| Author |
Message |
    
Joan
Supporter
Username: Joancrystal
Post Number: 4980
Registered: 5-2001
| | Posted on Sunday, February 20, 2005 - 11:49 am: | 
|
Bob:
I know but it isn't just those of us in the 55 and above category who need these assurances. Everyone who has put into social security (as required by law for many employments) has a right to expect that they will get from the system at least what they have been promised.
In addition, Bush may change his mind where our age group is concerned or, even more likely, may not be the one who gets to make the final decision.
I would be much happier seeing some sensible reforms for the future which would enable social security to continue at least for those of us who are presently covered.
Furthermore, because social security is presently built on a pyramid model, doing away with social security for future employees entering the job market won't fix anything, the funds to pay benefits will still have to come from somewhere. |
Pizzaz
Citizen
Username: Pizzaz
Post Number: 1510
Registered: 11-2001
| | Posted on Sunday, February 20, 2005 - 11:52 am: |
|
Joan, could you approximate how much is loaned from the social security trust? How could this be repaid without bankrupting, or causing an inconceivable increase in taxes. The current system is solvent and based upon more people paying into the system than receiving benefits. This trend, as we are told, will not continue. How then do we benefit those nearing retirement with those beginning their enrollment into the system. I don't think a young 21 year old will have a true benefit for retirement after 45 years of paying into the current system.
My take on this is to disallow the Federal Government from currently borrowing from the trust fund and allowing individual accounts with sufficient safeguards and controls to be enacted.
Just imagine if your contributions (6.2% x 2) and employer's went into a personal account over your years of work. I believe you would be comfortable had we the safeguards to protect the value of your trust investments. |
Joan
Supporter
Username: Joancrystal
Post Number: 4983
Registered: 5-2001
| | Posted on Sunday, February 20, 2005 - 2:59 pm: |
|
Pizzaz:
I appreciate how much has been loaned from the social security trust, especially in the days of high stock market yields when it looked as if social security would never be able to pay out all its assets. Had the fund not been raided, I doubt we would be having this conversation right now.
Note that I suggested setting up a repayment schedule. Staggering the repayments over time would not only provide a source of steady income to the fund for a great many years but it would enable the repayment without bankrupting the Federal government entirely.
How would you structure these individual retirement accounts? Would you have some or all of the money invested privately still be used to pay current retirement benefits? What about the funding for SSI payments or the additional benefits presently given to non-working present and former spouses of persons who paid into the system?
The system can only be self sufficient if the payments made by the members are sufficient to fund their own retirement or disability insurance one for one. Anything else requires subsidization and is likely to fail given the present economic philosophy of our current administration. |
Innisowen
Citizen
Username: Innisowen
Post Number: 448
Registered: 3-2004
| | Posted on Sunday, February 20, 2005 - 3:21 pm: |
|
People quoting Alan Greenspan's support of IA's for SS seem to forget one of his other sentences, from the same talk--- that he doesn't believe there is a SS crisis. So depending on what side of this mad chatter you are on, you may pick and choose your favorite utterance, as we all do anyway. Just remember how much trouble the UK, Sweden, and Argentina are having with their privatized accounts (and Argentina is REALLY up S--t's Creek with the fallout from its privatized social security).
Keep listening to the Bushies and their fantasies---pretty soon they'll be praising the life's work of a certain financial genius named Ponzi as a model of rapid wealth accumulation. |
Pizzaz
Citizen
Username: Pizzaz
Post Number: 1512
Registered: 11-2001
| | Posted on Sunday, February 20, 2005 - 4:05 pm: |
|
I certainly don't pretend to have the answers to all your questions. I do think though it's high time we stop passing the buck and do something about it.
I can see subsidization in the form of raising the income threshhold for higher wage earners and distributing the excess into some safety net for current, near and mid term benefit recipients and for those who are destitute and poor. Ponzi, I don't think so. |
cjc
Citizen
Username: Cjc
Post Number: 3156
Registered: 8-2003
| | Posted on Sunday, February 20, 2005 - 5:05 pm: |
|
Innisowen -- near-Ponzi schemes is what we have now with Social Security, with the last one in getting the least (if any) benefit as it's currently structured.
And as for forgotten sentences, Greenspan did use the word 'crisis' in his testimony if you read transcript from his House testimony. When pressed on whether he really thinks it's a crisis, Greenspan said it's less what you want to call it than realizing there's a very serious problem in the near future for Social Security. Call it what you want -- it's bad, and solutions are needed here.
Let's not call it subsidizing here by raising the income threshhold for high earners. It's a wealth transfer, people, and it's welfare. I'm up for helping the destitute and poor. I'm not for passing wealth to the middle class.
I think as liabilities to current and near-term retirees ebb, more and more of the SS monies will go into private accounts, but never to the point that 100% would go into private accounts so as to pay for those besides retirees dependent on the system.
I too receive SS statements detailing how much I've put into the system. Those statements have never indicated there's a little box or account with my name on it. All that's in there is a claim on the system. |
Bobkat
Supporter
Username: Bobk
Post Number: 7667
Registered: 5-2001
| | Posted on Sunday, February 20, 2005 - 6:08 pm: |
|
Most of the proponents of private accounts talk like there is no transistion cost involved in moving to this system. There is a cost, probably around the same amount as doing the usual bandaid fixes to SS and keep it moving along for the next 75 years.
How are these costs going to be paid? Higher payroll taxes, increased income taxes or putting it on the National Debt?
|
Tom Reingold
Supporter
Username: Noglider
Post Number: 5588
Registered: 1-2003
| | Posted on Sunday, February 20, 2005 - 7:01 pm: |
|
Wealth transfer. Hmm. What an intriguing term! It sounds like something that would be wrong. But isn't that what taxation is? How can you have taxing policies and spending policies without deciding whom to take money from and whom to give it to? No matter, what, you'll be transferring wealth, right? So why is it wrong? Because it hurts you? Because it helps the people you don't feel deserve help? Actually, those are often valid reasons, but only in a larger context. Taxation often hurts. Government spending often helps. So that's not new. What is new? |
cjc
Citizen
Username: Cjc
Post Number: 3157
Registered: 8-2003
| | Posted on Sunday, February 20, 2005 - 8:14 pm: |
|
Wealth transfers that alleviate a circumstance is one thing. Wealth tranfers that become part of the fabric of society -- rather than empowering those who have 'less' -- is quite another. The Great Society oversaw some 5 Trillion or so being transfered from the virtuous have-nots from the evil haves, and still as far as I can tell the same relative percentage of the population was still relying upon those wealth transfers to survive at a substandard level (and I'm not talking strictly in monetary terms). It failed, and not because of fraud, but because of what it was.
Taxation to some is a means of social engineering. In it's purest form, taxation is the means by which you fund necessary expenditures. Say government costs X per person, and you then tax divide the cost of government by X. But no -- we can't do that (and rightfully so because some have nothing to tax). But the farther you move away from each individual paying their fair share (or anything!) for what government costs, the easier it is for those who don't pay their fair share to vote for continued taxation upon others or some shill that advocates same. Example -- a majority feel one way to alleviate the SS shortfall is to tax people other than themselves. Wow! How do ya think they came to that conclusion? Likewise, it's easy to vote for more healthcare especially if you're not the one that pays for it. It's too hard to think about the systemic reasons healthcare costs or social security costs are spiraling, and God forbid you'd have to apply yourself in managing your own healthcare expenditures. Best to walk in, say "it's paid for!" and damn the costs because you never really see or feel it.
On the other side, you can't tax money from people who have no money. You have to go where the money is. But at the same time, you have people voting themselves a piece of other people's hard work simply because they 'need it.' I forget the exact quote, but something along the lines of the country going south as soon as people realize they can vote themselves part of the Treasury.
Who's to say transfering wealth 'helps' someone? How do you measure that without examining why they 'need' it. And why people need a bailout -- for Social Security or anything else -- is the more important discussion. |
Innisowen
Citizen
Username: Innisowen
Post Number: 458
Registered: 3-2004
| | Posted on Sunday, February 20, 2005 - 8:22 pm: |
|
WARNING: THIS WILL BE A LITTLE OFF TOPIC, but...Hmmm, privatizing SS accounts. I like the sound of that.
Why not let Wall Street handle the bucks and give the Street the gift of ENORMOUS transaction fees and asset management fees. We can only gain, eh? Except...
Does anyone go back far enough to remember the multi-billion dollar EF Hutton Check-kiting scandal? I think that was 1979-82...
Does anyone remember Drexel Burnham Lambert junk bond and LBO fiascos? I think that was in the '80s...
Anyone ever hear of the Salomon Brothers illegal moves on the T-bond market that cost John Gutfreund his job and moved Solly to the brink? That was the early '90s
Anybody ever hear of the insane run-up in internet stock prices fomented by analysts at Merrill, Smith Barney, and other houses and the preferential selling of shares to big investors out ahead of the market to get their investment banking business...That was just a couple of years ago...
Or maybe the Mutual Fund pricing scandals that Eliot Spitzer, NY ATTY GNL, has been investigating...oh, just recently...
Yup, let's privatize those accounts. Hand the bucks over to Wall Street to invest for us...
I'll go back and renew my Series 7 and 63 and help...
|
cjc
Citizen
Username: Cjc
Post Number: 3158
Registered: 8-2003
| | Posted on Sunday, February 20, 2005 - 8:43 pm: |
|
The first check kiting scandal I knew of was the House Bank scandal, followed by the House Post office in the early 90s. Nothing but IOUs in the SS Trust fund is right up there too.
Massive fees by Wall Street on private accounts? I don't think so. How much does Vanguard charge for their index funds? Below 1% last time I checked.
Innisowen -- what kind of fees are you being charged? Are you in the market? Feinstein, Corzine and Uncle Teddy are. |
Innisowen
Citizen
Username: Innisowen
Post Number: 461
Registered: 3-2004
| | Posted on Sunday, February 20, 2005 - 8:50 pm: |
|
Yup, in the market. And my recollection of Wall Street recent history is good. And I have worked at several of the firms I mentioned above. |
Bobkat
Supporter
Username: Bobk
Post Number: 7668
Registered: 5-2001
| | Posted on Monday, February 21, 2005 - 4:56 am: |
|
1/ How hard will Bush fight for low fees? Probably not at all given his approach to the Medicare drug benfit. The Federal thrift plan has very low fees set by competitive bidding. However, "free market" GOPers believe the "guvvmint" has to much clout, so Wall Street and the Drug Cartel have to be protected from market forces.
2/ How are disability and survivor benefits going to be handled? I believe these benefits account for around 20% of current payouts under SS? In other countries the insurance costs on this run in the 2% to 3% of contribution ranges.
3/ How are statements going to be handled and how often will they be rendered? How often will changes in the funds be allowed? All of these add up to costs. Can you imagine 100,000,000 people trying to move out of stocks and into bonds when the Dow takes one of its now regularly scheduled 100 plus point dips?
4/ Will the government guarantee the solvency of the contract holders? As Innisowen points out Wall Street firms aren't exactly immune from bankrupcy and financial shennanigans.
Cjc, and in spite of what you call "wealth Transfer" the gap between the top 20 percent of earners and the bottom 20 percent of earners continues to grow at a remarkable clip. There is a cost of living and investing in a stable enviornment. If you are unhappy here, try Argentina for a very wild ride. |
Innisowen
Citizen
Username: Innisowen
Post Number: 465
Registered: 3-2004
| | Posted on Monday, February 21, 2005 - 6:52 am: |
|
Bobkat has hit the nail on the head with the four questions above.
Anyone who has worked in a Wall Street firm during boom times knows the immense burden and cost of statement rendering and mailing, never mind the accuracy of reporting transactions and never mind making sure execution is done swiftly and correctly.
And this privatization would constitute a boom time like no other for Wall Street. Charley Prince, Sandy Weill, Jamie Dimon, et al. must be salivating over their T-bones and $800 bottles of merlot.
SIPC, I believe, still guarantees only up to $100K per account, against losses due to fraud, failure of a firm, etc. Can you imagine the sheer number of accounts that Wall Street firms will have to open? And do you think for one nanosecond that such processes have no cost? And do you really believe that Wall Street firms would absorb the cost?
Only if you believe in the tooth fairy. |
cjc
Citizen
Username: Cjc
Post Number: 3159
Registered: 8-2003
| | Posted on Monday, February 21, 2005 - 9:42 am: |
|
Nice, Bobkat. The old love it or leave it. No doubt you're doing handstands for the AMT hitting NE and CA states the hardest as (of course) we need to raise taxes to address the deficit. If you don't like it.....
The administration fees on the Federal Employee Thrift plan are quite low and seem to be serving the employees quite fine. At least their union isn't crying about them. I believe low fees are entirely possible.
Recent history isn't an accurate predictor of future gains or losses. And as you're in the market, Innisowen, what kind of fees are you being charged? Are you in stocks? |
Bobkat
Supporter
Username: Bobk
Post Number: 7672
Registered: 5-2001
| | Posted on Monday, February 21, 2005 - 10:05 am: |
|
Cjc, the comment wasn't love it or leave it. I was pointing out that there is some cost of living and investing in a country with stable markets. I believe in Argentina something like 1% of the people control something like 98% of the wealth and the markets are in chaos.
What is your plan for handling the survivor and disability benefits in the SS plan and still reach the hoped for 4.5% reutrn?
Unfortunately, we Ks are well aware of the AMT and that it is the biggest issue in the Northeast and California. Do you think the GOP cares? They know they aren't going to get the electoral votes in those states anyway.
|
cjc
Citizen
Username: Cjc
Post Number: 3160
Registered: 8-2003
| | Posted on Monday, February 21, 2005 - 10:36 am: |
|
I don't know what levels you have to maintain to cover those survivor and disability benefits, but for that reason I think there will always be some part of FICA that will go to traditional pay-as-you-go Social Security. That portion should also help guarantee a minimum level of retirement income in case of a stock market crash.
Sure the GOP 'cares' about the AMT (and 'caring' is overrated anyway). They're the only party that has spoken seriously about the AMT and overall tax reform.
I have to make my living here, but otherwise I'm quite happy those in the NE who routinely call for tax hikes are the ones hit by the AMT. |
Innisowen
Citizen
Username: Innisowen
Post Number: 468
Registered: 3-2004
| | Posted on Monday, February 21, 2005 - 1:23 pm: |
|
CJC, you miss my point. I know the Street well, as a former officer of several member firms. I have a nicely diversified portfolio of bonds, stocks, mfs, and some REITS through a well-known financial advisory firm. As far as fee levels that I am paying are concerned, well, that's my business, isn't it?
My point is: I am not comfortable trusting that the Street will overcome its just about quinquennial drive to commit some kind of investor scam, just because a lot of private accounts are being set up with the government's blessing.
And by the way, the EF Hutton check-kiting scandal I referred to, had nothing to do with the House Bank Scandal, and pre-dated it by at least 10 years. The ripple effect eventually brought down EF Hutton, but not before a lot of client accounts had been tampered with. |
cjc
Citizen
Username: Cjc
Post Number: 3164
Registered: 8-2003
| | Posted on Monday, February 21, 2005 - 1:33 pm: |
|
How do you know others will be subject to extraordinary fees? And if so, what do you consider high and what percentage are you paying?
You seem to be doing quite well in the scam-laden markets we have, otherwise I suspect you wouldn't be in them. I too am very happy with the results I've gotten. Why would others not be happy "nicely diversified portfolio of stocks and bonds"? |
Innisowen
Citizen
Username: Innisowen
Post Number: 469
Registered: 3-2004
| | Posted on Monday, February 21, 2005 - 1:37 pm: |
|
I do well because I have integrity, I watch my investments carefully, I know the business inside and out, and I have my assets managed by a reputable firm. I also have very realistic expectations of my investments, and have been through enough down markets and enough up markets to know that "if it's too good to be true, it isn't true..." End of story |
cjc
Citizen
Username: Cjc
Post Number: 3165
Registered: 8-2003
| | Posted on Monday, February 21, 2005 - 1:42 pm: |
|
Great. Sounds like it's possible for everyone. Have integrity, invest safely with reputable firms and have a reasonable expectation on returns and a overall sense of what investing in the long term means. |
Bobkat
Supporter
Username: Bobk
Post Number: 7673
Registered: 5-2001
| | Posted on Monday, February 21, 2005 - 2:58 pm: |
|
Cjc, do you really mean that the disability and survivor benefits should be eliminated? That is, well pretty radical. |
cjc
Citizen
Username: Cjc
Post Number: 3167
Registered: 8-2003
| | Posted on Monday, February 21, 2005 - 3:16 pm: |
|
Bobkat -- here's what I said:
"I don't know what levels you have to maintain to cover those survivor and disability benefits, but for that reason I think there will always be some part of FICA that will go to traditional pay-as-you-go Social Security. That portion should also help guarantee a minimum level of retirement income in case of a stock market crash."
I didn't call for the elimination of those types of payments. |
Bobkat
Supporter
Username: Bobk
Post Number: 7675
Registered: 5-2001
| | Posted on Monday, February 21, 2005 - 3:21 pm: |
|
Glad to hear it. I took you statement to mean do away with the welfare program.
|
Montagnard
Citizen
Username: Montagnard
Post Number: 1432
Registered: 6-2003
| | Posted on Monday, February 21, 2005 - 3:40 pm: |
|
Although I would benefit personally from privatized Social Security, I don't think it will be cheaper for the country as a whole. At some point in the future it will be necessary to raise taxes to cover the extra costs and my personal gains will likely be taxed away.
The false premise of private sector efficiency has already given the U.S. the most expensive and least effective health care system in the industrialized world. It would be a shame to repeat the same mistake with its pension system. |
cjc
Citizen
Username: Cjc
Post Number: 3169
Registered: 8-2003
| | Posted on Monday, February 21, 2005 - 6:22 pm: |
|
Why would you benefit from privatized social security, if you're only given the same investment options as the rest of us would? |
Bobkat
Supporter
Username: Bobk
Post Number: 7681
Registered: 5-2001
| | Posted on Tuesday, February 22, 2005 - 9:48 am: |
|
If the firm with say the contract for the index fund goes bellyup and SIPC has to pay, they will probably also go bankrupt. Leaving we the taxpayers on the hook.
I like the idea of private accounts. By instituting private accounts and indexing SS benefits on the consumer price index, a lot of the problem is solved. Just changing the index would solve the SS problem, but at a tremendous cost to retirees, especially those thrirty or more years away from retirement.
I have concerns on how to pay the transistion costs and numerous administrative questions. Most of the strongest advocates of the accounts ignore the tranisition costs and the complexity of administering a plan such as this.
|
cjc
Citizen
Username: Cjc
Post Number: 3171
Registered: 8-2003
| | Posted on Tuesday, February 22, 2005 - 10:51 am: |
|
The transition isn't being ignored. The cost is about 4 Trillion dollars. You can borrow it the money (send in those IOUs that people rave about in the Social Security Trust Non-Fund) or raise taxes or a combination of both. Complexity of the plan isn't something that is insurmountable. How complex is 5 index stock funds, 3 bond funds and a money market account? Mail out statements on the same basis SSA does now, and put other information on-line. If it gets too expensive -- outsource it!
When asked if the markets would panic if we borrowed that kind of money, I don't think Greenspan was definitive one way or the other, aside from general concerns about debt and deficits. I think he said the market may weigh the debt against long-term liabilities of the government going down. |
Bobkat
Supporter
Username: Bobk
Post Number: 7683
Registered: 5-2001
| | Posted on Tuesday, February 22, 2005 - 11:21 am: |
|
The Trust Fund exists, but isn't assigned to each contributor individually. The surplus is invested in government bonds at market rates, which is probably a pretty stupid investment for a fund that is accumulating tax free.
Possibly with some funny accounting and a shift to the CPI as an index, there might be some surplus in the fund that could help to pay for the transistion costs, although I haven't looked at the numbers, and since I am not an actuary, probably couldn't make sense out of them to start with. |
Rastro
Citizen
Username: Rastro
Post Number: 730
Registered: 5-2004
| | Posted on Tuesday, February 22, 2005 - 1:14 pm: |
|
cjc, it's not just a question of whether the markets would panic if we borrowed that much. It's becoming a question as to whether we *coud* borrow that much more. We would be increasing our debt by 50% or so if we borrowed $4 trillion more. There is already growing desire to diversify out of dollars and into Euros among many of our creditors.
As for the complexity of the plan, I think something many people are simply not thinking about is the impact on the market that all this new money will have. Trillions of new dollars in the market.
I'm particularly interested in the opinions of people who work in the markets. What kind of affect will all this new money have on the market?
Personally, as soon as it looks like this *might* actually happen, all my money is going into blue chips and index funds. It's going to be tulip-mania all over again. |
Innisowen
Citizen
Username: Innisowen
Post Number: 483
Registered: 3-2004
| | Posted on Tuesday, February 22, 2005 - 6:09 pm: |
|
Hmmm, 4 Trill at a minimum. Jerry Lewis can't raise that kind of money in his telethons... and judging by the administration's willful understatement of the Prescription Drug Bill costs, I'm confident you can tag another 2 Trill or so to cjc's 4 Trill.
But it's only money, and this administration seems to be spending money like drunken sailors (oh, excuse me, that's wrong, because hardly anyone in this administration ever spent time in active duty military service), I meant to say like drunks on New Year's Eve.
As someone who has seen a lot of major corporations make significant changes and seen how the bill for those initiatives can run amok, even with the best of planning, I predicte that such a major change as the administration wants to initiate will by its very nature have a slew of unexpected, unanticipated extra costs.
Anyone who has run a major project for a large organization will bear witness to that. So hang on for quite an expensive ride. |
cjc
Citizen
Username: Cjc
Post Number: 3180
Registered: 8-2003
| | Posted on Wednesday, February 23, 2005 - 12:28 pm: |
|
Right, and to save the current demographically unsustainable system will cost 3.7 Trillion to keep benefits as they are. It will be a lot easier for Congress to get their hands on that money if it stays in the system and replace it with paper than if it's in a personal account. |
Chris Prenovost
Citizen
Username: Chris_prenovost
Post Number: 352
Registered: 7-2003
| | Posted on Wednesday, February 23, 2005 - 12:55 pm: |
|
Right on, Innisowen.
Expecially that bit about the drunken sailors. |
Innisowen
Citizen
Username: Innisowen
Post Number: 488
Registered: 3-2004
| | Posted on Wednesday, February 23, 2005 - 1:11 pm: |
|
CJC,
Read what pension and benefits actuaries say about the beneficial reduction in SS costs, if the US were to raise its retirement age by only 2 years, from 65 to 67. Nice positive impact and nice savings. Look up the work of Sylvester Scheiber, consultant at Watson Wyatt Worldwide, a pension and benefits consulting firm, if you're interested.
67 would mean cost reduction and would align very nicely with another demographic observation: baby boomers are not likely to want to "retire" in the accepted sense, and geriatric research is showing that the longer people work and stay active, the better it is for them, and the healthier they stay (not bad for medical care costs for an increasingly larger older population either) |
cjc
Citizen
Username: Cjc
Post Number: 3182
Registered: 8-2003
| | Posted on Wednesday, February 23, 2005 - 1:22 pm: |
|
Interesting. The political attack on that -- and GUESS who would make it -- is that's a benefit cut, and doesn't allow for those in hard-labor industries the retirement they deserve. Kerry flatly rejected raising the retirement age during the campaign, as I recall.
But put it on the table. Let's have the debate and reach some conclusion on this. Bring the Democrats along if you can. |
themp
Supporter
Username: Themp
Post Number: 1524
Registered: 12-2001
| | Posted on Wednesday, February 23, 2005 - 5:50 pm: |
|
Honest but dumb chanting campus republicans blow GOP cover.
http://www.chuck2006.com/blogDetail.asp?id=65 |
themp
Supporter
Username: Themp
Post Number: 1525
Registered: 12-2001
| | Posted on Wednesday, February 23, 2005 - 6:18 pm: |
|
http://boston.craigslist.org/mar/60879572.html
? |
cjc
Citizen
Username: Cjc
Post Number: 3184
Registered: 8-2003
| | Posted on Wednesday, February 23, 2005 - 8:02 pm: |
|
How can you blame kids for wanting to get rid of a program that as it's set up leaves them nothing for all the money they're pouring into it.
The site also claims that Santorum was 'caught' saying Democrats supported personal accounts. In truth, one Democrat in the House has done so, though none in the Senate has as far as current office holders go. Democrats signed off on the Social Security Commission's report that included personal accounts (though with qualifications, I'll grant you. Let that debate begin!).
His better answer should have been "Democrats in the past have been in favor of putting Social Security monies into private equities." Just have to go back to the late 90s when Clinton and other Democrats were obviously throwing the poor under the bus with that thought, given their lack of caring for the less fortunate. |
Closed: New threads not accepted on this page