Social Security:A Bogus Issue

Published on February 14, 2005 By stevendedalus In Politics

What’s bogus about private accounts tied into social security is that they are not really private, nor are they pure savings but speculation by virtue of the government loaning you, say, 4% of your wages that you would normally pay into the security system. The principal still belongs to the government and must be paid back. If the total return on your account does not exceed what the lien is you have struck out and right back where you started as though you had stuck with the traditional retirement system, but with a very important difference: the cost of the transformation is deducted from your social security. Of course, if you are a shrewd speculator and come up with a bonanza account that exceeds the inflation by a few percentage points, along with the low interest loan the government has charged, you will do all right. However, you will not have the windfall expected as you would had you invested after tax money into your own account. To be sure, IRA and 401k tax deferments helps a great deal in paying back at a projected lower income; yet the government is counting on regaining revenue from a much higher accumulation of retirement income. This, however, is not the same for social security private accounts since payroll tax is unalterable and therefore a lien, not simple deferment is enacted.

This deceptive, sinuous scheme is far too chancy and what’s worse has nothing to do with stabilizing the system that is supposed to be in such dire financial straits. Much has been said about the fact that there are only three workers for every retiree whereas when social security began there were sixteen — forgetting that the payroll tax then was only 1%. That meant supporting the retiree was actually 16% and now three workers back up the retiree with 37½%. The biggest problem to social security is in trying to predict the quality of jobs in the future, and if the current trend is any indication the bang for the buck will be woefully diminished, regardless of the percentage of the payroll tax.

“Tweaking” as Senator Schumer says is what’s needed to meet the requirements of future retirees, such as keeping tabs on longevity and modifying the $90,000 cap. The more pressing issue is, of course, Medicare which is dire straits.

http://stevendedalus.joeuser.com

Comments (Page 2)

kingbee

on Feb 15, 2005

liberals do not want us to make decisions for ourselves, and the conservatives do

bush's entire scheme to 'reform' social security totally contradicts the concept of republican legislation (republican, in this case, referring to the form of representation rather than the party--which should ring everyone's alarms). after years of fruitlessly trying to get congress to dismantle social security (to which injury, the insult of medicare would later be added), the 'any means to an end' administration--cheered on by its neocon mentors--abandoned even the pretense of conservative ideology and began spending like a convention of lotto winners atta crackhouse. what appears to be fiscal irresponsibility is, in fact, is a concerted effort to starve social programs so completely our representatives in congress are rendered moot.

you may scoff. but before you do, explain to me how it's possible to avoid the projected shortfall by spending trillions to encourage people to take money OUT of the program and put it into the market, thus raising the amount and cost of money the government will need to to borrow to make up the shortfall. Or how investments in the market will earn 4+% interest in a market projected to grow less than 2% between 2015 and 2075. and finally why, if the end result of spending so much money and expending so much effort to achieve 'reform' may not produce significantly more retirement benefits at the end of the day, any of this makes sense or empowers anyone except those who broker the deal.

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