Dissent among the ranks (Social Security reform)

[Meg2]

With President Bush backtracking on his Social Security plan this week by alluding to the possibility of a tax hike, fierce opposition from Democrats is no longer his only worry…read more

I’d love to “own” more of my Social Security, well, in fact ALL of it, but I’m not yet convinced the proposed plans are the way to go. I’m happy there are others asking questions, too.

 

[Scott_Lafrance]

Meg2:

With President Bush backtracking on his Social Security plan this week by alluding to the possibility of a tax hike, fierce opposition from Democrats is no longer his only worry…read more

I’d love to “own” more of my Social Security, well, in fact ALL of it, but I’m not yet convinced the proposed plans are the way to go. I’m happy there are others asking questions, too.

I’m self employed, so I could care less.

 

[Meg2]

Scott_Lafrance:

I’m self employed, so I could care less.

So…I could say, “I’m in the middle-class with a skilled job, so I could care less about welfare, job training, low-income housing, minimum wage, etc.” ??

Don’t we have to make decisions that benefit the whole, not just ourselves?

 

[Catholic2003]

Scott_Lafrance:

I’m self employed, so I could care less.

Self-employed people pay into social security at twice the rate of those employed by others, because they pay for both the employee and the employer “contributions”.

I must say I’m disappointed that I will be paying more social security tax under President Bush, if he gets his way. It is one of the most unfair taxes this country has.

 

[HagiaSophia]

]
With President Bush backtracking on his Social Security plan this week by alluding to the possibility of a tax hike,

This as I understand it would only be on those earning $90K or more per year so I wouldn’t call it backtracking.

Meg2:

I’d love to “own” more of my Social Security, well, in fact ALL of it, but I’m not yet convinced the proposed plans are the way to go. I’m happy there are others asking questions, too.

Since it is “optional” those that aren’t interested don’t have to change – those that feel they could do better will be allowed to.

 

[HagiaSophia]

Catholic2003:

It is one of the most unfair taxes this country has.

I’ve never quite understood the double taxation of it – you pay tax on the oney when you earn it - they lock it away and put it into this non-earning systemn, then you pay tax (thanks to the AARP) on it as it becomes your income.

 

[Catholic2003]

HagiaSophia:

I’ve never quite understood the double taxation of it – you pay tax on the oney when you earn it - they lock it away and put it into this non-earning systemn, then you pay tax (thanks to the AARP) on it as it becomes your income.

It doesn’t make any sense; it’s just the government getting money any way possible, without examining the fairness of the method.

Another unfair aspect is the redistributive nature of social security; it is not really a retirement program at all. Yet those who belong to certain specified retirement programs are exempt from paying social security on the grounds that they already have a retirement program. If this were really true, then I should be able to opt out of social security because my employer already has a retirement program.

Yet another unfair aspect is that those who earn more than the cutoff amount ($90K or whatever) through two jobs do not get the excess employer contributions credited or refunded.

 

[HagiaSophia]

Transition costs, trumpeted by Democrats as a chief reason not to support President Bush’s Social Security reforms, are a myth, according to several prominent economists, including the 2004 Nobel Prize winner.

The trillion dollar totals that Democrats cite as “transition costs” are actually the amount the government is borrowing to pay current Social Security benefits combined with the massive debt already owed to the so-called Social Security “Trust Fund.”

“We hear a lot about transition costs,” Arizona State University professor Edward Prescott, 2004 winner of the Bank of Sweden Nobel Prize in Economics, said. "But I’m going to use some economic jargon, not ‘political accounting’ jargon.

“There are no transition costs,” Prescott said at the Cato Institute Feb, 9. “Re-labeling debt is not a cost.”

Lawrence Hunter, senior research fellow with the Institute for Policy Innovation, told the Cybercast News Service that he agrees with Prescott.

“There are no transition costs,” Hunter said. “There’s simply a cash flow crunch that exists and if Congress chooses to borrow the money to alleviate that, it has done nothing more than replace one form of debt … with another. It’s refinanced the debt.”

cnsnews.com//ViewSpecialReports.asp?Page=\SpecialReports\archive00502\SPE20050221a.html

 

[StJeanneDArc]

I’ve said this before: the whole SS system is immoral, as all Ponzi schemes by their very nature are.

Somebody always pays the piper when you set up a Ponzi scheme. In this case it’s the taxpayers, no getting around that.

 

[Scott_Lafrance]

StJeanneDArc:

I’ve said this before: the whole SS system is immoral, as all Ponzi schemes by their very nature are.

Somebody always pays the piper when you set up a Ponzi scheme. In this case it’s the taxpayers, no getting around that.

I agree, and earlier when I commented that I don’t care, it is because I have my money invested in business and real estate, etc… I have no inclination to let “Socialist Security” provide anything for me. I’ll take care of myself and my family thank you very much. Most men feel the same way. Little boys want the government to take care of them.

 

[Meg2]

HagiaSophia:

This as I understand it would only be on those earning $90K or more per year so I wouldn’t call it backtracking.

Yes, there is talk of raising the cap. The complete article did make this clear. I didnt’ mean to mislead. The backtracking part the article mentioned is one of two things, or both… that in the State of the Union address, Bush said, “We must not jeopardize our economic strength by increasing payroll taxes,” but now there is talk of doing just that.

Bush has also claimed that privitization will address Social Security solvency, but now he has said, “Certainly,” Bush said, “the personal account doesn’t fix the system. There needs to be better reforms, more meaningful reforms than that.”

HagiaSophia:

Since it is “optional” those that aren’t interested don’t have to change – those that feel they could do better will be allowed to.

True. But the more I read of it, the crappier it sounds, so I don’t think it’s right to just sit back and say, “well, just make your own choice then.” I think the current plan is bad and that it shouldn’t be implemented at all. There is another model that the Social Security Administration proposed in 2000 or 2001 that would allow people to put away 2% of their taxable income. That one I might consider, because it could make up for the reduced traditional benefits I would receive.

The example being used now is a worker earning $35,000 a year will save $250,000 by retirement. I don’t understand where he is getting this figure. This worker can only invest $175 a year (4% of his total 12.4% social security taxes). Using this basic savings calculator, a 6% return rate (the best estimate I’ve seen from the SSA so far), you’d save only $24,381.69 in 30 years, $7,358.29 when adusted for inflation. And this does not even account for investment fees you’d see in a mutual fund. I just don’t get it.

I think it’s important that I consider more than myself, I mean, Social Security affects everybody. If I believe it’s a bad plan, then I should tell others, and my representatives, so the plan is dropped or significantly changed.

 

[caroljm36]

Catholic2003:

Self-employed people pay into social security at twice the rate of those employed by others, because they pay for both the employee and the employer “contributions”.

…you suppose Scott doesn’t know that? Heheheheh

 

[Scott_Lafrance]

caroljm36:

…you suppose Scott doesn’t know that? Heheheheh

i’m in the process of converting to a LLC to get around this silly little stipulation.

 

[StJeanneDArc]

Meg2:

The example being used now is a worker earning $35,000 a year will save $250,000 by retirement. I don’t understand where he is getting this figure. This worker can only invest $175 a year (4% of his total 12.4% social security taxes). Using this basic savings calculator, a 6% return rate (the best estimate I’ve seen from the SSA so far), you’d save only$24,381.69 in 30 years, $7,358.29 when adusted for inflation. And this does not even account for investment fees you’d see in a mutual fund. I just don’t get it.

My understanding is that you can earmark 4% of your total salary for a personal account, not 4% of 12.4%. That would be $1400 for a worker making $35,000. That may make it a little more palatable to you.

 

[katherine2]

Christian Conservatives Cool to Bush Social Security Plan

Pensions & Retirement, February 22, 2005

Some Christian conservatives who back Bush on abortion, gay rights and judicial appointments are less certain about Social Security. Many like the program and are not convinced it needs an overhaul. This leaves Republican leaders without the full backing of their coalition. William J. Murray, chairman of the conservative Religious Freedom Coalition said “We can’t get our people excited about it.” Richard Land, a spokesperson for the Southern Baptist Convention, which stood with Bush on abortion and same sex marriage says the Southern Baptists will not be working with Bush on Social Security. According to Land, that while most Southern Baptists voted for Bush “They didn’t vote for him based on Social Security.” In fact polls show more interest in Bush’s plan among the upper income portion of the Democratic Party than working class and modest income members of the Republican Party.

Key social conservative groups like the Family Research Council and Concerned Women of America have left Social Security off their legislative priority list. Even the Christian Coalition, which is considered by many the social conservative group most loyal to the White House and closest institutionally to the Republican Party has admitted it will have a hard time selling the Bush plan to its constituency. Often supportive of Bush on abortion policy, the Catholic Church has long been a supporter of the Social Security program and, in fact, was intimately involved in the original design of the program under Franklin Roosevelt.

While some social conservative leaders may be fearful to go where their members will not follow, there are also philosophical reasons for their inaction. Social Security is extremely generous to traditional families. Children in large families who suffer the loss of a breadwinning father as well as stay at home wives and widows are treated well under Social Security, far better than even the most optimistic explanations of the Bush plan would allow. Also making strange political bedfellows, many homosexual rights advocates have “switched sides” and see the Bush plan as economically beneficial to gays.

 

[otm]

Meg2:

Yes, there is talk of raising the cap. The complete article did make this clear. I didnt’ mean to mislead. The backtracking part the article mentioned is one of two things, or both… that in the State of the Union address, Bush said, “We must not jeopardize our economic strength by increasing payroll taxes,” but now there is talk of doing just that.

Bush has also claimed that privitization will address Social Security solvency, but now he has said, “Certainly,” Bush said, “the personal account doesn’t fix the system. There needs to be better reforms, more meaningful reforms than that.”

True. But the more I read of it, the crappier it sounds, so I don’t think it’s right to just sit back and say, “well, just make your own choice then.” I think the current plan is bad and that it shouldn’t be implemented at all. There is another model that the Social Security Administration proposed in 2000 or 2001 that would allow people to put away 2% of their taxable income. That one I might consider, because it could make up for the reduced traditional benefits I would receive.

The example being used now is a worker earning $35,000 a year will save $250,000 by retirement. I don’t understand where he is getting this figure. This worker can only invest $175 a year (4% of his total 12.4% social security taxes). Using this basic savings calculator, a 6% return rate (the best estimate I’ve seen from the SSA so far), you’d save only $24,381.69 in 30 years, $7,358.29 when adusted for inflation. And this does not even account for investment fees you’d see in a mutual fund. I just don’t get it.

I think it’s important that I consider more than myself, I mean, Social Security affects everybody. If I believe it’s a bad plan, then I should tell others, and my representatives, so the plan is dropped or significantly changed.

I am not sure where you are getting your figures. 4% of $35,000 = $1400. Even if we were allowed to contribute only 2% ($700), the stock market averages a little better than 10% over its lifetime. Furthermore, it isn’t 30 years of work, it is more like 40 to 45 years of work. Most people are not retiring at 52, if they went to college, or 48 if they only finished high school.

 

[Meg2]

otm:

I am not sure where you are getting your figures. 4% of $35,000 = $1400. Even if we were allowed to contribute only 2% ($700), the stock market averages a little better than 10% over its lifetime. Furthermore, it isn’t 30 years of work, it is more like 40 to 45 years of work. Most people are not retiring at 52, if they went to college, or 48 if they only finished high school.

%between%StJeanneDArc/otm-

The factsheet at the whitehouse.gov site says “Yearly contribution limits would be raised over time, eventually permitting all workers to set aside 4 percentage points of their payroll taxes in their accounts.” (I also described the models in this thread.)

I was using the 6% figure, because that’s the best I’ve heard the SSA say so far. Yes 10% is the stock market norm, but we’ll be limited to more conservative funds and investments and investments will automatically be put in even more conservative funds as you near retirement, which would further lower your average rate of return. (but I guess you can sign a waiver, as addressed in the factsheet). 10% for 40 years still only gets me $146,282.38, $29,612.59 with inflation.

True, most people put in 40-45 years of work. But I personally will only have 30 years in the personal account savings, if the program starts in 2009 and if I want to retire at 67.

 

[otm]

%between%StJeanneDArc/otm-

The factsheet at the whitehouse.gov site says “Yearly contribution limits would be raised over time, eventually permitting all workers to set aside 4 percentage points of their payroll taxes in their accounts.” (I also described the models in this thread.)

I was using the 6% figure, because that’s the best I’ve heard the SSA say so far. Yes 10% is the stock market norm, but we’ll be limited to more conservative funds and investments and investments will automatically be put in even more conservative funds as you near retirement, which would further lower your average rate of return. (but I guess you can sign a waiver, as addressed in the factsheet). 10% for 40 years still only gets me $146,282.38, $29,612.59 with inflation.

True, most people put in 40-45 years of work. But I personally will only have 30 years in the personal account savings, if the program starts in 2009 and if I want to retire at 67.

I don’t agree that there would necessarily be limits on very conservative funds. There are funds not that pick, for example, the S&P stocks, or a portion of them. These are not what you call highly volatile stocks (Johnson & Johnson is just too big to be volatile), and they have several advantanges; 1) there are reduced fees because there is little or no trading, and little in the way of management fees; 2) they will produce higher rate of return because they tend to be the best long-term performers. That, of course, presumes that the money will go directly into a stock fund.

Another possibility is that the investment will either be, or look very much like, an annuity with a guaranteed return. You get the annuity payments (or make it payable, for example, to self and spouse), the return is set, and you bet the annuity company you will outlive their assumptions. Live longer, they continue to pay; die sooner, annuity ends. That looks more like SS, but should provide a greater return (SS return is beyond abysmal), and would solve at lest some of the problems we currently face.

 

[otm]

%between%StJeanneDArc/otm-

The factsheet at the whitehouse.gov site says “Yearly contribution limits would be raised over time, eventually permitting all workers to set aside 4 percentage points of their payroll taxes in their accounts.” (I also described the models in this thread.)

I was using the 6% figure, because that’s the best I’ve heard the SSA say so far. Yes 10% is the stock market norm, but we’ll be limited to more conservative funds and investments and investments will automatically be put in even more conservative funds as you near retirement, which would further lower your average rate of return. (but I guess you can sign a waiver, as addressed in the factsheet). 10% for 40 years still only gets me $146,282.38, $29,612.59 with inflation.

True, most people put in 40-45 years of work. But I personally will only have 30 years in the personal account savings, if the program starts in 2009 and if I want to retire at 67.

It gets you $146K, and if you are a smart investor, you can take out a sizeable chunk and keep the fund almost level with a lower interest rate. I don’t have the figures at hand, but was just looking at some projections done by the NAIC; they are quite interesting.

By the way, look at what SS is going to get you if this doesn’t come to pass. Granted that the system is given a much longer life that President Bush was speking of, that longer life is based on what are acknowledged to be some serious cuts to SS. Keep it as it is, get less. Change it, and keep it afloat as it is or better. Doesn’t sound like rocket science to me.

 

[Tom_of_Assisi]

Social security is immoral to begin with. People need to be paid for working. Not for being paid not to work. If people want a “savings account” they should set it up themselves.

Bush needs to lower taxes and scrap socialist security!!!