Predictions - SS reform

[haha]

Gather your children closely and listen.

Raising the cap right now increases the surplus which become more IOUs. WHAT??

This is a half solution at best. Raise more money for Bush to spend and create more debt for future tax payers.

Now hug your children and tell them you are sorry; John Galt elected the man.

This one is kind of short on rationality.

 

[Tadpole]

How so? Right now we are creating a surplus in the SS fund. If we increase the amount of money going into that surplus and spend it now, we will leave more debt in the fund to be redeemed.

How do you see this differently? The point is that it might be better to invest this money somewhere besides in governement entities.

 

[samclem]

Tadpole,

- Who is going to do the investment picking?
-- Individuals? I like that! But I'd guess you'd be opposed to this tenet of the "ownership society", as President Bush has called it.
-- The government? This would be government ownership of the means of production--a construct with a bloody history and a poor track recordfor performance. Aside from this concern, can you imagine the wrangling over which companies are appropriate for these govt investments? (Tobacco? Booze? Non-union labor? Defense contractors? Companies who've outsourced work overseas)) By the time they finished, there might be one company deemed suitable (probably a manufacturer of 100% organic hypoallergenic baby food--with small manufacturing plants in every congrssional district).


samclem

 

[Tadpole]

- Who is going to do the investment picking?

No there are no individuals involved since this is just a higher collection of the payroll tax. That was precisely my point. The government spends the money today and future taxpayers pay the money back when it is needed for SS benefits.

The money, once collected, must be invested somewhere until it is needed. Is there somewhere the government can invest the money that will not require future taxpayers to raise taxes to pay the liability?

Don't get me wrong. I want the SS system to be fixed but putting money into government entities is part of what has us thinking we need an immediate fix.

What is a lock box?

Combined with private accounts the question I pose may be mute since the extra money might not even cover liabilities. There are no numbers yet.

 

[samclem]

Tadpole,

Is there somewhere the government can invest the money that will not require future taxpayers to raise taxes to pay the liability?

- I think their options are about the same as yours and mine:
-- 1)US govt securities (what they are doing now)
-- 2)Corporate stocks
-- 3)Corporate bonds
-- 4)Commodities

- You don't like the US Govt investing in option #1 (due to low returns)
- Options 2 and 3 come with the same issues I noted above--the US govt helping some companies, hurting others--and all the baggage of govt ownership of "private" companies (or their debts).
- Commodities: Maybe we could go back to the gold standard? I think it best not to ask the govt to dabble in commodities.

- Hey--what about foreign currencies? Uncle Sam could make speculation in foreign currencies an official, above-board policy. Now THAT would be a wild ride. I'll bet a lot of countries that have been talking poorly about us would be a little nicer to 'ole Uncle Sam if we did.

Nope--the answer isn't for the US government to get a better rate of return. It sounds good, but the US government can't effectively do this as you and I can. And it shouldn't.

What is a lock box?

Just a phrase.


Regards,

samclem

 

[laurence]

You guys see this? At least people are talking about the problem now:

The Hagel plan
His plan includes personal accounts, though only for those under age 45. Everyone age 45 and up would remain in the current system. (The Bush plan keeps those 55 and up in the current system.)


Under Hagel’s plan, younger workers would be automatically signed up for a personal account and have until age 25 to opt out and stay in the traditional system. Once in, workers could invest in the same five accounts now offered to federal workers through the Thrift Savings Plan.

“I’m not saying my plan is the only plan that should be looked at. There may be a better way to do it,” Hagel said in an interview. “That’s the point of this — let’s get some facts on the table. Right now we are dealing with theory.”

Hagel, who is considering a run for president in 2008, noted that by 2018, the system will be paying more in benefits than it collects in taxes. By 2042, Social Security will only have enough money to pay 73 percent of promised benefits, according to the program’s trustees.

“This reality is daunting, but there is good news in all of this. The system can be fixed. It is within our power to preserve the social safety net of this nation,” Hagel said in a speech at the University of Nebraska-Lincoln.

The Bennett strategy
Another approach is being floated by Sen. Robert Bennett, R-Utah.

Bennett would keep the system the same for the bottom 30 percent of workers, but the richest workers would see their benefits tied to rising prices, rather than wages, which amounts to a benefit cut of nearly 50 percent.


Benefits for people in between would be based on a blend of the two measures, on a sliding scale.

Reaching out to Democrats, Bennett at first makes personal accounts voluntary add-ons to Social Security, where workers invest an additional slice of their wages, much as many Democrats have proposed. But after perhaps five years, workers could move some of the money from their Social Security taxes into these accounts.

 

[Eagle43]

I heard a solution to just quit spending ss money elsewhere. If you need govt money for some project or the other, then fund that project through general revenues and leave ss money alone. That's the whole problem period. The money's been used and not saved. You could do the same thing with your IRA, but the result would be different. If you did it, you'd just be broke. The government can just raise taxes (and they will).

BTW. Is the Democratic party becoming the "no" party? Their solution to every proposal is "no". No wonder they lost and will continue to lose. No ideas. This will probably result in more Dems losing seats in the Congress. Somewhere ole Karl is smiling.

 

[laurence]

Karl is a genius, that's for sure. I just wish my party would quit spending money like a democrat!

 

[sgeeeee]

Karl is a genius, that's for sure.  I just wish my party would quit spending money like a democrat!  

Sigh . . . Interesting. Ron Reagan ran up a deficit every day in office. The first George Bush ran a deficit. Clinton built up a surplus. And W runs up the largest deficit of any country in the history of the world. But there are still approximately half the voters in this country who think it's clever to use a term like, "spending money like a democrat".

I guess you can't deny that Karl is a genius. He has managed to find approximately half of the voters in this county who can be manipulated into believing this kind of nonsense regardless of the evidence. . . Or does that make him a con-artist?

 

[unclemick]

Hmmm - I can hardly wait until the 'real voters weigh in'.

The world currency, bond and stock markets.

There is no free lunch. Adam Smith's 'Invisible Hand' is at work right now.

 

[Eagle43]

http://www.washingtonpost.com/wp-dyn/articles/A15356-2005Mar7.html?referrer=email&sub=AR

I believe last night I called the Democrats the party of "no", kind of like the Capitol One commericals. Anyway, here's a weigh-in by Washington Post: Quote

What worries some Democrats about the debate over Social Security is that Bush stands for something and they do not, other than opposition to the creation of private accounts. So far, party leaders believe that posture has served them well. But some Democrats fear that Bush, by having pushed for changes and by appealing to younger voters with his proposal for the accounts, will score a political victory even if he does not get the main element of his plan.

Harold Ickes, White House deputy chief of staff in the Clinton administration, said that without a plan of their own, Democrats risk GOP inroads among younger voters and the potential of Bush engineering a compromise this year in which he claims victory, even in the absence of the personal accounts he has championed.

Democrats are winning the fight over private accounts, Ickes said. "But if the Democratic position is we can't have private accounts but also can't have an increase in the cap [on earnings subject to the payroll tax] or the retirement age, that may be a difficult position to sustain." He added: "I couldn't predict what form it [a compromise] might take, but I think the administration has a lot at stake on the Social Security issue. . . . They are a wily group and I think they are going to come up with something to claim victory."
------------------
As this article implies, this is a win-win for GWB. Even if the Dems manage to defeat private accounts, it should result in more republicans in Congress.

 

[laurence]

SG, your points are well taken, I said what I said lightheartedly. Small note though, it's Congress that really spends the money, creates the final budget and all the riders and pork barrel that goes along with it, and untill Clinton, the Democrats controlled both houses for 4 decades. What the last decade has shown, however, is that the urge to cater to your local constituency and hold power at the cost of a huge debt burden for future generations crosses all party lines. I don't really have the will to defend the GOP anymore, they abandoned too many core tenets in the process of grabbing control of Washington. There are a few Senators left who put policy in front of politics (I really like that Democrat from Deleware-but his name slips my mind) but most have been replaced with political demagogues Politics are going through a pretty dirty run right now. Instead of working with moderates, the opposite party will see that person as a potentially vulnerable seat and attack them during the election cycle, trying to gain another seat for themselves. Consequently, everyone has polarized. Back in the day, it would be unheard of to mount a serious challenge to a majority/minority leader in the house or senate, it was an unspoken rule. Democrats found out the hard way that rule has been thrown out.....

 

[Eagle43]

http://www.washingtonpost.com/ac2/wp-dyn/A35231-2005Mar14?language=printer
Quote....
Skepticism of Bush's Social Security Plan Is Growing
Polling and Interviews Find Concerns Across Age Groups

Three months after President Bush launched his drive to restructure Social Security by creating private investment accounts, public support for his program remains weak, with only 35 percent of Americans now saying they approve of his handling of the issue, according to a new Washington Post-ABC News poll.

While the White House has helped convince more than two-thirds of those polled that Social Security is heading for a crisis or possible bankruptcy without change, 56 percent disapprove of his approach, a survey of 1,001 adults conducted March 10-13 shows. By comparison, 38 percent approved of his handling of the issue and 52 percent disapproved of it in mid-December.

Moreover, 58 percent of those polled this time said the more they hear about Bush's plan, the less they like it. The latest polling, combined with detailed interviews last week, shows that Bush's drive to significantly alter the 70-year-old national insurance program has run into significant hurdles with every age cohort.

cut for brevity....

Finally, younger workers may support the idea of private accounts, but they also tend to oppose Bush. Democratic candidate John F. Kerry claimed 54 percent of the 18-to-29-year-old vote in November, the only age bracket he carried. And distrust of the president is lingering among even some young workers inclined to support investing part of their Social Security contribution. Only 40 percent of these younger workers say they support Bush's Social Security proposal.

"I'm not a big fan of Bush, not at all," said Michelle Hinson, 31, of Morgan Hill, Calif., just south of San Jose. But she grudgingly says she likes the idea of personal accounts. "If I think it's a good idea, then I'm willing to listen and hear what's going on. But for the most part, I don't agree with anything he's doing."
Unquote...
Article's much longer, but CutThroat should be estatic.

 

[unclemick]

I find it interesting that anyone thinks opinions have any bearing on the matter what so ever.

Red beads and white beads - ala W. Edwards Demings Red Bead Experiment. Either the numbers and models mean something or they don't.

Congress in 1983 did something because they had to.

The reason we elect those guys is to mind the store - hopefully they will.

But then again - I'm a liberal pessimist. Heh, heh.

 

[Cut-Throat]

Article's much longer, but CutThroat should be estatic.

Everyone that's planning on getting SS should be Ecstatic! I think everyone that values SS, wants to help save it. Bush pulled the wool over everyone's eyes on Iraq, hopefully the general public won't let him destroy SS.

Private Accounts = The first step towards SS elimination.

Hopefully the moderates will prevail and propose Raising the cap, Raising the retirement age on a graduated basis (like 1983 SS reform). Means testing for those with over $5 Million Net Worth. Plenty of ideas to help SS. Private Accounts Cost Money and do not help SS at all.

 

[cute fuzzy bunny]

They had some university prof on bloomberg this morning that talked with the students about this plan. Most of them view social security as a black hole the money goes into and they'll never get it out. Which is why he found a lot of them find the personal account thing appealing.

The GAO also issued an article showing how with a few small changes, social security could easily remain solvent until 2080.

And really, all you have to do is cut federal spending and start paying back some of the IOU's the feds have been taking from the SS pool to fix the problem.

Whoops...did I say the bad words "cut spending"?

 

[Hyperborea]

They had some university prof on bloomberg this morning that talked with the students about this plan.  Most of them view social security as a black hole the money goes into and they'll never get it out.

I imagine that if you asked most university students about pensions, 401ks and the like it would be similar. When you're 18-22 you don't even think about being 30 with kids never mind 65 and retired. I wonder how many of the students figured that if it was in a private account that they could pull the money to buy beer this weekend?

 

[retire@40]

My prediction is that we will see private accounts as a first step to change the structure of social security. The current cash flow model has faults. Eventually, social security as we know it will not exist. This may take a decade or two to fully implement. Each one of us will have our own private social security accounts. These accounts will work exactly like the current social security model except that they will be owned by the individual, not the community. We will all be forced into paying into our own accounts that will be invested in index-type funds. The government will still be the trustee, but will not own the funds in those accounts. Using this model, nobody will ever have to worry if the money will be there upon retirement.

 

[Eagle43]

And really, all you have to do is cut federal spending and start paying back some of the IOU's the feds have been taking from the SS pool to fix the problem.

Whoops...did I say the bad words "cut spending"?

Bingo! It will be a cold day in Hades, of course, but it's a nice thought.

A pox on both parties. They have been stealing that SS money for years to pay for pet programs because they didn't wanna raise taxes to pay for those programs. Best way to fix SS; Stop stealing it; Stop mis-using it; and pay back what you took.

Just imagine. Every legal business transaction, every day, the government gets to participate. Government is your silent partner and even if you lose, they win. And it's still not enough? They gotta run a deficit.

Oh and I read somewhere that when the boomers start spending all that 401k/IRA loot, guess who wins again. The guvmint gets to tax it. Hmmmm. Talk about a windfall profit. :

 

[Mr._johngalt]

Mostly BS, IMHO.

JG

 

[Beststash]

Prediction - SS reform is DOA until there is a bi-partisan panel formed to investigate and submit a bi-partisan solution.

Also - when the going gets tough - we can/might be in another international crisis. This President is engrossed with himself.

Off-Topic - I just hate to hear anyone mention the word "Nuclear". I truly think this is a very dangerous path.

I know, I know, it is just an expression but this is one technology that we all need to continue to fear - it is impossible for the lay person (including myself) to understand the effects of anything "Nuclear" - as almost everyone that has ever had anything to do with this technology - we are in world where we truly have the ability to destroy ourselves and the topic needs to be treated with reverence. We do not need to ever use this as an adjective to soften the meaning.

 

[Mr._johngalt]

Hey Beststash! You worry too much. You'll get a case
of the nervous twitches. Oh, I agree terrible things are
quite likely to happen. It's just that we will have little or
no control over events. Always remember.........
Murphy was an optimist!

JG

 

[Beststash]

Busted JG 8)

 

[johnblake]

Hopefully the moderates will prevail and propose Raising the cap, Raising the retirement age on a graduated basis (like 1983 SS reform). Means testing for those with over $5 Million Net Worth. Plenty of ideas to help SS. Private Accounts Cost Money and do not help SS at all.

Makes perfect sense except for the net worth means testing part. They already have enough information about us. I see no reason to give them more.

 

[Michael]

Best way to fix SS; Stop stealing it; Stop mis-using it; and pay back what you took.

I don't think there has ever been a democracy or republic that didn't spend lavishly, because voters don't pay attention to what is going on. For example, the US and Europe spend $500 billion dollars per year to make food more expensive through the farm price support program. Enough money to virtually solve our combined pension problems all by itself.

The average person would probably laugh at you if you asked him if he wanted his food to be more expensive. If you asked him if he was willing to take a Social Security cut in order to make his food more expensive, he would think you were insane to ask him such a question. Yet they keep voting for politicians who rob the Social Security trust fund, and use the money to do just that.

There are many other government programs of this sort, but people never question them. They don't bother to think through the implications of what the politicians are doing, so special interest groups reign supreme by giving perks to the politicians.