News-Record.com

Social Security was intended to be a safety net, not a retirement fund; those who expect to rely on it for the bulk of their retirement income were and are shortsighted. Those who would turn it into an IRA program are similarly shortsighted. The idea was to provide folks with a small cushion against major shocks to the economy, and that's what it should remain.

If you want to see what this will do to our Social Security look at Chile. This is the system that Bush is basing his ideas on. People who are retiring now in Chile are finding out that privatization doesn't work.

For my money, I'd rather the administration focus on the huge healthcare mess. Double-digit growth in healthcare costs every year can only last so long without having a major impact on the economy.

First, Bush does not want to look to anything that remotely resembles what he "envisions," whether good or bad, especially BAD!

Second, yes, SS was set up as a stop-gap measure. However, in our parent's/grandparent's day, their SS payment was sufficient enough for them to live on without fear. However, as the greed of capitalism has outgrown the "average" citizen, this is no longer the case.

Last, I agree with Kehaar, focus on the REAL problems and leave the rest alone!

This letter and the comments attached are from people who have well indoctrinated by the news and opion of the N&R. They show a deep and balanced understanding of the issues facing the SS system don't they media types?
The system was designed in 1930s and has had a couple of total overhauls since. The vehicle threatens to be like an old boat: a hole in the water into which you pump money just to say you have a boat!

With the long-term relatively steady economy that we now have a new and better safety net may be available.
Why not be a little more reasonable and wait until you have seen the new plans before you start trying to give it an abortion. Or has baby killing become such a habit that it is the only to approach solving problems?

Why in the heck would anyone object to the government taking less money out of their pocket at gun point.

What is being proposed is a portion of the money that is currently being stolen from each and every working American would be put in a place that would allow it to grow. That place, traditionally, has grown money at twice or more the rate that the money in the Social Security program.

The money put in that fund will belong to the person who earned it. It will not be stolen from you when you die as the current program does. You would actually be able to leave the funds to someone in your will. Unlike the current system that takes the money from you and should you die it vanishes into nothing. Nothing for you, nothing for your spouse and nothing for your children. Just stolen and no different than someone who raids your bank account and vanishes into the night.

Jasper, there is plenty of information about what the President's plan might look like -- I've posted links to a key White House memo on the subject, and to a detailed GOP briefing book, at my blog. Those of us who would like to see positive and meaningful SS reform are trying to participate in the debate, not just sit back and be dictated to.

Mac, I hear what you are saying, but this comes down to a fundamental definition of what SS is supposed to be. It's a plan to guarantee a minimum income to all seniors -- we the people pay in as part of promoting the general welfare, and if we die before we get ours back, well, that's part of the price in living in this great country, and over time it will even out for our families. You may disagree with this basic notion of what SS should be, and work to change the definition, but let's be clear about what the program has meant for generations, and clear as well that there is a difference between using some market strategies to strengthen it (which I strongly support) and in remaking the fundamentals of the program itself.

The author of the original letter shows little in the way of real understanding, only a visceral hatred of anything Bush tries to do. He should quit reading Molly Ivins and listening to Al Franken and get some real facts.
In 1998, Bill Clinton said social security was in crisis. It is now 7 yr later and the problem has not gotten any better, and the demographics say it never will. We are in a long downhill slide with an increasing velocity. What rate of speed-of-decline do need to achieve to declare an emergency and try to fix it? Dems dont want to do it now, because they want the political credit for saving SS - President Hilary wants that as her legacy.
We do need a fix, perhaps a redefinition of what the system is supposed to provide as Ed Cone suggests. The Chilean model, not the Swedish, should be our guide. Is it too much to ask that some portion of the money we unwillingly put in should grow at a higher rate and should actually belong to us? Nay-sayers who fret that the market fluctuations will wipe out some arent being intellectually honest. My guess is that many of the Dem naysayers who oppose overhauling the system, both in and out of Congress, have lots of money in 401ks and other investments. (Of course lawmakers have their own pension fund, perhaps that should be the model......fat chance)
Bush deserves credit for looking ahead and trying to fix something which is danger of becoming a huge train wreck. He deserves our support in making the fundamental changes which will raise the level of retirement living above the current "minimum wage".
So you know, I am 64 and therefore in the "protected zone", so I have no personal dog in this fight. But I do have three daughters (late 30s) and 10 grandkids, all of whom will prosper or suffer under whatever system we choose.

I think Ed raises a great point. Social Security isn't just an IRA for us as individuals. It's a way of making sure ALL of us have a better future, whether we grew up rich or poor.

Those of us who have had great educational opportunities probably aren't the ones that need to worry about what form SS has and what form it will take. Those that need to worry are the people who haven't had the best opportunities in life. As a society, we can say "every man for himself" or we can sit in the boat and do our best to throw a lifeline to those in need.

That said, we ALL want more money and I think we can all agree that Social Security needs reforming. I think it's vital to discuss and debate what form it should take and I don't think it is beneath us to consider how it will affect society as a whole.

Mike Crouch, it's not going to be Democratic opposition that tempers attempts to radically redefine the safety net, it's going to be Republican opposition.

The Chilean system is not looking so great these days. I would like to see more conversation about index funds and other broad, low-cost investments, and also more conversation about where we'll be getting the money to improve the system (eg transition costs to cover those under the existing program while younger workers divert money from it).

This is too important to be a partisan issue -- and (here's your moment of zen) the party that figures that out will reap enormous political benefits.

Ed, surely you are not among those who think that there is this big pile of money called the "Social Security Fund" in some bank out there?

There is no such thing. The government forces you, at the point of a gun, to surrender 14+% of what you earn to spend -spend -spend as whom ever is in charge sees fit. You have no choice. It provides no guarantee that you will get it back nor a guarantee that it will earn a profit while they are spending it.

Your statements above would indicate that you think there is some sure and certain thing about the current money diversion system known as Social Security. There isn't anything secure about it.

President Bush has already said, many times, that what he is proposing will insure that the people who are in the system will be protected. At the same time some are allowed to move to a better way of handling money.

I cannot picture why anyone would not want the money they earn to remain their property.

The big fear and the big resistance by the liberal factions in our government is that people will see how much their money can earn if it is really invested instead of confiscated and spent. When a person sees that what 10% or 20% of his earnings actually can produce and grow they will demand that all of it be put in that program. The liberals cannot afford to loose that control over people, it weakens their leash to pull them around with.

Mac, I am aware of the funding structure of SS, thanks.

You say: "I cannot picture why anyone would not want the money they earn to remain their property."

Well, I think we all want to hang on to our money, but many Americans believe that there is such a thing as the common good -- what the Framers called promoting the general welfare -- and that despite the virtues of private property ownership, some degree of taxation to support certain public programs is worthy, just, and responsible.

A question for Mac McAtee: If the government isn't going to pay what it owes Social Security, then why do lots of perfectly savvy investors (including a lot of national banks) continue to buy government paper?

Another question for Mac: Where are you consistently getting 10-20% returns on your investments? Let me know, 'cause I'd like in on that action.

Ed makes a point that's central to this issue: SS is a way of promoting the general welfare of our country. What's disturbing about privatization discussions (whether SS or other issues) is the implied dismissal of any obligation that we, as citizens, have to contribute to the common good. To paraphrase Warren Buffett, who knows a thing or two about creating wealth, if you drop a bunch of billionares into an unstable war zone their chances of creating vital businesses are much less than they would be in the relatively secure, economically stable US of A. That stability isn't, as so many would like to believe, a simple matter of a superior economic system. It's because we, as a nation, fund a social safety net to insure that anyone has a minimum income and promote a degree of social stability. It's because we pay for police protection, so that we have some measure of personal safety. And on and on and on.

So, when I hear someone complain of being ripped of "at the point of a gun," I ask, what is your obligation to the common good? Or do you believe that this is a quaint notion of the founding fathers that we've long since outgrown?

"Social" as in "Society". "Security" as in "secure". Not too hard to understand.

Ed:
If it is taxation then quit calling it Social Security and misleading people into thinking that it is some kind of protection. The President outlined a way to protect what you are calling the common welfare and also to allow people to keep and control some of their own destiny. That is something that is the basis for the founding of our country and it wouldn't be what it is without it.

Lex:
All it takes is a one person majority in Congress and the money that people think belongs to them no longer does. As an example, say you are 60 years old. You are able to retire at 62. You are told you have $60,000 in your Social Security account (that is pure fantasy by the way). When you reach 61 1/2 years old, Congress votes to make the age you can claim your money 65 years old. You die at 63. They just stole your money.

Ian:
Where did you find out that I constantly make 10-20% on investments? It is generally known that the money that is supposed to be in the Social Security fund returns about 2.5%. Twice that is 5%. The intent of Social Security is not to provide a minimum income for anyone. Where did you come up with that? Where did police protection get in the Social Security debate? By the way police don't protect anyone. They just come and write up the report after an event. If you are not providing for your own protection, yourself, you should think that over.

As far as the common good goes there is no provision for the Federal Government to play with local education, but they do. There is no provision, in fact there are laws against, NC and counties giving money to private companies, but they just did. There is no provision for confiscating private property to benefit private business owners but they do that every day. If all of the various governments would stick to things they are good at there would be no reason to steal little old ladies Social Security checks.

As far as getting ripped off at the point of a gun, that is how our tax system works.

Mike and Mac have a good handle of what the pipe dream of SS is. What everyone keeps overlooking is that if the idealistic phrase "general welfare" does not describe the SS system. How many billions of the benifits go to millionairs and to others whose retirement income is in excess of, say, $30,000 per year?

In my opinion the best solution is to scrap the old bucket of bolts,(O my God, how awful) and have a promise that is need based which assures everyone at least $18,000/yr indexed to inflation rate.

I think Robert Shirley got it right.

Mac, my mistake about your return on investment.

But back to my question: What's your obligation to the common good? Or do you only feel responsible for that which directly benefits you?

Mac, the program is called Social Security. It is supported by taxes known as payroll taxes, or FICA taxes. They are also sometimes called contributions. Don't know what's confusing or misleading there, but now that we've cleared it up, welcome aboard!

Jasper, you raise an interesting point -- should Social Security benefits be tied to need? I think you overestimate the amount of money flowing to the very rich, because that is a small group, but certainly lots of money goes to middle and upper middle class retirees.

Commenting on Jasper Martin's letter to the editor. Jasper needs to dig a liitle further in his research and he will see that if at retirement he has $99,000. dollars in his account he will wind up actually getting about $21,000.00 after his personal acct. will be charged for what it cost the government to start his account along with other fees. If Jasper starts his personal acct. at the age of 30 and lives to the required age for retirement, the government will have over 30 yrs. to draw interest that will be wiped out by cost to Jasper. Medicare is broke. Now Bush wants to really break Soc. Sec. by taking two trillion dollars out of it. I might add does Jasper realize that when Bush breaks Soc. Sec. if Jasper realizes it will become the responsibility of all the young people Bush is targeting to take care of their parents that would otherwise at least have been able to live above the poverty line on Soc. Sec. as we know it today. Bush does not want to fix it, he wants to break it and it sounds like Jasper is going to give Bush the ok to do it.

For those who bought the NY TImes Jayson Blair-like article on the Chilean SS system as evidence a private account system doesnt work, check out today's WSJ, Feb 4 ppA9. Seems as if the Times reporter cherry picked some weak points and disregarded the overall huge success of the system.
Half of all Chileans eligible for the new systems opted not to use it, those who did are reaping ten percent (that is 10%)annualized growth in their accounts. Those who did not participate are cited by the NY Times disingenuous "non-story" as evidence of failure!! HUH??
Pres Bush is changing the fundamental premise of SS. He wants to give some portion of ownership of the money to the people whose 7+% plus a matiching 7+% from their employers is being forcibly taken and REDISTRIBUTED.
That last word (redistributed) is the key sticking point with Dems. They are the party of income redistribution and any thought of backtracking on that premise is anathema to them.
Their view of the average American is that he/she is not bright enough to control his/her own destiny, that he/she is fundamentally greedy and that the government must play the role of arbiter to see that all are covered. If you dont believe that just read some of Hilary's remarks and read what the Dems are saying about the American voter who just elected Bush.
What this fight means in political terms is if Bush is successful, Dems have LESS sway over voters rather than more, they will have less money to co-opt from the Treasury for their social reengineering programs....the Dems will fight this to their last breath.
By the way, what Bush is proposing actually exists in America today......YEP, Congressmen and all federal employees have a thrift plan which channels their contributions into some low risk stock and bond index funds. Ask your friendly postman or other federal employee their opinion of their thrift plan. ASk them if they want to change. Hint.....it beats your and my Social Security hands down.
What is GOOD for American people is NOT GOOD for the Democrat party. Remember that.

Ian,
Depends what your definition of "common good" is.

If you mean am I responsible for you making poor decisions in your life, no, I feel no obligation for your common good.

If you mean do I feel it proper to use tax money to support our military, pave a road, sure, I have no problem with that.

I suspect I know how you wish to define it.

Why don't you take a bucket and go down the street where you live, knocking on doors. Tell your neighbors that you want them to put money in the bucket so when you get to be 65 years old you will have some money to spend. Let me know how much you get in the bucket. We both know the answer don't we?

Why do you feel it OK for you to hire a government agent to take a gun and a bucket and go to the same neighbors and force them to put money in your bucket? That is what you are doing.

I would also point out that what President Bush is proposing has the individual controlled portion of the tax being invested in very secure options. As examples, in the 401K program I participate in some of the safer funds have 10 year returns averaging 8.21%,7.5%, 8.4% per year. I'll take that over 2.5% and having the money confiscated in the end any old day of the week.

Mac, when you phrase it in terms of your obligation to my common good, you miss the point. The idea is that there are costs, risks, and rewards that we share, because the costs and risks exceed what any one of us should bear. This doesn't mean that we all equally share in each, or agree about the details. You may want paved roads and I may want a funded fire department, but you and I don't get to directly make those decisions. They're made, in general principle (though there are lots of cases where you'll disagree with the specifics), according to the larger needs of the citizenry.

The bucket analogy is also off point. SS is a way of pooling resources across the population to mitigate risk and provide a safety net. Sure, we can put money into private/personal/insert word of the week accounts (and a lot of us do this through 401k plans, as you point out), but this doesn't have the same benefit.

You imply that there's a simple correlation between good choices and positive outcomes, and poor choices and bad outcomes. I disagree. There are social, individual and economic forces that don't respect our decisions, and the way we make them manageable for everyone is by finding ways to pool risk.

If you think that everything you have comes by the sweat of your brow, that the government is a sinister oppressor intent on stealing your money, and that you owe nothing to others unless you agree with the need or find them deserving of your charity, then we obviously disagree. So be it.

An interesting analysis of the president's proposed plan: http://www.cbpp.org/2-2-05socsec4.htm.

If you want to cut right to the chase and see what the plan means to you, jump to section three and view the benefit projections based on the CBO's assumptions and methodology.

Section four is also particularly interesting since it addresses how private account gains will be recaptured by the government. The bottom line is that unless your private account generates a rate of return greater than 3% over the inflation rate, you get nothing from that account at retirement.

Finally, it illuminates the real borrowing costs of the plan (sec. 2). The White House offers a ten year projection beginning in 2006, yielding a cost of $754 billion including interest. BUT, the plan won't be launched until 2009, and won't be fully phased in until 2011. So, an accurate 10-year projection (2009-2018) shows a cost of $1.3 trillion. From 2019-2028, we would get a bill for $3.3 trillion. Quite a difference, huh?

From CNN/Money:

Bill Gross, manager of the world's largest bond fund, is criticizing President Bush's plan to privatize part of Social Security.
Gross, managing director at Pimco, called the argument about the solvency of Social Security "silly" and said it was an example of the president not focusing on more important issues, such as the budget deficit.

From Pimco's site:

Size matters in economics and finance too. Wall Street, K Street, and increasingly Main Street are all "abuzz" about Social Security and the size of our future liability to senior citizens. Can we afford it and what year does the system go bankrupt? (2052 according to the CBO - the day after tomorrow if you listen to Bush’s urgent tones). But this argument about insolvency and how much money is or will be in the Social Security Trust fund is really all so silly. It is an argument to promote an agenda that has little to do with seniors and more to do with Bush, his ownership society, and ultimately his domestic legacy alongside the likes of Ronald Reagan and FDR. Without a blockbuster of a program in his second term it is unlikely that Bush can go very far in the history books on the back of a paltry 3 or 4 percentage point tax cut for the rich. Presto! We now have partial privatization of Social Security heading the agenda upon which the President intends to spend his well-advertised political capital. Privatization, however, is advanced as a simple way to salvage a sinking system when in fact the problem has more to do with demographics than the lack of ownership.

He must be one of those lib'rul bond fund managers, so what could he know? More at: http://money.cnn.com/2005/02/04/markets/gross_social_security/index.htm?cnn=yes
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2005/IO_Feb_2005.htm

Mac, we were talking about two different things. You're talking about what the government might owe any one individual. I thought you were talking about what the rest of government owes the Social Security Trust Fund.

SS was never designed to be a retirement plan; it's a supplement to whatever you can put together on your own. I do believe in what some here have been referring to as a "greater good". I've never counted on SS as a significant part of my retirement plan. Thank God I have options, but I don't want to see the system shredded for those that do not. Down the road, do you want to tell the holder of a SS private account two years away from retirement that their fund is basically worthless since their retirement was preceded by 3 or 4 years of a down market? The economy goes up and down, you can count on that.
We already have supplemental retirement accounts in this country; they're called IRAs and anyone with a pulse can get one at the local bank or other financial service providers. Why would I want to see the federal government create yet another layer of beauracracy to run this plan, have to borrow even more money to cover the loss to the SS system due to incoming SS payments diverted to private accounts, and effectively tells private account holders they are out of luck if their account return is not at least 3% above inflation?
There has to be some other way to realize efficiency and savings in SS. Based on this president's management of the truth, why should I trust any of the rhetoric designed to ram this plan through Congress to his desk?