Posted on 09/11/2011 9:18:04 AM PDT by Cincinatus' Wife
.... One...key arguments for such a system is that the stock market’s historically high returns would allow the average worker to retire with more money in his pocket than the meager returns the Social Security system now promises (and projections suggest the system may not even deliver on those promises).
The underlying reason this works is that the money in personal accounts would be invested in private sector businesses, which would use them to create new wealth. In contrast, Social Security taxes are used to finance current government spending.....
[big snip of interesting points]
To unpack this a bit, the Social Security administration is currently taking in tens of billions of dollars more from payroll taxes than it is sending out in Social Security checks. The difference is lent to the Treasury Department to finance other government programs.
...if the SSA weren’t running a surplus, then the Treasury Department would have had to go to borrow that money from private bond markets instead, which would have meant less money being invested in private-sector wealth creation. Hence, switching to private accounts doesn’t actually increase the amount of money being invested in the private sector, and hence doesn’t produce any new wealth that can be used to pay future retirees.
[snip]
If the US had a system of personal accounts in the 1990s, then elected officials couldn’t have plausibly counted the accumulation of funds in peoples’ accounts as part of a federal budget surplus. And so the deficit would have looked worse than it did.......
...one way to think about personal accounts is as a mechanism for Congress to exert self-discipline. .....It’s simply not credible to think the federal government can “save” money by lending it to itself.
And this means that personal accounts are likely to increase the savings rate.......
(Excerpt) Read more at blogs.forbes.com ...
I'd like your thoughts.
Thanks.
To unpack this a bit, the Social Security administration is currently taking in tens of billions of dollars more from payroll taxes than it is sending out in Social Security checks. The difference is lent to the Treasury Department to finance other government programs.
This isn't actually true - the Social Security program has been paying out more than it takes in since mid 2010. It's already forcing "redemption" of those special bonds - meaning 100% of the incoming taxes for Social Security, and a chunk of other Federal tax revenues, are now used for Social Security.
Medicare's been that way since May 2009. Both these Ponzi schemes are imploding now - and it's only by the Government's ability to tax and cover with other funds that they haven't collapsed.
Right. I think he makes a similar point (more in article) as to why the feds can’t use their argument to keep the status quo.
And the author’s point, that government can’t claim personal investment can’t off set government spending (???) — but rather it will FORCE government to retract spending!
What a novel idea.
The alternative is untenable.
Perry knows this. THEY ALL know this.
Perry is forcing the conversation.
A picture is worth a thousand words!
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