Predictions - SS reform

[Mr._johngalt]

Hi Michael. Just wanted you to know that I, for one,
have spent a lot of time contemplating the implications of what the politicians are doing/will do. Mostly self-serving posturing and PC nuttiness. I see no way to reverse this, and even if I did I am too old to do anything about it. Specifically, on the problems you brought up (like "why do people keep voting for the same politicians", etc). First, most people are just not deep thinkers. That's a fact. And even if they were,
they lack good options to be change agents. We only have one major party now (Republicrats?). It is harder
and harder to see any difference. Sooooooooooooo,
I predict a continuous mostly uninterrupted descent into lefist PC socialism. Honestly, I can't see why any thinking person would dispute this. Just go back 100+
years and compare it to now. Most here use financial
history to debate SWRs. Seeing where our politics
is headed should be much easier and you don't even need a computer; just your eyes and a brain.

JG

 

[Tony2002]

:Interesting form a Newsletter I just Received on legislation for the 109th Congress, according to equity analyst Andrew Kligerman of UBS

Following a recent "field trip" to the nation's capital that included discussions with representatives of the U.S. Department of the Treasury, Senate Finance Committee, House Financial Services Committee and key lobbying groups, Kligerman said he saw only "limited" support for recent congressional proposals for lifetime savings accounts, tax deductions for long-term-care insurance, permanent abolition of the estate tax, and permanent reductions of the dividends and capital gains taxes, and doesn't expect any of them to move in 2005.

"From where I sit, there seem to be mixed signals," Kligerman said. "President Bush is coming off some recent political successes, but the polls show he is having a hard time convincing the public on this issue, and just yesterday, Sen. (Lindsey) Graham of South Carolina said focusing on private investment accounts was a strategic mistake." Under the Bush proposal -- which has yet to be introduced in either chamber of Congress but is estimated to produce transition costs of more than $2 trillion over the next decade -- younger workers would, beginning in 2009, have the option of investing as much as 4% of their salary into personal retirement accounts using funds that otherwise would have gone toward Social Security payroll taxes. Participants could choose to invest those funds into a limited menu of diversified equity funds and fixed-income funds.

Though the Social Security Administration would continue to administer the accounts, private investment companies would manage the funds under a contract with the government, with annual fees estimated to be about 0.03%. At retirement, workers would be required -- either through the federal government or on their own -- to use a portion of their account's distribution to purchase lifetime annuities.

Though the unified Democratic opposition and only soft Republican support seen for the President's Social Security package would make passage seem unlikely, Jim Morrill, Lincoln National's director of federal relations, said that given the President's commitment to the issue -- most recently evidence in an ongoing "60 stops in 60 days" tour across the United States -- he wasn't willing to rule it out.

But even without passage, the Social Security debate itself has raised awareness of both asset-planning issues generally and annuities specifically, Morrill said. "The word annuity has become better understood in Washington, and the whole concept of a paycheck for life is attractive to a lot of people who are looking at these issues," he added.

"Reform of the estate tax is more likely than repeal, but if they define reform at a 15% rate, and an exclusion of up around $5 million for individual and $10 million for a couple, that's tantamount to repeal and would cost as much as repeal," Morrill said. "We have seen numbers that indicate that if they had a 45% rate, which they're set to get in 2010 before it fully repeals, with those exclusions, that program is going to cost $300 billion. It's unlikely that they're going to find money this year to deal with a full or permanent repeal, so they're kind of throwing everything in to 2010."

Fresh interesting info. Looks like you people will be getting into Immediate Annuities with lifetime income after all. If Social Security reform goes through.

Tony

 

[Gonzo]

Could a portion of the SS Fund be managed similiar to a University Trust Fund to achieve greater returns rather then letting individuals invest on their own?

Gonzo

 

[Cal]

Social security is an immediate lifetime annuity with lifetime income. Duh!

It's just that it's being paid by the government and not by some insurance company that is getting some of my money to line their pockets and their agent's pockets.

 

[Michael]

Could a portion of the SS Fund be managed similiar to a University Trust Fund to achieve greater returns rather then letting individuals invest on their own?

Yes, but few trust the politicians to keep their hands off of it.

 

[Michael]

Just go back 100+ years and compare it to now.  

The big sea change seemed to be the passage of the 16th amendment (legalizing the federal income tax).  Once that passed, politicians that didn't give lots of taxpayer money to special interest groups couldn't win against politicians who did.

The creation of the fed at about the same time allowed politicians to borrow huge sums from the fed to give even more to special interest groups.  Prior to the fed, they had to borrow from private individuals, which limited how much they could borrow.  Now the fed simply prints more money, and uses it to "buy" treasury bills.

Frugal politicians simply cannot win elections against politicians who promise lots of government benefits under these circumstances.  A fact that was not lost upon the Founding Fathers, which is why they made such things illegal under the original Constitution.  The writers of the original Constitution wanted to save us from what happened to past democracies and republics in the next stage after the one we are in now.

I suspect you are right that the process is probably irreversible now.  All past republics and democracies went down this same road.  It appears to be human nature.

 

[Eagle43]

http://www.usatoday.com/printedition/news/20050316/oplede16.art.htm

Just in case you missed it, here's an article from yesterday's USA Today. Looks like private accounts are a success in Galveston, Texas, if this article is accurate. I did not realize that their plan takes care of disability, like SS. There's some stats, which I will let you read, and only quote the conclusion of the article:

Our experience has shown that even low-income workers would do better, but a guarantee would ease their worries. Moderate- and higher-income workers would do much better, as ours do, because they have invested more in the plan and are not prejudicially punished or topped out on retirement benefits, as they are in Social Security.

In today's debate about whether to partially privatize Social Security, the Galveston County plan is sometimes demagogued. But our experience should be judged factually and fairly, not emotionally, politically or on the basis of hearsay. We sought a secure, risk-free alternative to the Social Security system, and it has worked very well for nearly a quarter-century. Our retirees have prospered, and our working people have had the security of generous disability and accidental death benefits.

Most important, we didn't force our children and grandchildren to be unduly taxed and burdened for our retirement care while these fine young people are struggling to raise and provide for their own families.

What has been good for Galveston County may, indeed, be good for this country.

Judge Ray Holbrook was Galveston County judge from 1967 to 1995, and oversaw the creation and administration of the Galveston County alternative plan. Alcestis Cooky Oberg is on USA TODAY's board of contributors.

 

[cute fuzzy bunny]

Its quite true if you're much of a historian that many of our "great" civilizations became "kinder, softer and gentler" and became, for lack of a better word, more "liberal" in their leanings.

Every one of them were eaten by barbarians. Apparently a good barbarian knows a soft target when they see one. Hmm, and we're under a little bit of an attack by barbarians, as it were.

So I guess it'd be one thing if the whole of society decided to become more "socially conscious".

Of course, then some bunch of aliens in big flat ships would come by and blow us up. Hopefully if that happens we'll still have one of Jeff Goldblums descendants and Apple computer will still be around and making laptops.