social (in)security
one fact that few (if any) can deny is that social security, as we know it, is on its way out. with the demand of the baby-boomers increasingly out-pacing the payments of the current workforce, social security will not be able to live up to its obligations over the coures of the the next ten to twenty years. much debate is going on right now about how to "salvage" the social security program. it appears that the argument over providing for future retiring workers amounts to either the privatizing of a small portion of each workers money, thereby giving him/her something that is actually THEIRS, or pouring a ton of federal money into a hole-filled bucket that is bigger than the amount of water to go in. it's probably not hard from the emotive language used to determine my feelings on the subject.
in a current post on powerline, hindrocket gives his take on the current state of affairs with the social security system:
nay-sayers have been arguing that privatization of part of the social security program cannot work because too many people are unable to wisely manage their funds...the risk outweighs the possible advantage. another aspect of the argument (as outlined in powerline's rebuttle) is that this level of money management would lead to greater stress for individuals who now have to worry about losing their retirement funds in the stock market. however, former congressman, presidential candidate, and economics expert, jack kemp, has been trying to explain that the risks are minimal. he says that what most people fail to realize is that the amount that will used for the personal accounts has a safety net built into the plan that protects workers from losing more than their base payout would be within the current structure. one cannot lose more than he would have received from normal payouts. kemp argues that a responsible approach to handling the current crisis is to limit spending while reforming social security.
in an article on townhall.com, kemp explains the situation and outlines benefits of such an approach:
in a current post on powerline, hindrocket gives his take on the current state of affairs with the social security system:
I've always thought that the Social Security debate is weirdly attenuated. To me, the most basic point is that a person should OWN his or her retirement account, as I do mine, and as all upper-middle income Americans do. Social Security is a diabolically inadequate program: if you die, the "contributions" you've made to the system are forfeited, and your heirs are out of luck. Why? Anyone who saves money should be able to pass those savings on to his or her heirs. But for most people, the Social Security program sucks up the funds that he or she might have otherwise been able to save, and steals them on behalf of the federal treasury. For that reason, the Social Security program creates an environment that is much worse than we would have in the absence of any retirement program of any kind...the problems with the current social security system are anything but new. for years, economists and others who have recognized a problem have been sounding the warning. for example, based on research for his 1986 book, poverty and wealth, philosopher ronald nash described the current welfare system as "an elaborate pyramid scheme in which late-joiners are forcibly taxed to meet the cost of benefits assigned to earlier joiners. the generation of younger workers are required to accept on faith the principle that sill future generations of workers will absorb all future costs and will pay the taxes that will cover their benefits. Unfortunately, there is one enormous problem with this assumption: the number of future is recipients keeps growing at the same time that the number of future workers whose taxes are needed to pay for future benefits is declining"(147). as a result of this study, nash, along with others aware of the problem, were calling for the kind of privitization that is under consideration now. the concern is whether we have waited too late to make adequate changes. it seems that any solution, at this point, will require huge government subsidies. however, any government funds used to set up personal retirement accounts at least appears to be a choice that leads to building a new boat rather than simply stuffing dollar bills into the hull of the titanic while hoping the leak stops. real change can mean nothing less than new ideas for a bad system.
...The truth is that Social Security is an untenable, unsustainable program which, even at its best, fails to meet the most basic test of any retirement program: the recipients of Social Security are entirely dependent on the whim of the State. Congress can, at any moment, cut off all Social Security funding, and no one recognizes any property right in any "equity" built up by decades of contribution to the fraudulent Social Security "trust fund," which does not contain any assets.
The Social Security program is, in essence, a fraud. It would be best if it went out of existence as quickly as possible. Given the political realities, anyone under the age of 50 should be agitating to bail out of the sinking ship and obtain the right to save money, rather than relying on the whims of the political process.
nay-sayers have been arguing that privatization of part of the social security program cannot work because too many people are unable to wisely manage their funds...the risk outweighs the possible advantage. another aspect of the argument (as outlined in powerline's rebuttle) is that this level of money management would lead to greater stress for individuals who now have to worry about losing their retirement funds in the stock market. however, former congressman, presidential candidate, and economics expert, jack kemp, has been trying to explain that the risks are minimal. he says that what most people fail to realize is that the amount that will used for the personal accounts has a safety net built into the plan that protects workers from losing more than their base payout would be within the current structure. one cannot lose more than he would have received from normal payouts. kemp argues that a responsible approach to handling the current crisis is to limit spending while reforming social security.
in an article on townhall.com, kemp explains the situation and outlines benefits of such an approach:
the good news is that the Progressive Personal Account Plan put forth by Social Security guru Peter Ferrara and officially scored by the Chief Actuary of the Social Security Administration, provides a perfect way to combine spending-growth control with Social Security reform. PPAP helps pay the transition from the current tax-and-transfer redistribution retirement program to a fully funded personal saving-and-investment plan by slowing the growth of federal spending by 1 percentage point a year. This modest spending limitation gives workers a huge incentive to support spending-growth restraint because every dollar in spending savings realized under the speed limit on spending growth flows automatically and directly into workers' personal retirement accounts, building their personal wealth and providing for their retirement security and prosperity."it is always a scary thing to consider change, especially when it comes to retirement savings. it is clear that to do nothing is to deny the inevitable and that has been done for far too long. the only way clear to a hopeful economic future, is to introduce and support new ideas in order to take the money already being funnelled into this sinking ship and give to workers the ability to build equity in a system in which benefits are not forfeited to the government, but are passed on to the next generation, where they belong.
If Bush follows through as he is proposing to freeze discretionary spending growth to 1 percent or less next year - a version of the "flexible freeze" - overall spending growth would fall from the 6.2 percent currently projected by the Congressional Budget Office to 3.2 percent. Such savings would surpass the PPAP spending restraint by a factor of three. It would set the stage for creating and partially funding large personal retirement accounts with savings from controlling the growth in other federal spending.
By employing even a modest spending limitation, such as the one included in the PPAP, it would be possible not only to prevent Social Security from plunging off a cliff when the baby boom retires, but also it would represent a huge step toward empowering and enriching American workers. Under the PPAP plan, every worker would be permitted to use the savings from reducing other government spending to place into his or her personal retirement account 10 percent of the first $10,000 they earn and 5 percent thereafter up to the cap on Social Security taxes. That amounts to $2,000 a year for someone earning $30,000."
Labels: David C. Price
posted by DAVID C. PRICE at 12/21/2004 09:10:00 AM
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