George W. Bush, Snake Oil Salesman --->

[Stephanie]

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U.S. President George W. Bush (news - web sites) wave while he walks out to speak during a 'Conversation on Strengthening Social Security (news - web sites)' while visiting the Qwest Center Omaha in Nebraska, February 4, 2005.

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What Bush did not detail is how contributions in the account would reduce workers' monthly Social Security checks. Under the system, described by an administration official, every dollar contributed to an account would be taken from the guaranteed Social Security benefit, with interest.

"The person comes out ahead if their personal account exceeds a 3 percent real rate of return, which is the rate of return that the trust fund bonds receive," the senior administration official said. "So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent real rate of return. To the extent that his personal account gets a higher rate of return, his net benefit would increase."

If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars. All of that money would be the worker's upon retirement. But guaranteed benefits over the worker's lifetime would be reduced by approximately $78,700 -- the amount the worker would have contributed to Social Security but instead contributed to his private account, plus 3 percent interest above inflation. The remainder, $21,100, would be the increase in benefit the worker would receive over his lifetime above the level he would have received if he stayed in the traditional system.

Under the system, total benefit gains may be minimal. The Social Security Administration, in projecting benefits under a partially privatized system, assumes a 4.6 percent rate of return over inflation. Thus gains in an account would be offset by a reduction in guaranteed benefits equal to 70 percent of the account's balance.

The Congressional Budget Office, Capitol Hill's official scorekeeper, assumes a 3.3 percent rate of return. Under that scenario, the full amount in a worker's account would be reduced dollar for dollar from his Social Security checks, for a net gain of virtually zero.

http://www.washingtonpost.com/wp-dyn/articles/A59136-2005Feb2.html

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[barbaraann]

1. I think of him as the "Stunt President"

Snake Oil Salesman fits the bill, too.

[StClone]

2. Bush looks weak fear mongering support for his K-Street cronies

What a weak shill.

[Stephanie]

4. This is just a gift to the bankers & brokers, nothing more

On Social Security Reform, the Daring Policy Is Best
By Newt Gingrich, Peter Ferrara
Posted: Wednesday, February 2, 2005
ARTICLES The Hill (Washington)


<snip> Today, bond-market savants are raising similar questions about allowing workers a personal savings account option for Social Security. They argue that the government would have to issue trillions of dollars in transitional debt to cover promised benefits to today’s retirees while workers pay part of their payroll taxes into their personal retirement savings accounts. That debt, they again argue, would cause interest rates to soar, tanking the economy.

What these pessimists ignore is that the personal retirement savings accounts would guarantee huge sums in new investment funds moving into the markets as workers buy bonds and stocks for their accounts.

Consider the Social Security reform bill introduced by Rep. Paul Ryan (R-Wis.) and Sen. John Sununu (R-N.H.). The American Shareholders Association estimates that, under the Ryan-Sununu personal retirement savings account plan, if workers invested half their savings in bonds and the other half in stocks $85 billion would flow into the bond markets in the very first year alone. An increase of this size would double current annual investment flows into corporate bonds.

Moreover, the chief actuary of Social Security estimates that, after the first 15 years of personal savings under Ryan-Sununu, workers would have accumulated $7.8 trillion in today’s dollars in their personal retirement savings accounts, which is roughly the same amount invested in the entire mutual-fund industry today.

After the first 25 years of personal savings under Ryan-Sununu, the chief actuary estimates, workers would have accumulated $16.6 trillion in today’s dollars in their accounts. Yet, under the policies specified in Ryan-Sununu, the government would have issued only $1.25 trillion in new federal bonds at that point. Even that would be paid off during the following 15 years by the surpluses that would then be generated by the reform, according to the chief actuary’s official score of the proposal.

http://www.aei.org/news/newsID.21910,filter.all/news_detail.asp

[Stephanie]

3. Question - What if the stock market crashes and you lose money?

Will SS benefits make up the difference, or do you simply lose out? My bet is this will be heads you lose, tails you also lose.

[bobweaver]

5. Here's my version of that photo....

[Stephanie]

6. That's good, thanks!

exactly right.