Posted on 04/28/2005 6:38:41 PM PDT by Brilliant
I'll have to see the proposal to see how it works before I can pass judgment on it.
In principle, the SS program is already somewhat biased toward the poor. The benefit scale is skewed toward the poor, for example. This is one of the arguments against personal accounts -- even though the rich and the poor can both put money into them, the poor could be asked to give up a bigger return than the rich, since the poor's dollar taken out of the government part of the fund has a higher 'rate of return' than the rich. I BELIEVE, but am not sure, that this particular skewing is based each year on your earnings for the year, so it two people retire and neither has any money but one paid a lot more into the program than the other, the one who paid more will get more, but the "rate of return" for that person is less than that of the poor person.
The 2nd way it is unbalanced is based strictly on how much money you make after retirement -- it is the taxation of your SS benefits if you have too much other income.
What Bush seems to be proposing is a third application of the principle. Again, I don't know what the plan is yet, but I imagine he is going to apply some of the "benefit cuts" such as the change in indexing, but apply them based on income (not sure if it is on each year's pay, or based on income after retirement). If you are going to cut benefits, but you don't have to cut them that much, it may make sense to cut them only for those for whom it wouldn't push them into poverty.
After all, if the elderly are below poverty, we are just going to give them money through other programs anyway.
But it isn't "extra" money for the poor, it is keeping the "promise" of current benefits for the poor, while breakign that promise for richer people.
Now, if you assume that the people making more money each year are more likely to do the personal accounts, then the money THEY take out of the system is money that had a LOWER rate of return. In other words, for the money they take out, they will come out even better (or less worse). IN actuality, their return in the personal accounts will be no less under either plan.
But there is an interesting twist if this program is an indexing on current benefits. The rich who put money into personal accounts will actually LOSE less by taking their money out, because the money they take out will be that "returned" at a lower rate, while they leave in the first money which is "returned" at a higher rate (kind of the reverse of what happens with indexed taxation).
So, you might see the program sold like this:
In exchange for being allowed to invest their money, the rich accept a graduated return on investment. But the more they invest privately, the less it matters to them; and the money they take out is the money that had the lowest rate of return.
Meanwhile, the poor don't have to take chances with private accounts, because this deal has guaranteed them their higher benefits if they want to stay in.
I'm not ready to sign on, but I'm not going to dismiss this, it seems to have some merit.
Remember, we are starting from the baseline of a program that should never have existed, and should by all rights be eliminated if not for the promises already made. You can't expect the fix to smell like roses; you can only hope it has less of an odor than when you started.
you have to get something for the 20 years you have worked and paid SS. assuming you plan to work for 15+ more years, you would opt into the private account and in exchange, would draw some lowered amount from the SS fund you have paid into for 20 years. You can't walk away from SS with nothing, but you can walk away with a lower amount in exchange for your ability to divert some current and future contributions into your private account.
you are caught in the middle given your age - you have to be able to drink from both sides of the well.
I am as sick of socialism, welfare, and Democrat-style redistribution programs today as I was 20 years ago. What's with Bush?
I hope his SS plan die in Congress too. He didn't sound overly enthusiastic about voluntary private accounts, if he did, he'd have mentioned that any SS reform bill that doesn't include personal accounts will be vetoed.
I agree with you.
Once again, those who work their behinds off, think ahead about their retirement, save and invest routinely, "do without" from time to time, and comport their lives in a responsible manner will only see their money confiscated from them by big government so that it may be handed over to society's bums, losers, parasites, and other Democrats.
No thanks, President Bush.
Give everyone back the money of what they put into the system. Period - no make that exclamation point.
George, come back home and give us a modicum of conservatism.
That is absolutely untrue. I wish the President had the guts to stand up and declare Social Security what it is. Yes, private accounts is a baby step in the right direction. If the President said what it is said here that he said, then I don't like it.
Social Security is nothing but a tax; the only thing that it promises is to take your money. There is a welfare program for senior citizens by the same name, but the two are connected only in tenuous political rhetoric. The welfare program will end in due course before I become eligible for these welfare payments. The tax, nevertheless, will continue until time immemorial. If the government has taken your money, it has fulfilled its Social Security promises and obligations toward you.
The Federal Government doesn't have the assets to do this.
PEOPLE SS is already a welfare program. This is nothing new. Don't let the media fool you any longer. I would give up the whole thing NOW if I could. But I would also agree to a samller INCREASE in the future welfare monthly check for any amount of personal account NOW. Get it. And I am 46. I want some freedom from the terrible system. If you do not realize the above then just pout and wait for a hugh increase in pay roll taxes AND a future cut in your welfare check cause that is the ONLY other way to keep the scheme going. Plus you may have to wait till age 70 to be so blessed.
We should stop taking 15% of everyone's paycheck.
GOOD! Right now it's a wealth transfer program plus a horribly bad retirement "investment" with guaranteed negative returns. Get rid of the latter aspect completely, just pay welfare to the poor elderly (which we have to do one way or the other), and you'll cut costs and government interference drastically.
Yes, Social Security has replaced welfare.
I have to admit that I personally signed up a schizophrenic who had never really had a job and couldn't get one.
When he went for his interview he was so delusional he told them he was self employed as a landscape artist.
I agree 100%!!!
First, SS will absolutely fail for our children unless something is done. My children are savers and won't need it anyway, but that's more reason to be against a tax increase that would force them to support those who don't save.
Second, it isn't actual means testing. It's just using a different index to compute benefit increases. Unless something is done, ALL benefits will be drastically cut to the point where old people will be living in poverty and wealthy people will be living on their savings.
The more you buy into the talking points of the DNC, the more it becomes a self-fulfilling prophesy.
Republicans have wanted to lower the amount of this yearly automatic "cost of living" raise in benefits by indexing the raise to prices instead.
President Bush wasn't proposing to cut benefits to richer Social Security recipients. He was proposing limiting the yearly raises they receive to price indexing.
This is half a loaf proposal.
We can't get the whole loaf so we are going for a half loaf.
Without knowing more details I can't say much but the idea sounds good.
Man ....I dont know.
I was pretty sold on the idea of private SS accounts...thats one of the things that republicans have strongly campaigned on.
Now we have to give it up...why...was a bill introduced and voted down?
This new plan seems a bit complicated to the non CPA type...it makes me suspicious. If Washington does a bait and switch...and complicates an existing tax or revenue system in the hopes of 'reforming it', or 'saving it', bad things can happen..
The middle to upper middle class (especially those boomers 5-10 years from retirement) of taxpayer ends up getting screwed. With this plan...maybe people wont know they're getting screwed until they sit down with their accountant later on and he explains it all to them.
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