Author Topic: Social Security Privatization--the Scam is Dead!  (Read 705 times)

Decker

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Social Security Privatization--the Scam is Dead!
« on: November 24, 2008, 11:19:18 AM »
The purpose of Social Security is to assure basic income. No private account can achieve that goal. All owners of private accounts must bear the risk that asset values will fall.

In 2000-2001 when the NASDQ fell more than 70% and the S&P 500 fell nearly 50%, millions were reminded that this risk is terrifyingly real. Such a meltdown in the value of the basic income support for retirees or workers on the eve of retirement would be catastrophic.

Furthermore, post-retirement inflation erodes private pensions. Social Security, in welcome contrast, fully protects pensioners against inflation. That is another reason why traditional Social Security must be sustained.

Not only would privatization expose workers to risks they are poorly equipped to handle, it would subject their children to debts they should not be asked to bear. The federal budget faces deficits estimated at $5 trillion over the next decade. Diverting 2 percentage points of payroll taxes from Social Security into individual accounts would add just over $1 trillion to that.

The three privatization plans developed by a commission President Bush appointed to design ways to privatize Social Security would each add $4 trillion to government debt by 2040, according to the commission's own estimates. Increasing government borrowing so recklessly would threaten the financial and economic stability of the nation. Siphoning off 2 percentage points of the payroll tax would also hasten the day when the Social Security trust fund is exhausted or benefits must be slashed.

Closing Social Security's projected long-term deficit - sooner rather than later - is desirable. But rather than undermining Social Security by diverting payroll taxes into private accounts, Congress should move to buttress the system. A plan introduced by Rep. David Obey (D-Wis.) would do just that. It would increase from 85% to 90% the portion of earnings subject to the payroll tax, adjust benefits for inflation more accurately than current methods do and dedicate to Social Security revenue from a tax on estates in excess of $3.5 million. This would close all of the projected deficit over the next 75 years, as estimated by the Congressional Budget Office.

Saving in private accounts in addition to Social Security should be encouraged. But carving out payroll taxes to deposit in inherently risky private accounts would undermine the assured income that Social Security provides.
http://www.brookings.edu/opinions/2004/1101saving_aaron.aspx?p=1

How can the author Hammerin' Hank Aaron be wrong?

SS is not a wealth creating enterprise.  It is social insurance against senior poverty (for the most part).

Privatized accounts are open to risk of loss.  SS is not.

Nearly 40% of this country's seniors are kept out of poverty by SS.
Source: Senior Citizens League Guide to the 2008 US Senate Campaigns Oct 10, 2008
http://www.ontheissues.org/Archive/2008_TSCL_Jim_Martin.htm

The administrative costs of SS are less than 1% of assets.  Privatization has btn 11-19% administrative costs.

The market is a tough thing to play.  Who will spend the time and money educating the citizens about playing that game?

And finally, we have a system of private accounts for retirement purposes.  They are call IRAs or individual retirement accounts.

Privatization is a sop to the Wall Street bungler who stand to make billions off of a privatized system.


Soul Crusher

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Re: Social Security Privatization--the Scam is Dead!
« Reply #1 on: November 24, 2008, 12:20:32 PM »
I agree as to the stock market, however, I diagree with the fact that SS now is rife with waste fraud and abuse and pays drug addicts, alchoholics, etc.

I also disagree with the fact that a person can pay into SS all their working life, drop dead at 65, and then the children are left with nothing.  That I find awful and is why I think a person should be able to have their money purchase saving bonds, CD's or treasuries of the US Gov.

I also think we are going to have a MAJOR problem with boomers considering that people are living longer and collecting for far longer periods of time.

SS was never meant as retirement, and I think that unless the age limits are raises to reflect the thinking behind SS when it was enacted, we are in for deep trouble.


Decker

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Re: Social Security Privatization--the Scam is Dead!
« Reply #2 on: November 24, 2008, 12:43:09 PM »
I agree as to the stock market, however, I diagree with the fact that SS now is rife with waste fraud and abuse and pays drug addicts, alchoholics, etc.

I also disagree with the fact that a person can pay into SS all their working life, drop dead at 65, and then the children are left with nothing.  That I find awful and is why I think a person should be able to have their money purchase saving bonds, CD's or treasuries of the US Gov.

I also think we are going to have a MAJOR problem with boomers considering that people are living longer and collecting for far longer periods of time.

SS was never meant as retirement, and I think that unless the age limits are raises to reflect the thinking behind SS when it was enacted, we are in for deep trouble.


SS is not rife with waste and fraud.  The only fraud I see is that the government keeps borrowing money from the trust fund to pay other bills.

SS does not leave a participant's beneficiaries with nothing.  That's a red herring from the privatizers.  Here's why:  SS pays survivor benefits for a certain number of years to the participant's kids under 16 and for widows and spouses over age 60.  Actuaries have tabulated that 'inheritable' benefit at an average value of $400,000.

Under any privatized plan, those benefits would be drastically cut so the funds could be played on the market.

Under SS, participants receive benefits as long as they live.  Under privatization, you can outlive your money and find your ass on the street or greeting customers at Walmart.

The risk of loss coupled with the high fees/administrative costs make privatization a loser out of the gate.

From the beginning, SS was meant as a retirement income supplement.  It keeps something like 48% of our Seniors out of poverty.  http://www.publicagenda.org/charts/social-security-keeps-many-people-out-poverty

Soul Crusher

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Re: Social Security Privatization--the Scam is Dead!
« Reply #3 on: November 24, 2008, 12:46:06 PM »
SS is not rife with waste and fraud.  The only fraud I see is that the government keeps borrowing money from the trust fund to pay other bills.

SS does not leave a participant's beneficiaries with nothing.  That's a red herring from the privatizers.  Here's why:  SS pays survivor benefits for a certain number of years to the participant's kids under 16 and for widows and spouses over age 60.  Actuaries have tabulated that 'inheritable' benefit at an average value of $400,000.

Under any privatized plan, those benefits would be drastically cut so the funds could be played on the market.

Under SS, participants receive benefits as long as they live.  Under privatization, you can outlive your money and find your ass on the street or greeting customers at Walmart.

The risk of loss coupled with the high fees/administrative costs make privatization a loser out of the gate.

From the beginning, SS was meant as a retirement income supplement.  It keeps something like 48% of our Seniors out of poverty.  http://www.publicagenda.org/charts/social-security-keeps-many-people-out-poverty

I dont disagree on all your points, but the govt has screwed up the admn, like almost anything else.


Decker

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Re: Social Security Privatization--the Scam is Dead!
« Reply #4 on: November 24, 2008, 12:53:07 PM »
I dont disagree on all your points, but the govt has screwed up the admn, like almost anything else.


The trust fund is fine for the forseeable future.  To get the money back that was borrowed and spent for other things will call for redemption of the T-bills (Gore's lockbox concept came from the incessant raiding of the trust fund).

T-bills are supported with the full faith and credit of the US meaning they must be repaid.  The only instance that they cannot be repaid is if the government no longer exists.

It's a good program.

Soul Crusher

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Re: Social Security Privatization--the Scam is Dead!
« Reply #5 on: November 24, 2008, 01:07:27 PM »
The trust fund is fine for the forseeable future.  To get the money back that was borrowed and spent for other things will call for redemption of the T-bills (Gore's lockbox concept came from the incessant raiding of the trust fund).

T-bills are supported with the full faith and credit of the US meaning they must be repaid.  The only instance that they cannot be repaid is if the government no longer exists.

It's a good program.

If the govt no longer exists SS will be the least of our problems.