Posted on 02/13/2005 4:11:07 PM PST by SpinyNorman
Bush Social Security proposal a huge scam Sunday, February 06, 2005 By MICHAEL MEEROPOL
The Bush administration has thrown down a challenge to those of us who want to defend Social Security from the "privateering privatizers." (I call them that because if Congress guts Social Security to create private accounts, the financial services industry will skim 20 percent right off the top on all investments, whether the markets go up, down or sideways.)
The administration wants us to believe that Social Security benefits are doomed to be lowered by some future Congress, whereas with privatized pensions the individual will own the pension he or she has paid for.
Legally this is true.
However, whereas it takes an act of Congress to change Social Security benefits (and every member of the House of Representatives who votes to cut Social Security benefits will have to face the voters less than two years later), it just takes an economic downturn (or some serious dishonesty by some executives) to destroy the value of your personal pension.
The Enron employees owned their 401K accounts, and after Enron went bankrupt they had nothing.
The young workers of today are being asked to trade their Social Security guarantees for a lottery ticket.
Under private pension plans, if the company or the plan goes bankrupt (and most private pension plans today are grossly underfunded) the "owners" of those pensions have to get in line with all other creditors (banks, vendors) and let some bankruptcy judge determine how much of their pensions they actually get to collect - if any!
Under Social Security, Congress has the power to adjust taxes in order to keep the promises made.
Finally, let's remember our benefits are not limited to a lifetime pension. They also include survivors' benefits for children and spouse, and also disability benefits.
Most important, once we start collecting, payments are automatically adjusted upwards to compensate for inflation. With private accounts, the day you retire you have a chunk of accumulated savings which you have to hope will last through retirement. If inflation returns at even moderate rates and your investments don't keep up, too bad!
But your broker will collect when you cash in your last share of stock, no matter what its value.
To scare us into trading the guarantees for a lottery, President Bush asserts that when today's young workers retire there will not be enough money to pay them what they were promised.
This is the big lie of the scam being run on us all. There will not be enough revenue coming into the Social Security trust fund at current tax rates to fully fund promised benefits after 2042. (That's right, there's no problem till then; you can look it up in the Trustees Report.)
However, in 2042, workers in the U.S. will be earning 30 percent more in wages than today (that's over and beyond inflation) and either an increase in the payroll tax of 2 percent or faster economic growth than projected (these projections are highly uncertain anyway) would fix the problem.
In other words, there will be plenty ofmoney to pay future retirees what they were promised.
Meanwhile, with private accounts, the quantity of your retirement nest egg will depend on the timing of your retirement. Those who retired in 2000 ended up with a lot more egg in their nests than those who retired in 2002 (and many were forced to change plans and delay retirement!).
Do not be lulled by the siren songs of the privateering privatizers. All they want is your money.
Michael Meeropol is chairman of the Department of Economics at Western New England College in Springfield.
Here is the best part: beyond the fact that this ultraliberal fool somehow performed a "Wade Churchill" and smarmed his way to the top of the Dept. of Economics of WNEC, he is one of the sons of Ethel and Julius Rosenberg! Yes, those Rosenbergs.
Normally, I would not lay the sins of the parents on the child, but Meeropol has gone out of his way to use his credentials to becoms a semiregular contributor to the "Republican", not that it needed any more liberal contributors.
One can only wonder what sort of economics he teaches.
Academic Bill of Rights anyone?
The only thing I agree with in this whole article is:
"the financial services industry will skim 20 percent right off the top on all investments, whether the markets go up, down or sideways."
That better not be the way this program is set up. We already have a Medicare drug bill that subsidizes our drug industry and a farm bill to subsidize our farms, we don't need to turn our personal accounts into subsidizing the financial services industry.
Even if that were true, which it is not, it's better than having congress plunder 100% of everything to waste it on pork .
WARNING! If you have children who want to major in economics, DO NOT send them to Western New England College.
This guy is a complete fool and patsy of the socoalist 'Rats. He either has absolutely no understanding of capitalism or he is a socialist who would rather see everyone poor than some rich. Which is basically the stance of the 'Rat Party. The party elite being exempt from that, of course.
bump for later
What I don't understand is how is it that state employees in Ohio have a system that is not "pay as you go" or "insurance," but rather is invested in the markets. You never hear the politicians worrying that the teacher's pensions will not be there. Why? Because they are so generous in reality!
I have never understood the argument about accounts losing all of their value. People would not be able to invest 100% in Enron.
Isn't the Meeropol name connected with Julius and Ethel Rosenberg?
"However, in 2042, workers in the U.S. will be earning 30 percent more in wages than today (that's over and beyond inflation) and either an increase in the payroll tax of 2 percent or faster economic growth than projected (these projections are highly uncertain anyway) would fix the problem."
Why 30% higher wages above inflation by 2042? Bald assertion, no backup.
Economic growth 2% higher than projections would require what? Not if the Democrats give us higher taxes and a bigger government.
Rosy economic predictions in support of socialist schemes are presumed to be accurate. It was in the memo last week.
A very kind New Jersey couple named Meeropol adopted the Rosenbergs' sons, Michael and Robert, after the parents were executed, and the boys took the name. Both are very hard-core radicals, I think Michael is the older. This is one case where you don't have to think too hard about why someone becomes a radical leftist.
This is pure deception.He is trying to equate defined benefits pensions to the 401k style private accounts that are being proposed.
His analogy is more related to the Social Security system that we have now which promises a benefit but will not be funded to meet the promise.
I would take issue with his statement that these private pension plans are underfunded.He gives no evidence of this.I believe there are numerous regulations about funding and administering both traditional as well as 401k style retirement programs.
It is not just state employees in Ohio. City, county and state employees pay into PERS, Public Employees Retirement System. It includes tax deferred annuities etc. Teachers pay into STRS, State Teachers Retirement System. Most importantly CONGRESS pays little into SS. So, Teddy sitting there on Capital Hill spent his first 20+ years not investing a dime into the system. I believe they have only been contributing a small amount into SS since '84 maybe? What is good for the goose, don't ya know.
In this case, the apples don't fall far from the horse. I scratched around some and have come to the conclusion that the Rosenbergs' sons are golden at Western New England College.
This Michael Meeropol IS the son of the Rosenbergs.
FWIW, the average SAT at Western New England College is 1061, and tuition costs are unavailable (if you need to ask the price...) but average financial aid is $8,477. It claims to have 3020 students. Oh, and it has a law school!
To show how out of touch I am with SAT scorea, is 1061 good, bad, or just so-so?
Yep! Their son Robert was raised by the Meeropols, so he was known as Robert Meeropol. I assume Michael is either a brother or a son.
That better not be the way this program is set up.
It won't be. And that line proves that this "economist" is out to do a hatchet job on private accounts.
The model for private accounts will likely be the Thrift Savings Plan (the one that federal government employees, including Congressmen, use in place of Social Security).
The employee has a choice of five different funds -- graded across the spectrum from long-term growth to secure income. Younger employees would be expected to direct most of their account toward the long-term growth fund, gradually shifting the emphasis of the portfolio over time until most was in the secure income fund (mostly bonds) immediately prior to retirement.
The management fee on each of these five funds is .03% -- 1-and-a-half percent of what the numbskull "partisan economist" is claiming.
In other words, it's a lie...
"The model for private accounts will likely be the Thrift Savings Plan (the one that federal government employees, including Congressmen, use in place of Social Security)."
Bingo!
See www.tsp.gov for details on how the system works, and how it has performed in it's 16+ years of existence! Then you will know why you do not hear a single federal employee clamoring to get out of TSP and back to full SS!
My letter also asked: "Given the scare stories coming out of Meeropol and his ilk, it is fair to ask him if he has 401Ks or other retirement investments in the stock market. If he does, he is a hypocrite."
Further, you should be aware that Massachusetts state employees are NOT in the Social Security system. I don't pay a dime to SS as a Mass. employee, and neither does Meeropol, yet it is good enough for Joe Blow.
Among the critics of SS Reform, there is a distinct whiff of elitism. They don't say it directly, but an underlying premise of their resistance is that "the masses can't be trusted to handle their money."
Just like, given a tax cut, they can't be trusted to spend it "properly". They'll go out and buy a muffler...or something.
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