus 3 percent interest above inflation. The remainder, $69,562, would be the increase in benefit the worker would receive over his lifetime above the level he would have received if he stayed in the traditional system. That sum -- expressed as an annual payout -- would total $5,008.</nitf>

<nitf>But that benefit gain could be substantially smaller. The Congressional Budget Office, Capitol Hill's official scorekeeper, factors out stock market risks to assume a 3.3 percent rate of return and then subtracts 0.3 percent for expected administrative costs on the account. Under that scenario, the full amount in a worker's account would be reduced dollar for dollar from his Social Security checks, for a net gain of zero.</nitf>

<nitf>If investments earned less than 3 percent a year above inflation, a worker would do worse in total benefits than he would have done in the traditional system.
</nitf>

[Glengoyne]

Did you guys know - even if you make a assload of cash from investing your "SS money" under Bush's plan, you only get to keep set amount and anything over that you lose to the government. great plan.

You don't lose it to the government. You get all of the money out of your personal account. The deal is the Government doesn't PAY you Social Security benefits for the portion of Social Security that you didn't pay into. Your personal account makes up for that portion of your benefit. The 5k is gravy. It is money that you would never see under the current system. So tell me again. What is wrong with giving the person in the above example an additional $5k a year?

The above charge is a disengenuous argument against reform of the system.

[Dutch]

The 5k is gravy is exactly right. It's a potential benefit over the top. It's money that instead of rotting in a government coffer, was earned by growth in private business economy.

If the 3% is not met by the private sector stocks and bonds, chances are good, the goverment isn't going to have the money to meet the balance under the current SS plan anyway.

It's voluntary anyway.

That way Republicans can use it and Democrats don't have to. And when the economy booms, the Democrats can bitch about the rich getting richer and when the economy collapses, the Democrats can yell in glee and push for communism, or whatever their platform is these days.