Federal Reserve Chairman Alan Greenspan is supporting the Administration plan to reform Social Security through private accounts, arguing in testimony before Congress that the only way of dealing with the retirement of the baby boom generation is to increase personal savings:
“We need, in effect, to make the phantom ‘lockboxes’ around the trust fund real,” Greenspan said in testimony Tuesday before the Senate’s Special Committee On Aging.
As the system is now, the surplus that has been paid into Social Security over the past 20 years has been treated as part of the general budget and has already been spent by the U.S. Treasury.
If the accounts, as proposed by President Bush are created, workers would be allowed to divert up to a third of the payroll taxes they and their employers pay into Social Security and invest the money instead. That money would belong to them and be unavailable for the government to spend.
“The major attraction of personal or private accounts is that they can be constructed to be truly segregated from the unified budget,” Greenspan said in his testimony.
Of course, the usual suspects continue to naively insist that there is no crisis, either insinuating that Bill Clinton was a liar in the late 1990s or George W. Bush magically cured Social Security sometime in his first term. The argument that nothing needs to be done about Social Security doesn’t even pass the smell test. Insisting that we can simply wait until the system crashes is beyond naive — at that point the Treasury is going to have to pull $12 trillion in new revenue just to tread water. That sort of thing is hardly sensible.
The only way to fix the system is to completely reform it. Sen. Chuck Hagel’s reform package strikes me as one of the most reasonable, and he has the facts and the figures to back up his assertions. A combination of indexing benefits based on life expectancy, tweaking early retirement benefits, raising the retirement age by one year, and private accounts will make the system solvent for future generations. Hagel also gives us exactly what funds would be included in the system and what the rates of return on those funds are. By using the existing Federal Thrift Savings Plan funds, Hagel utilizes a proven system with an extremely low overhead. Most importantly, Hagel’s plan would not involve an increase in taxes, although raising or removing the income cap on Social Security taxation could be a reasonable addition to the plan.
The Democrats, however, continue to stick their heads in the sand and can’t quite seem to admit that there’s a problem. Given that only a quarter of the American people support the concept that we should leave Social Security alone, that position is as idiotic politically as it is economically. Something has to be done to fix the system — and the Democrats are systematically pissing away any chance they would have had to have a seat at the table. The Democrats are walking straight into another trap by following the path of obstructionism yet again, and the results are likely to be the same.
The Social Security system is inherently flawed. Taking money out of the economy reduces investment growth and weakens the overall economy. Private accounts will put a portion of those funds back into productive use, raising the economy overall. The current system is not sustainable. The Democratic insistance that it is stable is just a rhetorical ploy – the Democrats cannot tolerate anything which reduces the power of the federal government. The fact that the current system will pass on debts that dwarf anything we’ve ever seen before doesn’t matter to the Democrats — the only debts that matter to them are the ones that can be tied to their Ahab-like fixation on President Bush. Anything that reduces people’s dependence on the federal teat weakens the Democratic power base. The Democrats’ naive unwillingness to recognize the problem ensures that they are completely unable to even consider valid solutions for it — fortunately it appears that the Administration will hold firm in their promise to reform Social Security for future generations.
Backtracking to the beginning of this thread before your endless and infantile partisan diatribe was thrust upon the unsuspecting reader, it seems as though Greenspan’s comments about politicians using Social Security trust fund dollars to prop up the general fund is best directed towards Republicans, at least in the last couple decades. I seem to recall the Republican Congresses of 1998-2000 simulating a surplus in the general fund to justify trillions of dollars worth of tax giveaways when in fact the “surplus” of those years was made possible by transferring SS trust fund dollars. If we are now to believe that Greenspan disapproves of this idea, I guess then we almost must assume he voted for Al Gore, the guy who endorsed the “iron-clad lock box” proposal that Greenspan is now piggybacking upon.
Of course the Treasury already spent the revenue. That’s what the Treasury does with government bonds; it’s just like when you put money in a bank. They don’t stuff it in a box; they spend it. They loan it out.
If you’re suggesting that the Treasury is going to default on the 1.7 trillion dollars in bonds the SS Trust Fund holds then you have bigger problems, by far, than worrying about your retirement. If the Treasury defaults on those bonds no amount of private investments is going to help you. That would destroy the world of American finance. Your private investments wouldn’t be worth two shits – all investments, ultimately, are supported by the bonds backed by the full faith and credit of the US Treasury dept.
Again, you need to take Economics 101. That argument is idiotic. You have to pay Social Security recipients real money. You can’t print that money to pay them or we end up with hyperinflation (ask an Argentinian how well that works). In order to pay that money you must take it from somewhere. That somewhere is going to be from your (and everyone else’s) pockets. Given that we’d have to come up with $27 trillion dollars over 75 years, that just ain’t gonna work.
Private accounts are assets, same as a savings account. The government can’t raid them, and they aren’t just an accounting dodge. Money that goes into private accounts will grow much faster than the rate of return on Social Security. Money that goes into Social Security now might as well be flushed down the toilet because that money will be gone long before anyone under 30 hits retirement.
Yes, that is a major problem, which is why Alan Greenspan is saying we need to reform the system now.
Too bad the Democrats want to play pissant politics rather than fix the system.
Private accounts are assets, same as a savings account.
And the same as a Treasury Bond, which is what Social Security has now. But instead of chopping it up into little pissant private accounts, with massive overhead which is passed onto the account holder, we have a group system where the risk is averaged out among every participant. Under your stupid private accounts system, if your account is mismanaged or emptied due to fraud, or you’re disabled and unable to continue contributing, or hell – you live a lot longer than you planned, you’re screwed.
So, basically Republicans want to replace a system that gives you:
1) Low risk; guaranteed, defined benefits; survivorship benefits for your dependants, regardless of how much you contributed; a history of almost perfect management
with a system that hands you:
2) High risk; benefits only to the extent of your contributions; survivorship benefits only to the extent of your contributions; the potential – nay, certainty – for fraud, abuse, and ruinous administrative costs
How dumb do you think the American people are? Do you suppose that they have very little difficulty seeing that 1 is better than 2? Do you suppose that’s why support for privatization heads down the tubes – in every demographic – the more Bush talks about it?
SS isn’t a retirement program. There’s already hundreds of private and government retirement programs that anyone is free to invest in, and should be doing. SS is a social insurance program for people at their most vulnerable – people for whom age or disability has rendered them unable to earn an income.
Now if you’re seriously proposing that the Treasury department is going to default on 1.7 trillion dollars in bonds, then that is a crisis. It’s a crisis that demands the resignation or impeachment of Bush, Greenspan, and everybody else who’s setting this up to happen.
Wrong wrong wrong. The “Treasury Bonds” in Social Security are not real assets. They’re not even a promise to pay – the Supreme Court has already ruled that the government can cut or eliminate Social Security benefits at any time with no repercussions. The Social Security system does not in any way define a contractual agreement to pay anything on the part of the government.
Which is the same for Social Security. If by 2042 when the Trust Fund is totally gone, the government can just end the program and you’re completely screwed. Social Security is not guaranteed in any shape, way or form.
Almost perfect management? Give me a break, the system is going to start going under in 13 years, and unless we start massive structural reforms by 2042 it will be gone. A well-managed system doesn’t produce $27 trillion in debt over 75 years.
And I bet it will also leave the toilet seat up and drink all the milk in your fridge right out of the carton.
Sen. Hagel’s plan uses the same Thrift Savings Fund plans that the federal government has used for decades, all with excellent rates of return, varying levels of risk, and very low overhead. Simply pulling the accusation that there’s going to be massive amounts of fraud and waste out of your ass is a sign of desperation. Perhaps you should actually read Sen. Hagel’s plan before making such an allegation?
The risk is exceptionally low, the rate of growth will be far more than the current system, the survivorship benefits will be the same, the level of fraud and waste in the Thrift Savings system is negligable. All these arguments are pure FUD.
56% support privatization in the latest ABC polls. Over 75% understand that Social Security is in crisis. The vast majority of younger workers believe (quite correctly) that Social Security will provide little to no benefit to them.
The American people are smart enough to know that the Democrat’s idiotic idea that not doing a damn thing is just plain dumb.
Fine. Then Bill Gates shouldn’t be eligible. Let’s mean test the damn thing and cut payroll taxes so that we have enough only to support those who really need it.
No, the Treasury isn’t going to default on those bonds, they’re going to pay them out. The problem is that there aren’t enough bonds in the system to pay the current liabilities, which is where the crisis is.
The “Treasury Bonds†in Social Security are not real assets.
Look, Jay, it was cute the first two times, but c’mon. Stop the nonsense. Of course they’re Treasury securities. They’re backed by the full faith and credit of the US government according to law. If you don’t believe me you can even look up the dividend income that the OASI Trust Fund reports each year.
These are real securities, just like any Treasury Bond you could buy yourself. It’s ludicrous to suggest otherwise, and whoever told you different was literally lying to your face.
If by 2042 when the Trust Fund is totally gone, the government can just end the program and you’re completely screwed.
Right; a government which we democratically elected. If you don’t want your benefits to be cut you can elect Congresspeople who won’t cut them.Your SS benefits are defined by the legislative process that all Americans can participate in.
On the other hand you have absolutely no say in the performance of the stock market. If your benefits aren’t enough to feed you, or to cover your disability issues, tough shit. Absolutely no one has the power to make them larger.
A well-managed system doesn’t produce $27 trillion in debt over 75 years.
Indeed; neither, of course, does Social Security as it is currently operated.
Sen. Hagel’s plan uses the same Thrift Savings Fund plans that the federal government has used for decades, all with excellent rates of return, varying levels of risk, and very low overhead.
You’re talking about a plan that not all employees opt into or are allowed to opt into, and anyway, that’s an add-on to the current system of SS. It’s not capable of being SS’s replacement. You’re replacing apples with oranges.
Fine. Then Bill Gates shouldn’t be eligible.
Sure. Remove his benefits. You’ll get no argument for me. But he still pays FICA; nobody has a right to a “refund” on insurance they didn’t use. It’s like expecting a rebate from Blue Cross because you didn’t get sick that year. It’s ludicrous.
No, the Treasury isn’t going to default on those bonds, they’re going to pay them out.
Oh, so they are bonds now? Glad we got that straightened out. Now we can start to have the real conversation.
If you don’t believe me, how about the Office of Management and Budget then:
If you draw up a nice piece of paper and write “I will pay myself $100 next week” that isn’t a binding contract. Tommorrow you can spend that $100 on weed and Boones Farm and nobody’s going to care. It’s an IOU, not a line of credit. The “Trust Fund” is the same way. Tomorrow the government can say “F*ck Social Security”, take every little piece of paper in that government warehouse and wipe their asses with them. There is absolutely no legal obligation in Social Security. The Trust Fund is not backed by anything other than a promise which the government can go back on at any time. You can argue otherwise all you want, but that doesn’t make it true. If you don’t understand even the simplest elements of Social Security, don’t expect anyone to take you seriously.
If you don’t believe me, how about the Office of Management and Budget then:
I’d prefer to listen to someone that wasn’t directly employed by the President and his anti-SS cronies. For instance, the OASI itself:
All securities held by the trust funds are backed by the full faith and credit of the United States Government, as required by law. Those currently held by the OASI Trust Fund are special issues (i.e., securities sold only to the trust funds). These are of two types: short-term certificates of indebtedness and long-term bonds. The certificates of indebtedness are issued on a daily basis for the investment of receipts not required to meet current expenditures, and they mature on the next June 30 following the date of issue. Special-issue bonds, on the other hand, are normally acquired only when special issues of either type mature on June 30. The amount of bonds acquired on June 30 is equal to the amount of special issues maturing, less amounts required to meet expenditures on that day.
Section 201(d) of the Social Security Act provides that the obligations issued for purchase by the OASI and DI Trust Funds shall have maturities fixed with due regard for the needs of the funds. The usual practice has been to spread the holdings of special issues, as of each June 30, so that the amounts maturing in each of the next 15 years are approximately equal. Accordingly, the amounts and maturity dates of the OASI special-issue bonds purchased on June 30, 2002, were selected so that the maturity dates of the total portfolio of special issues were spread evenly over the 15-year period 2003-17. The amount of bonds purchased on June 30, 2002 is shown in table III.A9.
As you can see they’re real Treasury securities, with the same legal obligation for repayment as any other Treasury note, the same scheme of maturity, the same interest rate. These are real bills, as real as any other Treasury issued security.
The Trust Fund is not backed by anything other than a promise which the government can go back on at any time.
Right, just like it can go back on any other Treasury security. That’s all T-bills are; a loan to the government with a promise to pay. An IOU. (That’s all everything is, pretty much, including money itself.)
What do you suppose will happen to the value of T-bills when word gets out that the government defaulted on 1.7 trillion dollars worth of them? What do you suppose will happen to your private accounts, or any other investment, when the backbone of American finance melts away?
Now, personally, I don’t think politicians and financiers are suicidal, so I doubt they’ll let the Treasury default on those notes. A lot of Bush’s personal wealth is in Treasury notes so he’s got a considerable personal interest in US government bonds being worth more than the paper they’re printed on.
But if you disagree, if you’re certain that the US government is going to default on those notes, then your “personal investment account” or whatever buzzword we’re calling privitization these days better be full of gold bullion and German marks, because nothing else is going to be worth a damn. And I wish you’d tell me why you’re so certain that we’re going to destroy the economy, so I can plan my move to Canada.
Yup, anything that might contradict your worldview gets thrown out. How wonderfully “progressive” of you.
Note the date on the OMB report. Note what date that President Bush was sworn it. Unless you’d like to argue that President Clinton was against Social Security your argument is completely and utterly idiotic.
Let’s get a few things straight:
1. The $1.7 trillion isn’t the issue. The government isn’t defaulting on anything. The current amount of the Trust Fund will get paid out. The problem is that by 2018 we have to start using that $1.7 trillion and by 2042 it will have been spent. There’s no problem with paying current benefits, it’s when we get the Baby Boomers starting to retire than the shit hits the fan.
2. Social Security is not backed by real assets. The OASI bonds aren’t legal tender. They’re a promise to pay by the government to the government. Treasury bills are a promise by the government to pay someone else. Your whole argument is patently idiotic and has no relation to anything even resembling real economics. In Flemming v. Nestor 363 U.S. 603 (1960) the Supreme Court rules that Social Security is not a contractual obligation on the part of the government. The government can end the program, modify benefits, or do what they want through the legislative system at any time. You have no guaranteed benefits under Social Security. The “OASI Trust Fund” has no assets – the government has to cough up the money to pay for them from somewhere else. Over the next 75 years that adds up to $27 trillion in unfunded liabilities.
Social Security is not backed by real assets.
Sigh… Here’s the Social Security Administration on the subject:
As stated in the answer to “What happens to the taxes that go into the trust funds?”, most of the money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the current increase in the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.
Far from being “worthless IOUs,” the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.
from http://www.ssa.gov/OACT/ProgData/fundFAQ.html#n7
They’re real assets, Jay, just like any Treasury note is both a real asset and a bookkeeping contrivance.
There’s no problem with paying current benefits, it’s when we get the Baby Boomers starting to retire than the shit hits the fan.
The question is not when they start to retire, because they’re already starting to retire. The question is when do they start to die? In 2042 the oldest among them will be at least 100. Look up an actuarial table and tell me how many of their cohort group are expected to live that long. If the funds in SS last till 2042 (2052 by more generous estimates) then there’s not much of a crisis, because that’s when the Baby Boomers die off.
Hence why Social Security has a problem. At the point at which the Baby Boomers begin to retire and receive benefits (around 2018) the system has to start cashing in those “securities” – which don’t exist in real funds. There isn’t $1.7 trillion dollars sitting around in a bank vault somewhere. Which means that when that money comes due, it has to come from somewhere, which is either taxpayers or other programs. Over the next 75 years estimates of the unfunded liability approaches anywhere from $12-$27 trillion depending on the various factors involved.
And the OASI Trust Fund is not a real asset. The government has no obligation to pay Social Security recipients. The Supreme Court ruled that there is no contractual guarantee to Social Security in Flemming v. Nestor . In fact, go to the Social Security Administration website and read the history the case. There is no right to Social Security benefits whatsoever. The government has to pay back its Treasury bills, but it does not have to pay out Social Security benefits. Furthermore, if you’d read the very page you linked to, it too indicates that the current Social Security system is not sustainable over the long term and is in need of serious structural reform.
And the OASI Trust Fund is not a real asset. The government has no obligation to pay Social Security recipients.
Those are two different positions. The OASI Trust holdings are real assets that the government is required by law to make good on; there is no legal obligation for OASI benefits to remain the same.
It’s a real asset but it’s not an asset owed to the American people. OASI benefits are determined by the legislature, and therefore by extention, the American people.
What influence do the American people have over their stock holdings? Not a hell of a lot.
The system pays out full benefits – in fact, it could easily pay out more than it’s projected to – all the way through 2052, according to the Congressional Budget Office. At that point the Baby Boomers are over 100 years old. How long do you think they’re likely to recieve benefits at that point? We have a few years of liability for SS benefits that has to come from the general budget, like we did in the 60’s, and then the system returns to solvency as the demographics even out. There’s a speed bump, sure, but I don’t see the “crisis”.
And the legislature can take them away at any time.
And what influence to the American people have over Social Security? Absolutely none. If I had an investment that could only produce less than 2% rate of return each year, I’d dump it in a heartbeat. A private account has asset allocations with varying degrees of risk, and a private insurer can’t just up and decide not to pay on a whim, which the government can do.
The figures don’t lie. There’s an unfunded mandate of anywhere from $12-$27 trillion. And of course, anyone who’s younger than the Baby Boomers won’t see a dime – the system won’t have anything in reserve and everything will have to come out of the Treasury which is already going to be in the hole thanks to rampant spending and Medicare.
You may not see the crisis, but Bill Clinton and Al Gore did. Alan Greenspan does now. The SSA sees the crisis. The crisis is quite real, and the only way to fix it is to enact significant reforms to the system. Removing the income cap will give us 6 years of leeway, but even that won’t solve the problem. The only way to solve the problem is to increase the overall rate of return and ensure that Social Security can’t be raided to pay for other programs. Only a combination of raising the retirement age, the income cap, and optional private accounts can keep the system solvent, and that’s why a plan like the one Sen. Hagel proposed must be implemented as soon as possible.
And the legislature can take them away at any time.
How about that? Geez, if only we had some way to determine who got to be in the legislature. Oh, wait.
And what influence to the American people have over Social Security? Absolutely none.
Yeah, it’s not like the American people have any way to influence the outcome of politics. Man, wouldn’t it be great if we had a system where people could, I dunno, somehow govern themselves?
There’s an unfunded mandate of anywhere from $12-$27 trillion.
$12 trillion what? You keep throwing around that number absent any kind of context where it makes sense.
The soonest projected time when SS can’t fund itself is 2042; more reasonable estimates put it ten years later. At that time the total yearly shortfall constitutes about one-half of one percent of the nation’s GDP, or about one quarter of the tax revenue lost to Bush’s tax cuts.
Somehow that doesn’t constitute a funding crisis to me. It’s more like opening your wallet and discovering that you don’t have enough cash for both the power bill and beer and pizza on friday. Well, that’s not exactly Sophie’s choice, now is it? So you don’t go out friday night. “Crisis” averted.
Only a combination of raising the retirement age, the income cap, and optional private accounts can keep the system solvent
Look, absolutely no one thinks carving private accounts out of the SS program makes it solvent. The only possible effect it could have would be to hasten its insolvency. Even the President agrees with me on this. Nobody’s offering private accounts as a way to make SS solvent, because they have the opposite effect.
I still don’t see the crisis. I see a small and temporary hiccup in the finances, a hiccup that is nowhere near the crisis SS faced in the 60’s.
And just what exactly does “the full faith and credit of the U.S. Government” mean? What does the U.S. Government “produce” to fund its obligations? Maybe sell some tanks, jets or public lands, but the Government gets its money predominately from the taxes it collects and the cash it borrows – or it can just print more. It’s the “how can I be broke, I’ve still got checks?” (or a printing press) school of economics. Sure, no politician is going to want to vote to default on the benefits. How many, however, do you think are going to want to vote to raise the taxes to cover that obligation? (I guess it depends on how many Democrats are in office then).
Personally, I’d rather have my retirement funds in a private account, even with the chance of fraud. At least that way if someone misappropriates the money in my account he or she gets prosecuted instead of re-elected.
Which of course doesn’t give anyone direct control over their money. If you want to put your money in the hands of Congress, fine. Personally, I’d rather give it to that wino down the street with the tinfoil hat.
$25 trillion is how much Social Security will owe over what it collects in taxes by 2077.
Dear God, I hope you don’t balance your own checkbook.
That estimate takes the total shortfall and divides it up by the number of years. The problem with that is that the debt isn’t spread evenly. In 2019 the shorfall will be small — from there it grows on a massive scale. By 2077 when things have gotten really bad, it will consume a massive amount of revenue.
And without Bush’s tax cuts, we wouldn’t have 5.2% unemployment and a robust rate of growth. Last I checked tax revenues were increased by economic growth. Raising taxes lowers growth, thus lowering revenue. But that’s an argument for another time.
No, it’s like finding out you’ve just run up $50,000 in credit card debt and the interest payments are climbing. Since you have airs of being the wizard in economics, would you care to tell us how the government will come up with $25 trillion dollars over 75 years? Unless you care to start invading and looting Canada, that isn’t going to happen without catastrophic consequences.
So much for that whole “liberal deficit hawk” thing apparently. President Bush’s relatively paltry tax cuts are going to end the world, but the collapse of Social Security is suddenly not a crisis. And this is supposed by the “reality-based” line? Puh-leeze.
Individual retirement accounts do two things: they increase growth, allowing for more income into the system, and they take the money that’s supposed to be spent on benefits and put that in a place that Congress can’t spend. As Alan Greenspan said in the article that started this whole discussion, that’s the only way to create a real “lockbox” and keep Congress from raiding Social Security.
$25 trillion in debt over 75 years sure as hell sounds like a crisis to me. The whole idiotic attitude that we can just stick our heads in the sand and raise taxes a bit is just plain naive. The Democrats have absolutely no plan for dealing with a contingency that they themselves were talking about just 4 years ago. I guess that whole chant of “save Social Security first” was just another in a long stream of Democratic horse crap.
And just what exactly does “the full faith and credit of the U.S. Government†mean?
Basically? The government has a credit score, just like you or I do. That score is represented in the market value of Treasury instruments.
If the government defaults on its obligations – declares bankruptcy – then that credit is ruined, and all those Treasury bonds your grandmother has been buying you every year since your 10th birthday are toilet paper. What that happens to a country that’s usually when the military steps in and shoots the President.
$25 trillion is how much Social Security will owe over what it collects in taxes by 2077.
Why stop at 2077? How can you take a prediction that far ahead seriously? Hell by then we’ll have invented free food pills and homes on the moon. Economists can’t even predict the stock market in a week. We’re supposed to believe they can see that far into the future?
And without Bush’s tax cuts, we wouldn’t have 5.2% unemployment and a robust rate of growth.
Still waiting on the robust rate of growth. You must be getting that from the same place you keep hearing that the insurgency in Iraq is in its “last gasps.” We’re still holding our breaths for that “robust rate of growth.”
Since you have airs of being the wizard in economics, would you care to tell us how the government will come up with $25 trillion dollars over 75 years?
Hey, here’s an idea – why don’t we save up for it now? Like, in a Trust Fund or something? We can invest in T-bills because that’s the safest investment in the world, and they’re passively managed. So the administrative overhead is a tenth of that of an actively managed fund.
Heck it’s such a good idea – we’ve been doing it since 1983.
And without Bush’s tax cuts, we wouldn’t have 5.2% unemployment and a robust rate of growth. Last I checked tax revenues were increased by economic growth. Raising taxes lowers growth, thus lowering revenue.
Missing logical step – showing where lower taxes spur economic growth. Since economies are driven by demand and not supply, lower taxes for the rich never improve the economy. They never, ever have.
The problem with that is that the debt isn’t spread evenly. In 2019 the shorfall will be small — from there it grows on a massive scale. By 2077 when things have gotten really bad, it will consume a massive amount of revenue.
So we’d better repeal those worthless, counter-productive tax cuts now. The sooner we start saving, the better.
Individual retirement accounts do two things: they increase growth, allowing for more income into the system
SS as it stands now puts as much money into the system. That’s where it’s going, remember? Out of your pocket and into grandma’s, only unlike GM and Boeing, grandma is actually going to be spending that money domestically instead of using it to finance overseas development.
and they take the money that’s supposed to be spent on benefits and put that in a place that Congress can’t spend
…on benefits. See, that’s the thing. Where does that money come from to bootstrap into the privatization scheme? Borrowing, of course.
Any idiot knows that its better to save up for later than to borrow now.
$25 trillion in debt over 75 years sure as hell sounds like a crisis to me.
33 billion a year? Hell that’s less than we spend on Iraq. It’s next to nothing. We’re not even talking about real money. You’re telling me that Congress can’t cough up 33 bil a year? Ludicrous.
And remember that’s only the money we need to come up with to preserve benefits at the current levels. Once the trust runs dry we can still pay benefits out of FICA, they just drop to about 70% of their current levels. And that’s before we raise the taxable income cap.
But carving out private accounts and accelerating program’s insolvency is beyond idiotic (and you wouldn’t be supporting it if this was the brainchild of anyone but your beloved Bush.) It’s the proverbial hatchet to remove a fly from your friend’s forehead. As people in the UK and Chile have found to their great dismay.
The only crisis is the crisis of stupidity that seems to be epidemic among some Republicans; the symptom is support for a plan that has failed in every country where its been tried.
Ever hear of a mortality table? Besides, people are likely to live longer in the future, which only makes things worse if we’re going to be paying benefits for a group of people who’s life expectancy is up to 3 digits.
Because when those T-bills come due, where is the money going to come from? You can’t just print more money, it has to come from somewhere. The administrative overhead for the funds in the Federal Thrift Plan is around 0.3%, or less than $5/person/year.
Try reading the news sometimes.
Except in 1960, and 1983, and 1996, and 2003, etc. When President Reagan slashed taxes in the 1980s, revenue jumped 99.4%. When President Clinton cut capital gains taxes in 1997 incomes jumped across the board.
Unlike you, I can produce a mountain of statistical data to back up my assertions.
Yes, let’s go back into recession. That would make things so much better.
No, it’s going out of everyone’s pockets and getting spend by Congress. There are no real assets in the Trust Fund. There’s nothing other than the implicit promise to pay in those bonds. They’re not convertable. Only the SSA can spend them.
Furthermore, by 2042 they’ll be gone. No more money. Doesn’t matter if they’re backed by Uncle Sam or not.
And last I checked, GM and Boeing both employ tens of thousands of American workers and contribute billions to the US economy directly and indirectly.
Well, if we can just borrow $25 trillion over 75 years, then the costs of borrowing for private accounts should be nothing.
You don’t understand the concept of compound interest, do you? The costs won’t be level, they will increase each year.
And $25,000,000,000,000 / 75 = $333,333,333,333.33/year. For that price we could invade a new country every year. I’m thinking we should schedule France in for 2007.
That assumes that lifespans remain constant, which you’ve already said wouldn’t happen. Furthermore, raising the cap only delays the insolvency by six years. It’s not enough alone.
Actually, Chile’s pension system is considered a model for the rest of the world. And the UK system is vastly different from the proposed American system.
Except in Chile. Oh, and it’s been very successful here in the States too.
Social Security reform is necessary, has been tried successful here and abroad, gives power to people rather than the bureaucracy, and must be implemented sooner rather than later. Every year we delay makes the problem worse – and that’s precisely what Chairman Greenspan said. Quite frankly, in the choice of believing Chet the Kool-Aid Guzzling Leftie and the Chairman of the Federal Reserve, most people are going to go with the latter — and for good reason.
Actually, Chile’s pension system is considered a model for the rest of the world.
You’re talking about this system?
While acknowledging that privatization has been successful in many respects, the change “wasn’t the big silver bullet that everyone expected,” said senior World Bank economist Truman Packard. “There was the strong expectation and the promise that participation rates would go up to as high as 80 to 90 percent. Judged by that expectation, there is tremendous disappointment.”
Also, more than 17 percent of retired workers over age 65 keep on working or head back to work because their pensions don’t give them enough income, according to a study conducted for the Chilean government.
That’s from the very article you handed me. Did you read it first? I’m supposed to believe that a system that sends seniors back to work is the model to base our future on?
Jay, I’m done with this. There’s no evidence that can convince you, because your support for this position is based on nothing but the fact that its coming out of Bush’s mouth. The very, very good news is that the majority of Americans are seeing right through the lies as easily as I was able to.
Apparently you didn’t read the part where the Chilean system only applies to 20 years of earnings.
Yeah, whatever. I’ll do you a favor and ban you again so you needn’t worry about it then. Obviously you’d rather impugn the motives of others than listen to their arguments.