(Social Security) Participants Would Forfeit Part of Accounts' Profits

[kskiska]

Under the White House Social Security plan, retirees who opt to divert some of their payroll taxes into private accounts would ultimately get to keep only the investment returns that exceed the rate of return that the money would have accrued in the traditional system.

The mechanism, detailed by a senior administration official before President Bush's State of the Union address, would hold down the cost of Bush's plan to introduce private accounts to the Social Security system. But it could come as a surprise to those lawmakers and voters who have thought of these accounts as akin to an Individual Retirement Account or a 401(k) that they could use in its entirety upon retirement.

"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren," Bush said last night. "And best of all, the money in the account is yours, and the government can never take it away."

The plan is more complicated. Under the proposal, workers could invest up to 4 percent of their wages subject to Social Security taxation in a limited assortment of stock, bond and mixed-investment funds. But the government would keep and administer that money. Upon retirement, workers would then be given any money that exceeded inflation-adjusted gains over 3 percent.

more…
http://www.washingtonpost.com/wp-dyn/articles/A59136-2005Feb2.html

[nadinbrzezinski]

1. Yep Chileans were promised the same

yep ask them if they are happy...

[cthrumatrix]

17. when you retire --- you can't even take a "lump sum"... lifetime payments

Highlights of the Proposal

• ELIGIBILITY: People born before 1950 would not be affected.

• INDIVIDUAL ACCOUNTS: People born in 1950 or later could divert up to 4 percent of income subject to Social Security taxes into individual accounts, up to $1,000 a year -- a cap that would be phased out.

• WHEN: The accounts would be phased in between 2009 and 2011.

• OPTIONS: Workers would be able to choose among several stock, bond and mixed-investment funds.

• LIMITATIONS: Participants would have no access to the accounts before retirement and could not borrow against the balance.

• AT RETIREMENT: Participants would be required to buy annuities to ensure steady payments out of the accounts over a lifetime.

http://www.washingtonpost.com/wp-dyn/articles/A58731-2005Feb2_2.html

[mikeytherat]

19. And if you die, you forfeit EVERYTHING

http://ap.tbo.com/ap/breaking/MGBEOOZ9Q4E.html

<snip>
All workers choosing to set up a personal account would be required to purchase an investment that would combine with their monthly government check to assure income above the federal poverty level during retirement.

Any funds that remained available under these annuities after death would go to the Social Security program; the money could not be inherited. While that would assure retirees a monthly check while they live, it also could undercut what polling shows is one of the most persuasive arguments on behalf of personal accounts - that they can be inherited.

The Chimp lied through his teeth.

mikey_the_rat

[salin]

21. While staring gape jawed at the fact that they KEEP the entire

investment (pay in 40,000 - they keep it all - you only get access to the earnings on that and only the earnings above 3%)... I missed the point completely that you point to. This has become his big speaking point.... you can't currently pass on ss to kids - but under his plan, says he, you can do with it what you want because it is yours...

Will the bushbots ever "see" this lie, they seem so immune to comprehending that he constantly lies straight to their faces.

[mikeytherat]

27. I don't see how folks can miss these big LIES

as they are right out there in print (AP wire, Wash Post, etc.).

It's not hidden, it's right in front of them. I guess it's the old magician's trick -- get you to look focus on something else so you don't see the trick. Me? I watch where the magician does NOT want my focus.

mikey_the_rat

[cthrumatrix]

28. the GD media better report this...he lied to us in the SOTU....

[cthrumatrix]

23. can he be impeached for lying in the SOTU ??????

[Mugsy]

80. Lying in SOTU is Lying under Oath.

According to the Constitution, the SOTU is a legal proceeding which the President "is required by law" to give each year.

By definition, a "legal proceeding" takes place "under oath"... in this case, "the oath of office" and therefore, lying "under oath" is perjury, a Federal Offense for which President Clinton was impeached in 1999.

Despite the big Iraq/Niger/Uranium lie in the 2003 SOTU, and now the "inheritance" lie about his SS reform proposal in 2005, as long as the Republican Party is in charge, no investigation into these crimes will ever take place.

DEMOCRATIC MAJORITY IN 2006!

[Clark2008]

94. According to a couple of pundits, many of the moderate Republicans

aren't liking this plan - and the other conservative agenda items.
Snow, McCain, et al...
It could be that many will jump ship, become Independents, vote with the Dems and, in effect, produce a Democratic majority BEFORE 2006.

Warms your heart, doesn't it. :)

[KoKo]

72. A C-Span caller said Bush's program good because she can leave it to

her daughter if she died, but she couldn't with regular SS! I almost fell on the floor. I guess the Repug Talking Points had been sent early to her...

[amandabeech]

124. Another AP story puts it a little differently.

If the flow of total benefits coming from both traditional Social Security payments and withdrawals from personal accounts dropped the retiree below the national poverty level, money from the personal accounts would have to be placed in annuities, which are investments yielding fixed payments during the holder's lifetime. However, such an annuity would not qualify to be part of an inheritance - and any funds that remained available under these annuities after death would revert to the government or annuity issuer.

http://hosted.ap.org/dynamic/stories/S/SOCIAL_SECURITY_GLANCE?SITE=FLTAM&SECTION=HOME&TEMPLATE=DEFAULT

The paragraph seems to suggest that if your social security check plus withdrawals from your private account are equal to or greater than the federal poverty level, then your heirs will inherit whatever is left.

The upshot will be that people who are poor will not be able to deliver an inheritance to their heirs, however small, because they will be forced into annuities.

The question here also is whether the annuities will be the same for men and women even though women live longer. Also, will the annuity remain for the surviving widow/widower, or will the widow/widower just be out of luck, and the widow generally left in poverty with only her annuity which is likely to be smaller because women generally earn less notwithstanding any actuarial gender difference which might further decrease a widow's annuity.

[Occulus]

107. wow

"LIMITATIONS: Participants would have no access to the accounts before retirement and could not borrow against the balance. "

In other words, it is NOT LIKE THE TSP AT ALL. TSP being the thrift savings plan, which is what federal workers have. However, after something like three years of investing in the TSP, you can borrow against it. It's your money!

I guess Bush wasn't serious about people owning their retirement accounts. What s shock!

[baby_bear]

2. Translation: He lied through his teeth

<snip>
"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren," Bush said last night. "And best of all, the money in the account is yours, and the government can never take it away."

The plan is more complicated.
</snip>

Ahem. The plan is more complicated? How about: Bush presented it in an entirely misleading, if not entirely fabricated, manner.

Stay tuned for more bogus and "the sky is falling" messages, coming to your city soon.

b_b

[cthrumatrix]

16. govt. takes 3% off the top ---- sounds like "mafia" to me ---is this legal

[salin]

18. Not just that... THEY KEEP THE INITIAL INVESTMENT

you have no access to that $40,000 that you invested over the years.

That $ you get to "pass on to your family after you die".... is ONLY those earnings above 3%. Over the time frame if your earnings were 3.6% - not much return for that investment. If your returns were 2.9% You get NOTHING. Not the initial $40,000... NOTHING.

[cthrumatrix]

20. $$$ 4.5 Trillion in costs thru 2028 ....... who gets that money ????????

In a nod to lawmakers worried about the budget deficit, the White House will also hold down the initial cost of the Social Security plan by phasing it in over three years, beginning in 2009. The administration official said funding the individual accounts would cost $754 billion through 2015. But because of the phase-in, the personal-accounts system would not be fully effective until 2011.

In its first 10 years, 2009 to 2018, the system would cost more than $1 trillion, Furman said. Between 2019 and 2028, the cost would jump to about $3.5 trillion, he said.


snip

http://www.washingtonpost.com/wp-dyn/articles/A59136-2005Feb2.html

[davhill]

29. In 2009 Democrats will be in power

And we can reverse the whole thing. Or we can do what ever we can to survive among the shards of the Bush economy.

[cthrumatrix]

31. this deserves a MSM blast .... he lied in the SOTU and to the people

[shanti]

68. not so fast

they have the voting machines on lock and don't intend to relinquish power.

[whistle]

3. A lot of double talk out of Bush's mouth, if the government....

....administers the money, it ain't yours, if the government can never take it away how does the money pass onto your children? What right does Bush have dictating such a program without ever consulting with experts, having open discussions and placing all the facts before the people? It is a total shell game.

[Erika]

4. A total shell game

Any profits over 3% would go to the financial institutions. Their charges would be taken out even prior to the 3%.

Bush is a criminal.

[On the Road]

85. Wait a Minute,

the management fees are in ADDITION to the 3%? So if you need to make 3 PLUS management fees for your account to be worth anything?

[FlavaKreemSnak]

5. so after all those years they get to keep most of what your savings earned

as a present, and you get a little bit.

And if you happen to make really good investments and have a lot in there, when you retire you won't be allowed to take it out and invest the whole thing to make it even more. They will drip some out to you, while it still earns more interest that they get to keep.

Sweet.

[Mokito]

6. This is a f*ck*ng rip off!

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.

With a 4.6 percent average gain over inflation, the government keeps more than 70 percent. With the CBO's 3.3 percent rate, the worker is left with nothing but the guaranteed benefit.

This is a rip off if I've ever seen one. You would be better off if you just stuffed the $1,000 under your mattress every year. Then at least after 40 years you end up with $40,000.

Where do they come up with this sh*t; save money to end up with LESS money than you saved!?

Or am I looking at it the wrong way?

[itzamirakul]

9. Your response is exactly the message we need to

spread by word of mouth to EVERYONE that we know. It has to be made persoanl in dollars and cents and not the high-flying rhetoric that Bush is giving out of dreams of pie in the sky retirement funds.

I, for one, am copying your response to pass on to my friends as a talking point.

Thanks...

[salin]

12. Think about it.. Invest $40,000 - but only get HALF of it back

and that is if you get a decent rate of return.

You can invest $40,000 - and take NOTHING out. They KEEP the entire investment and only pay WHEN the return is higher than 3% and you only keep the amount that is higher than 3%.

[lebkuchen]

160. Insider trading would take care of the profit margin

Wish I were ten years older right now--the new system wouldn't affect me, then.

[SammyWinstonJack]

47. Anyone post this at FReepland?

Think this will piss off the bush**bots? Nothing else he's done to date has, however, this amounts to the government stealing their money after forcing them to invest it. Will this finally wake the adoring bush**bots?

[cthrumatrix]

50. it would help if the MSM had a damn spine and reported this

[SammyWinstonJack]

87. Fat chance of that happening

Those overpaid bush** butt kissers don't have to worry about SS benefits upon retiring. They didn't care about innocent Iraqis and US troops dying in bush** illegal invasion, they certainly won't care about American workers getting the shaft on SS. How do they sleep at night?

[byronm]

49. You would get your investment of 40k back

And only accrue the difference in earnings. So if you earned 4.6 rate of return and the government took its maintenance fee of 3.3% off the top you would basically get your distributions amortized at a rate of 1.3% return.

Less than what the fed makes on interest while in a safe bank account i'm sure.

so i think the worker would get 78,700 and the government would get 21,100 in the end.

remember though that your monthly distributions would be taxed as well. So if you retire for 10 years and your taxed on your distributions that 78,700 isn't going to last you or replace the benefits you get from todays social security offerings.

Also this money assumes that your also being taxed the other 75% of your fica to pay for todays retiree's and not your own. It would essentialy be 2048 before the kids of america have the 40 years of full distributions to be able to amass such an account.

anyhow, the entire idea is flawed because we don't elect corporations to run our government, we elect people. Our government shouldn't be in the business of creating profit but being responsible to the people of america.

[htuttle]

63. No, you wouldn't get your 40K back

Read the plan closer. You do not get your principle back like in a 401K.

"so i think the worker would get 78,700 and the government would get 21,100 in the end."

You might think that, but you'd be wrong. Again, read the article closer.

[byronm]

150. I've read it, and i think its misleading

It's very misleading and was just corrected.

Your 4% would be $1,000 dollars over 40 years. That equates roughly to 100k. Because you took 4% as personal funds and its assumed the adjusted rate for the money you took from "social security" towards your private account would be roughly 79,000 dollars, your total benefit from the ""private"" account is only 21,200 or whatever.

That means you get your normal social security benefits + 21,200. What they do with that money is beyond me. I'm sure it will be taxed as capital gains when you withdrawl it.

Whats really scary, is that these numbers are only good for people making a boatload of income already.

If a dual home income for the average middle class is 60k a year, there is no way your 4% contribution will equal 1,000/year and to rely upon a system that needs 3% yield atleast (or total collapse) to benefit for such little money in the end result is pretty sad.

If families just invested that 4% in a private IRA and took 80% social security benefits through there lifetime by reduced fica the would have 80,000 more dollars than this program could ever provide and the risk wouldn't be on the taxpayers shoulders but on true capitalism.

[Skinner]

67. No. That's the exact opposite of what the article says.

Here's the quote:

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.

The $40,000 invested is a loan from the government, and you have to pay it back with interest.

[Skinner]

66. LOL. That is spot-on.

Invest 40,000 -- end up with $21,000. I can't wait till the American people hear this. It's a killer.

[TahitiNut]

84. The flip-side screws EVERYONE.

The $1,000 'invested' each year is apparently treated as a loan from the Trust Fund. Let's say, at the end of that 40 years that the account is only worth $60,000 due to failures in the market. That means that there's a loss in the Trust Fund in the amount of $18,700. The pirate account holder gets nothing and the Trust Fund incurs a loss that reduces benefits for all other current retirees! Now, whether they limit that loss to retirees or require that current taxpayers make up the difference, that means that the government is, in effect, hammered by market downturns in a compounded way. This, in effect, amplifies the impact of national economy downturns.

[realFedUp]

102. Can someone file it down to talking points please

I understand the basics, but can someone
do some real concise talking points against this
that we can send out...TIA

[nodictators]

143. It's even more of a rip-off than that:

Middle-aged people under 55 are really screwed by Bush:

From a WashingtonPost article on MSNBC.com:

If instead, workers decide to stay in the traditional system, they would receive the benefit that Social Security could pay out of payroll taxes still flowing into the system, the official said. Which option would be best is still unclear because the White House has yet to propose how severely guaranteed benefits would be cut for those with individual accounts.
http://www.msnbc.msn.com/id/6903404/

Since so much money is to be diverted into the investment accounts, there won't be much money flowing into Social Security. So, people who keep a traditional Social Security account may have severe cuts in benefits too.

Bottom line: With the investment accounts, a person has to exceed a 3% inflation-adjusted return to have any gain. As noted in the post above, that's hard to do. They also get a severe benefit cut.

With the traditional account, there will be a bigger shortfall in the money flowing into Social Security than if nothing at all were done to "fix" SS. So benefits will be cut there too.

Bush is screwing the baby-boomers the most. They get big benefit cuts and get no good options either.

[TahitiNut]

7. It's welfare to investment bankers and large stockholders.

The worker gets screwed blue ... but large pension funds might love it since they already hold large amounts of stock that would be inflated. The "Greater Fool Game" get the perfect player: a totally brainless one.

[KT2000]

8. OK - now I get it

what a hustle!

How in this system are African-Americans supposed to do better because they do not live as long?

Sounds like he has lied about everything.

[Judi Lynn]

10. It's not selling yet with the Ohio GOP.

Ohio GOP lawmakers cautious on Bush’s plan

Thursday, February 3, 2005 By PAUL M. KRAWZAK Copley Washington

WASHINGTON — Though they are natural allies of President Bush on many issues, area GOP lawmakers reacted cautiously to new details of the president’s controversial plan to strengthen Social Security.

Reps. Ralph Regula, R-Bethlehem Township, and Bob Ney, R-St. Clairsville, stopped short of supporting the president’s proposal, which Bush began to flesh out in his State of the Union speech Wednesday night.

Democrats meanwhile criticized the plan, which they consider risky and premature.

Although Regula believes Congress ought to address structural weaknesses in Social Security now rather than later, he isn’t sure that Bush’s still-emerging proposal would prevent the retirement program from running out of money.

“I don’t know for sure what his plan is,” he said. “I haven’t seen a bill. This is a very sensitive subject. You want to be sure that people’s rights and the things they depend on are taken care of.”
(snip/...)

http://www.cantonrep.com/index.php?Category=9&ID=206202&r=1&external=&newCookie=yes&userID=110924
(Free registration is required)

[salin]

11. So its very possible that one diverts money from the system...

thereby lowering the overall payments out by shrinking the dollars coming into the system.... but due to lower than the projected rates of return - and the fact that they NEVER get back their actual investment ... that person is only able to draw on regular social security, AND they can only draw a portion of that out (since they diverted the rest) so now they only get a portion of an already reduced payout. Oh - what a deal.

And who invests in something that eats up the investment and that only pays on the amount of earnings over a certain amount... even a decent 4 % gain becomes a 1% that one can keep? Even in these days of low interest rates in savings accounts - those sound like a better deal.

Sounds like they are designing a fool's gold social security program. Can we call it something like that?

I trust the real social security... I don't need fool's gold social security...

[davhill]

33. Privatization is Just a Cover

The plan appears for inflation to come roaring back. Benifits will not be reduced but will be paid in worthless dollars.

[0rganism]

13. Holy crap, Batman, it's not even an extended 401k!

Talk about your fuckin' rip-offs from hell.

This is even more blatant than I thought it possibly could be.

Unfortunately, bushco's low opinion of the American intellect has proven to be accurate more than once. If he could sell us a bogus war, I bet he can sell this snake oil, too.

[LizW]

24. Rip off from Hell

Exactly! And it's not that Bushco thinks Americans are stupid. He KNOWS he has to lie and hide the truth to get this heist through. If he told the truth, people would say, "Screw that!" So he lies through his teeth about what the plan really does. (See: Medicare so-called prescription drug "benefit")

I am amazed that it's even worse than we thought. And yet I shouldn't be surprised.

[truthisfreedom]

14. bushco=baitandswitchco.

lies are them.

[auburngrad82]

15. So this is the Bush Administration's "alternative reality"?

Don't blame me, I didn't vote for him...

[cthrumatrix]

22. If your account grew 4% yr ---- the govt gets 80% of the money !!!!!!!!!!

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.

http://www.washingtonpost.com/wp-dyn/articles/A59136-2005Feb2.html

[salin]

26. so if it were spread out over, say, 10 years (the payout)

that "investment" would yield one $176 a month. Wow! And that is for an account that actually gives some earnings!

[cthrumatrix]

32. and when you die.....your heirs get ZERO...he lied when he said they

get an inheritance

Isn't that grounds for impeachment.

[booksenkatz]

25. I should be able to claim it RETROACTIVELY as a loss on my 1040

As I said in another thread: if they're going to redefine the rules RETROACTIVELY and say that the money that my husband and I have paid to FICA for 30 years is "ours" yet we won't be able to see a penny of it, then we should be able to say, ok, we've RETROACTIVELY lost 30 years of an investment of "our" money, therefore we should be able to claim it as a huge loss on our 1040 this year.

Those of us who are not quite 50 are fucked without so much as a kiss. But hell, maybe our 5-year-old son will grow up and land a fantastic job that hasn't been outsourced to India and will throw down some food to us once in awhile (we'll be living in his basement).

[KayLaw]

30. Not just "not quite 50"

I'm 51 and am getting screwed royally, too. I don't even have a job anymore. I trusted these guys--I really didn't have much choice, did I?--when Ronald Reagan and Alan Greenspan raised my FICA deductions through the roof, and planned my retirement and my husband's accordingly.

Since Bush came along, we've taken hits in the stock market, CD interest, and my husband's 401k. Now Bush wants to steal the fortune we've paid all these years ala FICA. We've both worked hard, saved, lived responsibly and played by the rules. On top of everything, we have a severely disabled child to care for. Should I just give up?

Also, can you believe the lie he told last night about leaving the money to your children and grandchildren when the plan specifically says you can't? Freepers, get a clue. Your guy is a shyster. You're screwed even if your in your 20s because you're probably going to have to help your parents, who like I, am a victim of these Republican criminals.

[cthrumatrix]

34. the point is ...the bush plan sucks... and lying to us to sell it

[booksenkatz]

41. You're right, of course

I was speaking only for myself, but certainly you and your husband are getting shafted for another half dozen years more than my husband and I are! And as you said, EVERYONE is getting shafted in one way or another, even the young ones. You are right, we had no choice, we were told that there would be SS for us and not to worry about it, and now those years of dutifully holding up our part of the bargain are GONE and we get NOTHING for it, not even a tax deduction for the loss!

I, too, am jobless (my huge national company closed its local office in 2002) and my husband's 401K is going into the toilet even as I type these words. What happens when the market tanks and all of today's young kids who "invested" for all of their years of employment have nothing for their retirement? They may have it worse than we will! I think my great-grandfather's money-under-the-mattress method is looking more and more attractive.

(Here is a special hug for your son)
:hug:

[KayLaw]

44. Thanks for the hug

I guess we were just born at the wrong time. The other kicker is that our husbands will keep paying for people like many in my family who have plenty of money, no mortgage, pensions, and need their Social Security checks like they need a hole in the head. It's just so depressing, and there's no excuse for what's being done to us.

Republicans just can't be trusted--period.

[Megahurtz]

92. We need to post the truth

on all the Freepers sites. (Even though I can't stand going there) This information needs to get out to EVERYONE. This guy is a lying, cheating con man:grr:

I think that everyone that paid into the SS system for this many years should have the option of saying:

NO! I do not want to participate in your bogus system, I have already paid enough into my "private" SS account as it is now, and I WANT MY MONEY BACK!!!

The guy just thinks he can take the money and run! And he's lying about the SS system going bankrupt. The only way it will go bankrupt is if he continues to steal from it. He just wants to fund his and all of his rich buddy's Cayman Islands accounts (and wherever else they may be, believe me, the places are many):mad:

I wonder if all of the Freepers would really go along with this scam if they really knew the truth.

W the Dictator is conning, scamming, lying and stealing from the American citizens and dumping them on the street. How dare he do this to us!!!

Fuck George W. Bush!!!:argh:

[snippy]

35. This is so outrageous that it can not be what Bush

really hopes to accomplish. Not even the most devout followers of Bush will support this. This has got to be part of some bizarre negotiating ploy. Maybe Bush is threatening to bury American workers under this huge, stinking, steaming pile of shit so that they will be grateful when he only pisses all over them.

[cthrumatrix]

36. BINGO.....IMHO I think they want a "value added tax"

[sendero]

37. who in the world..

... would want this steaming pile? Even if you thought "privatization" was a good idea, this implementation reeks.

[Overseas]

38. Kick this-- Least Known Aspect of their Plan

I heard this once before but not nearly as often as it should be discussed...

[Walt Starr]

39. This is NOT a "Social Security" plan. Instead, Bush is proposing a

BROKER Security Plan.

[Mountainman]

40. Are we saving this information for reference later?

We should all write LTTEs and explain that Bush lied and keep it up until this thing is defeated.

I'm one of those who will not be affected but I want younger people to have all the facts.

[Beetwasher]

42. This is FUCKING NUTS! BATSHIT FUCKING CRAZY! It's a Blatant PONZI SCHEME!!

Seriously, I'm astounded at this blatant PONZI SCHEME!!! They are merely counting on the plan being too complicated for most people to understand so their eyes glaze over.

This is out and out blatant THEFT. :wow:

[despairing optimist]

165. It's more like a shell game: Now you see it, now you don't

Your reward for lucky or haplessly wise investment choices will be government confiscation of what it decides is excess profits. If only the same reasoning were applied to the tax code with regard to millionaires, there'd be no need to try to deceive the rest of us.

[htuttle]

43. BREAKING: Meyer Lansky appointed to head Social Security Administration

[AP]

45. Notice how Bush talks about the "money left over" that you can give to...

...your kids.

Uhm, what happens if you run out of money while you're still alive? What if you blow through your 401(k) and SS equity?

The transfer of money is going the other direction: from your kids to you.

[cthrumatrix]

46. with the bush plan - you die, your heirs get $0 (read this)

Here is the text from his speech vs the reality of the plan. You get life payments..when you die - heirs get $0


snip

Here is why personal accounts are a better deal. Your money will grow, over time, at a greater rate than anything the current system can deliver - and your account will provide money for retirement over and above the check you will receive from Social Security. In addition, you’ll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren. And best of all, the money in the account is yours, and the government can never take it away.

snip
http://rawstory.com/news/2005/index.php?p=27

now here is the reality of "your privatized soc sec account when you die:

snip

Any funds that remained available under these annuities after death would go to the Social Security program; the money could not be inherited. While that would assure retirees a monthly check while they live, it also could undercut what polling shows is one of the most persuasive arguments on behalf of personal accounts - that they can be inherited.

http://ap.tbo.com/ap/breaking/MGBEOOZ9Q4E.html

Your lifetime payments STOP when you die. Your heirs get $0.

[WildClarySage]

128. What he meant was "You can still slip a $5 bill into their birthday cards"

But that assumes that you HAVE any $5 bills... which, under his plan, you won't.

Either way he's a lying sack of crap.

[ProfessorGAC]

48. EXACTLY As I Predicted Yesterday

I knew this was still a gov't administered idea that would not PUT THE MONEY BACK IN THE PEOPLE'S HANDS!

I also knew there would be some portion the gov't would keep.

There was a thread yesterday in GD where this was discussed. I knew that this "free lunch" was anything but free.

I also suggested that there was no way the worker would buy their own equities or bonds, and that there would be a very limited set of funds from which to choose.

And, on top of all of this, the gains will be an illusion due to the equity inflation of dumping as much as another $100 billion per year into the equity markets, chasing after the exact same value of corporate shares.

And the sheep go "Bah!" and buy into the nonsense. This is a monumentally stupid plan that defies economic and financial theory and the idiots think it's a good idea.
The Professor

[TahitiNut]

95. From the same people who brought us the S&L Scandal.

This is the S&L Scandal Economics on steroids. If you liked the S&L Scandal you'll have orgasms over this scheme. It's beyond comprehension that anyone with any genuine interest in Social Security whatsoever would even entertain this total and complete fraud.

[ProfessorGAC]

112. Well Said, TN

The Professor

[high density]

51. Wow, this sounds so good... to Wall St.

This weekend I'll have to write up a couple of letters to my senators letting them know how I feel about this issue.

[cthrumatrix]

52. eveyrone should write letters

[Coastie for Truth]

53. Washington Post:: Participants Would Forfeit Part of Accounts' Profits

Participants Would Forfeit Part of Accounts' Profits

http://www.washingtonpost.com/wp-dyn/articles/A59136-2005Feb2.html

By Jonathan Weisman
Washington Post Staff Writer
Thursday, February 3, 2005; Page A13

Under the White House Social Security plan, workers who opt to divert some of their payroll taxes into individual accounts would ultimately get to keep only the investment returns that exceed the rate of return that the money would have accrued in the traditional system.

The mechanism, detailed by a senior administration official before President Bush's State of the Union address, would hold down the cost of Bush's plan to introduce personal accounts to the Social Security system. But it could come as a surprise to lawmakers and voters who have thought of these accounts as akin to an individual retirement account or a 401(k) that they could use fully upon retirement.

"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children . . . or grandchildren," Bush said last night. "And best of all, the money in the account is yours, and the government can never take it away."

The plan is more complicated. Under the proposal, workers could invest as much as 4 percent of their wages subject to Social Security taxation in a limited assortment of stock, bond and mixed-investment funds. But the government would keep and administer that money. Upon retirement, workers would then be given any money that exceeded inflation-adjusted gains over 3 percent.

EDITED BY ADMIN: COPYRIGHT

[democracy eh]

54. risk, hmmm

who bears the risk?
who nets the reward?

sniff test begins.... now

[SpiralHawk]

55. VooDoo Economics !

Come on Dems. Chant it from the rafters:

Republican VOO DOO Economics

Will put families in Deep Doo Doo

[durablend]

93. It's "Doo Doo Economics" pure and simple

Dems had BETTER piledrive this steaming load of shit into the ground or else!

[Jack The Tab]

56. Last night the media apologists were out in FULL FORCE..

all of them spinning their Dear Leaders Social Security dismantling. NBC and CBS anchors were falling over themselves to let you know just how well C Plus Augustus's plan would go, and not to worry about that 40% reduction in benefits.

I can't listen to any of them anymore.

[Boxer Rebel]

57. Wow, so they keep 80% of your money...

I can't wait to tell the idiots I know who voted for Bush becasue they wanted to "keep their own" SS $$. Ha.

[54anickel]

58. WTF?

"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children . . . or grandchildren,"

What about that article earlier this week regarding not using Medicaid as an inheritance program? That money won't be passed on, it will subsidize your long-term care should you end up needing it.

edit to add:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=1205228

[shrike]

59. This makes absolutely no sense

why would I want to invest money if I'm not allowed to keep the higher returns it's supposed to bring me? And what if the stock market tanks? Does the government make up the shortfall for me? I presume not.

[AlCzervik]

60. I think the plan is that you won't read the fine print.

[WildClarySage]

136. because you won't have any choice in the matter.

by the time this is over.

[kskiska]

61. DUPE

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=1207900&mesg_id=1207900

[KansDem]

62. When will people wake up & realize this country is being run by mobsters?

Workers who draw money out of the Social Security system for their accounts should have to pay that money back with interest.

George W. Bush's version of the "payday loan?"

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.

WTF???

[cthrumatrix]

64. funny how MSM doesn't mention this....... it's plain evil

[realFedUp]

74. We are now "Allawied" to torture mobsters...

Bring us the head of the Bushies.

[indepat]

65. Why would anyone wish to take risk without getting the rewards?

Absurdly nonsensical and only a rabidly partisan ideological fool would support this fraud. Hopefully the Congress is not embodied with any such fools, but time will tell.

[Mokito]

139. Ah, hope...

the last of Pandora's curses.

[AngryWhiteLiberal]

69. Financial Industry PAYOLA...pure and simple. IT'S TIME TO MARCH!

It's time for a Million Granny or Granddaddy March on Washington! This financial industry payola scheme is pure BULLSHIT.

JB

[cthrumatrix]

71. actually I think it's a move to "get more in tax dollars".....watch

this plan fail and a puch for a VAT to arise from nowhere

Our deficits are going to be our undoing...the $$ is toast

[V Lee]

70. So the Bush Admin is screwing the American people ...

... while helping their big contributors (in this case the financial industry) get rich.

I'm Shocked! SHOCKED I say! They've NEVER done anything like that before!

Once again, they're true to form. How can people vote for these bozos? Do Bush supporters have some sort of self-destructive urge?

Yes, "the people spoke" in the 2004 election, and the Bush voters said "Bend me over and screw me for four more years! And while you're at it, screw the rest of the country too."

[bearfan454]

73. F*ck that shit !

I want my GUARANTEED GOVERNMENT BENEFIT from Social Security. I have paid into it since 1972 and I want my money ! Anybody stupid enough to let the govt keep your principle deserves to lose their money.

[Megahurtz]

97. KICK!

:thumbsup:

[Mugsy]

75. So basicly, you only get to keep your profits?

Okay, let me see if I have this straight:

It is basicly a loan SocSec gives you to gamble in the stock market. You get to keep your winnings, but then must repay the principle w/o interest. HOWEVER, the government must borrow the loan from another country that DOES charge interest. And when you finally do retire, the government can tax you on those profits... whatever profits are left after paying all those broker fees. Have I got that right?

Who came up with this F'ed up plan???

[cthrumatrix]

76. BINGO, BINGOBINGO, BINGOBINGO, BINGOBINGO, BINGO

above 3% return....

If you die at 67 after retiring at 65....your heirs get "nothing".

The payments or "profits" go back to the govt/soc sec.

[underpants]

77. That is a great summary. Also if you lose you are out

I wonder what happens if say you only earn 2%. You get nothing.

[cthrumatrix]

81. at 2% average return.......you would get nothing

not even the principal you put in over 20 years.

In fairness...youowuld think stocks/bonds would get 5% over time...but that is not the point.

[TahitiNut]

100. "what happens if say you only earn 2%" ... THAT'S THE BOMB!

Remember, their "plan" says that the pirate account holder is "guaranteed" a benefit that's no less that that in the traditional system. Remember also that in the return-greater-than-inflation scenario that the pirate account holder only gets the excess returns.

What this means is that either every retiree gets reduced benefits (due to the losses in the Trust Fund from such "bad loans") or that the taxpayers get handed a bill to pay for an under-performing stock market!! It must be noted that such an "under-performing" stock market would be symptomatic of a more general economic downturn ... the very time when taxpayers are least able to bear such a burden.

We MUST keep in mind that "under-performing" means showing gains LESS than inflation. That's one helluva lot different than just a "down market"!

This is a Wall Street Wet Dream ... especially for the most extreme sociopaths on Wall Street.

They've been reducing the feed for the geese laying golden eggs (i.e. the working class) for the last 30 years, and now they're going to reach inside and tear out the goos guts!

[underpants]

104. It doesn't seem that any of this mentions broker's fees either

So your money (in their hands) needs to earn >3% AND making up the broker's fees-the way I read this.

[Nordmadr]

96. How can it be a loan?

IT WAS MY MONEY TO FUCKING BEGIN WITH YOU GOD DAMNED CRIMINALS!!!!!!!!

[underpants]

98. They are loaning you your own money

This has to be one of the sadly funniest things I have ever read.

[underpants]

78. THEY BROKE THEIR OWN RULE!!!---K.I.S.S.

Keep It Simple Stupid at least in your propaganda.

This is getting WAY too complicated for many people to wrap their heads around.

[Lerkfish]

79. just tried to explain this to a freeper coworker...the told me to gotohell

and refused to believe it was true...refused to read the article, refused to listen to me.

I tried to tell him it affected him, as well, since he's in my same age bracket...45.

wow. the koolaid is very strong.

[Jacobin]

162. Busies do everything based on 'faith'

Otherwise they would never have supported him.

His faithful blind will go off the cliff for him, and sing hymns on the way down.

Pied Piper of Crawford.

[Bouncy Ball]

82. I read the entire article and I'm sick to my stomach

and actually starting to cry.

My God. I sincerely hope I am not an old lady eating cat food someday. We're not wealthy. And we decided to only have one child to ensure we could really take care of one, instead of being stretched further with two or three.

As for everyone who voted for him, I'm honestly not even sure THEY deserve this. And I KNOW we don't. Dear God, this is horrific.

[htuttle]

106. I have no intention of eating cat food when I get old

If this f'ed up plan goes through, I've got other ideas:

[whistle]

83. Isn't that what France had prior to WWI and after the horendous

...defeat they suffered (an entire generation of young men wiped out) the whole social national pension system collapsed. Bush is setting this country up for the same thing to happen. Run the numbers.

[gasperc]

86. how's that your money if you only get "gains over 3%"

and if all these fucking schemes are so great why don't they put the entire social security account into a "limited assortment of stock, bond and mixed funds"

why are individuals needed to "decide how to invest their money"

Damn, there are so many fucking things about this shit to scream at the tops of your lungs.

and what about these rules that "wall street brokers will not be allowed to charge excessive fees to prevent your savings from being eaten up" why do brokers have to even be brought into the picture?

Why can't examples of the funds be made public?
I've kept my own 401k retirement funds in very safe fixed and bond funds because the swings in the higher rate funds have been ridiculous. I've lost $10,000 and made back less than $5000 and all 401k "info" pages keep showing returns of 5-12%. Bullshit. In the "safe funds" I've earned a paltry 1.5%. My social security IS earning better than my own 401k. I went to college, I'm doing the best I can to save for my family for retirement. But over 50% of our NEIGHBORS don't have that luxury. I find the GOP's raid on social security an obsenity. This is about trying to break the bond that republicans believe Democrats have with the government. This is about the bond that all citizens should have with thier government. One that believes their government is being honest with them, it is doing all it can to insure our security and it'll will be the citizens tool to redress grievances with fellow citizens, corporations or foreign governments.
Instead the US government is becoming a Citidel to protect the wealthiest 10% and manipulating the emotions and fears of at least 40% of the population to create a majority to institutionalize a government that only answers to wealthy individuals and corporations. A system that it morally, ethically and economically catistrophic. A system that exists in Mexico and throughout South America but only because the US system approves. Just like Enron, such a hollow and phony government will implode from the weight of its bancrupt values.

[liveoaktx]

88. So if the money DOES NOT generate a profit past the rate of return

the person gets NADA.

Oh, yeah, let's give up an INSURANCE program for an IFFY INVESTMENT in which we don't even get to keep ALL the money we invest.

[underpants]

89. Would you OWE? or get the REDUCED BENEFIT?

:shrug:

[TahitiNut]

109. In effect, BOTH.

Remember, even under the Piratization Scheme, the guaranteed OASI benefits would be reduced earlier and more than is projected under the current system! (It's like lengthening a rug by cutting some off one end and sewing it onto the other.) The scam is the 'prospect' of making up more than is lost under the 'guarantee' by returns from 'pirate investments.'

But 'guarantee' is 'guarantee' ... so the shortfall when market-based 'investment accounts' under-perform the traditional return would have to be made up by the general tax base. In other words, taxpayers would be insuring Wall Street ... at no cost to Wall Street.

But again, when such a shortfall occurs it would be one of those periods (we've had several such multiple year periods in the last 55 years) when the economy itself is under stress and the taxpayers are least able to bear the additional burden. This is, quite literally, a recipe for complete economic disaster in the U.S.

[underpants]

110. I'm glad nothing like this never happened in....say....Argentina

Because that would be like being beaten with a boat orr in the forehead leaving a mark that reads "STUPID IDEA" in a mirror.

I thought it might be both.

God this is hilarious in a black humor kind of way.

[MissB]

113. Black humor indeed

And I did laugh at your post. Spot on, unfortunately.

[TahitiNut]

115. Well, I'd say 1600 Pennsylvania has become an Oar House.

If there were any justice, these people would have "Dangerous To Himself and Others" (too fucking stupid to breathe) tattooed on their foreheads. The abysmal corruption, greed, and predation exceeds anything in my experience. Even the McCarthy days pale in comparison to the criminality of this power-obsessed cabal.

[MissB]

116. I'd love to see a photoshop of that

The "Dangerous to Himself and Others" on Bush's head, for example.

thanks for the laugh.

[underpants]

122. How's this?

That is a photoshop of an actual photograph (the arrow wasn't pointing down at him) I didn't do it though another DU'er did.

[MissB]

123. That works for me!

Thank you!

[whistle]

90. After reading the article again I find the comments by Peter Orzag

...distressing:

<snip>

In effect, the accounts would work more like a loan from the government, to be paid back upon retirement at an inflation-adjusted 3 percent interest rate -- the interest the money would have earned if it had been invested in Treasury bonds, said Peter R. Orszag, a Social Security analyst at the Brookings Institution and a former Clinton White House economist.

"I believe you should be able to set aside part of that money in your own retirement account so you can build a nest egg for your own future," Bush said in his speech.

Orszag retorted: "It's not a nest egg. It's a loan."

Under the system, the gains may be minimal. The Social Security Administration, in projecting benefits under a partially privatized system, assumes a 4.6 percent rate of return above inflation. The Congressional Budget Office, Capitol Hill's official scorekeeper, assumes 3.3 percent gains.

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.

<end of snip>

So if the government keeps the $78,700, what does the government do with that money? If it goes into the social security trust fund just like it does currently, I would think that it is used to pay social security recipients in much the same way it works at the present time. On the other hand if the government spends it, then the worker has lost over half of their investment and it is nothing but another tax. I am inclined to think that the republicans are engaging in a social security shell game where the players, you and I and those who have to work for a living, are the suckers who loose in the end. In my working lifetime, there has been the Vietnam War from 1963 to 1974, the hyper inflation of the Ford and Carter administrations, the engineered recession of Ronald Reagan from 1980 to 1984, the stock market crash of 1987 under Ronald Reagan, the recession under GHW Bush, then the dramatic climb of the economy under Clinton, followed by the worst recession and stock decline in 2001 through 2004 under the Shrub.

What I have now to look forward to is my Social Security and my maturing IRAs and profit sharing retirement plus a little bit of savings. If my social security which I paid into over the past 40 years at maximum every year where subjected to the above plan, I would be SOL going into retirement.

What the republicans are planning to do under this corporate drafted social security plan needs to be counter balanced by a national organized labor movement, a Federal Union of All American workers (FUOAAW), because these corporate bastards will steal it all just like the airline companies are doing to their pilots and workers and just like what is happening in every major corporation across America. It is so clear now!

[cthrumatrix]

101. let's see rethugs address these comments...they won't!

[MoonbatBane]

117. The opt out...

"I am inclined to think that the republicans are engaging in a social security shell game where the players, you and I and those who have to work for a living, are the suckers who loose in the end."

If you think it's such a rip-off, then just opt out. If I or some other "Bush-bot" doesn't think it's a rip-off, then how does it hurt you if we opt-in? Or rather if we have the mere choice to opt in?

[LilBitRad]

91. Kick for read after work n/t

[ihaveaquestion]

99. Freepers reaction

On the St. Pete Times forum - dead silence! Typical when something is posted that contradicts their fantasies.

Does anyone here read freerepublic? Any response there yet?

[jayfish]

103. Nothing.

No-one has given them the talking points yet. If any of the RW radio hosts cover this today you will see an uptick. Freeper types are not original thinkers.

Jay

[underpants]

105. Is it even posted over there?

:shrug:

[jayfish]

108. Not A Peep.

Well, as far as I could wade through that excuse for a board. I could post it myself. I would probably be outed though.

Jay

[amandabeech]

111. I read some of it.

Somebody posted the Washington Post article.

Those who thought that the WaPo had some credibility were pissed, and could not believe that * could come up with such a scam.

Others thought that the WaPo story was a liberal lie designed to discredit *.

No one was happy with the prospect that the alleged "private accounts" would not be no-strings-attached.

The AP story stating that the remainder from the annuities could not be inherited was not posted.

[ihaveaquestion]

129. Got a few responses from one GOP Moderate...

on the St Pete Times forum.

He's not happy with the Bush scheme. Not happy at all!

[MoonbatBane]

114. Help me understand your point of view...

If I understand the overall idea correctly, the proposed "private savings accounts" are optional -- you can stick with the old system or opt to put some of your SS money into the "private accounts." Therefore, if these accounts are such a rip-off, won't people simply not use them? Maybe "Bush-bots" will, but if they get ripped off, that serves them right, correct?

I just don't get the strong opposition to giving people a choice about how their SS money is handled. Why is that so bad, especially in light of the abysmal return we currently get on our SS money, and in light of the fact that if you die before retirement, the gov gets to keep all of the money you've put into the system your whole life? If the private accounts also operate that same way as stated here, that's at least no different than what we've got now, right?

[Beetwasher]

118. THEY ARE GOING TO CUT EVERYONE'S GUARANTEED BENEFITS

Regardless of whether or not you opt in...Get it? I have NO choice about that...

Furthermore, we have NO idea how "optional" this is going to be...Just because they say so, doesn't mean it's going to be so...

[MoonbatBane]

119. Cut everyone's benefits...

Isn't that inevitable, regardless of if Bush's plan is implemented?

Seems to me this is like telling a terminal cancer patient that they can't try a new drug because it might kill them.

BTW, some Republicans appear to agree with the general sentiments of DU: http://news.yahoo.com/news?tmpl=story&u=/ap/20050203/ap_on_go_co/social_security

[Beetwasher]

120. Bull Fucking Shit

It is NOT inevitable, NOT AT ALL. SS is FINE RIGHT NOW. There MAY be a problem WAY in the future if the economy continues to suck. But if it continues to suck, then investing in the stock market IS FUCKING STUPID TO BEGIN WITH. If it DOESN'T continue to suck THEN SS HAS NO FUCKING PROBLEM. Duh.

There IS NO TERMINAL CANCER PATIENT. This is like telling someone they have terminal cancer when they don't and then forcing poison on them instead of a cure.

If you've got a problem w/ SS's rate of return, open YOUR OWN goddamn 401k. Private accounts already exist. They're called 401k's.

[coda]

149. Hey MBM

You would agree that this is another expansion of the Federal Government, right?

That's not even counting the enormous amount of money that will have to be borrowed (likely from CHina, Japan, South Korea, that is if they are willing) to fund this thing.

[ProfessorPlum]

121. Part of the "abysmal return" we get on our SS money now

is that we don't have large portions of our society, the elderly, infirm, disabled, and suddenly widowed or orphaned people, living in abject poverty.

Sure, SS isn't a great deal if you are earning a lot of money - it's just insurance against being too poor (due to any of the millions of things that can go wrong - including being bilked by unscrupulous Wall Street types, or unforeseen market crashes, or accidents) to survive.

That's well worth my money, and I'm willing to take a smaller "rate of return" on my investement to make it so.

[jayfish]

125. I May Be Wrong...

but I thought I read, or heard, that the average S.S. recipient gets back everything they put into the system after the first couple of years. If that is indeed true then it doesn't sound like too abysmal of a return to me. Does anyone have any other info on that?

[ProfessorPlum]

127. I think here the "rate of return" is referring to what the SS

trust fund is getting for their bonds . . . because the rate of return for any individual is so highly variable - depending on how long they live, what their salary was just before their retirement, etc.

I can't imagine that most people get back what they put in that quickly, unless it is dollar amounts not adjusted for inflation, but maybe it's true. Wow.

[ProfessorGAC]

132. I Just Looked At The Charts

It's not true for me. I've paying in at the cap for almost 15 years. It will take me at least, per the current charts, adjusted for wage growth, 11 years to get to parity. That means zero return on personal investment for the first 11 years. I only realize any return on that money if i live at least 12 years beyond the beginning of receipts. Don't know where Jayfish heard that, but it's not correct in my case.
The Professor

[jayfish]

134. Thanks Prof...

It was a long time ago so I'm probably not remembering correctly.

Jay

[ProfessorGAC]

137. Ya Know . . .

. . .i didn't look to see what it would be for someone paying at the minimum wage and collecting later. It might be way shorter than it will be for what i pay in.

I'll have to look into that.
The Professor

[loritooker]

159. Today's retired people got back their ss deposits after just several years

For example, my parents, who retired in the last decade, didn't pay in all that much relative to my generation and now my (and all working people's) deposits are paying for the old folk's ss checks. My father-in-law, who is much older than even my parents definately got his deposits all back in the first few years of his retirement.

For myself, I calculate that so far I have paid in $20,000 in ss, in 30 years. ( I didn't work much some years). I calculate, based on my personal tax stucture that I'll pay in another $50,000 by the time I'm 70. So that's $70,000 in my working lifetime. Then, if I start drawing at 70, ss says I'll get back about $1200 per month. 1200 x 120 more months of life = $144,000 for me. So that means my money would have doubled from 1973 to 2025. Over 52 years it doubled. Is that good? I don't know for sure, but I calculate that is about 4% return on average per year. And the longer you live, the better the return is.

[Beetwasher]

126. Also, It's A Smaller Return BUT IT'S GUARANTEED!!!

That's the part these loons don't get...It's not so much an investment as it is insurance...

[ProfessorPlum]

131. Yeah, I'll be pretty pissed if the 20-somethings

allow themselves to be lied into thinking that this is all right.

I have, right now, SS to fall back on as I look forward to becoming elderly. If Bush has his way, I'm sure I will get nothing. Easy as that. Will Bush _guarantee_ I won't get nothing? Of course not. Therefore, it's easy to calculate my expected return. $0.

[ProfessorGAC]

133. Rate Of Return Is Easy Too, Huh Plum?

The Bush plan will make all the math simple. Nothing on something is always zero percent. Don't even need to program an Excel spreadsheet for that!
The Professor

[ProfessorGAC]

130. Well Said

SS is part of what a GOOD citizen absorbs to live in a compassionate and solid society.

Messing with it and worrying about absolute rate of return is what a BAD citizen focuses upon because it's ALL ABOUT THEM, PERSONALLY.

Good americans accept the lower rate of return, but it prevents mass proverty and privation. Bad americans don't care about the poor. That's why they use this lame argument about rate of return. (Which by the way is a complete canard, because the Repubs don't want to talk about equity price inflation when that much cash hits the equity markets and the true value of corporations isn't increasing.)

It's a monumentally stupid plan rooted in stinginess and a complete lack of compassion.
The Professor

[TahitiNut]

141. The "return" is directly correlated to fair labor compensation, imho.

The "return" is inversely correlated to the ownership profiteering that drives down labor enfranchisement (number of employed and wage equity). Over the last 30 years, working class equity has declined. The "bottom 80%" have received a steadily decreasing share of the income pie. Prior to that time (about 1975), equity was rising and OASDI recipient benefits exceeded their "investment" to a greater degree than today, all other changes in the system factored out.

The Social Security system is founded solely on employee compensation, particularly the compensation of employees below the maximum OASDI wage ($90,000 in 2005). That's the aggregate wage base. When employees already earning more than the maximum OASDI wage receive wage increases that're greater percentage-wise than those below, we get not only increased inequities in income distribution but we get benefit requirements (wage-indexed) that increase at a greater rate than the aggregate wage base.

[ProfessorGAC]

144. You've Given This Considerable Thought TN

Me, i'm opposed to it on purely financial and economic grounds, but i do recognize SS for what it is, and that's a safety net for those who need it most. It's not an investment fund, so we shouldn't be worried about ROI.

My opposition is social and theoretical, but you've got your ducks in a row on this one.
The Professor

[TahitiNut]

152. Thank you. I count on you to help keep me on the plantation.

I'm not an economist; merely a very analytical person with a math degree. I trust your intellectual integrity and your conscience and rely on your perception that what I'm expressing is congruent with the macroeconomic perspective you possess. I've pored over the number until my eyes won't focus and the major message that doesn't seem to be heard is the increasing inequity of labor compensation at the lowest 80% of wage earners. We're eating our youngest and weakest.

I have always seen the Social Security system as a "dividend" on making our working class healthier, more productive, and better educated. As each generation leaves the working class stronger, their children are better able to support themselves, their children, and (returning the favor) their parents. The microcosm is a family where the parents labor to ensure their children are healthy and productive. Rather than the Malthusian third-world system of having litters of children in the hopes that some will survive and be able to care for the parents, we've opted for quality of life rather than quantity of life. Countries without socialized care for the elderly have abysmally high birth rates and infant mortality. Countries with socialized care for the elderly have lower birth rates, better health care, and better education. It's NOT accidental, imho. Dog-eat-dog retirement security (every family for itself and only itself) just leaves a lot of sick and dead dogs lying around.

Corporatist profiteering has become the implacable enemy of labor compensation. That's why jobs are being off-shored. That's why profits don't go into business expansion (the U.S. customer base is correspondingly shrinking in it's economic wherewithal). These people are deluded into thinking that their larger wedge of a shrinking pie is "good." They're fucking nuts. After they kill labor, they've kill the goose that's laid their golden eggs.

[ProfessorGAC]

155. Truer Words Were Never Spoken

"These people are deluded into thinking that their larger wedge of a shrinking pie is "good." They're fucking nuts. After they kill labor, they've kill the goose that's laid their golden eggs."

Anyone who thinks long range knows that the same proportional slice of a bigger pie is better! But, conservatives wouldn't be conservative in their thinking if they thought long range. The original definition makes conservatism in favor of the status quo. Status quo thinking is, by definition, short term.

Now, for some reason conservatives want the status quo from the "good old days" (despite the fact they never existed) and are revolutionaries in pursuit of it. They are a self-contradiction. Revolutionary pursuit of the status quo, that USED TO EXIST, even though it reall didn't.

Now you know why i consider myself an anti-conservative, first and foremost.
The Professor

[ClayZ]

142. The whole thing sounds like Republican Amway!

If someone came to my door with this plan I would tell them, "sorry, not interested"!

I think it is a 10 ton Paper Tiger.

They have something awful up their sleeve and they want the whole country to focus on this pile of junk!

They are trying to "piss us off to death" so we won't reach retirement age anyhow!

The more dead boomers the less people who will talk sense into the "Army of One" volunteers.

[KayLaw]

138. Honestly

Why would they rush to assure there will be no change for people over 55 if the rest of us weren't going to suffer benefit cuts?

[sunnystarr]

156. Opt Out? How long would that last? SS had an opt out option

too until it became mandatory.

[Pirate Smile]

135. The WH must have jumped on this because it now says it has been

"corrected". I saw on CNBC they were saying the WH said the article wasn't correct in some parts.

Correction to This Article
An earlier version of this article incorrectly described how new private accounts would work under President Bushs Social Security plan. This article has been corrected.
http://www.washingtonpost.com/wp-dyn/articles/A59136-2005Feb2.html

[underpants]

145. I'm sorry but the NEW version restates the old one

with some BS from proponents of the plan.

How is this NOT the same thing as the original article said.

The original story (available here) should have made clear that, under the proposal, workers who opt to invest in the new private accounts would lose a proportionate share of their guaranteed payment from Social Security plus interest. They should be able to recoup those lost benefits through their private accounts, as long as their investments realize a return greater than the 3 percent that the money would have made if it had stayed in the traditional plan.

Ans what does this mean? How is it different?

"The person comes out ahead if their personal account exceeds a 3 percent real rate of return, which is the rate of return that the trust fund bonds receive," the senior administration official said. "So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent real rate of return. To the extent that his personal account gets a higher rate of return, his net benefit would increase."

[truth2power]

148. Thank you. Please someone address this...

I was scrolling thru this thread to see if anyone saw that the article had been corrected - time 1:51 pm.

So....could someone please check the update to see how this little scam is said to work now that the WH has twisted the arm of the WP?

What is changed? Thanks.

edit> Sorry. I see the additional posts now. Posted around the same time I did.

[underpants]

153. Last paragraph- "...a sense of ownership in the economy"

and THAT would be "imparted" by the White House-so much for conservatives not trusting the gubment.

Supporters say the system is far better than what had been incorrectly described by the Post. Between withdrawals from a personal account and a Social Security check, total benefits would be the same, whether the loan repayment comes from the account or from the guaranteed benefit. But by leaving the balance of the account untouched, the White House would impart a sense of ownership in the economysaid Stephen Moore, a conservative Bush supporter and author of a book on the president's ownership society.

[sunnystarr]

157. Well that explains it lol ... we'd get a "sense" of ownership ...

but not the real thing. Kinda like being able to smell the cookies but not eat them.

[TOhioLiberal]

140. I Smell a RAT!

The story at the link in the OP HAS BEEN CHANGED

The text at the top:
Correction to This Article
An earlier version of this article incorrectly described how new private accounts would work under President Bush's Social Security plan. This article has been corrected.

'corrected' HA! HA!

I haven't read the article yet; does anyone have hardcopy of the 'original'?


AM I Paranoid???

[underpants]

146. I have one in my pocket

I printed it out to take home and show my wife-We had a good laugh about this over the phone, with a co-worker too.

This is BS. They restated the original in a different way and the mouthpieces just SAID that it wasn't true. Total BS.

[Occulus]

147. Article was changed.

I wonder if the plan itself was after they realized how stupid this all was?

" The original story (available here) should have made clear that, under the proposal, workers who opt to invest in the new private accounts would lose a proportionate share of their guaranteed payment from Social Security plus interest. They should be able to recoup those lost benefits through their private accounts, as long as their investments realize a return greater than the 3 percent that the money would have made if it had stayed in the traditional plan.

That 3 percent level is the interest rate earned by Treasury bonds currently held by the Social Security system.

The Post mistakenly reported that the balance of a worker's personal account would be reduced by the worker's total annual contributions, plus 3 percent interest. In fact, the balance in the account would belong to the worker upon retirement, according to White House officials.

<snip>

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars. All of that money would be the worker's upon retirement. But guaranteed benefits over the worker's lifetime would be reduced by approximately $78,700 -- the amount the worker would have contributed to Social Security but instead contributed to his private account, plus 3 percent interest above inflation. The remainder, $21,100, would be the increase in benefit the worker would receive over his lifetime above the level he would have received if he stayed in the traditional system."

[DFLer4edu]

151. Help, somebody explain

As I understood this artical, the people don't get there original investment back, for do they get the first three percent of inflation adjusted gains, all they get is the part that is over three percent. That can't be right. The artical isn't very clear. Can somebody explain the thing.

[underpants]

154. They loan you your money and you get anything over 3% earned

that would get you back to your original benefit and you get the excess if there is any if there isn't you get less benefit. At least that is how I read the original article and the follow up spinfest.

[cthrumatrix]

158. they put your account (the 3% example - 78k) into a life annuity

the surplus ($21k in this case) may go to another annuity or payments which your heirs can share in --- I don't have details on that.

But the $21 profit can be paid out over 10 yrs, 20yrs etc. So if you died after 5 yrs...the next 5 yrs could be paid to your heirs.

That's the way I read it.

It's the inflation adjusted "hurdle" that on emust achive for "profit" to be enjoyed in retirment.

[Catherine Vincent]

161. IF IT AIN'T BROKE, DON'T FIX IT!

I say keep the old system.

[BronxBoy]

163. And this brilliant plan...

is coming from an administration that is running up historical deficits.

Maybe it's me but shouldn't these financial geniuses at least try to resolve our CURRENT financial problems? I wouldn't take advice from a financial planner who gambles and owes an awful lot of money to his bookies. Why should I trust these clowns? It just amazes me that we are talking about putting our national retirement program into the hands of a person who has been an absolute failure at any business venture he's attempted.

I'll be 47 and I'm f**g scared shitless.

[AuntiBush]

164. From my Senator

A snip rec'd today from my wonderful Senator

(snip)

The President asserts that such changes are necessary because there is an impending crisis in the Social Security system. The facts show that there is no such crisis. By law, Social Security has a budget entirely separate from the rest of the United States Government. The Social Security budget is currently running a surplus that, according to the Congressional Budget Office, will be maintained until the year 2020. With no alterations, Social Security has sufficient resources to pay all scheduled benefits until the year 2052. While we must find ways to ensure that Americans can depend on Social Security after that time, there is no imminent crisis facing Social Security.

Under the guise of this false crisis, the President is seeking to replace a portion of each American's Social Security account with a so-called private savings account. Such accounts would endanger not only the structure of the system itself, but could also leave our senior citizens with insufficient funds to meet their basic needs. First, by diverting money into private accounts, the Social Security system itself will experience a shortfall ranging from $100 to $350 billion a year, by some estimates, and not have sufficient resources needed to cover promised benefits. Additionally, there is no guarantee that the investments selected by individuals will result in earnings sufficient to meet their needs in retirement, and the Administration has offered no explanation of how it will provide for those senior citizens who unsuccessfully risked their retirement funds.

I very much regret that the Administration squandered a real opportunity to ensure that Social Security continues to provide for generations to come. When President Bush took office, he inherited a ten-year surplus estimated at $5.6 trillion, yet in 2004 our Nation had a record deficit of $412 billion. Our surplus was squandered by repeated tax cuts, which, if made permanent, will add a total of $2.6 trillion to our national debt - a reversal in our Nation's fiscal health of a staggering $9.1 trillion. Instead of cutting taxes for those who are the most successful in our Nation, I believe the President should have found a fiscally responsible way to assure that those most in need - the elderly and disabled - can count on Social Security for generations to come.

(end snip)

With that said, B-U-C-K F-U-S-H!

:kick: :kick: :kick:

Kick!

[0rganism]

166. OK, here's the skinny on the difference between versions, AFAICT

Let's start with SocSec as it is now. The worker invests P (as in "principle") $$ into the program, and it grows at the Treasury's bond rate, let's say X%. After n years, R (for Return) on a single year's tax looks like

R = P*(1 + X/100)^n

which is the standard compound interest rate formula. An investment of $3300 grows to $4434 over 10 years. According to the new article, bushco wants to set up a plan where up to 4% of income subject to payroll tax can be allocated to certain preferred private sector investments, earning Y%. This is, at most, about 30% of the original amount taxed. Rb (for Return according to bushco) is

Rb = (0.7)*P*(1+X/100)^n + (0.3)*P*(1+Y/100)^n

The difference, dR, between R and Rb is

dR = Rb - R = (0.3)*P*((1+Y/100)^n - (1+X/100)^n)

so assuming X to be the usual 3, if Joe Sixpack pays $3300 in FICA payroll tax and opts for the full account deduction to invest in private-sector funds averaging 5% (Y=5), his returns over 10 years are increased by

dR = $977((1.05)^10 - (1.03)^10) = $279

The economist cited in the original WP article described the "accounts" as a loan from SocSec that must be paid back. In this case, Rp (Returns with payback) is

Rp = (0.7)*P*(1+X/100)^n + (0.3)*P*((1+Y/100)^n - (1+X/100)^n)

In this case,

dR = Rp - R = (0.3)*P*((1+Y/100)^n - 2*(1+X/100)^n)

so Joe Sixpack's investment from the previous example earns much less.

dR = Rp - R = $977((1.05)^10 - 2*(1.03)^10) = -$1034

Joe has actually lost money compared to the return on SocSec alone! This is not to say that such an arrangement could never have positive returns, but it takes either a very high rate of return or a very long time. All else equal, Mr. Sixpack begins to get more back in this scenario after about 36 years, although he has been investing additional moneys at the same time. Alternatively, to break even with SocSec after a single decade, Y must be over 10% -- an unlikely situation for a typical index fund.

But why even consider this scenario, if the republicans deny it's what they have in mind? Very simple. This is what is required for Social Security to be funded entirely by payroll taxes at current levels. Because the money is going into private sector investments, the amount lost by Social Security from Joe Sixpack's re-allocation of payroll tax is given by

(0.3)*P*(1+X/100)^n = $977((1.03)^10) = $1313

Coincidentally, this is the difference of the return differentials in the first interpretation ($279) and the second (-$1034). This difference, accumulated over decades, is also why bushco has to borrow $$Trillions$$ to fund the "changeover". What is not being acquired from payroll tax must necessarily be drawn from some other revenue stream (e.g., selling off national parks) or deferred for later payment (e.g., making additional gov't bonds available to investors) or (most likely) a combination of the two.

One way or another, unless you happen to be a wealthy investment banker, you're getting the shaft from bushco.