Actually there may be some points of agreement among us. I like private accounts, just not to replace Social Security which serves a different function.
I like 401Ks in which some percentage of income is removed from taxation and used to promote retirement savings. Let us look at what this crisis is and what needs to be fixed. The Social Security Report by it's Trustees which has been accused of using too conservative of assumptions, does show some relatively minor adjustments have to be made. http://www.cbo.gov/showdoc.cfm?index=5530&sequence=6 A median income male with median earnings and a median lifetime born in the 50's will have a median scheduled annual SS benefit of $17,200 in current dollars. They foresee only a minor underfunding of some long lived beneficiaries resulting in a lifetime median net present value benefit of $151,400, about $100 less than regulated. Someone born in the 80's should have a scheduled annual SS first year benefit of $22,900 in current dollars but because of the SS income shortfall it would be reduced $1,000. Instead of a net present value of lifetime benefit of $218,400 it would be reduced to $183,200. Someone who is born this decade, say this year, should have a SS first year benefit of $29,500 when they retire at age 67 under current regulations and assumptions but it will have to be reduced to $22,300 to make payments out of the SS fund. The NPV of their median lifetime SS payments would be $208,900 instead of the scheduled $290,900. This indexing of benefits to inflation instead of wages may help as does a guaranteed median federal benefit of $29,500 65 years from now seem necessary? BTW, I am most concerned about low income retirees as doing nothing to change the formulas doesn't and running SS off of the diminished trust payments doesn't seem particularly harmful 50 years from now except for that group. There are ways of fixing Social Security by a combination of reduction in the growth of benefits, raising the retirement age, a small raise in the tax and raising the cap that would fix this program but that is not Bush's objective. Some intelligent observations are at Talking Points memo. "Your payroll taxes and the whole edifice of the Social Security Administration [over the objections of the SSA] is being joined to Karl Rove's outside astroturf groups pushing the Social Security phase-out. Or, I guess you could say that your payroll taxes are being used to cheat you out of what you've spent the last decade or two or three paying them for." http://talkingpointsmemo.com/ And some more factual information at MSNBC, which I am not normally a fan of., http://msnbc.msn.com/id/6827519/ "In 14 of the past 47 years, including 1975 to 1983, Social Security paid out more in benefits than the government collected in payroll, with the gap reaching $10 billion in 1983. So the projected "crossover" point in 2018 is a relatively meaningless milestone, say opponents of Bush's privatization plans, even as they acknowledge the system faces long-term problems.... "The emphasis on 2018 by Bush and other officials relies on "either an implication or very often an explicit statement" that the Social Security trust funds have no real assets, Greenstein said. Try telling that to the Social Security trustees, including Treasury Secretary John Snow, who offer a detailed list of government securities they hold, paying up to 9.25 percent interest and totaling more than $1.6 trillion.... "John Rother, AARP's point man on the subject, suggested raising the wage cap on Social Security payroll taxes, currently at $90,000, and bringing into the system some of the few employees not covered by it. Raising the wage cap alone could close 40 percent of the financing gap, he said." The reason this is being pushed into crisis mode is that the federal government will be required to raise taxes on the rich by raising the wage cap to improve SS and to raise income tax rates to meet the federal debt starting in ten years or so and the more they attack the problem now the less the higher incomes will have to pay in the next decade. It is a crisis because they cannot continue to cut taxes for the wealthy. Gary Denton _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
