I just can't see how this is the first step in eliminating SS.
Well . . . first it is important to understand that private accounts do not help the impending short-term short-fall in the social security program. They are not a solution. Rather, they exacerbate the potential problem: To the extent that social security is in trouble, it is because several years from now the total amount of taxes being paid into social security will be exceded by the total benefits being paid out. If we go to private accounts, we reduce the amount of social security taxes being paid but in the short term we will not have reduced the benefits owed. This will result in increased debt and put our entire system into real crisis. We will have to borrow more money, sooner if we replace existing social security with a private accounts sytem.
So -- if private accounts don't help the problem, what do they accomplish? They don't provide more financial stability for the average American. They reduce the role of social security for the average American in retirement and replace it with these private accounts. Another way to look at this is that they transfer the typical American retirement plan away from a guaranteed benefit plan (very safe and stable) to a contribution and performance based plan (varries with stock and bond market performance and completely out of the control of most workers).
Okay . . . so they don't solve the financial problem. They don't provide the typical worker with greater financial stability. What do they do?
The right-wing think-tankers have published their thoughts on this subject. They believe that the way to get rid of social security is little by little. They recognize that this program is the most popular federal social program in existance. So first, they need to establish a precedence of reducing it. Once that has occured, they can reduce it repeatedly till it is no longer has value. Then they can eliminate it.
The low income family can't take advantage of the private accounts as most of them are just trying to take care of their basic needs. So why not use a small portion of SS to go towards a private account?
So you believe that the low income family that has not been able to LBYM under the current system is likely to become sophisticated enough investors to use private accounts to advantage over the 40+ years that they work? And you believe that this system (where every minimum wage and low income blue collar worker has to become investment savy in order to avoid retirement in poverty) is a good thing for them?
Based on current savings rates and investment performance for low income workers, this seems unlikely to me. What data leads you to believe differently?
I'm not sure I can swallow his sliding scale of benefits though. We already have a sliding scale to some degree as the middle to high income earners don't receive the same proportionally as the lower income earners.
Well . . . when social security taxes have been producing a surplus for several years and that tax is very regressive. Those earning more than $90K pay decreasing rates as their salaries increase. So the social security surplus has been collected disproportionately from the poor. In the past, the benefit phase of social security has been very progressive. But, of course, if we reduce the traditional benefits in favor of private accounts, we will have taken that regressively collected surplus and given disproportionately to the wealthy.
