Aces High Bulletin Board
General Forums => The O' Club => Topic started by: oboe on February 17, 2005, 08:21:53 AM
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You don't hear the details of the plan very often, but I did hear President Bush say yesterday "people ought to be able to take their own money and invest it" which is somewhat counter to the details I've learned about these proposed private accounts.
This is supposedly how they will work: in return for cuts to your guaranteed SS benefit, you will be able to earmark a small percentage of your SS taxes to go into a 'private' investment account which can invest in some number of government approved funds. But, and this is a BIG 'but' - you have to repay all this money when you retire, plus 3% interest. So, you only actually keep any gain over and above 3% in your private account.
My question is, if you have to pay it back, how can it be referred to as 'your money'?
And I wonder how steep the cut to guaranteed benefits will be.
Like any government program, the devil is in the details I suppose - but it is certainly not as simple a plan as Bush is portraying it to be. Many young people are going to automatically be approving of it without really knowing the details of what they are getting themselves into. And that's too bad.
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Well... the best way to avoid fuzzy math is to just avoid math altogether.
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link please
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Here's the least fanatical of the criticisms of it that I found. It's tough to find even-handed treatment of the issue.
http://www.startribune.com/stories/1519/5223806.html (http://www.startribune.com/stories/1519/5223806.html)
Editorial: Young workers/The real victims of Bush's plan
February 6, 2005 ED0206A
There are so many deceptions to discuss in President Bush's plan for dismantling Social Security, and many of them require complex explanations to show just how deceptive they are. For now, let's take on a couple. Please pay attention, young workers, because you get taken to the cleaners by his plan.
The structure of Bush's private accounts isn't new; it was offered as "Plan 2" by the 2004 President's Commission to Strengthen Social Security, so it has been pretty well studied.
In addition to the private accounts, the Bush plan envisions future benefit cuts for everyone. The line being peddled by the White House is that private accounts would more than offset the cuts, leaving younger people better off. That is simply not the case.
Using figures and economic assumptions from the Congressional Budget Office, the Center on Budget and Policy Priorities, a highly regarded liberal think tank in Washington, did the calculations. Here's what they found for first-year benefits for a worker now 25, of median income, who retires at age 65:
• If nothing is done to Social Security, some time between 2042 and 2052 (opinions differ) there would not be enough revenue flowing into the program from payroll taxes and its trust fund to cover the benefits flowing out. If benefits then were cut just enough to make up the difference, our hypothetical worker's annual benefits at retirement would decline $800, from $20,500 to $19,700.
• If the Bush plan is enacted, our worker puts the maximum allowable amount into a private account and the economy performs as the CBO expects, our worker would get only $13,097. Who wants to sign up?
Bush also says you own your private account and that you can pass it on to your heirs. Neither is true. In effect, the government loans you part of your Social Security tax to invest in a private account. But through a mechanism called "benefit offsets" that loan must be repaid at retirement, with interest (starting at 3 percent but adjusted for inflation).
What does that mean? Let's say you put $1,000 in your private account annually for 40 years, and you get a pretty-good 4 percent annual earnings on your investment. The value of your account would grow to $99,800. But the government would deduct $78,700 from your Social Security benefits, leaving you only $21,100, about 20 percent of what your account had accrued. If you earn only 3 percent on your investments, you don't come out a dime ahead from the private account, but you still suffer cuts in your guaranteed benefits.
In addition, most of the money in your private account could be passed to your heirs only if you die before you retire. The government would convert most of the value of your account into an annuity and give it to your heirs. If you live to retirement, the annuity goes to you, and when you die, whether one day or 20 years after retirement, the remaining value of the annuity reverts to Uncle Sam.
Younger workers should not be bamboozled. Something must be done to ensure Social Security pays them the benefits they deserve, but the system is in no danger of "bankruptcy." Bush's plan would make the existing problem worse rather than better, and younger people would bear the resulting financial pain.
I do note also that Alan Greenspan said he approved of private accounts, but he said to go very slowly. He also said it wouldn't help with the SS solvency problem, which makes me wonder why he would be in favor of it any way? Maybe he just means its going to need to be a mixture of increased taxes, reduced benefits, and private accounts.
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Congressional Budget Office, the Center on Budget and Policy Priorities, a highly regarded liberal think tank in Washington,
read that far..
something tells me if skerry had won and proposed the same thing, it would be a fantastic idea...
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That's too bad. I think there's a lot of crap spewed on both sides of any issue, but if you eliminate reading the other side's criticisms, you leave yourself only the propaganda of your own side. And I mean that goes both ways.
Clinton proposed investing Social Security in private accounts and it went nowhere.
http://edition.cnn.com/US/9812/09/social.security/ (http://edition.cnn.com/US/9812/09/social.security/)
That either means it's a bad idea, or that neither side can propose a workable non-partisan plan.
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Its almost identical to the plan federal workers have.
It isnt like he's giving you all your SSI funds and saying "gamble away" We're talking 1%.
But right now, the left is trying to insist "What problem?".
Politics aside what's the big deal with 1% being invested the way YOU see fit?
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i think that we should be able to invest our own money too.
unfortunately, my gut tells me that this proposal is motivated by corporate interests who are seeking yet another flush of welfare from the public sector.
when looking at the stats it becomes immediately clear that the advantages are
limited. statistics vary, but there are some that go so low as a one to three percent return annually, not to mention that the program will be heavilly regulated and a significant portion of return is wrapped up in exploded administrative costs.
what i propose is this.
rather than the government offering the corporate sector yet another carte blanche with my money, why not just allow me to opt out of social security period. doing so means that i will not be adding to the system, but it also means that i will not be able to enjoy the benifits should i ever need them.
i think that would be a much more significant motivator to many people to earn, invest and save thier own dollars.
note. i said "thier own".
right now, my "own" money is being spent on a war that i dont support to bolster an arms industry that is way out of the fence.
i wouldnt mind some say so on that too...but alas, political spin has spiraled out of control and what is a story today will be forgotten by the dumb beast of a mass tommorrow and the waste will be locked in yet again.
its funny how "conservatives" constantly fail to adhere to the root meaning of the word.
i am for ending corporate welfare in all of its ugly forms and this my friends is all that this latest form of "reform" is.
just my 2.
88
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Originally posted by JB88
i think that we should be able to invest our own money too.
>snip<
its funny how "conservatives" constantly fail to adhere to the root meaning of the word.
Umm...nah, nevermind.
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I thought The SS all had private accounts in swiss banks?;) :lol
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thats kinda what i was thinking jb88. who is really going to make a buck on this deal? not the taxpayer. sounds like the saving and loan scandal rewarmed.
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Originally posted by Eagler
Congressional Budget Office, the Center on Budget and Policy Priorities, a highly regarded liberal think tank in Washington,
read that far..
something tells me if skerry had won and proposed the same thing, it would be a fantastic idea...
Well based on your input above I will counter saying that your comments are just as biased if not more biased as any Center On Budget and Policy Priorities ever could be; and your nose is so far up our presidents rear end you might be reincarnated as a diamond in a future life...
Do your homework on countries that have tried this type of system.. The Fees run whatever benefits you think you may or may not get into the ground (fees that wihout a doubt will go to one of Bushes friends..) ... on top of that would you like your benefits to be directly tied into the current ecomony of the USA. I dont.. What if we have another Sept 11 and the market really crashes this time. then WTF.... your benefits will crash right along with it... and that shouldn't be the case when you have been putting into the system for 40 years and get little or nothing out of it due to market adjustment.. I think civil war would be a understatement if that scenario came to pass...
IMO Bushes plan is premature .... yes we will need a change; some economists say no earlier than 2020 and no later that 2043... so how is there a current crisis.... 15 years from now at minimum.. we have more on our plate as of current that should take priority..
We are fighting a preeumptive two front war at the moment with huge resources being expended.. The priority should be getting our deficit down or else we could turn into a bananna republic like argentina was when they crashed and burned... Then you wont have a pot to piss in.. but hey for some "history will teach us nothing" (bonus pts for whoever knows the song im talking about, pretty famous artist.)
Eagler your carbon 14 right now.. soon to be a diamond.... give your propaganda a rest... (gives eagler a fark.com {Florida tag} )
and to the rest of you fellas do your homework its all out there get edu'ed and make your own opinion on this so called SS "Crisis" just like the so called WMD crisis or the so called hero Jessica Lynch shooting till you die hero BS .. Deductive reasoning is bane to the puppet masters..
I say give the public a choice if they want to risk their money on this type of program, then that would be the best system.. (currently we have that choice right now, called private investment..) This crap of we choose.. we choose is borderline marxist.... (have govt approved accounts to make it easy for the un savy... and give people a choice..)
have a nice day...
:)
DoctorYo
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diamond is my Birth Stone :)
Yo you think if any of ur scenerios above came to pass, SS would be there in it's current state?
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I'd just encourage you guys to do more research before forming a firm opinion - I get the impression alot of people are hearing the phrases "my own money", "private account", stock market", and not thinking critically about it.
But in reality the details of whatever plan is finally implemented might really harm you financially.
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well, according to supporters, the actual risk involved is small due to the fact that they will be earmarking fortune 500 companies.
but then these are the same companies who routinely lay off workers to keep the bottom line black and lets not forget about the enron's and worldcoms in the world.
i just dont think that the private sector should be getting to cozy with the public sector.
governments purpose is not for profit. it is administration and protection.
i dont have a problem with social security in principle. it is not unreasonable to ask a government to ensure the well being of its citizens...it is good to have, but something that i think that we should be able to opt out of completely. they are pretending to give the money back to us when in reality, they are not.
its just more big government and more ripping off the little guy.
smoke and mirrors.
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I do not think SS will be there for me as it stands now when I hit 72 or will that be 76/80/82?? :)
what can be worse than that?
I would like it if they stopped stealing my money NOW and let me handle it and my retirement. ANY change is a step in the right direction to me
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right. but doesnt the motive seem even slightly suspect eagler?
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Originally posted by JB88
right. but doesnt the motive seem even slightly suspect eagler?
Why? As noted, President Bush is not the first president to suggest reforming SS, or the inclusion of some sort of private accounts. What's being proposed (and in no way it's final form) is essentially what Congress and a million and a half federal employees currently are allowed to participate in. There is no discussion of "dismantling" SS, as the article boldy declares, but of finding ways to insure it's continued viability. I have a volutary investment program with my company, where I can invest up to 15% of my gross (tax deferred). They also match $0.75 on the dollar up to 8% of my gross. The return this last year was almost 5% (not counting the "free money" dollar-matching). I choose the most conservative of the fund options, in terms of both risk and return on investment.
The main thing is, you can't wait for SS to collapse to begin reforming it. Bottom line: it's my money, and I want as much control over it as possible. Personally, I'd sign over any right to collect SS today if it meant I didn't have to pay anything more into it, for the reasons Eagler points out. And I'm 43 years old.
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It should be noted that the Minneapolis StarTribune is one of the most democratic liberal anti-Bush rags that disquises itself as a newspaper in the nation.
Many in the Minneapolis area call it "The Star and Sickle". So, don't expect complete accuracy and honest, certainly not support for any Bush program.
I don't know if the article is correct or not, but I certainly don't take it on faith.
dago
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I get the feeling nobody is reading about the details of the plan.
First, its not YOUR money. Once the government collected that SS tax, its THEIR money. They are willing to loan it back to you at 3%, in return for a cut to your guaranteed benefits. So you keep whatever profit you make over and above the 3%, less the benefit cuts, and fees and admin charges associated with your private account. And it also sounds like your fund choices are limited to goverenment approved or controlled funds.
Sabre mentioned earning 5% on his conservative investment. I wonder if the 2% excess would cover his benefit cuts? I doubt it.
Seems to me people who are willing to give up guaranteed benefits and assume this much risk deserve a better deal.
I think I'd rather see SS fixed by a combination of raising the cap and means testing, and expansion of the existing IRA programs than private accounts the way they are currently proposed.
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Its not rocket science. You have this huge cash cow and the government wants to put some of that money in the hands of private companies in an effort to increase American prosperity - in other words , corporate welfare. They want you to keep those nice financial advisers in business by having you pay them to manage part of your social security fund. So remember, before you figure how much of a return you are going to have to make to break even, make sure you account for overhead like managment fees.
But we should rush into this because W tells us the sky is falling...
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recieved my SS statement last week
first time it has ever stated that by 2042 my payback will be 3/4's of what it projected in the statement, if I am lucky
I see it as a way of investing in the country, not the gov
Was shown that if the same investment for the past 35 years in SS which produced < $150,000 would have yielded over $500,000 if invested in the stockmart over the same time period
give me the choice with MY money
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Originally posted by TweetyBird
But we should rush into this because W tells us the sky is falling...
Oh boy yet another bogus Bush lied claim
Clinton made the same claim. Nobody wanted to hear it then either.
Fact is SS is going to go broke.
A large chunk of the money the naysayers claim SS has is on paper only in the form of Gov IOU's because the government has for years and years now been borrowing from the surplus that was there. Which it is supposed to pay back with interest.
Well when the time comes to pay up the money will have to come from somewhere and guess who gets to pay for all those IOU's
Problem with this is it is going to be considerably more expensive to do something about it later then now.
Its a case of do you fix the dying oil pump now or do you wait till the engine seizes?
In any event we are only talking about a small percentage of your SS funds that would be allowed for private investment. And as I heard one financial analyst put it. You would make more money keeping that money in a regular bank account then you will in SS.
Add to that its voluntary which means if you dont like the idea you dont have to do it. But you have that choice.
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Originally posted by LePaul
But right now, the left is trying to insist "What problem?".
because they are trying to count money that is there on paper only.
Really this is typical partisan political BS
Clinton wanted to do something and the right was against it. now Bush wants to do something and the left is against it.
Typical Washington at its very best
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Originally posted by Eagler
give me the choice with MY money
"Choice" being the operative word.
Personally I fail to see the problem with this concept.
If you want to you can. If you dont. You dont have to.