In Ads, AARP Criticizes Plan on Privatizing

Interesting article from CNN Money that explains one of the possible privatization methods.

Keep in mind that Bush has not disclosed his plan for this and won't do so until January.

http://money.cnn.com/2004/12/06/retirement/social_security/

Then you haven't been reading very much. Every existing proposal is for voluntary particpation in the privitized portion of the program. There are NO proposals that mandate that people participate.

I heard one economist explain how SSI can be saved with a relatively minor tweak: As of now, yearly benefit increases are tied to the rise in average national wages. Change this by tying the rise in benefits to the annual CPI increase. Retirees would still keep up with inflation, but the reduction in the increase in benefits would save the system.

Or how about this question: Anyone earning more than $95,000/year pays no SSI on the amount over the $95,000. Why is that, I wonder?

Quite so. The original 1935 SS Bill only provided benefits for workers - not for their spouses or children and there was no disability benefit. It was also paid in a one time lump sum. The spousal benefit didn't start until 4 years later (1939) and monthly payments didn't begin until 1940. Less than 50% of workers in the US were covered under SS until the 1950s becuase there were exemptions that allowed virtually all government employees (and Railroad workers) to opt out of the system.

All didn't pay and all weren't entitled.

Fishin
That is not my understanding and I doubt very much if that will or can happen. The book keeping of a two tiered system would be horrendous.
The prescription benefit was in reality a benefit for the pharmaceutical and insurance industries. And this would be a gift to wall street.

I think you have this backwards. SS COLAs are currently tied to the CPI.



Add on: Why will Bill Gates, who has billions of dollars at his disposal, get a monthly check from SS when he retires? (The same applies to any other multi-millionaire)

Fishin
All who paid were intitled.

The 3 most commonly referred to proposals came from the Presiden't Commission of Social Secuirty. You can find copies of their report here: http://www.csss.gov/ None of them make participating in the privatized portion mandatory.

Every time they make a change in SS the older folks get shafted a bit more. I don't give a damn what the young say; give us what we were promised when we first started paying in.

Fishin
Correct the commission did call for voluntary participation. having posted the following on a2k a while ago I should have remembered
Proposals:

Morning Edition, November 11, 2004 · President Bush says reforming social security will be a top priority during his second term. He wants workers to be able to divert some of their payroll taxes into private accounts. They could invest that money in stocks and bonds to save for their own retirement. NPR's Kathleen Schalch reports on what privatization could mean, and how it might be done.

Three Reform Models

In December 2001, a bipartisan, 16-member commission issued its recommendations for reforming and strengthening Social Security. Their report included three reform proposals, summarized below:

Reform Model 1

· Establishes a voluntary personal account option but does not specify other changes in Social Security's benefit and revenue structure to achieve full long-term sustainability.

· Workers can voluntarily invest 2 percent of their taxable wages in a personal account.

· In exchange, traditional Social Security benefits are offset by the worker's personal account contributions, compounded at an interest rate of 3.5 percent above inflation.

· No other changes made to traditional Social Security.

Reform Model 2

Currently, workers and their employers pay 12.5 percent of their income as payroll tax. Under Reform Model 2, the leading plan drafted by President Bush's Commission on Social Security, up to a third of that money could go into private accounts. This model establishes a voluntary personal account without raising taxes or requiring additional worker contributions.

· Workers can voluntarily redirect 4 percent of their payroll taxes up to $1,000 annually to a personal account. No additional worker contribution required.

· In exchange, traditional Social Security benefits are offset by the worker's personal account contributions, compounded at an interest rate of 2 percent above inflation.

· Plan establishes a minimum benefit payable to 30-year minimum wage workers of 120 percent of the poverty line.

· Benefits under traditional component of Social Security would be price indexed, beginning in 2009.

· Temporary transfers from the general budget would be needed to keep the Social Security Trust Fund solvent between 2025 and 2054.

Reform Model 3

Establishes a voluntary personal account option aimed at matching or exceeding scheduled benefits under current law. Achieves solvency by adding revenues and by slowing benefit growth less than price indexing.

· Personal accounts are created by a match of part of the payroll tax -- 2.5 percent up to $1,000 annually (indexed annually for wage growth) -- for any worker who contributes an additional 1 percent of wages subject to Social Security payroll taxes.

· Add-on contribution is partially subsidized by a refundable tax credit.

· Traditional Social Security benefits are offset by the worker's personal account contributions, compounded at an interest rate of 2.5 percent above inflation.

· Plan establishes a minimum benefit payable to 30-year minimum wage workers of 100 percent of the poverty line (11 percent for a 40-year worker). This minimum benefit would be indexed to wage growth.

· Benefits under traditional Social Security would be modified by: 1) adjusting the growth rate in benefits for actual future changes in life expectancy; 2) increasing work incentives by decreasing the benefits for early retirement and increasing the benefits for late retirement; and 3) changes to the benefit formula.

· New sources of dedicated revenue are added in the equivalent amount of .6 percent of payroll over the 75-year period.

· Additional temporary transfers from the general budget would be needed to keep Social Security trust fund solvent between 2034and 2063.

Source: 2001 report of the President's Commission to Strengthen Social Security.

Twelve reasons why Privatizing SS is a bad Idea

http://www.socsec.org/publications.asp?pubid=503

12 reasons from a group that insists that the current system we have is the only way to go and who's own links don't support their claims.

Is that a joke?

The good news and the bad. Good news is that we are living longer. Bad news is longer life is causing the financial Social Security dilemma.
solutions:
Put a cap on life span
Let the elderly poor starve
Make the elderly work till they drop.


http://www.nytimes.com/2004/12/31/politics/31benefit.html?th

Just kidding, I hope :wink:

The comment was made that SS was installed because people had no retirement income. You failed to address the main point here, which is WHY didn't they have retirement income? I can tell you why for the baby-boomers. With relatively few exceptions, they didn't save. They expected to be taken care of (apparently didn't actually look at the amount of money SS would provide) in their old age and so did little to provide for themselves, regardless of means. We have people who have earned a good wage all their working lives that have never bothered to put money away. This is not supposed to be a retirement free-for-all. It's supposed to be a back-stop for folks in dire straits. Meanwhile, the younger workers are working their tales off, knowing full well that 2 of us will be expected to support 1 babyboomer, plus saving for our own retirement because SS won't be there for us (nor should it), but the transition will be a killer. So, go ahead - all those of you who can support yourselves in retirement, by all means, collect what you feel is your due while you gripe about deficits. You're not the ones who will have to pay for it anyway.

Idaho
Have you even the slightest idea or clue regarding the economic and human conditions at the period in history when SS was adopted.
In addition I sense sour grapes in some of the responses. In that the only reason people are deriding the Social Security system is because they fear they won't get theirs and if they don't why should anyone else. Were that not so they would be in the forefront and cheering. I have no doubt that the SS system will stand up to the test of time.
On the subject of saving. True people should save, that is if they can. However, Many American live from paycheck to paycheck. Their greatest worry is to keep a roof over their heads and food on the table. Saving for them is more like a dream than a reality. In addition the baby boomers you speak of, the ones that did not save. How many millions of them lost their jobs and exhausted their savings just to keep their heads above the water? I guess it is simple solutions for simple people

The sour grapes seem to run the other way to me. Look at edgarblythe's earlier post. Screw everyone else as long as I get mine?



Really? Can you find one post or SS Reform proposal that cuts off benefits to those currenmtly collecting them? Can you find one single proposal that mandates everyone dump out of SS as it is? There isn't one single proposal that people have suggested that cuts off any benefits for anyone else.

I think your "only reason" is a fabrication of your own mind. The people that are pushing SS reform the hardest, for the most part, are the very same people that will have to bear the brunt of paying for supporting those on the existing system AND paying the transition costs to any reformed system. The people fighting reform are, in the majority, people who are already getting their monthly checks. Who's displaying the greed here?

The most simplistic solution I can think of is "let the government take care of me."

More people have televisions than indoor plumbing.

How many people make the choice to buy a sack of potatoes instead of a box of Lucky Charms?

How many people "struggling" have cable?

(How much of that guy's (or gal's) paycheck goes to Social Security and Medicaid?)

This is not sour grapes or wishful thinking; I know several social workers that have to educate (and re-educate, and re-educate, and threaten to suspend services) people about this.

I'm a pretty liberal guy, as most will know from my posts on this forum. But I think government handouts are pretty stupid; we need to be spending the money on education, job-training, home economics education, etc.

People are taking far more out of Social Security than they ever put into it. And they see nothing wrong with soaking the people still working.

Does anyone remember the story (it was a few years ago) about the ex-Senator or ex-Congressman (can't remember) trying to give back his SS check?

It was funny Seems he was a "double-dipper"...receiving pension checks from both his military service and his retirement from his government service. When he became eligible and started receiving his SS checks, it was obvious to him that he didn't need it and wished it to go "back into the pot" for those that did.

I can't remember all the details, except for smiling a lot throughout his tale of trying to return the checks and get his name removed from the SS rolls. You can imagine the redtape he had to endure

I'll try to find a link to the story.