| Author | Message | ||
     Rastro Citizen Username: Rastro Post Number: 591 Registered: 5-2004  |
Star, I can't speak for "libs," but from a moderate independent... You have lots of retirement savings accounts. Why is a SS savings account a "must have now?" Do you dispute Corzine's claim that the change to privatization (making assumptions based on public statements) will cost more than the SS shortfall? And I would think you (of all people) would simply want the elimination of SS, rather than privatization. That way you could do what you want with your money, invest as much of it as you like, however you like. I'm sure with all your wealth and power, you don't need the gov't putting any restrictions on how you invest any of your money. While Paul is quite a bit left of me and most people I know, I do agree that this is a manufactured crisis. That's not to say that Democrats haven't used it as a manufactured crisis in the past. But the issue is not that close to "crisis" stage. Until the President puts forth his plan, I think we should all take a breath and see what he comes up with. It's easy create a strawman positoin to support or tear down if there is no clear plan in place yet. And MJ, The gov't isn't promising you your money back. They're promising to take money from someone else to give to you. Isn't that the primary complaint about it? That it's taking money from one group to give to others? | ||
| Mark Fuhrman Citizen Username: Mfpark Post Number: 1108 Registered: 9-2001  |
Straw: Why don't you respond to Tobias's arguments that privatization won't work. You have not answered his points at all with any substance. All you have done is make a statement without any weight. | ||
| Strawberry Supporter Username: Strawberry Post Number: 4252 Registered: 10-2001 |
let's see because: a) I don't feel like searching the web for a link that supports my opinion b) I know Bush is going to get it passed with or without the support of whining liberals. | ||
| themp Citizen Username: Themp Post Number: 1357 Registered: 12-2001 |
It's pointless to argue. | ||
| Michael Janay Citizen Username: Childprotect Post Number: 1432 Registered: 1-2003  |
Tom, I'm college educated, and I don't know the difference between income and growth stocks. OK, I'll stab at a guess: you buy income stocks for the dividends and growth stocks in hopes of selling them at a profit. Whether I'm right or wrong doesn't indicate how smart I am, and it isn't a moral obligation to know the difference, either. And if, given the explanation, which is quite simple to understand, and a simple set of guidelines based on your age, do you feel you could make an informed choice on where to invest your money? Rastro, Fine: Social Security is based on the best of American values. It promises all Americans that if they work hard, pay taxes and play by the rules, they will be able to retire and live in dignity. Only it doesn't, as Corzine says later on... Social Security is not a handout. It's an earned benefit that promotes and rewards work. Except that it doesn't promote work, it hinders employers from creating jobs, and takes money away from earners to give to non-earners. Please, give me an example of how SS promotes work. Get real. Social Security guarantees that regardless of the state of the economy or the stock market, every contributing American will have a basic level of financial security. The Bush privatization plan undermines that guarantee. Since Bush hasn't revealed his plan, Corzine can't actually know what it will or will not do, and since SS is going insolvent, there is no real guarantee anyway. By changing the formula for calculating benefits, the Bush commission's plan would impose steep cuts. According to the Congressional Budget Office, which is a nonpartisan official scorekeeper, the Bush plan's cuts would be about 25 percent for many current workers. In the future, cuts could exceed 45 percent. These figures include the projected proceeds from privatized accounts. The Bush cuts would apply to all retirees, even those who choose not to invest in privatized accounts. Those who do invest in these accounts would be hit twice -- first with a cut in their basic guaranteed benefit, and second with a new, added tax on their account when they retire. That tax could wipe out most, or even all, of their account, depending on actual returns. New added tax? only if the Dems get their way. So how could this tax wipe out an entire account? Ludicrous. And these cuts he's talking about are cuts in increases, not cuts in overall benefits. Overall benefits would still increase, in fact, Every model out there shows a better rate of return over the long term with a private account versus SS. In any case, although the plan does not explicitly raise the retirement age, its cuts almost certainly would force many Americans to delay their retirement, in order to build up more assets. So what. An able bodied 66 year old will still work... boo hoo. The golf course will have to wait. Even without these cuts, Social Security's guarantee ensures only a basic existence. Today, the average Social Security benefit is about $950 per month, or $11,500 a year. For women, the average benefit is about $825 per month, or less than $10,000 annually. For most seniors, especially those living in high-cost areas like New Jersey, that's hardly enough to maintain even a basic standard of living. Here it is... SS doesn't provide security. So what is he saying, that something is better than nothing? Work hard for years and get a pittance in return. Great. This is an arguement for privatization, seniors need a better rate of return on their investments. Some argue that we need deep cuts in Social Security benefits to save the program. But the numbers prove that's wrong. Over the next 75 years, the entire Social Security shortfall represents about 0.4 percent of our gross domestic product. By contrast, the cost of President Bush's tax cuts, if made permanent, would be 2 percent of GDP. Yet the tax cuts stimulate the economy and grow GDP where SS shortfall is pure debt. In other words, the tax cuts will cost about five times the entire Social Security shortfall. The truth is, we have the resources to meet our obligations and honor our promises. It's simply a matter of setting priorities and maintaining fiscal discipline. So keep pouring money into a broken system instead of fixing it. Great idea. These are not "our" promises. I never made any promise. To be clear, I am not opposed to the use of private accounts to save for retirement. To the contrary, it is essential that Americans save privately for their retirement, and that is why I strongly support providing tax subsidies for 401(k)s and IRAs. He makes no sense here either, if you could invest your SS tax payments in an IRA instead of SS, you'd have a better retirement income. There is no doubt about that. But private accounts, by their nature, cannot provide the same level of security as Social Security. When investments tumble, health declines and all else fails, Social Security benefits are there -- guaranteed -- as a final lifeline for seniors. Keep the final lifeline, call it what it is, welfare for seniors. Don't force everyone to use it. Help those that need help, let the rest of us keep our money. I am especially concerned that President Bush apparently plans to finance privatized accounts by incurring massive amounts of debt. In the first 10 years, that debt is likely to exceed $2 trillion. But that's just the beginning. In the second 10 years, for example, debt could increase by more than $4 trillion. To provide some perspective, that's almost as much as our entire publicly held debt today, which totals about $4.4 trillion. Such massive increases in debt would impose a huge burden on young Americans and our nation's future. They also would threaten to raise interest rates and undermine economic growth in the short-term. If you look at the SS liability as it is right now as debt (which it is) the numbers right now are about the same. As a former bond trader, I find it almost incomprehensible that the president would want to increase debt so dramatically when we already are suffering from the largest deficit in our nation's history. This kind of fiscal recklessness is simply not sustainable. Well, since the deficit is shrinking and the economy is growing, its not that reckless. Not to mention again, that we ALREADY HAVE the SS debt, the government just doesn't call it that. Many privatization advocates rest their case on claims that seniors will enjoy better returns. However, such claims are misleading. First, they generally overlook the costs of financing the accounts -- the higher interest costs that future taxpayers will be forced to bear. Huh? higher interest equals a higher rate of return. SS reform can't happen in a vacuum, there still needs to be strong fed monetary policy, and there will be. Also, privatizers typically ignore the fact that Social Security, in addition to its role in protecting retirement security, also includes insurance for workers who become disabled and for survivors of workers who die prematurely. OK, perhaps some of the money in your private account will be mandated to go to LTD and life insurance. Big whoop. Perhaps more fundamentally, privatization proponents generally fail to adjust projected returns for the added risk of investing in equities, as virtually all economists agree is necessary for a fair comparison. Having earned my living as a trader and investment banker for 30 years, and having run one of America's largest financial companies, I understand something about markets. I can assure you it is pure folly to assume that privatized accounts will always increase in value and will be at a high-water mark at the moment when an individual retires. The truth is, markets go up, down and sideways -- sometimes for many years. One thing they never do is provide guaranteed returns or protection against both inflation and the risk of outliving your savings -- only Social Security does that. Yes, very true, but when looked at long term, the market outperforms SS in every way, even when there is a huge downturn. Let us take the risk if we want to. There is another problem with privatized accounts: They are very costly to administer. One reason is that many accounts are quite small, so a significant share of any gains is eaten up by management fees. A University of Chicago study found that fees would reduce benefits by 20 percent. By contrast, Social Security's administrative costs are minimal, about one-half of one percent. let the maret decide that, there are tons of no and low fee funds. management fees would be minimal, and people could shop around for the lowest fee. Please Mr. Corzine, show me a mutual fund with overhead fees of 20%. It doesn't exist because no one in their right mind would invest in it. Social Security at its most basic level provides a simple guarantee: Work hard and contribute now, and your financial future will be secure. Except it doesn't, as Corzine says above. Proposals to cut guaranteed benefits in favor of individual bets on the market strike at the very core of Social Security's promise. Those who disagree with that promise have a right to call for the program's repeal. But they shouldn't pretend that privatization promises security for America's seniors. It doesn't. Except that privatization does provide seniors with more retirement income and actual assetts. Corzine gets an F for this one. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5084 Registered: 1-2003  |
http://www.nytimes.com/2005/01/11/opinion/11krugman.html Op-Ed Columnist: The Iceberg Cometh January 11, 2005 By PAUL KRUGMAN Last week someone leaked a memo written by Peter Wehner, an aide to Karl Rove, about how to sell Social Security privatization. The public, says Mr. Wehner, must be convinced that "the current system is heading for an iceberg." It's the standard Bush administration tactic: invent a fake crisis to bully people into doing what you want. "For the first time in six decades," the memo says, "the Social Security battle is one we can win." One thing I haven't seen pointed out, however, is the extent to which the White House expects the public and the media to believe two contradictory things. The administration expects us to believe that drastic change is needed, and needed right away, because of the looming cost of paying for the baby boomers' retirement. The administration expects us not to notice, however, that the supposed solution would do nothing to reduce that cost. Even with the most favorable assumptions, the benefits of privatization wouldn't kick in until most of the baby boomers were long gone. For the next 45 years, privatization would cost much more money than it saved. Advocates of privatization almost always pretend that all we have to do is borrow a bit of money up front, and then the system will become self-sustaining. The Wehner memo talks of borrowing $1 trillion to $2 trillion "to cover transition costs." Similar numbers have been widely reported in the news media. But that's just the borrowing over the next decade. Privatization would cost an additional $3 trillion in its second decade, $5 trillion in the decade after that and another $5 trillion in the decade after that. By the time privatization started to save money, if it ever did, the federal government would have run up around $15 trillion in extra debt. These numbers are based on a Congressional Budget Office analysis of Plan 2, which was devised by a special presidential commission in 2001 and is widely expected to be the basis for President Bush's plan. Under Plan 2, payroll taxes would be diverted into private accounts while future benefits would be cut. In the short run, this would worsen the budget deficit. In the long run, if all went well, cutting benefit payments would reduce the deficit. All wouldn't go well; I'll explain why in another column. But suppose that everything went according to plan. Even in that unlikely case, privatization wouldn't even begin to reduce the budget deficit until 2050. This is supposed to be the answer to an imminent crisis? While we waited 45 years for something good to happen, there would be a real risk of a crisis - not in Social Security, but in the budget as a whole. And privatization would increase that risk. We already have a large budget deficit, the result of President Bush's insistence on cutting taxes while waging a war. And it will get worse: a rise in spending on entitlements - mainly because of Medicare, but with a smaller contribution from Medicaid and, in a minor supporting role, Social Security - looks set to sharply increase the deficit after 2010. Add borrowing for privatization to the mix, and the budget deficit might well exceed 8 percent of G.D.P. at some time during the next decade. That's a deficit that would make Carlos Menem's Argentina look like a model of responsibility. It would be sure to cause a collapse of investor confidence, sending the dollar through the floor, interest rates through the roof and the economy into a tailspin. And when investors started fleeing because they believed that America had turned into a banana republic, they wouldn't be reassured by claims that someday, in the distant future, privatization would do great things for the budget. Just ask the Argentines: their version of Social Security privatization was also supposed to save money in the long run, but all it did was move forward the date of their crisis. A responsible administration would reverse course on tax cuts and the botched 2003 Medicare drug bill, both of which pose much greater threats to the government's solvency than the modest financial shortfall of the Social Security system. But Mr. Bush has declared his tax cuts inviolable, and he says that his drug bill will actually save money. (The Medicare trustees say it will cost $8 trillion.) There's an iceberg in front of us, all right. And Mr. Bush wants us to steam right into it, full speed ahead. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5085 Registered: 1-2003 |
Michael asks me: And if, given the explanation, which is quite simple to understand, and a simple set of guidelines based on your age, do you feel you could make an informed choice on where to invest your money? I might be able to make an informed choice, but that choice still might not bear the fruit I need. A proper retirement plan is a mix of investments, varying in risk. Taking away SS benefits as an entitlement takes away the low risk portion. Nothing is currently as low-risk as SS, except for now that we are endangering SS itself. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5086 Registered: 1-2003 |
So Strawberry, if I understand you correctly, you feel your argument (or really lack thereof) is correct not because of its merits, and not because your opponents say something that lacks merit, but merely because of WHO your opponents are. | ||
| susan1014 Supporter Username: Susan1014 Post Number: 336 Registered: 3-2002 |
I don't really have time for this debate, but do want to make a couple of points... 1. The beauty of Social Security is that it is a defined benefit plan, rather than an investment account. That gives insurance to those without the time/skill to figure out their own investments, at least for the safety net portion of their retirements (Given the crap that investment advisors keep trying to sell my mother and mother-in-law, I think that this is critical...it takes us many hours a year to analyze the stuff that our parents are about to buy and talk them out of it...someone recently tried to sell my mother "oil royalty futures" as a low-risk high-return investment). 2. Investment fees are a killer, and I've seen no evidence that the government is going to put in the safeguards to keep them low. One of the constituencies of Bush's plan is the financial industry, which is salivating over the fees that they will gain. 3. You can't get something for nothing. Either we pay for Bush's plan by cutting benefits substantially (or raising the retirement age substantially), or we go deeply into debt to pay for it. I just can't get the logic that we should go into debt now, in order to avoid debt in the future. My husband is the family guru on this topic, not me (he lectures on the future of Social Security under multiple scenarios every year at his office), but my sense is that there are much more moderate moves that make more sense, and don't have the scr*w-the-poor and-uneducated flavor of the Bush proposals (and some of their supporters here). Social Security is not, and should not, be primarily about upper middle class concerns. It is a social program (different than a charity!) designed to meet a societal need. Somewhere in my files I've got some amazing charts on mortality-by-cause over the past century or so. Some of the charts are obvious (the impact of vaccination and antibiotics on infectious disease deaths). But I was floored by the one that showed the downward spike in suicide in the elderly after the passage of the Social Security Act. This program truly exists for a reason, and I fear the Bush's current plan. | ||
| Strawberry Supporter Username: Strawberry Post Number: 4254 Registered: 10-2001 |
Tom, The GOP no longer has opponents who matter. We will get anything and everything we want. Bush will get SS reform because he wants it. So do I. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5089 Registered: 1-2003 |
OK, so it seems that I do understand you correctly. One side is categorically right because of what it is, and the other is categorically wrong for the same reason. | ||
| Mark Fuhrman Citizen Username: Mfpark Post Number: 1110 Registered: 9-2001 |
Tom, you are arguing with a narcissist, which is self-defeating. One side is categorically right because he thinks so, and the other categorically wrong for the same reason. There is no reference to reality or logic or reasoning. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5090 Registered: 1-2003 |
I'm not arguing with him at all. Haven't you noticed. I'm just confirming how he thinks so I know why I never do bother trying to argue with him. | ||
| Crazyguggenheim Citizen Username: Crazyguggenheim Post Number: 741 Registered: 2-2002  |
Call me crazy, buy he who argues argumentively ought not argue with whom is argueing to argue solely to create argument? | ||
| Debby Citizen Username: Debby Post Number: 1516 Registered: 5-2001 |
Arguably. | ||
| Parkbench87 Citizen Username: Parkbench87 Post Number: 1684 Registered: 7-2001 |
Argy Bargy | ||
| cjc Citizen Username: Cjc Post Number: 3001 Registered: 8-2003 |
susan1014 -- you make the false choice of saying that we could go into debt for Bush's plan versus the Social Security we have now. The current plan cannot pay what it promises and debt (or repeated hikes in taxes) and cuts in benefits are the only thing to save the current plan. Killer investment fees -- I think the clout of the government is significant and can keep them down. They are quite low for the federal thrift-savings plan available to federal employees. Why not here too? National Review addresses this in the thread's opening, I think. | ||
| Bobkat Supporter Username: Bobk Post Number: 7200 Registered: 5-2001 |
cjc, Bush wouldn't allow the government to negotiate reduced drug prices for Medicare. I doubt if he will allow the government to get involved in setting fees. | ||
| susan1014 Supporter Username: Susan1014 Post Number: 337 Registered: 3-2002 |
CJC, perhaps I wasn't clear...of course we have to make changes in order to meet the 2042 problem. However, there are gradual changes that we could begin making now, within the current system, that would accumulate over time. (possible areas include indexing to inflation vs. wage growth, altering retirement age or early retirement rules, raising or removing Social Security max, etc, etc). Whereas if we make a decision that requires high debt now (in order to pay our our promises to existing retirees while you and I start deciding how to invest our excluded monies), then we have to pay debt service on that debt over the years. Generally it is cheaper in the long run to take the gradual solution than to take all of the debt up front and start paying interest on it now! (Finance 101 I think) | ||
| Rastro Citizen Username: Rastro Post Number: 595 Registered: 5-2004 |
MJ, It was tough to parse out your post, but I’ll try to respond… (Plain text is Corzine, italics is MJ, bold is mine) Social Security is based on the best of American values. It promises all Americans that if they work hard, pay taxes and play by the rules, they will be able to retire and live in dignity. Only it doesn't, as Corzine says later on... How is this contradictory? While I agree it’s a thin connection, the idea is that since it promises you benefits if you work hard, more people will work hard. I don’t necessarily think he’s completely right on this, but it’s not a contradiction, as you imply. Social Security is not a handout. It's an earned benefit that promotes and rewards work. Except that it doesn't promote work, it hinders employers from creating jobs, and takes money away from earners to give to non-earners. Please, give me an example of how SS promotes work. Get real. This is a laying it on a little thick. Hinders employers from creating jobs? I can’t imagine any employer saying "I need a couple of new employees, but that darn SS tax just makes it not worthwhile." Social Security guarantees that regardless of the state of the economy or the stock market, every contributing American will have a basic level of financial security. The Bush privatization plan undermines that guarantee. Since Bush hasn't revealed his plan, Corzine can't actually know what it will or will not do, and since SS is going insolvent, there is no real guarantee anyway. Either Bush’s plan will have a guaranteed minimum return, which will increase costs, or it will not, which will undermine the guarantee. SS has been going insolvent for years. And it has been fixed before, just not quite enough. By changing the formula for calculating benefits, the Bush commission's plan would impose steep cuts. According to the Congressional Budget Office, which is a nonpartisan official scorekeeper, the Bush plan's cuts would be about 25 percent for many current workers. In the future, cuts could exceed 45 percent. These figures include the projected proceeds from privatized accounts. The Bush cuts would apply to all retirees, even those who choose not to invest in privatized accounts. Those who do invest in these accounts would be hit twice -- first with a cut in their basic guaranteed benefit, and second with a new, added tax on their account when they retire. That tax could wipe out most, or even all, of their account, depending on actual returns. New added tax? only if the Dems get their way. So how could this tax wipe out an entire account? Ludicrous. 1-You missed quite a few comments in there, particularly about the cuts in benefits. 2-I’m not quite sure what tax Corzine is talking about, but I don’t think he’s talking about a new tax (as in one that doesn’t exists now), but a tax that does not currently apply, but will. To be honest, he lost me here a little bit as well. And these cuts he's talking about are cuts in increases, not cuts in overall benefits. Overall benefits would still increase, in fact, Every model out there shows a better rate of return over the long term with a private account versus SS. Not every model out there shows it. Consider the past five years. Almost no one, using a conservative, but equity-based, investment strategy would have made money. But a model is just that. A model. It’s not a prediction of the future. Otherwise there would be a lot more people who got rich consistently from their own investments. |
