Well, actually, the money in the trust fund
is saved in 'some' way - it now consists largely of treasury bonds, the IOU's that were left when the gov't appropriated those funds.
But that's minor quibbling; i largely agree with you. To avoid a very long reply here, i'll just say that i've been collecting information (sources available) on the subject here -
http://www.democrats.us/beta/forum/view_topic.php?id=2103&forum_id=3 .
The major points: there is no crisis of any kind, and Bush's proposed fix is not a solution in any sense that retains the function of SS as a guaranteed minimum retirement. - It saves no one any money, it reduces the benefits massively, and it borrows over a trillion dollars to accomplish that much; when even Bush's appointed social security commission projects interest payments to already be a far larger problem than social security.
The rhetoric about 'ownership' and 'personal' accounts is false; under Bush's proposal #2, the current favorite, the investment would be done by the government until enough money was piled up in 'your' account to make it attractive to mutual fund managers, at which point you get to perform your sole bit of 'personalization': you would get to select which of the five government-approved managers would manage 'your' account. This would represent a massive centralization of the US economy and make the government a major player in the stock market. Those five managers would have the power to make and break companies. A greater inducement to corruption is hard to imagine.
In addition, the proposal loads SS down with many new costs: the costs of managing millions of private accounts, to begin with. Brokerage fees of undetermined size. The cost of setting up an annuity for retirement, alone, represents 20% of your savings. The secret of SS is that it is in fact very efficient: all but .6% of income is paid out as benefits.
But anyway, that's all complaining about Bush's proposal. I think you were entirely right to say that to combat it effectively, the democrats must put forward their own proposal. Even though the projected problem is far off and of limited scale, it'd be best to go ahead and address it well ahead of time so that we can choose which methods carry the most bearable cost.
I don't have the figures for a complete lifting of the cap, but if the cap was reset to 90% of incomes, (which is how Greenspan set it up in 1983, but incomes have changed since then) that would raise the cap from $87,900 to $110,000 and take care of 40% of the projected shortfall by itself.
Another option to consider is to set benefits to correlate with the CPI (consumer price index) instead of with average wages. When you're retiring, you're not nearly as concerned with how your income compares with others as you are about how your income compares with the prices you have to pay. The Bush commission credits this shift with savings equal to 2% of taxable income. It's something of a cut in benefit, but it's a reasonable one. It made sense originally to tie benefits in with average wages, because of the pay-as-you-go structure of SS; money out would correlate with money in. However, because wages are projected to rise faster than prices, it is projected to be cheaper to pay benefits based on prices.
Those two changes alone pretty well deal with the projected deficits over the 75-year projection range, and would provide an excellent democratic alternative - fixing the problem with the most bearable costs. To really round it out as political ammunition, tack on greater support for
real ownership of individual retirement plans; as a supplement to SS, not instead of it.
Some other things that would make a big difference: raising the minimum wage, and shifting the illegal immigrant worker population to a legal immigrant worker population.
(Is this post too long? I am not yet familiar with local norms.)
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
