Bush intent on change as Social Security turns 70

[Sean]

http://today.reuters.com/news/newsAr...VERSARY-DC.XML

CRAWFORD, Texas (Reuters) - Social Security, the New Deal-era program credited with keeping millions of elderly people out of poverty, turned 70 on Sunday with Americans rallying around it and President George W. Bush as determined as ever to give it a makeover.

The debate over the future of the program, created by President Franklin Delano Roosevelt, has quieted down recently after Bush made it the centerpiece of his domestic agenda earlier this year.

Many Republicans now see only a slim chance for the passage this year of Social Security legislation that includes Bush's goal of creating private investment accounts.

Passions on both sides of the issue still run high. Bush shows no sign of backing away from his plan, and Democrats are eager to attack the president on an idea that has proved unpopular with the public.

Bush, in a statement, called Social Security a "vital program" that has a hole in its safety net. That came a day after Democrats devoted their weekly radio address to the subject and renewed their vow to block private accounts.

"I'm guessing it's not going to go anywhere unless there's significant Democratic support," said William Niskanen, chairman of the Cato Institute, a libertarian think tank.

Niskanen said that despite Bush's repeated warnings about the financial woes Social Security will face in coming decades as the baby boom generation retires, the program is an "embedded part of our fiscal picture."

"I think that it may very well take a Democratic president -- maybe the combination of a Democratic president and a Republican Congress" to revamp Social Security, he added.

Now I should first say that this is not supposed to be a soap-box for your opinion on whether or not we should have some sort of "social security". It is a thread to discuss whether or not a) Social Security is in trouble and B) whether or not Bush's plan will help.

I remember watching the Fox News morning show while I was getting ready for school and they spoke of how less-and-less people are paying into the system to cover for retirees (I think it is at 3 people per retiree right now).

My question is how does enabling people to pull out money into their own private accounts help the growing problem of less money being available in the Social Security system? To me it seems like the opposite. It seems by allowing people to pull further monies from the system that we actually increase the likelihood that Social Security will collapse.

Also, if privatization of Social Security via Wall-Street is intended to help Social Security then why has the option of one giant account not been mentioned? That is, would retiree’s money not be more competitive if it was in one huge account on Wall-Street (like business often does with insurance, healthcare, etc)?

Opinions?

[Mr.Vicchio]

SS is going to collapse, the question is, on what terms?

Terms we define or just let it fail?

If it jsut fails were all screwed, if we take steps to allieviate the damage by converting to a private acocunt system.. it's worth it.

[Prometheus]

A lot of libertarians argue for SS abolition, but I am not in that camp (otherwise I wouldnt be posting in this thread, as per the request in the initial post)

Although I do not think the program should have ever been created, I think that since our seniors and middle aged folks have peen paying into it for thier whole lives, they are entitled to something back.

We all know that there is no way to reimburse them for all they put in, but the proposed plan should at least allow for them to get some small pittance in return for a lifetime of contributions.

Of course the labor shortage is the looming event that will bring SS to it's knees under the current system.

My proposal is as follows:

(1) All of the funds witheld ostensibly for SS will actually go into the program. Right now, only about %30 of those funds taken from your paycheck make it in to the SS system. The other %70 is "borrowed" by congress for the rest of the budget. Technically, they still owe it to the program (they have a backlog of about 30 years already), but a pile of IOU's does nothing for the elderly.

(2) Half of the funds collected for SS will go to pay current SS benifits.

(3) The other half of the funds go into private accounts similar to Roth IRA's. This money is untouchable by the US government. Individuals can choose to invest a certain percentage of thier funds as they see fit. This percentage will decrease as the individual approches retirement age. The portion that is not invested discressionally will be put into interest bearing bonds. Unlike the current system, no arrangement of marriges or the like will disinfranchise people from thier spouses benifits.

(4) Since this system will be instated in the middle of many people's careers, traditional payouts will be based on life expectancy. For example, the life expectancy in the US is 77 years, retirement age is 63. If a person started working at age 19, then they would be working for 44 years. Lets say that this plan is instated when they have been working for 22 years (half of thier career). They would then have to life off of the private account savings after they retired for 7 years (77-63=14; 14/2=7). After that they would get traditional benifits 'till they died.

[Sean]

SS is going to collapse, the question is, on what terms?

Terms we define or just let it fail?

If it jsut fails were all screwed, if we take steps to allieviate the damage by converting to a private acocunt system.. it's worth it.

Mr. V, thanks for towing the Republican Party line but why not explain WHY you think it will collapse, and why you think private accounts are "worth it"... thanks :)

Prometheus, I think I like your idea. I did not know the US gov used that much of SS as a part of its budget..why not just fix that?

[Prometheus]

Prometheus, I think I like your idea. I did not know the US gov used that much of SS as a part of its budget..why not just fix that?

Even with sending all SS taxes to the SS program, it will crash. Unfortunately, even under this plan, benifits would have to be cut up to %25. Most calculation about SS crashing are done assuming that all SS taxes in fact go to SS. Those taxes are still on the balabce sheet of the program. They are justin the form of IOU's that never get paid.

The government would *have* to cut expences to make this transition that I propose. Maybe cut back on welfare and foriegn wars...

[Milton Bradley]

C-SPAN helps to out the truth again. (don't have a link, sorry)


It has been brought to our attention the there are three actuarial predictions made about the health of SS.


History shows that the true healt of the systen is represented by the middle prediction, not the best case, or worste case scenarios.


Bush is focusing his attention on the numbers predicted in the worste case scenario, even though that has been shown to be historically inaccurate.

[Prometheus]

Middle prediction or pessimistic one, you can;t deny the system is in trouble. The worse Bush can make it look, the faster action will be taken. He may be overstating his case, but you can;t deny that something needs to be done. Unfortunately it takes the pessimistic doom and gloom case that Bush is using to get people to wake up and take action.

[monty of ll]

Isn't it just a matter of whether or not you want to fund it? If the American people see it as a socialist (bad, commie, etc.) program and they can't stomach it for that reason then you should get rid of it in it's present form. I as a Canadian boil it down to these simple terms because it is as simple as that for us and our SS system. We want it, we need it, and we care enough about our fellow citizens to make sure it stays healthy.

I would just add that from an outsider's pov it looks obvious where the right agenda is headed on your SS. If they get their way there will be no safety net in the future and the blame will be able to be placed on the shoulders of those who don't subscribe to Bush's plans.

Hello Mexico!

[Prometheus]

In the initial post is was asked that we discuss options other then abolishing the program. It is not generally observed on this forum, but I chose to honor the request of the thread initiator.

I don't think the program should have been started. Many libertarians take themselves out of this debate because they aren't willing to provide a rational solution - they only bitch about what a bad idea it was in the first place. I would rather propose a workable solution that is practical, and dosent disinfranchise our citizens from a lifetime of contributions.

[Mr.Vicchio]

Sean, it WILL collapse. If left "as is". You pointed out the cause, 3:1 coverage ratio and falling.

But is that "towing the GOP line" because I happen to agree for the most part with thier stance on the issue?

[Prometheus]

But is that "towing the GOP line" because I happen to agree for the most part with thier stance on the issue?

Yes. No one said it was a bad thing. That's just what it is. If it bugs you then maybe you should reconsider your alegiances.

[RickSp]

The Social Security system is supposed to be self financing. Due primarily to demographics, the current system is actuarilly unsound. If not modified it will become insolvent some years into the future.

The problem I have with Bush's focus on Social Security is that I find it more difficult to get concerned about a future insolvency when the Federal government itself is running such huge and unsustainable budgets. Sort of like worrying about running the ship of state aground in a few thousand miles when the ship is in danger of sinking right now.