The Cellar Security proposal
 

The Social Security debate is on, maybe the Cellar should hash out a proposal. Two things I don't want to see are the continuation of a program that does not foster ownership and I don't want to see payroll taxes funneled to a few chosen companies. What don't people want in a new system?

David Brooks has a nice piece mentioning Bob Kerrey's old Kid Save proposal. Fed Gov opens an account for the youts, seeds it with pocket change, and compound interest does the work.

Perhaps we first should go about getting out from under the current system.

How should it be ended? What would be "fair" to the people who have paid into it and not rob those who need it now?

My modest proposal:

State that as of a certain date, say, March 1, 2005, all children born will not be able to enter the system at all. Those who are already in it (to whatever extent) may opt out but will lose whatever they paid into it. If they choose to remain, they continue to pay at the current rate and receive the promised benefits at the end, but with no guarantee that SS will survive that long. Those who are already receiving SS benefits will continue to do so until death, as promised.

This will take at least a generation to fully implement but it seems to be the fairest I can think of.

Comments?

BRian

Well, I suppose this will make me sound like a Commie or something, but I say keep the current system with the provision that after Jan 1, 2006, Social Security will become a catastrophic national insurance system. Those who retire at age 65 or more and have less than $12,000 a year from private pensions and investments may tap into Social Security to make up the difference. Same for a worker who becomes disabled before retirement age. Anybody with an income from other sources over $12,000/year wouldn't qualify. Also, stop the government practice of raiding FICA for everything else under the sun EXCEPT social security. Make the government be honest about what that money is REALLY going for. Maybe the big spenders in Washington would calm down if they were actually held accountable and couldn't tell their standard lies about the real use of our tax dollars. If FICA actually only went to social security under the circumstances outlined above, our FICA with-holding would actually be less, and the system wouldn't be broken in the future (it's NOT broken now).

Someone is going to first figure out how GWB is going to answer to those supporters whom he promised a big open cookie jar to dip into. This isn't about making you or me more secure in our old age. This is about getting all that fallow money into the pockets of people who will use it to improve the economy. Whoops...sorry...I meant to say "people who will use it to improve *their* economy". Damn typos.

The Democrats raid the corporations, the Republicans raid the little people.

Well, I'm no commie but I fully support the idea that those whose income is over some basic amount should not be permitted to draw out of the system. The floor needs to be kind of low to avoid providing a disincentive for people who can work and want to work from working.

I don't think that's communist at all.

Why are people so opposed to raising the benefit age? The system was put in place at a time when people retired at 65 and died at 68. Now many people work well into their 70s, and don't die until 80. The system was never intended to support people for 15 years.

Starting with people who are 30 this year, state that the social security benefit age will be raised by 1 year every two years for the next 10 years until the payout starts at 70.

So if you turn 30 this year, you draw benefits when you hit 66 in 2036. If you turn 30 in 2 years (2007), you draw benefits when you turn 67 in 2039.

Eventually, the system will revert to what it was intended to be - a cushion to keep elderly citizens from dying of starvation in the last few years of their life. It really shouldn't be more than that. Noone should expect to live a reasonable quality of life purely on Social Security benefits.

Zat so, just what do this people do? Sit at a desk? What about the people who actually do physical work. People who after 60 are in constant pain at work and go home swollen and exhausted. I guess they should have chosen their professions more carefully....Oh wait... they don't have professions they have a fucking job...maybe.
Just like that? Pay in your whole fucking life and because you have a $12k pension you don't get a dime? Remember $12k is $490 BELOW the god damn poverty level for 2 people.
I'd say below the poverty level is "kind of low"
Why is that?

Remember after you make your Grannie a bag lady she's not going to put a little something in your birthday cards anymore. :p

OK, Bruce, I'll admit that I was just answering off the top of my head. The payment amount should be set to place people just above the current poverty line. You'd also have to make the change a bit more gradual - say everyone who is now 40 or 45 would get their social security benefit, regardless, but the younger members of the work force should not plan on getting social security except under the extreme contingency of being thrown below the poverty line by a disability or retirement without an adequate pension plan. If we were to stop giving social security benefits to everyone, regardless of income, this would lower the cost of the plan, along with the chunk now taken out in taxes. That difference could then be used to invest in the retirement plan of your choice.

I don't think such a plan would be a disincentive for people to save - after all, few of us want to live just above or at the poverty line in our remaining years. Sure, the majority of people would be paying into an insurance plan that they got no money back from, but how is that different than paying car insurance? Maybe you're a safe driver who will never have an accident or become involved in one with a careless driver - still it's good to know that the insurance is there if worst comes to worst.

I generally put somthing in my grandma's birthday card and not the other way around, and she's not even a bag lady, although I know her income is limited.

Exactly my point. Philosophical discussions about how to "fix" Social Security always lose sight of the reality that you're fucking with peoples lives. :eyebrow:

First solution to a Social Security problem. Any monies taken by the government to pay today's bills are replaced in the SS Trust Fund with T-bills. IOW the government pays the SS Trust Fund interest on the money it takes from that Trust Fund. SS problem now solved.

But this solution would expose another problem. A problem even Ross Perot so accurately noted more than 10 years ago. Government accounting is so corrupt that any corporation doing same would be subject to fraud charges, corporate officer jail, and massive fines. The government hopes even lurkers in The Cellar don't learn this fact. The government takes SS money to pay bills - such as a war in Iraq - and never even leaves an IOU. That is called fraud anywhere else in the United States.

So instead we are going to invest in the stock market to fix the problem? Fine. Instead of giving the government all that SS Trust Fund money, instead, invest it all in index funds. No brokers get commissions. The Fed buys a seat in the markets and invests blindly in index funds. Again, Social Security shortages solved. But the brokers don't get rich? Clearly this solution must be wrong.

So who profits by a George Jr solution? People who will get big commissions and who will contribute even more to the Republican campaign war chests - stock brokers. Noted are those not strongly in favor of this George Jr SS modification. Bond traders. Bond traders would suffer under this 'so called' solution. But it does not matter. The reasons for bond trader objections are too complex for the man who only reads the Daily News or who is informed by Rush Limbaugh types. Ignore the Bond Traders. Only George Jr tells us the truth.

Simple solution. Government must pay T-bill interest rates on money taken (not borrowed - taken), fraudulently, from the SS Trust Fund (and FAA Trust Fund and Highway Trust Fund). George Jr hopes you don't know this little fact and don't learn about this solution. It would expose how much bigger the government debt really is. Ahhh... but Reagan proved deficits don't matter.

Corporate officer jail? Bah...that's un-American. :)

wow, never seen Bruce get riled up so quick !

Look, just tax everybody at an even 15% nationally, 5% state and give every adult a check for $1000 each month.

You can hippy up and live on that alone if you live with a few other people in just about any part of the country.

Or you can use that as a good way to help pay the necessities while working towards a worthwhile goal.

Who knows? It makes more sense than anything the gov't is going to tell us.

Kind of Long, sorry
 

look - i don't know what bush's plan will really look like so i'm not basing my thoughts on his plan.

despite tw's frequent cries that this is a ploy to make stockbrokers wealthy and HM's concerns that this will screw over the little people, i think individual accounts are a good idea.

1) since tw has brought up the idea of individual accounts making brokers (such as myself) wealthy i'll respond to that. most of us when talking it through have come to the conclusion that a solid ownership system would most likely take clients away from us, not add additional funds to our management. the government system isn't going to call XYZ broker and say "i'll take 1,000 sh of Worldcom" - by necessity, they would have their own licensed traders who will buy straight from the street without the markup of a middleman.
as people get comfortable with the new system, human nature would set in and they would realize that they can invest less $$ in their outside accounts because of the stability within their gov't personal acct.

2) i know that many, like HM, are concerned that people will make foolish decisions with their personal accounts and retire with nothing.
A) If there are only five different options to choose your balance from, and they are all designed by prospectus to be managed in a conservative nature (as are many of the TSP's already in use) then that should alleviate the concern about JOhnny PUblic putting all of his money into a speculative venture.
B) I put together some numbers in another thread that showed what $100/month over a forty year career looks like in a Conservative Equity fund and a conservative bond fund. You can find it here .
C) I would not support anything that completely leaves people hanging in the wind. If at any point in time, a person who starts to withdraw from their personal account would receive a smaller benefit than those who didn't opt-in - then the gov't would have to make up the difference until the personal account returns to a position of strength. In short, it would be impossible to lose real benefits by choosing the personal accounts. That is more a peace of mind measure than anything because participation over a 20/30/40 year period in the individual account system will leave a large enough balance to ride smoothly through the down years.

3) Bruce's hot button is the hardest to deal with, because it is the most emotionally charged. Who gets what? Why does someone born a day later, get something different? There isn't a simple answer for the question. There will have to be a birthday cut off somewhere. i think 55 years old is too late. i think an incremental phase-in system from age 35-50 would be fair, with age 51 and above locked into the existing system with their expected benefits, unless they choose to opt-in. The most important thing to remember is that no one will lose any benefit that they have lived their life expecting.

4) How do we pay for it? well, i would think that my generation will probably pay the most for it. if our SS tax remains the same and roughly half goes into our personal account and the other half goes to the existing obligations, we have enough years to allow our personal accounts to compound and we can honor the promise made to those nearing retirement.

A modest proposal
 

Shut it down cold turkey. Make euthanasia cheap and easy.

The grey lobby isn't going to allow anything useful to be done or benefits to be cut, and in about 10 years payroll taxes are going to have to go through the roof to pay the old farts, fostering intergenerational hatred.

That's because you didn't see the first toilet seat debate. ;)

[quote]have you decided to post in a clear and concise manner exactly why individual retirement accounts won't work.[quote]

:handball: should i take your silence as a resounding "no"?

where oh where oh where is tw?

Notice that Lookout123 refuses to deal with the basic fraud. Money is removed from the SS trust fund. No IOU is left. No interest is paid on that money.

Monies taken by the government to pay today's bills can be replaced in the SS Trust Fund with T-bills. IOW the government pays the SS Trust Fund interest on the confiscated (borrowed) money. All Social Security problems solved with no increased risk to the public AND with more money for Social Security. One reason why Lookout123 avoids this? No windfall profits to be made by stock brokers.

you ignorant SOB, have you even read my previous posts on the subject. it is the general opinion of most people in my field that a well designed and run Individual account system would make many of our clients less likely to invest additional $$ with us - thereby taking money OUT of our pockets, not putting more in.

ignoring the idea of paying back the IOU's? hardly. that is an option. if i've read correctly, that method would put the system back on track to remain solvent through the middle of this century. that would be good for anyone who plans on dieing before then. but let me ask you, how much do you trust the politicians not to raid the cookie jar? it hasn't worked up to this point.

have you read any of my posts describing the effects of only $100 month savings in a personal account of different types of funds? or is it just easier to ignore those real life scenarios and say i'm a stock broker so i must be a liar?

tell us, what specifically scares you about individual accounts? please give me specifics, not generalizations about MBA's, shiny shoe salesman, and mental midgets - tell us what exactly doesn't work, in regards to individual accounts?

Ignorant SOB? Posting insults when caught lying again? Clearly your god would not approve.

Want people to invest more of their retirement income elsewhere? Lower the SS taxes. Reduce the number from about 15%. Simple solution without adding complex laws to an already bloated tax code. Just another solution that involes no financial advisors - ie stock brokers. Lookout123 could not recommend a simple solution that provides no profit.

Somehow we will divert SS money to the stock market - and stock brokers will get none of the business? Selling East River bridges again?

Need to fix Social Security? Make the government pay interest rates on the money taken from the Trust Funds. Just another simple solution that will not enrich stock brokers. Lookout123 does not like simple solutions. No profit. No wonder he posts insults. Honest logic from a stock broker?

You want private investment. Its called Roth IRA. Its called 401K. Its called 403K. Plenty of private investment schemes already exist. Why would you advocate raiding the cookie jar? To fix SS? Even the president finally had to concede this private investment nonsense does nothing to fix SS.

Why more complex private investment schemes that only increase risk unnecessarily? Workers have a long list of private investment schemes they are suppose to be using. SS is the safety valve - a guaranteed nest egg - for those who failed in their private investment schemes. A problem the Wall Street Journal recently discussed in an article entitled "Theft From 401(k)s Is on the Rise". But Lookout123 pretends we depend only on SS for retirement. Therefore we must increase the ROI on SS money - increased risk be damned.

SS is the safety net - the one source of money not at risk - for good reason.

Plenty of private investment oppurtunities are available without complicating Social Security. Those shiny shoe MBAs hope we forget that little fact. Anything to get a piece of the Social Security money into their managed portfolios. Its called greed. Another reason for politicians to solicit legalized bribery money from grossly overpaid stockbrokers.

Calm down Lookout123. Your god does not approve of your routine half truth postings. A little confession rather than posting insults is good for your soul.

wow - i see you once again typed a lot but didn't actually answer the question about what specific part of individual SS accounts scare you.

Let me get this straight. you honestly think that if the government has all those$X00,000,000,000 to invest they are going to call lookout and say "hey lookout - could you buy 20,000 share of Intel?" give me a break tw.

TW, my default position on Bush is that he is not here to help the little guy. It's usually easy for me to see his angle in every move he makes, but I haven't figured it out this time with his proposals to change social security.

Why, in you opinion, is Bush proposing this change? Who is he trying to help here? What's his motivation? Do you really think his prime motivation is to support the stock broker lobby? I just don't understand why he is pushing for this, or how it's going to positively impact SS in any way.

i don't know bush's reasoning (he hasn't checked in with me this week), but from what i can see, the current SS system needs to be overhauled. It was not intended to be a retirement plan, but a supplement. the problem is that they take a lot of money from you over your career and what they give back to you in retirement doesn't begin to approach the amount that would have been available if the exact same money had been invested in a conservative mix of equity and bond funds among other things.

that can clearly be seen by the numbers that i've put in earlier in the thread. Those funds are not exceptional, they are pretty run of the mill conservative money managers.

what i hear as the main objection is that people will make bad choices with their money and not have any SS to count on in retirement. I think i showed what one could expect to be able to draw out on a monthly basis even if the market collapsed and dropped by 50% - still a hell of a lot more than they are getting from the current system. from what i understand, the proposals are for their to be a limited number of investment choices, all fairly conservative - similar to what is currently found in most TSA's.

from that standpoint, the individual accounts would work. i don't know what the smoothest way to convert from the old system to the new system would be, but their must be some solution.

but instead of looking at how to make something work, we've got people like tw screaming in the wind how this too, is designed to screw the little people and only benefit people who know how to polish their shoes (as if that is a crime).

[quote=tw Its called 403K. [/QUOTE]

I know this is a very, very minor point ... but the non-profit organization version of a 401(k) is a 403(b).

I have two of 'em.

wolf, i'm guessing that one of your 403(b)'s is from a previous employer? if so you will generally be better served by rolling it into an IRA.

it's kind of like the difference between the quik-e-mart and a grocery store. sure you can but things in each, but the grocery store offers so much more and generally provides better values.

FWIW

Ah, the devil is in the details. But we have heard no details from anyone.

I fully believe that Social Security will not be around for me when I retire (I'm 38) unless something is done to fix it. I'm in favor of fixing it or eliminated it today before I pay another penny into it. If it's not fixed, somebody will be left holding the bag, and I don't want it to be me. I also believe that the "rate of return" for social security is miserable compared to virtually everything else, but since SS wasn't originally set up as an investment fund but rather as a pyramid scheme, it's not a fair comparison.

You sound very confident that a conversion away from the pyramid scheme to private accounts is possible, but I honestly don't see how. The amount of money we are talking about is staggering!

I've seen Bush do so many things that blatantly favored corporate America over the little guy that I simply don't trust him. He's not giving us the details of his plan. I don't agree with those who say he is dumb. You can usually see the twisted logic in what he does, but I don't see it here.

Maybe he realizes that US stocks are not doing so well as a result of his fiscal policies that he wants to give them this shot in the arm, and this is a form of corporate welfare. Maybe he's trying to please that enormous stock broker lobby. :) Maybe he's going to set up funds that only invest in companies owned by his friends.

I am very dubious that his "plan" would help Social Security (he even said it wouldn't) and I simply don't understand his motivation.

actually they are doing very well. we are in an upward moving trend, certainly not a boom ,but that is ok. it takes time for people to be comfortable with equities again because of all the horror stories from 2000-2002. slow and steady is a much better situation than a runaway bull market anyway.

most of this is just cyclical and not easily swayed by the whims of a president. the market does what it does and that is all there is to it. the government can tweak it and make certain things more favorable, but there is always someplace inthe market to make solid returns.

in reality, if they brought this system on line, most of the money would have to be placed in treasuries or very,very large companies just because of the amount of dollars we are talking about. it wouldn't be wise to throw massive amounts of cash into the equity markets all at once. it would be a slow process moving from income vehicles to equities.

It's kind of a long story, but what happened ...

We had a bad fund company once upon a time. A breakaway group of employees decided that we wanted to have our own 403(b) with a very, very large company that happens to have offices locally. We were unable to convince the whole hospital to go with their stuff, but the hospital agreed to send our 403(b) $$ to our hand-selected company over which we actually had some control, and a wider range of choices of funds to pick from. The hospital even put up with the for quite a few years. Then they dumped the old financial management company, and went with a new one, one that was irrevocably tied to the bank that they also switched to as new customers. There was nothing wrong with our old bank, incidentally. I assume they got the $25 gift for signing up for the new account, as well as some keychains and pens with the new bank's name on them, because once again we got locked into a situation where the company had a lot of different fund offerings, but we were only allowed to choose from 10 of them.

Oh, and the hospital said it was too much trouble to allow us to continue to contribute to our nice plans that had been working out quite well, so we wouldn't be allowed to say what we wanted done with our money anymore.

that is one seriuosly messed up situation.

If its done properly, the Republican Party stands to gain a lot of registered voters. The Democrats have been cynical and cavalier with SS. They taxed the working man disproportionately and pissed away the surplus. Letting people actually build a savings moves voters out of the Dem ranks. This GOP Congress is pretty sucky as well but over the long haul the Dems have been the bigger theives.

This question has been asked repeatedly in business discussion groups. There is no single reason. But one often mentioned is a neo-cons adversity to support programs such as Social Security. Their belief is that government should not be a social service. Social Security since its inception has been opposed by right wing extremists. The Neo-cons were not happy when Reagan raised the taxes on (contributions to) Social Security.

Private accounts is a first step to undermining a Trust Fund that does so much for the neo-cons strongest opponents - the poorer and more needy. The Trust Fund is the one and only retirement program that is guaranteed - no risk. It is only intended as partial support. Americans are expected to have other private retirement investments because SS was never intended to be enough to live on and stay out of poverty.

The original lie about private investment was that it would save Social Security. No one bought that lie. So the lie was recently changed. George Jr recently acknowledged that private investment accounts would not help nor save Social Security. IOW the neo-cons really never had a good reason for their SS 'reform'. So that we don't call them liars, they are now spinning private investments for other reasons. But the real reason they were promoting SS changes - step one to dismantling a program that is adverse to a neo-con political agenda

1- An influx of $$$ into the market would push the whole market up just like when mutual funds became the thing to do. Money managers have a flow of money they have to buy something with, they’re bidding against each other, market prices rise, Bush’s buddys get richer.

2- When people buy this stock some of it will be issued by the companies rather than from someone that holds previously issued shares. That money flowing into the Board of Directors and CEO’s hot little hands will make Bush their God. Probably worth 4 gimmes(sp) per 18 holes for W.
I doubt if any of the money will be labeled “Not to be used for evil”.

Aside~~ I worry about the people below the “middle class”.
Some are not well educated. Some are unlucky. Some never have two nickels to rub together their whole lives.
It’s hard to preach the virtue of saving on a regular basis to people who are living hand to mouth.
Granted, some of them are living that way because of there own actions......carrying on a family tradition?
Many don’t even know what an IRA is and couldn’t or wouldn’t handle it anyway. Giving them the opportunity to direct their retirement plan is a joke. Probably a third of them would buy Amway.

Is this your problem? No. Should you be penalized from making a fortune because of them. No.
But you have other options for making your killing.
Don’t kill these people in the process....please. :(

Again Lookout123 spins nonsense. SS monies are taken by the government to solve cash flow problems (such as a war in Iraq). Instead the Trust Fund should be *repaid with interest*. All SS Trust Fund problems solved – no problem. Lookout123 must avoid this solution *repaid with interest* to keep spinning his half truths. I have no problem with a solution to SS. I have a problem getting Lookout123 to even acknowledge simple solutions that are contrary to his neo-con agenda.

What scares me? The propaganda that Lookout123 promotes. For example, a discussion of brokers on (I believe it was Bloomberg News) noted that bond traders would be harmed by the privatizing of SS contributions. But stock brokers would reap substantial rewards. Lookout123 instead lies by saying Right. More money in the stock market and yet stock brokers would see less business? Only a student of Pravda and Gerhing (professional liars) would say that. These neo-con lies - just like lies that promoted the 'Pearl Harboring' of Iraq - scare me. Lookout123 has again posted propaganda - half truths – that private accounts would cause reduced business for stock brokers. Who, pray tell, could ever believe that lie. But then notice who makes that ‘reduced business’ claim.

If Lookout123 were honest, he would demand that government *repay with interest* the monies confiscated from the FAA, Highway, and Social Security Trust Funds. He completely avoids that discussion - as any good political propagandist must. There is no neo-con agenda for correcting this accounting fraud.

An honest Lookout123 would have first demanded that all monies taken from the Trust Funds be *repaid with interest*. Notice every post from Lookout123 completely avoids the concept. Neo-cons don’t want this fraud highlighted. Lookout123, et al have other agendas. What’s good for a neo-con is good for America?

bruce - you've brought up some good points. i think those are very valid objections to the private accounts.

tw - you continue to be a self impressed asshat. accuse away. you have yet to ever answer a question i've asked of you. as long as you have everything figured out, i'm sure we'll all be ok.

Ever since I reamed Lookout123 a new asshole with a simple question, he is now playing this game of "you don't answer my questions - boo hoo hoo".

Never forget the very first question someone was accused of avoiding. Lookout123 - when will we go after bin Laden. He still will neither answer nor even acknowledge that question.

Latest expression that the neo-con and religious extremist Lookout123 must avoid: *repaid with interest*. As a good propagandist of the neo-cons, he must avoid the concept. *Repaid with interest* is not in the neo-con agenda. Therefore Lookout123 maybe is not permitted to discuss it? Interesting. Who does he work for? Is Lookout123 a paid neo-con spokeperson? Maybe he is told what he can and cannot discuss? *Repaid with interest* is not permitted. "When do we go after bin Laden" - he's not permitted to discuss that either?

Riddle me this, tw: If the government doesn't have the money to afford Baby Boomers surging into Social Security, how is it they're supposed to have the money to repay with interest the money they borrowed over the decades??

Yeah, if I pulled money out of my ass I could repay my mortgage tomorrow. But the fact is I don't have that money, that's why I had to borrow it in the first place. You're crying over spilt milk--the money they've stolen is gone, spent on other things. Harping on their financial irresponsibility doesn't help fix the problem.

OK, let's assume much of the old money is gone. SS therefore is only solvent for another 40 years. But if starting today, every new dollar put into SS gets paid interest, then plenty of money remains to fund the boomers. But if starting today, every new SS dollar bought Treasury bonds, then a major Federal Treasury cash flow problem gets exposed. Best to avoid the *repaid with interest* solution. You just asked the question they (and Lookout123) hope to avoid - because the answer is rather embarrassing and troubling.

BTW, its not just the Republicans that fear to address *repaid with interest*. This fraudulent accounting is endorsesd with winks from both sides of the aisle.

are you kidding me? when the hell do you think you reamed me? cite? or is this one of those things that if you say it enough, you can accept as truth. i've been asking you to answer questions since i got here last april... total questions tw has answered since then... 0.

and on Bin Laden - tw - i've answered that one enough times. i guess that is just further proof that you don't read any posts but your own.

but, damn, you got me on the neo-con bit... was it the horns sticking out of my head that tipped you off?

Yes you did answer it all zero times. But you did not answer it through that newly reamed asshole.

So how many times will Lookout123 discuss "repaid with interest"? Let's see. He cannot do it minus one times......

have you been drinking? if not, could you start?

Finally a starting point. We know the FedGov can't pay interest on anything without robbing the taxpayer. Hmmm... who would borrow money and pay interest on it at no cost to the citizenry and a net gain to society?

Washington Post

But all along people have been deceived into thinking they were paying a certain tax to the Feds and another tax for SS when in fact more of the total was actually going into the budget than they thought. Maybe that would wake people up to how much the feds are actually spending. The budget numbers are so huge nobody can relate to them, but the amount you pay becomes a real mumber to show changes in spending. :(