Karl Rove....as viewed by Paul Krugman

"Lets move on to social security which Krugman mentions in passing. Krugman has written several articles declaring emphatically that there is nothing wrong with social security. On the other hand Allen Greenspan, Chairman of the Federal Reserve, who I would trust with my life, says there is a problem with Social Security and it should be fixed sooner rather than later. Now who would you trust.....Krugman or Greenspan?"

This is almost comical if Greenspan wasn't a political animal like everybody else that's working for the Bush wh. Same-o, same-o like all the generals now on active duty. They are all scared shetless on what these thugs can do - not only to your career but to your family as well.

I trust Krugman 100 percent of the time, and Bush zilch.

Why, you ask? Well, let me tell you why. There is no crisis in social security. Did you hear that? THERE IS NO CRISIS IN SOCIAL SECURITY. Social security will be funded until 2042 according to all the experts.

What Greenspan has done is to puppet what Bush is trying to sell the American public. There's a cirisis. That's not to say something shouldn't be done with social security, BUT THERE IS NO CRISIS. The longer our government waits to take action, the tougher it will be to make the necessary action to ensure the viability of social security. BUT THERE IS NO CRISIS.

Yes, I trust Krugman. You may trust Greenspan with your life if you wish. That's your choice.

BM, great thread!

A BM & a question. I really want to know. This may be moot but in 100 words more or less, what is the gist of the Bush plan?

Bush is pushing for "private accounts" that uses part of the payroll withholding to fund. With private accounts, one keeps ownership of their investment. With social security, if one dies before receiving benefits, the invested funds belongs to the government. However, if private accounts are instituted, the amount of insured social security benefits will be reduced, and there is no guarantee that "private accounts" will accumulate any value. This private account scheme does not save the government any money. Some analysts are claiming that private accounts will end up costing more to taxpayers, because social security benefits are paid by current workers, and there is no such thing as a social security savings fund.

Bush with all his rhetoric to the contrary has only one objective and that is to privatize Social Security. His attempt to sell it as a way to assure the solvency of the program is a transparent ruse.
The peons are not and never have been of any concern to Bush and his ilk.

No, I do not know tht Krugman is a lying sack of shyt. But I do know that George Bush is.




Yer right. Except that I do not know he is.

But I do know George Bush is...aAnd just because George Bush is a lying sack of shyt doesn't make him any less a liar either.

We agree.

Thanks, CI.

So each person will take this money and invest it as they see fit, eg. buy some real estate, stocks and/or bonds, brother Ralph's hot new business, up and coming dot coms, etc.

Is this the idea behind the president's plan?

JTT, I'm not sure, but I believe they will establish some rules and regulations on where those funds can be invested. You must remember, though, that when one talks about 3 or 4 percent of payroll withholding going to private accounts, you must do the math to understand how insignificant the amount will be for most wage earners. The investments would need to perform exceptionally well for most wage earners to have anything signifant saved in their private accounts to retire on. My wife and I saved 15 to 20 percent of our income into our retirement funds from very early in our marriage, so we are now quite comfortable.

Don't forget, many who had investments in the stock market during the past 15 to 20 years have lost a huge percentage of their retirement savings during the tech bust about five years ago. Some have never recovered from that loss.

Thanks again, CI. Those were my next questions or actually, observations. Since the free market has at least as many losers as winners, such a plan seems awfully risky.

With so many losers, it seems that their shorfall will have to be made up by some new type of welfare retirement funds. Six of one, half a dozen of another.

It goes deeper than that.

Basically, with Social Security, this generation's workers pays for the retirement of the previous generation's workers, who themselves paid for the retirements of the previous generation's workers, etc.

The Social Security plan has been running a surplus for many years. That is to say, the payroll taxes being deducted has more than covered the benefits being paid out.

The surplus has been saved in the Social Security Trust Fund. This fund was set up because the planners realized that when the baby boomers retired, the money deducted from payroll taxes will not be able to comletely cover the costs of benefits being paid out. That is why they set the Social Security tax rate to so that it can produce a surplus all these years. So when you hear about the baby boomers retiring in a few years, fear not-the system has been planning for this for decades.

All is not totally well with the Social Security system, however. The Trust Fund is due to be exhausted in 2042. Something needs to be tinkered with to ensure that we don't just run out of money on that date, with no contingency. But still, the situation is hardly dire-we need to plan now to prevent something happening 37 years down the road.

Incidentally, the date of the projected exhaustion keeps moving back. Back in 1994, the Trust Fund was projected to run out of money in 2029. But the Clinton years, largely, brought in additional payroll taxes, which went to the Trust Fund, so now the exhaustion date is back to 2042.

This is not a crisis, by any stretch of the imagination. But the Bush people are going to scream that it is.

Why? Because they want to introduce a plan where one third of the Social Security payroll taxes will NO LONGER go into paying benefits and the Trust Fund-it will go into individual accounts to be invested in the stock market. The person gets to keep the profit from that investment account, and should have a nice big payout when the retires. Of course, they still will be paying into the Social Security system, but at a lesser rate. As a result, when they retire, the regular Social Security payments will be considerably less. But the money frm the stock investment plan should more than make up the difference.

Sound good? It's not. Because the money from the Social Security payroll taxes paid today goes to the benefits paid to the people who are now retired, (just as they paid the benefits of the then-retired when THEY were working). Now, eliminate one third of that payroll tax-since that is what is being diverted into the individual retirement accounts-and now we have a very big problem. Where is the money going to come from to pay today's retirees and the ones about to join them? The money to pay it will have been cut by one third!

The yong people in the individual retirement plan will have a lower rate of benefits when they retire, true. But that won't happen for thirty years or more. Meanwhile, decades of workers not in the individual retirement accounts will need to have their benefits paid-and the money to pay them will be cut by a third.

This shortfall is almost certain to cause the system to collapse.

Make no mistake about it. The Republicans want to scrap the Social Security system. This "reform" is nothing but a cover to guarantee it become insolvent in a few years, at which time they will say, "It's too late to fix it now, time to get rid of it".

Hope this helps.

Ironically, the Social Security Act passed in 1935 was only possible because the Republicans secured a promise from the Democrats that the Trust Fund would not be invested in the stock market. They claimed it would rapidly grow to the point at which it controlled the market, and that such an idea was the thin end of the wedge of socialism.

Thanks, KW, it helped a lot but questions are sproutin' faster than dandelions on a hot spring day. Just one for now.

Where does this huge nest egg sit? Does it earn anything, interest wise?

He could... at golf!

Missed you Frank!

Jason

KW
That so called trust fund exists only in paper. The government will have to start making good on that paper on or about 2020. They do not have the funds and will in all likelihood have to raise taxes or borrow.
There is little doubt that SS needs some fixing. However with the Bush plan the cure is worse than the disease.
I would add further the government surpluses that were so highly touted actually were from surpluses funds collected for FICA.
The Bush tax cuts are being paid for from that source. I wonder how much of the recent lowering of the deficit also comes from that source.

Hey Jason. Where ya been? :wink: