The truths vs. the myths about Social Security

[UpInArms]

http://www.newsday.com/news/columnists/ny-saul4056961nov27,0,2589308.column?coll=ny-news-columnists

The e-mail from Rich S. gives us an opportunity to assert some truths about the nation's 70-year-old Social Security System, which may help prevent the Bush administration from souring the coming Social Security debate with the kind of lies that got us into a war.

<snip>

When Social Security became law (over Republican opposition) it was feared that retirees would continue to work and take jobs away from younger workers. Thus for years Congress reduced benefits by a dollar for every two dollars earned over a certain limit, which saved money for the system. But a few years ago, as more retirees went to work, Congress phased out the penalty for beneficiaries over 65. But not for Rich, although he and others like him may earn as much as $12,000 next year without a reduction.

<snip>

1. Social Security is not in crisis and nowhere near bankruptcy. If nothing is done and the economy grows at a snail's pace, the Social Security retirement system would begin dipping into the trust fund in 2018 to pay benefits. But the system's Republican trustees say the trust fund, with assets of $1.8 trillion (which continues to grow from interest paid on its Treasury holdings), can pay full benefits until 2042, when the youngest boomers will be 78. And if need be, it can continue to pay 70 percent of benefits until 2078.

2. But if the economy does better and Congress makes slight adjustments, more modest than in 1983, like raising payroll taxes 1 percent and ending the wage ceiling on which taxes are collected, Social Security would remain in the black, guaranteeing inflation-adjusted pensions for millions of Americans into the next century. The generation following the boomers is considerably smaller.

3. Don't let anyone tell you the trust fund is not real, that it consists of a bunch of worthless IOUs. The so-called IOUs are U.S. Treasury notes, backed by the full faith and credit of the United States. And the Bush administration, which is borrowing heavily from the trust for Iraq (evidence that it's real money), won't dare renege on the debt.

...more...

(Note to Mods: I realize that this article is a "column", but the "news" media refuses to report any truth about the SS debate - allowing this mal-administration and it minions to lie and confuse. I thought it might be helpful for others to have some facts to refute those lies.

Do as you will. Thanks for your tolerance :hi: )

[gottalickbush]

1. Personally

This may seem wrong, but, I would rather be in control of my own retirement than have the government take care of it for me. Kind of like having the fox guard the chicken coop. I don't trust ANYONE in our government, to the point that I feel they are trying to find a way to get my retirement. Another reason is I could do a better job at earning better interest on my money. Thats just my opinion on it. I want to be able to retire comfortably and not have to worry about working again. Hope I don't piss anyone off for that view:)

[UpInArms]

3. for a history of the Social Security program

and what you should think about, a bit of reading might be in order

http://www.nps.gov/elro/glossary/great-depression.htm

and from this article:

http://www.tikkun.org/magazine/index.cfm/action/tikkun/issue/tik0201/article/020113a.html

excerpt:

Bush II's proposals to privatize Social Security would redirect $100 billion per year of payroll taxes (the largest levy paid by 80 percent of Americans) into financial markets where, from 1983 to 1998, 53 percent of market gains flowed to the top one percent of households.

Under the *Co plan, you will not be in control of your money any more than you are under the SS plan. You will be "allowed" to invest "your" money only through certain brokerage firms (so that they, as private corporations, can then syphon off their portion of your savings), with the Mellon (see Richard Mellon Scaife) being the prime recipient.

This is just another shell game with you as the loser.

[gottalickbush]

5. Thank you

Thank you for the information. I'll read it and let you know what I think. As far as trusting the government----I don't. It appears to me that they say they want to take care of me, but all they want is in my pocketbook.

[UpInArms]

8. I can well understand your sentiment

they say they want to take care of me, but all they want is in my pocketbook

and if you actually are applying that logic, you will note that "those" who are trying to get into your pocket appear to the the ones that are telling you that they "want you to control your own money".

This verbally manufactured crisis is more smoke and mirrors.

BTW, Welcome to DU!

[gottalickbush]

9. Thank you

I'm enjoying being here. Everyone seems to be real nice.

[UpInArms]

15. here's a story about private investments

http://www.suburbanchicagonews.com/newssun/city/w25wright.htm

where's the fox and the henhouse?

[gottalickbush]

16. its everywhere

People are corrupt. And it sucks. So really now, who DO you trust?

[UpInArms]

18. it is difficult to "trust"

in the "honesty" of mankind (in general) when the rule of law is discounted and discarded.

You are getting to the root of the problem in your thinking - but we have to learn how to get the debate back into the minds of the population.

When you have no checks and balances (see our current one-party government), that trust is eroded.

When any voice of dissent is silenced, when certain questions are not allowed (where are the "press conferences"?), when our media is owned by 6 or 7 major corporations and the FCC is run by a person who has stated that he "does not have a sense of public service", when the Fairness Doctrine is tossed aside (see ruling by Robert Bork under RayGun) and the "balance" of the networks operating and profiting on the public airwaves is skewed to allow punditry to scream talking points without any correlation to reality, trust is illusive.

You may be nearing the understanding that when you need a helping hand, look no further than the end of your arm.

It's is a frightening revelation to grasp that all of our institutions are now in the control of corrupt individuals that do not serve the public.

We, collectively and as individuals, must make our stand for truth and justice in our country.

Will we allow our elections to be rigged and our pockets to be looted by the minions of the corporate masters or will we each seek ways to remove their control? http://www.thepen.us/e-fraud.html

Will you continue to shop at places that invest in everything but the future of our country? (See corporations moving headquarters to Bermuda) Will you spend your hardearned dollars into the hands of those that funnel money into the decline of our civilization? (see www.opensecrets.org)

There is much each of us can do - go here: http://www.karmabanque.com and see a few more ways you can have an effect upon things.

:hi:

[Just Me]

53. I elect people to "protect" my life and liberty and avenues to happiness.

This "dictatorship" is using my life and liberty and happiness to serve their own interests.

This power-mongering lot manipulates others in order to increase the interests of a few.

True "leadership" empowers humanity.

This powership uses humanity.

Humanity is a base/foundation that can either be spent or utilized.

Seems to me that a shopping spree is in the works,...and it buys nothing but material which has no worth, whatsoever.

[gottalickbush]

54. Interesting sites

Those websites were interesting. I'm looking forward to delving into them deeper. With all the boycotts going on, I need a list to keep them all straight. ;) . Thank you for helping me. I still need to research more about the privatization, but it should be interesting.

[GOPFighter]

14. It's always healthy to be skeptical of the government

But I trust the government far more than I trust the private sector. The private sector would just love to get hold of your social security money. Why do you trust the private sector to give a damn about your retirement? Do you think that the companies you would be investing in are run by good-hearted souls who care about whether you get a good rate of return or not? I think Enron and all the other recent scandals prove that many of the people that would be handling your money care first and foremost about themselves. If they can find a way to line their pockets at your expense, they will.

When I think of privatizing Social Security, I think of my Dad who was a wonderful person, but constantly made poor investment choices. I'm reasonably certain that if he had been able to invest part of his Social Security in the private sector, he would have lost most of it, and his sons and daughters would have had to support him and my Mom for the rest of their lives. It is far too easy to sucker trusting people into making bad investments.

[Imperialism Inc.]

22. I'm with you.

The private sector is certainly less trustworthy than the government.

While there are plenty of liberals who share a distrust of the government , there is a reason that the "don't trust the government" mantra comes more from the right. It is the one place where we the people have a voice. The one place that isn't ruled by "he with the most dollars wins". If they can get the people to turn on this one place they have a voice, then they can rule without any interference from the pesky people and their needs.

[pokercat999]

49. You can't be serious.

Congress and ALL administrations are all about "he with the most dollars wins".

I would put more faith in my local crack dealer than my local, state or national Representative.

We simply cannot trust any of them, sure vote for the ones you think are best but then watch them like a hawk!

[54anickel]

59. Unfortunately, with the ever increasing amount of influence the lobbyist

on K Street continue to gain over government decisions, the gov't and corporations are rapidly becoming one and the same. We need to get control of our gov't back - somehow. I just don't know how we can do it.

http://www.washingtonmonthly.com/features/2003/0307.confessore.html

snip>

The chief purpose of these gatherings is to discuss jobs--specifically, the top one or two positions at the biggest and most important industry trade associations and corporate offices centered around Washington's K Street, a canyon of nondescript office buildings a few blocks north of the White House that is to influence-peddling what Wall Street is to finance. In the past, those people were about as likely to be Democrats as Republicans, a practice that ensured K Street firms would have clout no matter which party was in power. But beginning with the Republican takeover of Congress in 1994, and accelerating in 2001, when George W. Bush became president, the GOP has made a determined effort to undermine the bipartisan complexion of K Street. And Santorum's Tuesday meetings are a crucial part of that effort. Every week, the lobbyists present pass around a list of the jobs available and discuss whom to support. Santorum's responsibility is to make sure each one is filled by a loyal Republican--a senator's chief of staff, for instance, or a top White House aide, or another lobbyist whose reliability has been demonstrated. After Santorum settles on a candidate, the lobbyists present make sure it is known whom the Republican leadership favors. "The underlying theme was place Republicans in key positions on K Street. Everybody taking part was a Republican and understood that that was the purpose of what we were doing," says Rod Chandler, a retired congressman and lobbyist who has participated in the Santorum meetings. "It's been a very successful effort."

If today's GOP leaders put as much energy into shaping K Street as their predecessors did into selecting judges and executive-branch nominees, it's because lobbying jobs have become the foundation of a powerful new force in Washington politics: a Republican political machine. Like the urban Democratic machines of yore, this one is built upon patronage, contracts, and one-party rule. But unlike legendary Chicago mayor Richard J. Daley, who rewarded party functionaries with jobs in the municipal bureaucracy, the GOP is building its machine outside government, among Washington's thousands of trade associations and corporate offices, their tens of thousands of employees, and the hundreds of millions of dollars in political money at their disposal.

At first blush, K Street might not seem like the best place to build a well-oiled political operation. For most of its existence, after all, the influence industry has usually been the primary obstacle to aggressive, ambitious policy-making in Washington. But over the last few years, Republicans have brought about a revolutionary change: They've begun to capture and, consequently, discipline K Street. Through efforts like Santorum's--and a House version run by the majority whip, Roy Blunt (R-Mo.)--K Street is becoming solidly Republican. The corporate lobbyists who once ran the show, loyal only to the parochial interests of their employer, are being replaced by party activists who are loyal first and foremost to the GOP. Through them, Republican leaders can now marshal armies of lobbyists, lawyers, and public relations experts--not to mention enormous amounts of money--to meet the party's goals. Ten years ago, according to the Center for Responsive Politics, the political donations of 19 key industry sectors--including accounting, pharmaceuticals, defense, and commercial banks--were split about evenly between the parties. Today, the GOP holds a two-to-one advantage in corporate cash.

That shift in large part explains conservatives' extraordinary legislative record over the last few years. Democrats, along with the press, have watched in mounting disbelief as President Bush, lacking either broad majorities in Congress or a strong mandate from voters, has enacted startlingly bold domestic policies--from two major tax cuts for the rich, to a rollback of workplace safety and environmental standards, to media ownership rules that favor large conglomerates. The secret to Bush's surprising legislative success is the GOP's increasing control of Beltway influence-peddlers. K Street used to be a barrier to sweeping change in Washington. The GOP has turned it into a weapon.

snip>

A good example is the pharmaceutical industry. Drug companies have a natural affinity for the GOP's effort to move seniors into private plans, because if Medicare were to begin providing prescription drugs, its bargaining power could drive down drug prices. But over the past few years, Republican leaders have carefully cultivated and cajoled the industry. The upper ranks of its Washington trade group, PhRMA, are stocked with former aides to powerful Republicans, and its political behavior reflects it: The industry, which gave roughly evenly during the fight over Clinton's health-care plan, now contributes 80 percent of its money to Republicans. PhRMA has essentially become an extension of the GOP. It supported Bush's plan with a multimillion-dollar ad campaign even before the plan had been finalized and made public, and continued its support even as Bush compromised in ways that went against the drug industry's interests. By contrast, large corporations waited to see what Clinton's plan looked like and then haggled over its details, while health-care companies funded the famous "Harry and Louise" ads that eventually helped sink it.

Bush's Medicare legislation could still stall or get watered down. But the fact that the White House and the GOP have pushed it so far, so fast, regardless of the risk and downside, hints not only at the power of an organized K Street, but at the political end to which it is being directed. For years, conservatives have tried and, mostly, failed to significantly reduce the size of the federal government. The large entitlement programs in particular command too much public support to be cut, let alone abolished. But by co-opting K Street, conservatives can do the next best thing--convert public programs like Medicare into a form of private political spoils. As a government program, Medicare is run by civil servants and controlled by elected officials of both parties. Bush's legislation creates an avenue to wean people from Medicare and into the private sector--or, at least, a version of the private sector. For under the GOP plan, the medical insurance industry would gradually become a captive of Washington, living off the business steered to it by the government but dependent on its Beltway lobbyists--themselves Republican surrogates--to maintain this stream of wealth. Over time, private insurers would grow to resemble the defense sector: closely entwined with government, a revolving door for Republican officials, and vastly supportive, politically and financially, of the GOP. Republicans are thus engineering a tectonic political shift in two phases. First, move the party to K Street. Then move the government there, too.

more...

[54anickel]

63. A more relevant snippet from the article -

If you read The Washington Post last spring, you might have come across what seemed, on the surface, to be just another small beer scandal. This one involved Rep. Michael Oxley (R-Ohio), who heads the House Committee on Financial Services. Late last year, Oxley was set to launch an investigation of pricing practices in the mutual fund industry. But in December, one of his staffers allegedly let it be known that Oxley might go easy on the mutual funds if their trade group, the Investment Company Institute (ICI), pushed out its Democratic chief lobbyist, Julie Domenick. The Post's reporting caused a minor uproar; the House Ethics Committee briefly considered an investigation. The press coverage, however, never made clear why a powerful committee chairman like Oxley would risk his career over one job on K Street.

What explains Oxley's decision is the same thing that explains why the Bush administration would risk angering voters by attempting to privatize Medicare: The GOP needs K Street's muscle for long-term ideological projects to remake the national government. For years, conservatives have been pushing to divert part of Social Security into private investment accounts. Such a move, GOP operatives argued, would provide millions of new customers and potentially trillions of dollars to the mutual fund industry that would manage the private accounts. The profits earned would, of course, be shared with the GOP in the form of campaign contributions. In other words, by sluicing the funds collected by the federal government's largest social insurance program through businesses loyal to the GOP, the party would instantly convert the crown jewels of Democratic governance into a pillar of the new Republican machine. But to make the plan a reality, the GOP needed groups like the ICI to get behind the idea--by funding pro-privatization think tanks, running issue ads attacking anti-privatization Democrats, and so on. The ICI, however, had always been lukewarm to privatization, for which conservatives blamed Domenick. Hence, the GOP machine decided she had to go. In the end, to quell the Oxley scandal, Domenick was allowed to keep her job. But ICI hired a former general counsel to Newt Gingrich to work alongside her, and the GOP's campaign to get K Street behind Social Security privatization continues.

snip>

Indeed, it's striking how openly and unapologetically Bush and his party have allied themselves with corporations and the wealthy. The rhetoric of compassion aside, no one who pays attention to what goes on in Washington could have much doubt as to where the Bush administration's priorities lie. If the economy doesn't improve or unemployment continues to get worse, the GOP may find it's not such an advantage to be seen catering so enthusiastically to monied interests. But most Republicans seem confident that the strength they gain by harnessing K Street will be enough to muscle through the next election--so confident, in fact, that Bush, breaking with conventional electoral wisdom, has eschewed tacking to the political center late in his term. And if the GOP can prevail at the polls in the short term, its nascent political machine could usher in a new era of one-party government in Washington. As Republicans control more and more K Street jobs, they will reap more and more K Street money, which will help them win larger and larger majorities on the Hill. The larger the Republican majority, the less reason K Street has to hire Democratic lobbyists or contribute to the campaigns of Democratic politicians, slowly starving them of the means by which to challenge GOP rule. Already during this cycle, the Republicans' campaign committees have raised about twice as much as their Democratic counterparts. So far, the gamble appears to be paying off.

It wouldn't be the first time. A little over a century ago, William McKinley--Karl Rove's favorite president--positioned the Republican Party as a bulwark of the industrial revolution against the growing backlash from agrarian populists, led by Democratic presidential candidate William Jennings Bryan. The new business titans flocked to McKinley's side, providing him with an extraordinary financial advantage over Bryan. McKinley's victory in 1896 ushered in a long period of government largely by and for industry (interrupted briefly, and impermanently, by the Progressive Era). But with vast power came, inevitably, arrogance and insularity. By the 1920s, Republican rule had degenerated into corruption and open larceny--and a government that, in the face of rapidly growing inequality and fantastic concentration of wealth and opportunity among the fortunate few, resisted public pressure for reform. It took a few more years, and the Great Depression, for the other shoe to drop. But in 1932 came the landslide election of Franklin Delano Roosevelt, and the founding of the very structure of governance today's Republicans hope to dismantle. Who knows? History may yet repeat itself.

Let's hope with the speed that information spreads with today's technology, it will only be a matter of months versus years for history to repeat itself.

[goddess40]

27. Trust CEOs?

This is Goddess40's mom. So you don't trust the government with your money? Funny but my Social Security payment has remained stable but my pension money that was invested in stocks lost $40,000.
Just look at all the fraud that has taken place in the past four years with many of the companies that sell stocks. And if the stock market goes belly up after you retire who is going to bail you out?
And how many people are disciplined enough with their money to keep their hands off it until they retire? Not many.

[bvar22]

36. Yes, I want to control my retirement!

I don't want to trust the government which has NEVER missed a SS payment, is TOTALLY transparent and accountable, operates with a less than 2% overhead, has NEVER reincorporated under a different name, and will probably still be here in 50 years.

I want to trust my retirement to Corporations and the Stock Market, like Enron and Arthur Anderson. They have always taken care of the little guys!

[tabasco]

50. Well said.

My sentiment exactly.

[Divernan]

4. Privitization does NOT give you control over your money

A lot of people mistakenly hear some sound bite about Bush privitizing social security and think that THEIR take home pay will increase the amount of their SS deduction. NOT true. It would simply m ean that the government would still withhold exactly the same amount from your check but turn it over to some designated private investment group (and we all know how little oversight the Bush administration gives to their private sector buddies, don't we?) As one of my kids, a corporate banker, explained to me, the private investment groups will make many millions of dollars in fees from this privitization plan. The only control YOU will have is choosing from among 5 or 6 general types of investment for your money. So you go 25% each for bonds, small cap stocks, large cap stocks, etc. The private bankers/investment guys will collect a fee for each one of those choices; they will collect fees every time they make some change to the various portfolios. In other words, just like in all privitization plans, there will be another layer of profit taken out of the system, at the expense of the taxpayers.

[UpInArms]

7. nicely summed up, Divernan

[0007]

17. .....these private bankers and the pharmaceuticals companies

are juniors best friends. Notice who regulates the price of prescription drugs! A $600 a year credit for medications is the biggest sham yet for those that have a poverty level income.

[T Roosevelt]

6. Also understand what SS really is

it is NOT a retirement plan - it is a social safety net put in place to make sure that the least among us is protected. It provides supplemental income to retirees, but does a lot more for widows and the disabled - hence its true name: Old-Age, Survivors, and Disability Insurance (OASDI).

People who believe that SS is for retirement really are the problem, because they go through life thinking that they don't have to save, and by the time they find out they should have, whoops, it's too late.

My advice - ignore SS altogether and plan as if it will provide you NOTHING.

[gottalickbush]

12. well

Thats the way I look at it. I have several accounts set up so that my gf and I will be taken care of when we do finally retire.(want to travel) Too many people don't plan for retirement, who are able to, I should say. Even if it is a little bit, it still adds up.

[Hamlette]

19. saving for retirement is what you should do

but you need social security in addition to make sure you are not destitute.

We put into retirement all our lives. When the stock market was on the rise, we put it all there. We lost half of it when the bubble burst.

I'd always said, it won't happen to me.

If we'd put it into savings accounts it wouldn't have grown nearly as much.

The stock market is tempting. It was very tempting in the 90s. We are not (ordinarily) idiots. If push comes to shove we can live on our social security income. If we'd invested our social security income in the market in the 90s, there wouldn't be enough left to take care of ourselves.

My advice? Keep saving but also buy a house and travel now. Don't wait until you retire. We have been all over the world. The older I get, the harder it is to travel (physically). I'd glad I saw it when I was young enough to have the energy to stay up all night to watch the sunrise in Paris.

[WyLoochka]

10. Social Security is Insurance

for anyone who might need it due to unanticipated, untoward events totally beyond their control. Like maybe an "economic armageddon" that wipes out 10-15 years of personal earning/saving/investing opportunities.

Social Security is NOT your personal "retirement" account. It is THE safety net. An insured safety net benefits every single one of us, the wealthy included. The ONLY body that can provide this insurance is the federal government.

One major change needs to be made to Social Security. The cap on FICA taxes over incomes of $84K needs to be blown away. People need to pay FICA on every dollar earned, whether by labor or investment, right on up to the multi-miliions per year that some are fortunate enough to amass.

Otherwise, leave Social Security alone.

[jwirr]

26. Amen

[TahitiNut]

33. While I partially agree ...

... I don't agree that the cap should be "blown away" or FICA should be paid on investment income.

We already have altogether too much of our economy tied to the Greater Fool Equity Markets, imho. Less than 1% of the dollars traded in the equities markets ever find their way into the enterprises in which those equities are held.

Social Security is currently the only 'investment fund' (insurance reserve) that's tied to labor compensation instead of labor profiteering (ownership equity). A big part of the reason it's facing hard times is because we're employing a smaller percentage of the population (about 10 million fewer under Bush43*) and the compensation received by employees (for the wealth they create) is getting less and less. Every single job that's off-shored is a job that no longer contributes to the support of our Old Age, Survivors, and Disabled (OASDI) people. As the minimum wage continues to decrease in real terms, Social Security revenues are proportionally decreased.

Never before in recent history has the effective tax on corporate profits (profits off the wealth created by labor) been lower.


Never before in recent history has labor been compensated less as a percentage of the wealth it creates, and never before in recent history have after-tax corporate profits been higher.

[intheozone]

20. Another thing about the private accounts

that is at least being considered, if not already planned, is this little known detail: the gov't will determine a fair return percentage for the private accounts, for example say 9% is the return that the gov't considers fair, and when accounts do very well and exceed that percentage, for example your account earns 12%, the earnings over the 9% set by gov't will be taken by the gov't to offset the costs of the privatization program. Of course if your account does poorly, like it earns only 6%, the gov't will not contribute the difference to your account. This little detail is being hidden behind all the talk of "ownership" and it is easy to understand why the administration doesn't want to provide details of its plan.

[jwirr]

24. How does your view differ from bushies?

[sandnsea]

25. Simplistic rhetoric

Designed to make you not look behind the curtain. Others have laid out the rest of the story, I don't need to do it again. The solution to an irresponsible government is not to cut your own throat, the solution is to make them be responsible with our money again and stop giving away our tax dollars to corporate hogs and then pretend it's a "free market" when they won't meet their responsibilities to workers and the environment.

[TahitiNut]

30. Then go ahead and TAKE CONTROL of your retirement!

There's NOTHING about Social Security that stops anyone from preparing for their retirement years. Nothing at all! In fact, Social Security actually allows people to take more risks while seeking a fatter piggy bank, since it protects against total impoverishment.

Social Security is insurance, not a savings account and not a pension! People who argue that they should be able to take part of their Social Security insurance premiums and "invest" those premiums in the Greater Fool market should take a little trip to their insurance agent's office and make the same argument to State Farm or Allstate. After being laughed out of their office, try making the same argument to another insurance agent, and another, and another.

There's NOTHING that stops people from taking advantage of tax-subsidized retirement savings such as an IRA, 401K, or Keogh - all of which already funnel funds to the investment banking profiteers and abdicate control over investments to those profiteers. The amount of money being shoveled into the equity markets without corresponding voting interest or individual control over those investments is already enormous. That has resulted in an inflated market capitalization that has driven employment compensation down for workers across the country ... and has helped drive jobs offshore.

Social Security is the ONLY such Trust Find, public or private, that is tied to employment compensation as an "investment." As labor is compensated less and less in real terms as a percent of the wealth created, the Social Security "investment" suffers. Social Security depends on fair labor compensation for the "bottom 95%" of employees. Over the last 25 years, the "bottom 95%" have gotten less and less compensation for the wealth they create. It's absolutely no accident that the Slave Labor Capitalists on the Reich Wing are trying to drive this down further. (These people love to 'socialize' expenses - as long as profits are privatized to an ever-narrower number of wealthy people.)

Do a little mental exercise. Consider the FACT that an increase in the minimum wage would result in an increase of Social Security revenues! Consider the FACT that when the percentage of people employed goes up the Social Security revenues also go up! More people employed at higher wages at the lower income levels benefits the Social Security Trust Fund. The Social Security Trust Fund suffers when fewer people are employed and their compensation is reduced in real terms.

This is what the Gini Index is all about: the equitable distribution of wealth in an economy. As the Gini Index goes up, we're driven further and further into the Plantation Economics that characterizes Banana Republics.

[AmandaRuth]

32. no one is saying that you can't

take steps to prepare for your own retirement.

[indigolady]

39. to "gottalickbush"

<I would rather be in control of my own retirement than have the government take care of it for me.>
I had this same thought in the mid 90s! Stock Markets and mutual funds seemed so easy, till it wasn't. That's why they say to only invest money you can afford to loose.
Many of us are able to be in control of our retirement investments, and many more are not. That's why we have Social Security, so the least fortunate among us will not starve in old age. It's just the base of a larger retirement plan, when all else fails. Social Security is a safety net.

[gottalickbush]

51. Thank you

I understand what you're saying. I've got most of my retirement set up, and if anything happens to me, then my will states that my girlfriend gets the house, and all retirement, 401(k)'s, IRA's, stocks etc. She'll be set for quite awhile. I've been saving since I was 16. I'm 37 now. I just look at my paycheck and see how much I've paid in and just know that I'll never see any of it. Basically, I've taken the stress of retirement away(hopefully). I just have a problem about the government and out of control spending. It just seems like they'll try anything to get to it. LOL

[SharonAnn]

40. Then you sure has heck wouldn't want to trust Wall Street, which

has no inventive to get your retirement money to you intact.

I'd much prefer to have the much touted "three-legged stool" for retirement financial planning: Social Security which is guaranteed, company retirement which is earned as part of wages, and personal savings which can be IRA's and 401-K accounts, etc.

It's called "not putting all your eggs in one basket". It's the much recommend "diversification" or "portfolio balancing".

If we actually have a "Depression", and I think one's about due, then investments won't be worth much, companies will go out of business and the Pension Benefit Guaranty Fund will go broke, and Social Security is all there'll be.

[Upfront]

2. Informative

Thanks for this post. You would not believe the people who are not informed on this issue. I understand your view point, and am not pissed off. lol My view is SS was intended to be an insurance program not an investment program. The problem with investment is the money will no longer go into SS but a separate account. To fund SS that money will need to be replaced or benefits will be cut in some way. I don't see a solution but am not saying there can't be one.

[izzie]

11. People seem to forget it is not just for retirement

I know people who really paid into this for years and things happened where the family needed help and SS did. Sometimes it is not any ones fault if some one dies or gets hurt. I had a cousin that husband died, and she died soon after and she left two children. I know a women that husband died at 40 and left 4 children. I know a man who lost sight in one eye and he could not work for a long time. It is very important that SS be around for this. Does any one know what happened to those families at one time?

[jwirr]

28. For some it is the only "retirement"

program they will ever have. When you look at the waitress, the clerk at the store, the garbage person, the nurses aide, the child disabled from birth, etc. you need to remember it is the only saving they can do and even that hurts them.

[DS1]

13. And these people call US naive?

And the Bush administration, which is borrowing heavily from the trust for Iraq (evidence that it's real money), won't dare renege on the debt.

:eyes:

[OneBlueSky]

21. correct me if I'm wrong, but doesn't that $1.8 trillion . . .

in the Trust Fund consist entirely of U.S. Treasury notes? . . . essentially IOUs? . . . won't be worth a hell of a lot if the government goes belly up fiscally . . .

[UpInArms]

23. that seems to be the intent of this mal-administration

to bankrupt our government and our country - to destroy the tenets of the Constitution, to devalue our dollar and to allow the corporate masters to move on to the "next emerging economy".

Since the dogs (the media) have been effectively silenced (bought by the corporations) and the public has been duped into believing the right-wing mantras, it falls to us (as individuals) to sound the alarms.

See Grover Norquist http://www.thenation.com/doc.mhtml?i=20010514&c=1&s=dreyfuss

[WCGreen]

29. SS was never intended as the sole means

of retirement. It's more like retirement insurance, s stipen, if you will, that provides just the bare essentials to get by.

Now if you end up with nothing more than SS, at least you will have that...

With all the plans and tax incentives to invest in your own retirment, everyone who is able should be socking their own money away..

But just in case your choice of stocks has been Enron or Prodigy or Compuserve or any number of other equities that have gone the way of the buggy whip, well, at least you'll have social security......

[Yupster]

31. The lie is

that there is $ 1.8 trillion in a trust fund. There isn't. That money has already been spent. Bombs are expensive you see.

Anyway, all will be fine as long as the government releases the $ 1.8 trillion. Since they already blew the money, well then, all will not be fine.

[tibbir]

34. I'm 53, retired due to disability and receiving SS-Disability.

It scares the hell out of me every time the subject of privatizing Social Security comes up. I will never be able to work again so there's no way I'll be able to contribute anything to the so-called private accounts. Bush, et. al. have said the no matter what happens they will never lower the benefits for people currently receiving social security (in retirement). They've been very careful not to include those of us who are receiving benefits due to being totally disabled.

I'm a CPA who was the owner of a CPA firm and I was 42, just getting to the point of really being able to set some money aside, when I became disabled. I'm totally dependent upon Social Security and Medicare to get by. I can't even work as a greeter at WalMart to make ends meet.

Bush and his cronies have absolutely no desire or plan to do anything to help the average person. The Medicare drug "benefit" is a joke. The drug companies are making out like bandits but the Medicare beneficiaries are getting very little relief. There is no reason in the world to trust that privatizing any part of social security will benefit anyone but the investment firms that hold the private accounts created under the plan.

These ultra-conservative repukians do not believe in Social Security and Medicare. They want to bankrupt the system ultimately and taking money out of it to "privatize" accounts is just the first step.

[marew]

35. Bushco and SS

I think it is truly ironic that Bush want to invest other people's money when he himself was a complete disaster in several businesses. Everything he touched went south. I have maintained for a long time that if Bush didn't have his name and incredible wealth behind him, he would never even be able to keep the most menial job. Way, way back, while I was in college, I was a part time-long distance operator. As part of our evaluation to get the job, we had a spelling test. I'll bet the house payment * would have flunked. Anyway, my real point is most people cannot afford to take risks with their retirement money. * cannot relate because money has never been an issue with him like most of the rest of us. What recourse will people have if their investment goes bust? And I don't believe for a moment that there won't be some shady deals as to who will get the privatized ss funds. *'s buddies companies? Don't trust him at all. I've lost a good bit just in the past few years in the market. Thank heaven I'm not depending on that for retirement.

[msgadget]

37. Thanks, I looked at Social Security in the Historical Tables and

it's self-supporting except for when its plundered and the only danger to it is from the jobs to pay for future generations being shipped overseas, in my unlearned opinion. I'm a little pissed not to be hearing dems screaming like banshees about this alongside Ross Perot-like graphics.


http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf

[UpInArms]

38. wanted to add this Paul O'Neil quote

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=005UNl

excerpt:

In the interview, O'Neill called the current U.S. tax system "an abomination" that required changes to its "very structure." His preferred changes? O'Neill "absolutely" supports the elimination of taxes on corporations-- and the shifting of the tax burden to individuals, saying government would work better if it "collected taxes in a more direct way from the people."

He also called for the abolition of Social Security and Medicare, on the grounds that "able-bodied adults should save enough on a regular basis so that they can provide for their own retirement, and, for that matter, health and medical needs." In fact, O'Neill believes the U.S. should reconsider the whole purpose of taxation: "National defense is a federal responsibility," Shlaes paraphrases O'Neill as saying, "but all other outlays need review."

And O'Neill assured Shlaes he was not speaking only for himself: "Not only am I committed to working on this issue, the president is also intrigued about the possibility of fixing this mess."

The Financial Times described O'Neill's comments (approvingly) as "radical" and "political dynamite." Yet the story has so far failed to take hold in the U.S. press.

Three columnists at New York's Newsday noted O'Neill's remarks: Robert Reno (who said the Treasury Secretary "comes across as a man who has paid a lot of taxes and clearly resents it"-- 5/27/01) Marie Cocco (5/31/01) and Paul Vitello (5/24/01). An obviously irked Vitello took it the furthest, actually calling O'Neill's spokesman at Treasury to confirm that these were not "made-up quotes":

"The secretary didn't really mean to say that no matter how old, no person who has paid into the Social Security system all his or her life would be entitled to benefits until he or she is physically no longer able to work? He didn't really mean to say that ExxonMobil and Time Warner should be treated as we treat the church-- as tax exempt?

"'Yes,' said the spokesman, 'that is our position. The quotes were all accurate.'"

...more...

[indigolady]

41. The link wouldn't open...

check the spelling on "greenspun" , did you mean "greenspan"?

That O'Neill guy is really scary!

[UpInArms]

43. it just opened again for me

:shrug:

would fix it if it were broken :(

[marmadogg]

42. What many of us forget is...

Before Social Security most of America's elderly were dieing without food and a roof over their heads.

Social Security is the major reason people live so long today. Without Social Security the elderly could not afford to buy the drugs they need to survive as well as they would be eating dog food and living in the streets.

Social Security is a 'must have' social program.

[many a good man]

44. Inconvenient SS facts to consider

Its damn expensive insurance. 15% of your pay check (up to $84K) is a lot of money. Half of all workers pay more in payroll tax (SS) than they do in income tax.

Its actually forced savings. Govt takes 15% of your income every working year of your life and saves it for you until you're 67. Then they give you back less than you can live on. If you die before 67, its money down the toilet. If you were to voluntarily invest 15% of your income your whole life, you'd retire a multimillionaire.

Its not fair to higher income earners. Sure, the more you put in the more you get back -- but only up to a point. That's why they cap it at $84K, because there's no way you'll ever get any of that extra money back.

Big tax hikes coming down the pike. SS is sound AS LONG AS the feds pay back their IOUs. How in the world are they going to do that? By jacking up taxes to all-time highs. The reasoning behind deferring taxes through IRAs and 401Ks is that you expect to be in a lower tax bracket when retired -- but not if taxes skyrocket for each category. Expect only the neediest to get SS while all of yours is eaten up by new taxes.

All the above makes it sound like SS sucks. But its the only thing that stands between millions of granny and gramps having to live in cardboard boxes under the bridge down by the river in their twilight years. I don't want to live in a country that does that to its elders.

The harsh reality is our government is chronically, systematically underfunded over the long haul. Americans must learn to live within their means. We must accept higher taxes and wage class warfare on the ultra rich. Without redistribution of wealth the economy will collapse and civil society will disappear. What kind of country do you want to leave to your kids?

[Chicago Democrat]

45. ..pay back their IOUs. How in the world...

The Feds can and will simply cut benefits...there is no way Bushco is going to increase FICA.

[many a good man]

46. It'll be around 2010-2015

And its the general revenue fund that has to pay back those IOUs. SS is good for many decades past that date on its own. There's no need to increase FICA.

In twenty years this country will pay more in taxes than any social democracy in Europe -- and receive less than half the services in return...all to pay off this massive debt.

[Chicago Democrat]

48. With Devalued Dollars, The Deficits Don't Matter...

this is their sick little plan. I think they all have swiss bank accounts and are simply playing the oldest game in the world...debasing the currency.

Solves all their little problems and screws the pensioners on Social Security. Understate inflation, in effect steal all the natural resourse and totally game the world markets. Yup, pretty much Bush policy in action.

[barb162]

61. agree, this is one sick administration

[LincolnMcGrath]

47. "Its not fair to higher income earners?"

The CEOs (WE HAVE CO-CEOs) Are both done paying into Payroll tax on the 3rd of January.

How can you say they will never recoup the benefit they may have payed in? I have a friend who went on TOTAL disability in his early twenties. His care has costs MILLIONS of dollars so far and he is net yet 40.

I say, remove the cap so the Payroll tax could be lowered for all. This would include all forms of INCOME! Wages, capital gains, interest, dividends, and inheritance. They are all forms of income. As for class warfare, it is being waged right now by the haves. The only redistribution going on now is from the working class to the Haves and Have Mores.

[Lydia Leftcoast]

55. Factually wrong

It's not forced savings. Your money goes to support current retirees. Your contributions only establish eligibility for future benefits.

You'd retire a millionaire if you invested 15% of your income all your life IF you made wise investment decisions and IF you happened to retire at a time when the stock market was high and IF you earned enough to begin with so that 15% of your earnings was a signficant amount. (I have interest tables somewhere, but I don't have time to do the math.)

[American Tragedy]

58. You have a bizarre understanding of Social Security

"Its actually forced savings. Govt takes 15% of your income every working year of your life and saves it for you until you're 67."

The money goes to sustain current recipients of SS. None of it is set aside for you.

[many a good man]

65. Like, not is

forced savings You are factually correct, but as an analogy it is works. People with a narrow-minded, selfish perspective see it like that. This is the perspective of all who would want to eliminate SS. They think of it as govt forcing them to save and giving them a horrible return. They think that if everyone was responsible enough to save then they would have retirement security, given historical returns over the past 70 years. They look at it like some people are not responsible so govt must force them to save.

SS is one leg of the retirement stool. Compared to the other legs it has the lowest return, if you're capable of ignoring the lives that would be devastated without it. If you only look at it from an investment perspective, it is pretty sucky. And some of it "is set aside for you" in the sense that your SS check will be higher than somebody else's who didn't earn as much money over their lifetimes.

unfair I think its pretty inconsequential to CEOs and millionaires. Its objectively unfair to higher earners in the sense that they will receive back far less proportionally than they put in on a relative basis. David Cay Johnston says that the income tax burden over the past 30 years has shifted mostly upon the shoulders of those earning between $77,000 and $550,000/year. Earning $90K/year in an area where it costs $400 grand to buy a flimsy townhouse does not make one rich. I wouldn't shed a tear for them, but we need to re-think the entire tax structure to make it more fair -- and more compassionate and responsible.

I expected my post to generate a little fury, but I think we have to be careful about insulating ourselves with facts and the righteousness of our beliefs. People have perceptions and feelings about things like SS that are somewhat based on inconvenient "truths" like I just presented. Just countering them with cold facts doesn't win the argument.

Encouraging people to save is good, but privatization is insane. A majority of Americans have a bigger balance on their credit cards than they do in their retirement accounts. This spells disaster a few decades down the road. If we let them give people the idea that SS won't be there when they need it they will adopt the me-first strategy. We have to avoid having the debate framed in that way.

[LiberalFighter]

62. It is not 15% it is 7.65% (combined employee and employer is 15.3%)

The other 7.65% is paid by the employer and is not part of wages. If it was then it would be $13448.70 (15.3%) max on 87900 vs 6724.35 (7.65%).

It is not 84K it is 87,900 for 2004 and 90,000 for 2005. This cap should be eliminated.

I don't consider it to be class warfare on the ultra rich... they benefit from the laws and regulations in this country. They should expect to pay their share. And your right that the economy and especially civil society will disappear or at least result in civil unrest.

[doc03]

52. Ok,your SS is in the market in 2000 and you are 64 and going to retire

in a few months. As you know the market started to tank about then and it still hasn't fully recovered after 4 years? What then? There was a local investment firm and a representative from the Heritage Foundation pushing this privatizing on a local talk show this week. Does anyone really believe the investment salesman and the Heritage Foundation is pushing this for our benefit? I noticed it has been mentioned there is $1.8 Tril. in the trust fund. These people said it would cost around that amount (I don't remember the exact figure) over the next ten years to implement this program. Hmm!I wonder where that money is going to come from? Also remember Bush promised to put one dollar out of every three of the surplus into SS. Surplus who got that?

[Lydia Leftcoast]

56. Yes, most college professors are in a (401)k-type fund called TIAA-CREF

and I had colleagues who were ready to retire when the stock market tanked. They lost a lot on their funds and were worried that the stock market might go down even further.

I'd hate to have my entire retirement based on the stock market.

[doc03]

57. I was offered a buy-out on my job last year and my 401K was down

$38k from $98K I had in 2000.

[barb162]

60. thanks for posting; Bush and cohorts are trying hard to gut

social programs and lying to high heaven about insolvency and the need to cut benefits, etc. Paul Krugmann of NY Times has also been doing similar articles over the last few years like this one from Newsday. Lots of people just believe the Bush lies.

[54anickel]

64. A kick