Posted on 09/28/2004 7:27:13 AM PDT by The Great Yazoo
Would you sign a contract that enabled the other party to change the terms of that contract at will, while you could neither stop him nor make any changes of your own? Probably not. Yet that is exactly what happens when you pay money into Social Security.
No matter what you were promised or at what age you were supposed to get it, the government can always pass a new law that changes all of that. But you still have to pay into the system.
A private annuity plan run by an insurance company is legally required to pay you what was promised, when it was promised, and to maintain assets sufficient to redeem its promises.
One of the few issues on which Senator John Kerry has taken a stand and not changed it (yet) is Social Security. He has said: "I will not privatize Social Security."
This has long been the position of liberal Democrats, and John Kerry's voting record in the Senate makes him one of the very few Senators more liberal than Ted Kennedy. That is the ranking given by Americans for Democratic Action, a leading liberal organization that ought to know.
Why are liberals against letting people put part of their Social Security payments into private investments?
Risk is one of their arguments. Al Gore incessantly repeated the phrase "a risky scheme" during the 2000 election campaign and risk still seems to be the big objection to letting people put their own money where they want.
Some liberals may actually believe that politicians know what is best for you better than you know yourself. That is, after all, the philosophy behind many other government programs.
Another reason for liberal opposition to private investment of Social Security payments is that it deprives them of control of billions of dollars that they have been spending from the Social Security trust fund for years. They can buy a lot of votes with all sorts of giveaway programs, financed by money taken from Social Security.
As for the risk of making private investments, that might be a real concern if people were putting their money into commodity speculation or other volatile markets. Most people have better sense and privatization could limit where Social Security premiums could be invested.
Although the stock market bounces up and down from day to day, people are not investing today in order to retire next week. They begin paying Social Security premiums when they first get a job and they retire decades later.
Stocks are far less risky in the long run than they are in the short run because the ups and downs balance out over a long period of time. It is virtually impossible to find any 40-year period in which the stock market has not paid a higher rate of return on your money than you get from Social Security.
There are some mutual funds that simply buy a mixture of the stocks that make up the Dow Jones average (or Standard & Poor's), so that their clients will have the kind of return on their investments that the stock market as a whole has. They don't make a killing but they don't get killed either.
How did Social Security get into its present mess in the first place? Because politicians made it the "risky scheme" that they now claim privatization would be.
The same political expediency which caused Social Security to be called "insurance," in order to get public support, guaranteed that it would be nothing of the sort. Unlike an insurance company, Social Security has never had enough money to pay for all the pensions it promised.
Instead, Social Security has been run like a pyramid scheme, where the first people to pay in get money back from the second wave of people who pay in, and the second wave get money back from the third wave, etc. This is so risky that pyramid schemes are illegal -- except when the government does it.
They have gotten away with this thus far because the first generation covered by Social Security was an unusually small generation that was followed by the unusually large "baby boomer" generation. But when the baby boomers retire, the pyramid scheme will no longer bring in enough money to pay for their pensions.
Nothing is more risky than depending on politicians.
Thomas Sowell ping..........
At the very least I should be able to put just a portion of the money I pay in to be put into government bonds. What is wrong with that? How can the Libs argue with investing in the governemnt?
We should have the option of what Galveston TX did.
How Galveston Opted Out of Social Security
http://www.libertyhaven.com/politicsandcurrentevents/healthcarewelfareorsocialsecurity/galveston.shtml
The Republicans need to alter Social Security, but it has to be done incrementally. The best first step would be to give title to the underlying assets to each American. Each person should have ownership of the "investments" made on his behalf, at least after death.
The Republicans need to alter Social Security, but it has to be done incrementally. The best first step would be to give title to the underlying assets to each American. Each person should have ownership of the "investments" made on his behalf, at least after death.
Press once Schultze.
People sign up for marriage contracts all the time, even though the government can and does change the terms without the consent of EITHER of the parties to the marriage. Time to rebel against ALL these contracts with the government.
That said, being that politicians pander to the large senior voting bloc, I expect to be living under a bridge someday just to subsidize the maintanance fees on their condos.
Agreed. A slow but steady movement to a new hybrid system.
I'd get a better return on my investment buying baseball
cards.
Good point about marriage contracts being altered or amended by the government from time-to-time without consent. But at least with marriage contracts, the parties themselves can alter the consequences of governmental mettling through the use of pre- and post-nuptial agreements. That is an option not afforded we subjects to the federal social security system nanny.
Correction: The real reason...
Or...would you invest your retirement savings in a plan that showed a -1% long-term return?
Federal Employees have the option of investing a portion of their income in the Thrift Savings Program( http://www.tsp.gov ). If they can do something like this, why not the rest of the population?
Ping list for the discussion of the politics and social aspects that directly effects Gen-Reagan/Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
Measure twice, cut once, or something.
What about when a couple with a dependent spouse (usually the wife) moves from one state to another, from a "community property" state to one that isn't? The marriage already occurred, and given the laws of the state where the couple married, they didn't feel a pre-nup was necessary. But now, say with the husband having finished medical which the wife worked to put him through, the national residency matching system is forcing them to move to a non-community property state. And the husband secretly isn't so sure any more that the marriage is forever, and throws cold water on the idea of doing a financial agreement (or more likely doesn't even have to, since probably neither of them is even aware of the different laws in the state they're heading to) -- so the wife is totally screwed, when hubby finds a cute young nurse a couple of years down the road, long after residency in the new state has been established.
This sort of thing really does happen to people, and it's high time that government be booted out of the marriage business. The traditional legal concept of marriage dates to an era when women were legally chattel, and were not able to enter into any kind of contract. That's how the government got to be a party to the marriage contract -- to protect the poor helpless females who weren't full fledged citizens. It just doesn't have any applicability to modern society.
" If it's illegal for private citizens, it ought to be illegal for the federal government."
Yes, but the government employees don't have to depend on Social Security, they have a much more lucrative disability, medical, retirement scheme. Think of it...the people who approve or refuse to approve your claim, never have to depend on that same system. That alone makes it intolerable.
Privitize SS. The recent totalization agreement with Mexico by the State Dept. and the SSA will give Social Security to ILLEGALS, who will only need 6 work credits to qualify. You and I need 40.
At least the government could put some equity in this scheme.
Don't hold your breath.
Social Security is a ponzi/pyramid scheme. It's about time liberals faced up to it.
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