Social Security Reform

[Armethius]

Hi all,

I am currently working for Students for Saving Social Security (S4, www.secureourfuture.org), which is an organization created and run by students (and recent grads) to push for reform of the system.

Now, I am well aware that many here are going to be openly hostile to the idea of personal accounts, but it is something I feel very strongly in, and I believe there are others out there. I think this is an issue that everyone can agree on if they just think about it. The potential for ownership to help alleviate poverty is enormous. Every member of the working poor will suddenly have the opportunity to become an investor, an opportunity they do not get currently. Furthermore, the inheritability of personal accounts will help the poor build intergenerational wealth.

I just wanted to make everyone aware of a petition that we have launched in partnership with other organizations at http://www.americansagainsttheraid.org . The purpose of this site is to express our belief that Social Security taxes should not be spent on other things.

If you agree with me, please take a second and sign the petition

Thanks!

 

[43st]

:thumbsup: Lockbox

:thumbsdown: Santorum

 

[Uhtrinity]

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

 

[EatSpam]

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

:thumbsup:

 

[zendari]

Signed. The socialists are raiding the people with the ridiculously high payroll tax.

 

[Mursilis]

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

 

[Armethius]

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

Personal Accounts. When was the last time the govt raided your savings account?

 

[IronWing]

Originally posted by: Armethius

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

Personal Accounts. When was the last time the govt raided your savings account?

Personal accounts are a fantasy made up by the Bushies. You would have no personal ownership in the money in the account.

 

[Mursilis]

Originally posted by: Armethius

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

Personal Accounts. When was the last time the govt raided your savings account?

That would be my personal preference, but I wanted to hear what others had to say. I don't see any other way to keep Congress from raiding the money for other uses. If the fox raided the chicken coop once, chances are good he wouldn't pass up the chance to do it again.

 

[umbrella39]

Originally posted by: Armethius
Hi all,

I am currently working for Students for Saving Social Security (S4, www.secureourfuture.org), which is an organization created and run by students (and recent grads) to push for reform of the system.

Now, I am well aware that many here are going to be openly hostile to the idea of personal accounts, but it is something I feel very strongly in, and I believe there are others out there. I think this is an issue that everyone can agree on if they just think about it. The potential for ownership to help alleviate poverty is enormous. Every member of the working poor will suddenly have the opportunity to become an investor, an opportunity they do not get currently. Furthermore, the inheritability of personal accounts will help the poor build intergenerational wealth.

I just wanted to make everyone aware of a petition that we have launched in partnership with other organizations at http://www.americansagainsttheraid.org . The purpose of this site is to express our belief that Social Security taxes should not be spent on other things.

If you agree with me, please take a second and sign the petition

Thanks!

Good luck! PSAs will never happen in your lifetime IMO but can't hurt to try.

 

[43st]

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

They could start by writing a law that would make SS money off limits. Too simple huh?

 

[Mursilis]

Originally posted by: Thera

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

They could start by writing a law that would make SS money off limits. Too simple huh?

That's like handing a drunk the key to the liquor cabinet with strict instructions to keep himself out of it. Do you honestly think that if Congress did it (raid the SS fund) once, they won't do it again? :roll:

 

[Whoozyerdaddy]

Originally posted by: Armethius

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

Personal Accounts. When was the last time the govt raided your savings account?

April 15th.

Seriously, I'd rather have the money in a private account than in the hands of the government. Even if I just left it in a CD I'd have a greater return than SS is going to give me. (Assuming it's still there when I reach 65... err 70... err 72... errr... 75)

 

[zendari]

Let's reform SS to where the government cannot touch it for other purposes, after dropping fica to 1% on your first $3000.

 

[shira]

A couple of points:

This notion of a "lockbox" is meaningless. Are you advocating getting the surplus in cash and sticking it in a safe-deposit box somewhere?

The point I'm making is, if money (your savings, for example) is placed into ANY sort of interest-bearing account, it will be "spent" by the institution it's on deposit with (for a bank, the money will be loaned out at a higher rate of interest than is being paid to you). This is exactly what happens with the SS surplus: It's invested in special treasury notes. The SS surplus used to purchase those treasury notes is then spent on whatever the government decides. These are those "worthless IOUs" that everyone talks about - in fact, they're high-quality treasury notes. Do you think that foreign governments would invest hundreds of billions of dollars in treasury notes if they thought they were "worthless IOUs"?

The second point is that it's not just those "near retirement" who are concerned that their benefits will be cut. What about people 10 or 20 years from retirement, who have been paying into SS for 30 or 40 years? These people are not going to be able to derive the full benefit of personally-directed SS accounts. So if you want personal accounts, you're going to also need a VERY long phase-in "adjustment" so that people who aren't just starting to work aren't penalized. This is a complex situation, requiring a sophisticated solution, and one I haven't seen presented yet.

 

[EatSpam]

Originally posted by: Armethius

Originally posted by: Mursilis

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

And what, pray tell, is going to stop the gov't from doing this?

Personal Accounts. When was the last time the govt raided your savings account?

I pay taxes on my savings account.

 

[ShadesOfGrey]

My question is why not just get rid of Social Security instead of trying to make it less bad? Replace it with a system that helps the truly poor instead of telling people it is their retirement fund.

 

[Armethius]

Originally posted by: shira
A couple of points:

This notion of a "lockbox" is meaningless. Are you advocating getting the surplus in cash and sticking it in a safe-deposit box somewhere?

The point I'm making is, if money (your savings, for example) is placed into ANY sort of interest-bearing account, it will be "spent" by the institution it's on deposit with (for a bank, the money will be loaned out at a higher rate of interest than is being paid to you). This is exactly what happens with the SS surplus: It's invested in special treasury notes. The SS surplus used to purchase those treasury notes is then spent on whatever the government decides. These are those "worthless IOUs" that everyone talks about - in fact, they're high-quality treasury notes. Do you think that foreign governments would invest hundreds of billions of dollars in treasury notes if they thought they were "worthless IOUs"?

The second point is that it's not just those "near retirement" who are concerned that their benefits will be cut. What about people 10 or 20 years from retirement, who have been paying into SS for 30 or 40 years? These people are not going to be able to derive the full benefit of personally-directed SS accounts. So if you want personal accounts, you're going to also need a VERY long phase-in "adjustment" so that people who aren't just starting to work aren't penalized. This is a complex situation, requiring a sophisticated solution, and one I haven't seen presented yet.

You make very good points, however, I think there are some very important differences in your examples.

While it is true that the balance in a normal savings account is "re-loaned" at a higher interest rate, it doesn't necessarily follow that this makes it similar to the Social Security treasury bonds.

Economists talk about "savings" and "investment", and ultimately it is the level of both that determines how quickly our living standards increase. Putting your money into a savings account is a "good" example of savings. This is because the money then goes to a worthy business that will take it and create jobs or buy capital to make workers more efficient.

In contrast, the balance in the "trust fund" that consists of treasury bonds is not loaned out or invested, but simply spent on government programs, most of which have very little long-term positive impact on the economy (examples include the iraq war, bridges to nowhere, farm subsidies, and other things). Government spending doesn't inherently increase productivity, which is the main problem.

Secondly, the balance in the trust fund is, in fact, worthless, and I will explain why.

While the balance in a savings account consists of a liability to the lender, the lender is also covering this liability by lending out the money at a higher rate of interest, thereby having truly more assets than liabilities. When I close my savings account, all the bank must do (slightly oversimplified) is call in all of the loans made with your money. Of course they keep enough money on hand so that this doesn't have to happen, but this is the gist of what happens.

In contrast, the problem with the trust fund is that the government has loaned the money to itself. Therefore, any interest is largely contrived (as it has to be raised from future taxpayers) and the principal is spent (you can't call in a loan to yourself). When it comes time to redeem these "special treasury notes" where does the government get the money? From taxpayers.

Finally, while your savings account is backed by an FDIC guarantee (and by law), you bascially have every conceivable reason to believe that nobody will mess with it. In contrast, the Supreme Court ruled that you do not have a property right to your Social Security benefits. Consequently, congress could reduce your benefits tomorrow (as they have before), and you have no recourse.

Let me finish by clarifiying one thing. <b>Nobody is arguing that the government will default on the treasury bonds. We are arguing that when the time comes to redeem these bonds, the govt will have to raise taxes to do it. There's just no other way</b>

 

[Mursilis]

Originally posted by: Armethius

Finally, while your savings account is backed by an FDIC guarantee (and by law), you bascially have every conceivable reason to believe that nobody will mess with it. In contrast, the Supreme Court ruled that you do not have a property right to your Social Security benefits. Consequently, congress could reduce your benefits tomorrow (as they have before), and you have no recourse.

THIS is key - citizens have no legal right to one dime from SS, unlike a 401K or any other private account. THIS is why SS is incredibly flawed - the gov't takes workers' money and gives nothing back but 'trust me'.

 

[charrison]

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

What do you want this lockbox to look like?


No one seems to want to answer this question and I have asked it many times.

 

[Armethius]

Originally posted by: charrison

Originally posted by: Uhtrinity

Originally posted by: Thera
:thumbsup: Lockbox

:thumbsdown: Santorum

Ditto, if the government would just stop raiding SS it would be fine.

What do you want this lockbox to look like?


No one seems to want to answer this question and I have asked it many times.

The lockbox would be a personal account that is invested in some type of non-government investment (not treasury bonds). So it could be invested in one or many of corporate bonds, CDs, mutual funds, stocks, etc. Basically a government mandated 401K.

This is the only configuration that would ensure that congress wouldn't get to your money. Anything else is just creative accounting.

 

[Jhhnn]