Re: PRIVATIZATION: The boogey man will get you, IF
ALthough I am new to this forum I want to add my 2 cents to this on SS because in a class I am taking I learned somethings yesterday about this topic:
First of all, as someone said earlier, it all comes out of the same 'pot' and that is true.
Current debt figures are around 7.3 TR (trillion) and
of that 4 TR is in marketable debt (there are securities of one sort or another that can be bought and sold to manipulate the debt and the 'real' money in the economy). This is all further complicated by the currency exchange rates and who is buying our 'debt'.
Each year the Treasury pays around 450 BN (billion)
to cover JUST THE INTEREST on the debt. What does that interest mean? It is the interest paid to the investors in the government securities! Recently the government 'called back' some of the older securities with high interest rates issued in the 80's. But to do this
they have to be able to pay not only the interest but also the principal.
When enough securities are not sold to provide for that interest only payment, the Fed and Govt agencies 'borrow' out of any monies elsewhere in the system (including the SS trust fund) to pay that debt interest and hopefully some of the capital. To me that sounds like my going around to every relative who will lend me money when I can't pay the mortgage!
Currently Medicare and Medicaid are in worse shape fiscally that SS. And of course that all links to the general costs of healthcare (not the cost of groceries and rent and stuff like that that one thinks of the general SS collector using their monies for). Who benefits from the rise in healthcare costs
Very, very smart people are manipulating the debt to real money ratio every day. The US government securities market is the largest market in the world...way bigger than Wall Street. Our tax monies go into that mix to pay for whatever the government buys and sells.
As someone earlier said, then, I don't understand why the government can't find a way to protect SS as an insurance plan if it has all those people experienced in high finance.
There are people who sincerely believe that if you invest in the Stock Market in any fashion (including mutual funds, etc.) that they will make more $$$. However, not everyone who contributes to SS has that sort of business knowledge or time...(eg - see commercials on why people don't use TD Waterhouse!).
So, when you create another managed fund for this private investment the people in the long run who make the most off it are the people who MANAGE the investments, 10 or 15% at a time. I don't think you really have all that much control over your investments unless you watch them day and night 24/7 like those people are paid to do. I just don't think the majority of the people who might opt for private accounts are going to be able to manage them, themselves. And I fear that all the hype aboput how they are going to solve the problem will make people NOT sophisticated enough to manage them, opt for them just on the idea of 'I am keeping MY $$ out of the government's hands".
Since current SS is being paid out of current wages and not from what has been 'invested' people get scared when they see the workforce (or us boomers) going down in numbers. There are other ways to put the people back into the working and paying taxes mode that will save SS. I don't see what is wrong with raising the dollar level on which SS is collected. After all, when we do the math, each and every person who has drawn social security to date will eventually on the average would be entitles to withdraw MORE than they ever contributed. SO every time an interest rate jumps one way or the other and every time ANY entitlement program gets a COLA increase that withdrawal rate icnreases over the contribution rate unless something
is done to offset that.
I do think there are people who have looked more closely at the far range impact of the private accounts that Mr. Bush. I don't care for him generally because I don't think the IRAQ war is a 'just' war, but that is a topic for another time or place.
