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[Eddy]

I'm surprised this wasn't discussed already, but here goes.

If you watched the State of the Union Address, you would have seen that one of the primary items of his attention.

Let her rip everyone.

[JuntaJoe]

Let me shamelessly steal this from estio's site:



Reagan's 1964 "A Time For Choosing" speech.


"Now -- we're for a provision that destitution should not follow unemployment by reason of old age, and to that end we've accepted Social Security as a step toward meeting the problem.

But we're against those entrusted with this program when they practice deception regarding its fiscal shortcomings, when they charge that any criticism of the program means that we want to end payments to those people who depend on them for a livelihood. They've called it "insurance" to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified it was a welfare program. They only use the term "insurance" to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. There is no fund, because Robert Byers, the actuarial head, appeared before a congressional committee and admitted that Social Security as of this moment is 298 billion dollars in the hole. But he said there should be no cause for worry because as long as they have the power to tax, they could always take away from the people whatever they needed to bail them out of trouble. And they're doing just that.

A young man, 21 years of age, working at an average salary -- his Social Security contribution would, in the open market, buy him an insurance policy that would guarantee 220 dollars a month at age 65. The government promises 127. He could live it up until he's 31 and then take out a policy that would pay more than Social Security. Now are we so lacking in business sense that we can't put this program on a sound basis, so that people who do require those payments will find they can get them when they're due -- that the cupboard isn't bare?"

[JuntaJoe]

Let's just say that politicians have condidered SS the "third rail in politics".

Touch it and you die.

And Bush is brave enough to say that we must do something and welcomed advice from both sides of the aisle.

But look for Republicans to CYA to save their re-elections and Democrats stonewall just to give Bush a hassle.

It will be a long hard road for sure.


So let's look at the issue.

The panic is a bit premature. The fund is fully solvent until 2042 and 3/4 solvent from then on. It's not drying up in a few years as some scream.

But there is one glitch in the program. The money comes in and we first pay the current SS bills. The excess isn't banked. It's used to buy government bonds and that money is then dumped in the general pool. What is that general fund pool? Today we call it the national debt! Yes, we dump the excess into that yawning sinkhole that's trillions of dollars deep. So the excess generated isn't saved. It's "loaned" to our debt problem.

What does that idea do for your digestion?

Furthermore, as bad as that is there is the issue of the earnings on the government bonds. So when we pull the money out of the sinkhole, we have to drag a bit more out than what we dumped in.

And it gets worse. For all this mess, you would think Uncle Sam would have the decency to pay a decent rate of return on those bonds.

Nope. Those SS bonds pay a whopping 1.5% annual return. You can earn more than that in a money market fund that is totally safe. Ultra-conservative investment funds are super safe and pay at least 3 to 5 percent annually. That's two or three times what the government is paying to itself out of thin air. Even considering the recent volatility of the stock market, it has earned an average of 10% per year for the last century, even including the flat Depression years.

Anything that gets this money away from the Washington mis-managers is a good thing.

Trust me, Bush can't steamroll over Congress with this issue and get exactly what he wants. Not even close. Lending him your vocal support will merely make Congress give a little ground. We could all march into the streets and be lucky to get a small change.

I've never believed in tossing blind support behind a politician. But this is one case where no matter how much you wave your little flag that you need not fear a runaway train. Push with all your might and be happy you move the rock an inch. :wink:

[Eddy]

Ok, I just wanted to throw the topic on the floor for discussion, but now I'll contribute. Just a note. I am abbreviating Social Security to SS for this discussion. There is no intent to compare it to the Nazi organization that had the same initials.

I am completely against privatizing SS. Considering that Bush and his ilk are the kind who were involved in Enron and Halliburton, it should come as no surprise that I distrust the entire idea.

My reasoning is simple. SS was designed to be a supplemental income plan to prevent little old widows from starving. It was never designed to be your sole source of income as many people believe. The whole point of SS was that it was guaranteed. While it may have a low rate of return, the pact between generations stated that it would be there, no questions asked. Privatizing basically breaks this pact for younger people and shows why I personally distrust anything older generations say and despise my country.

What they don't tell you about privatizing is that the only sure winners are the capitalist brokerage firms who will make billions off this scam. The typical individual will rush to invest in HIGH PROFIT items while neglecting to notice that it is also high risk. The stock market is an excellent example. I will grant that there is a historically higher return, but the fact is that a single day can wipe out your savings in a flash. Just ask anyone who had a pension plan in Enron. Ask anyone who saw their stock portfolio plummet after September 11th. Ask anyone back in 1987(?) when the market crashed. The average person doesn't understand economics and doesn't care. I don't consider myself average, yet even I don't bother reading the pages and pages of corporate propaganda in a stockholder's report. What about Joe Sixpack or Ernie Hourly?

Another problem I have is that the accounts, as proposed, don't truly allow you greater gains. You are forced to have an annuity, that upon death reverts to the government. Right now, SS does the same thing, which is what it is supposed to do. I have no objection to that. My major objection is that the so-called private accounts really aren't. You are told that you can make MAJOR LOOT, but in reality, any gains above a certain (low) amount will be taken back by the government. Frankly, I am surprised you capitalist types favor this since it is in effect, a tax on success. If you do poorly, you lose money. If you do well, it is taken from you.

One other huge problem I have is that the funds are chosen by the government. Given this administration's poor track record with corporate corruption, I can only imagine the potential for corruption if elected officials are involved in deciding which companies to back. All I can say is the Teapot Dome will be a tempest in a teapot compared to the hurricane that will surely result from this.

Joe, you made the point that the SS system invests in bonds. Frankly, this is the only investment our government should make. Government should never back a corporation or entity for investment terms, especially when a promise was made that the money would always be there. I do concur that the cooking of the books should end, especially since Clinton did this to make it seem like there was a huge surplus in the treasury, but I don't think it is a black hole. I don't want the money being given to a bank or investment firm who will make a profit on my taxes. That money should be government only.

To be honest, I don't ever expect to see a dime from SS simply because it will never last that long. I feel resentment every time I see that 6.2% of my wages being stolen from me at gunpoint, but I expect nothing else from this decadent empire. I just wish they'd admit they were stealing from me instead of trying to make it sound like some glorious goal.

[JuntaJoe]

Then let me tackle a few of those fears.

Enron pensions going poof! This was a result of the pensions being tied to Enron stock. This is where government decree actually can be good. They can mandate that only certain categories of funds may be used. They call these funds "index" funds. Instead of being tied to money manager choices, these funds are mandated to buy an equal share of all stocks or bonds that are available.

A good example is the proverbial Fortune 500 companies. A fund tied to that requires that no matter how good or bad a particular stock is doing in that group that it will be represented as an equal share in the whole. The fund must buy one of every stock in that group before buying the second share of a same company. In a case like Enron, only 1/500th of your stocks would have been in free fall.

Index funds are like averaging in math. You cut off the peaks and valleys and keep the middle.

You can do the same for bond funds as well. And those bonds need not be either US Government or business bonds. Unlike the federal government, most local and regional governments are required to use a balanced budget with no deficits. So there is no huge unfunded black hole of debt. All debt must be covered. A municipal bond fund can be about financing a park or road. All of these government entities have a bond "rating" as well. A measure of how well these smaller governments pay off their bonds. The privatizing could mandate only bond funds that invest in A+ rated municipalities.

Last is the comment that the money goes away if you die. That only happens in an annuity. Bush clearly stated in his address that he didn't want that. Look for annuities to only be an option and not a requirement.

As for requiring investors to learn a bit about investment, the trend has already been around for 20 years. Companeis have already gotten rid of most pensions in favor of 401k's. Most Joe Sixpack's already have to pick funds for their company retirement accounts. The government didn't force this trend. Society did. Ernie Hourly will have to learn a bit about investing. But you can't say that he doesn't have an incentive.

I also imagine that there will be the option of buying federal bonds as well. The paranoid or clueless could still just leave it in treasury bonds. The upside is that now those bonds will have your name on them instead of the SS administration's. Ownership is 9/10ths of the law, right?


As I said before, Eddy, don't panic on this. Something needs to be done as the system is broken. But Washington politics will simply not permit a drastic change on this issue. Supporting this with all your heart is more likely to get the smallest change done. You can be sure that "evil big business" will be thoroughly muzzled right off the bat.

[broomdalf]

Whoohoo! Skip Humphrey, (President of Minnesota's AARP, and Democrat who lost to Jesse) came into my school today, basically to glorify Social Security in its present state. He kept talking about how Social Security is a promise to us, so I asked a question that went something like "How can you say that Social Security is promised to all of us, if the Supreme Court ruled that we aren't entitled to its benefits in Flemming v. Nestor in 1960?"

He said he hadn't heard of it.

Too bad I didn't have it printed up, and with me...

[JuntaJoe]

Hehehe, nothing like luring a politico in for a "safe" school speech and blasting him off the podium.

I hope you guys had a camera going.

Your local news outlet will pay real money for the tape.


Seems like the Democrats are in a full court press to sway younger voters on this issue.

That's rather sad.

It's their money they will be losing.


We need to fix SS and take the monetary hit right now instead of passing the costs down the line.

That was the mentality that got us into this mess to begin with.

[Morticcia]

broomdalf wrote: Whoohoo! Skip Humphrey, (President of Minnesota's AARP, and Democrat who lost to Jesse) came into my school today, basically to glorify Social Security in its present state. He kept talking about how Social Security is a promise to us, so I asked a question that went something like "How can you say that Social Security is promised to all of us, if the Supreme Court ruled that we aren't entitled to its benefits in Flemming v. Nestor in 1960?"

He said he hadn't heard of it.

Too bad I didn't have it printed up, and with me...

Well, this is sickening. Did you read why he was denied his money?

Quote: Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party.

[JuntaJoe]

Gingrich Gives GOP Social-Security Advice

February 25, 2005 2:50 PM EST

WASHINGTON - Former House Speaker Newt Gingrich says Republicans should rework their argument about Social Security because Americans aren't buying the idea that a crisis is near.

"As a practicing politician, you can't get the American people worried about 2018," Gingrich said Friday at the American Enterprise Institute. "If I called you and said, '10 years from today your roof is going to need (to be) fixed, would you like to sign the contract this afternoon?' You'd say to me, 'How about calling me back in nine years, 10 months.'"

Gingrich praised President Bush's plan to allow young people the option of privately owned Social Security accounts, but he said immediate benefits - not future concerns - should be the focus of the campaign.

"The urgency ought to be simpler," Gingrich said. "Every day young people are denied the opportunity to have a personal Social Security savings account, they are cheated out of that day's compound interest."

Although he stressed a short-term message, Gingrich said failure to change the retirement system could be catastrophic in the long run. If Social Security, Medicare and Medicaid aren't fixed by the time the baby boom generation retires, "we will bankrupt the country," he said.

If private Social Security accounts work, young people will rush to sign up, Gingrich said. In recent years, he says, the party has departed somewhat from that sort of market-based approach to governing.

"We've had control of the Congress now for a decade, had control of the White House for five years," Gingrich said. "And yet, if you look around the planet and say, 'Tell me the 10 most interesting privatization projects, they're not here, because we're worn out."

Gingrich was the architect of the "Contract With America," a conservative, legislative list that helped Republicans win control of the House in 1994. He resigned as House speaker in 1998 and quit Congress after Republicans lost seats in midterm elections that year.

In his recently published book, "Winning the Future: A 21st Century Contract With America," he addresses what he says should be the new focus of conservatives, including changing the immigration system and reaffirming God in public life.

"The things that made us a majority are not the things that will keep us a majority," Gingrich said.

---

On the Net:

American Enterprise Institute: http://www.aei.org

Copyright 2005 Associated Press.

[JuntaJoe]

Poll: Americans Nervous About Retirement

February 28, 2005 2:01 PM EST

WASHINGTON - Americans over 40 and people who are nervous about retirement are most likely to oppose President Bush's plan for creating personal accounts in Social Security, an Associated Press poll found.

Almost half of Americans who haven't retired say they don't think they're doing a good job of getting ready for that time in their lives, according to the AP poll. Many say they're not confident they'll have enough money to live comfortably after they quit working.

"People are trapped in a dilemma," said Robert Blendon, a polling expert at Harvard's Kennedy School of Government. "They know they're not saving enough. They can't count on Social Security and they're not sure these private accounts will be better. They're not sure what to do."

More than half of Americans, 55 percent, say they oppose the president's plan to create private accounts, while 39 percent say they support it, according to the poll conducted for AP by Ipsos-Public Affairs. Support for the plan drops among Democrats and independents when it's described specifically as "President Bush's plan."

Two-thirds of those who say they're doing an excellent job of preparing for retirement support Bush's plan to create personal accounts, while those who say they are doing a good job are evenly split. Two-thirds of those doing a fair or poor job of preparing for retirement oppose his plan.

"It's important to people who are not saving enough to know they have some financial base they can count on," said Charles Franklin, a political scientist at the University of Wisconsin-Madison who specializes in polling.

Support for the changes in Social Security also varies sharply with different age groups. A majority of people from 18-29, 54 percent, support the president's plan, while only a third of those from 40-64 and a fourth of those 65 and over say they support the plan.

That difference among age groups could be important as the president attempts to persuade members of Congress to back his plan. Younger voters tend to play less of a role in midterm election years, which 2006 will be, than they do in presidential years.

Younger Americans are more likely to see the personal account plan as beneficial to them.

"I think it does need to be on a more private and personal basis," said Kevin Settles, a 24-year-old Republican from Eastman, Ga. "You should have a decision on how your money is handled."

Among the millions who are uneasy about retirement finances are some who acknowledge they find the situation scary.

Maureen Jones, a 46-year-old wife and mother in Detroit, said she can't save money and her situation makes her uneasy.

"Something's got to be done. Social Security doesn't seem to be working," she said. "My husband is concerned for his Social Security, we're both concerned. We haven't got an IRA right now. And the job situation stinks so much there's no way to put anything away."

Some other poll findings:

-One in five hope to retire at 55 or younger; nearly half plan to retire in their 60s and 10 percent say they will retire at 71 or older or never retire.

-About two-thirds of current workers plan to keep working after they've retired. Some want to make enough money to make ends meet; others want money for extras or just a way to stay busy.

The AP-Ipsos poll of 1,000 adults was conducted Feb. 22-24 and has a margin of sampling error of plus or minus 3 percentage points.

---

Trevor Tompson, AP's manager of news surveys, contributed to this story.

---

On the Net:

Ipsos-Public Affairs: http://www.ap-ipsosresults.com

Copyright 2005 Associated Press.

[Baron]

I'm all for the plan. And, I think it should go farther in privitization...limiting the program and creating larger private accounts.

Of coarse, the plan would work out perfectly for me, as I am just now entering the job market.

[JuntaJoe]

Did anyone note how the AP poll counted hands?

The slackers who didn't save are against changing the system and the frugal types are for it.

[JuntaJoe]

GOP Attacks AARP Over Social Security

March 02, 2005 12:50 PM EST

WASHINGTON - Republicans attacked the AARP as well as congressional Democrats on Wednesday as they struggled to build momentum behind President Bush's call for personal investment accounts under Social Security.

The AARP, which claims 35 million members age 50 and over, is "against a solution that hasn't been written yet," said House Majority Leader Tom DeLay after a closed-door meeting with the GOP rank and file.

He called the group's opposition to personal accounts irresponsible and hypocritical, adding that it sells mutual funds to its own membership.

In response, an AARP spokesman said the organization is "opposed to the central notion of trying to improve Social Security solvency by taking money out of Social Security."

"Even the administration has acknowledged that taking money out of Social Security does nothing to solve the solvency problem," said the spokesman, David Certner. He also said AARP encouraged its membership to invest in mutual funds "in addition to Social Security."

DeLay and Speaker Dennis Hastert also criticized congressional Democrats, who are virtually united in opposition to Bush's plans. "The party of no," Hastert called them.

Republicans unleashed their latest attack as Federal Reserve Chairman Alan Greenspan urged Congress to act quickly to fix looming financing problems for Social Security as well as Medicare. "If existing promises need to be changed, those changes should be made sooner rather than later," he told the House Budget Committee.

One program provides retirement, survivors and disability income for 54 million Americans, while the other is the government's health care program for seniors.

As he has before, Greenspan endorsed a key element of Bush's plans for Social Security, a proposal that would allow workers to set aside a portion of their payroll taxes to be invested on their own. But he stressed that much more needed to be done to put the giant retirement program and Medicare, which he said faced even more severe financial strains, on a more sound footing.

Diverting the payroll taxes into the Social Security trust fund, Greenspan said, had merely allowed the government to run larger budget deficits. He said that switching to the private accounts would be a way to bolster the nation's low savings rate.

Greenspan repeated his view that a go-slow approach to setting up Bush's proposed private accounts was necessary to gauge the impact on financial markets of the increased borrowing that will be needed. "I think it is very important that you move gradually and see what the response is," he said.

"The one certainty is that the resolution of the nation's unprecedented demographic challenge will require hard choices and that the future performance of the economy will depend on those choices," Greenspan said.

Hastert and DeLay talked with reporters after meeting with lawmakers just back from a week spent sampling public opinion on Social Security. DeLay said the session produced "not one negative comment by the members."

At the same time, both he and Senate Majority Leader Bill Frist left open the possibility on Tuesday that final action may not be possible this year, and the Texas Republican conceded that opponents of Bush's plans were better organized than supporters.

Both DeLay and Hastert said Republicans are determined to move ahead with Bush's proposals, and several Republicans said they believe the president's national campaigning is slowly raising public awareness of the issue.

"We're still early in the process," said White House spokesman Scott McClellan.

Bush and congressional Republicans have consistently sought to coax Democrats into negotiations on Social Security. Democrats have just as insistently resisted, arguing that since Republicans control the White House and both houses of Congress, they must first present a comprehensive Social Security proposal of their own.

At stake is an issue of surpassing political significance. Democrats contend Bush and Republicans want to cut benefits to pay for privatizing part of the Depression-era program, and have made clear they intend to try and use the issue at the 2006 elections.

Republicans counter their goal is to shore up a program with shaky finances, but also are leery of being maneuvered into taking a series of politically difficult votes unless the result will be legislation that Bush signs and at least some Democrats support.

Bush is to travel to six states over the next two weeks, and many more later as he tries to build public support for a Social Security overhaul.

Echoing White House claims, congressional Republicans said they hope that by the time he is finished, the president will have produced a public groundswell for legislation, forcing at least some Democrats to reconsider their opposition.

Bush has said his plan would guarantee that Social Security benefits would remain unchanged for retirees and workers age 55 and over.

Younger Americans would be allowed to invest a portion of their payroll taxes on their own. In exchange they would receive a lower government benefit than they are now guaranteed, on the assumption that the proceeds of their investments would make up the difference. In addition, though, even younger voters who choose not to establish personal accounts would receive a reduced government benefit under Bush's plan, according to GOP congressional officials who have been briefed on the plan.

Copyright 2005 Associated Press. All rights reserved.

[JuntaJoe]

Ever heard of a country where retirement usually means you get rich?

I have.

Chile.

About 30 years ago their government totally privatized their elderly welfare plans and had employee deductions go straight into broad spectrum mutual funds. As a result, their elderly have the highest standard of living based on income to expenses ratio in this hemisphere.


Did you know that certain US federal government workers don't have to sink all their SS deductions into the SS system? The federal Thrift plan enjoyed by members of Congress earns a solid rate of return. The dollar collected by SS ten years ago is worth $1.10 today. While the dollar collected by the Congressional Thrift plan ten years ago is worth $4.00 today. That money is sunk into well diversified bond and stock funds.

Why is something good enough for our legistlators, but not good enough for us?

[s_stabeler]

and what if the privatised social security( i'm brittish, so it doesn't affect me, but our national insurance works in a similare way, it's just that in britain, the government HAS to pay out regardless) was moddeled on the thrift plan? then people could get a lot more income via the privatised route. anyhow, the experiance is that most of the people in the thrift savings plan either go for a fund tracking the s+p 500 or for one that does exactly the same as social security.

[JuntaJoe]

That's my point.

We should offer a thrift plan style of retirement account.

People who wish to stay with the basic plan can still do it.

Others who go with diversified bond and stock funds can do that as well.

And they could shift between groups, under certain conditions, if they feel they wish to increase or decrease their risk.

[s_stabeler]

and if they went with a mix according to how it is invested currently, they will get over what the bush admionistration are predicting( the current mix in the thrift grows by about 8% every yewar, with some annualised rates being in the double didits, and i think that bis on one of the bond fund option. and rthey have a mix that is identical to social security.

[JuntaJoe]

But opponents here scream that anything other than the original is unacceptable. :roll:

[s_stabeler]

and they will be the first to volenteer to pay more tax to make up the shortfall?

[JuntaJoe]

No they won't.

They will point fingers back and forth to deflect the blame.

Let's hope that costs a few their jobs.