Views on politics and current events

Wednesday, November 17, 2004

Yet More Thoughts About Social Security

The diverting of Social Security withholding taxes to private funds would add yet more debt to our deficit-riddled economy.

In addition, I believe the implementation of this plan would benefit current holders of stock and financial advisors more than anyone else.With nothing guaranteeing that this 'new' investment money would be venture capital (new goods and services) there would be a finite number of stocks available. With a finite number of stocks and increased competition to purchase them, stock prices would rise. Who would benefit by this? Certainly not the new investors brought about by the plan. Their rate of return would be lower than the 'older' money already in the market. These new investors would have to purchase stock at an inflated price, and the current holders of stock could sell it at a higher price. The rule of thumb 'buy low, sell high' would change to the reality of 'new money buy high, old money sell high'.

Financial gurus play the stock market for a living. What of the common working person? Do most working folks have enough knowledge to invest wisely? Look at the consequences if they don't, for this proposal is not a restructuring of Social Security. It is the first step in the process of eliminating Social Security. Perhaps a wise new investor would consult a financial advisor, but there goes yet more of their return towards professional fees. When there is no Social Security and people's retirement income depends on how much and how well they have invested, making good investments with a good return becomes crucial.

It takes tremendous non-partisan lack of foresight to allow a system that has been going for seventy years to teeter on the brink of collapse. The Social Security fund should be used only to pay benefits, and not looked upon as a general fund. It is time for the idea of tax cuts without budget cuts to cease. It is time for the programs that exist for the welfare of citizens to over ride pork barrel spending and other forms of government waste. It is time for fiscal responsibility and accountability by our elected officials, from the federal government on down to local municipalities. If irresponsible spending continues, Social Security will fail and the entire economy will follow in its wake.


Dean said...

As usual, I find no flaws in your thinking. I hope you get lots of random visitors, because it is thinking like this that needs to be read....and digested!

engprof said...

Well, I have a lot of problems with your reasoning, starting with the claim that this system has worked well for 70 years. What Social Security has done is to take away personal responsibility for one's future. In addition, if you take a look at the actuarial tables, anyone who draws maximum social security benefits for more than 5.8 years (that is, anyone who starts drawing at 65 or so and lives beyond 72)has drawn more in benefits than he/she and his/her employer have contributed to the system, even accounting for interest on the account. So we are paying people just for living longer. Isn't that silly?

What we need to do is to phase out Social Security and tell people that they alone are responsible for taking care of their retirements. If they cannot do it on their own, then they can work until they drop dead. Why are we subsidizing irresponsibility?

Like you, I am not in favor of Bush's senseless idea about semi-privatization. After all, what can one expect from a man who never succeeded in any business he owned/was a partner in? He is a joke when he talks about economics. Of course, he carries the near-sightedness of the rich with him, and if Daddy hadn't been there to bail him out all the time, he might have wound up working at Mickey D's, which is a job he is truly suited for.

But the issue is not to privatize or not to privatize. The real issue is to figure out a way to scrap Social Security entirely. Just think: everyone would get an immediate 15% wage increase---the 7.5% the taxpayer pays, plus the matching funds from the employer. Couple that idea with the concept of making credit cards illegal (bye bye, MasterCard and Visa), and lo!, fiscal responsibility, albeit enforced in a unique way.

You are attacking the problem from the wrong end. And just in case you think I am some kind of a right-wing nut, Dean can tell you I am far more radical than he is.

Alan said...

Making credit cards illegal! Now that is something that is so radical that it sounds good! I have thought for a long time that the reason why our economy is so topsy-turvy is the idea of credit that is far too easy to get and abuse. I do have a credit card, have had for twenty years, but I can say I use it strictly for convenience and have never payed a dime on interest for the thing.

I have known so many folks that have so much credit card debt, and not much to show for it. If individuals are willing to go into so much debt, can we honesly criticize our government for doing the same? I'm not against all credit. But a person has to be responsible enough to use it wisely.

Speaking of responsibility, can't say that I disagree about the thought that people should be responsible for their own retirement funds. I know in my case that when the steel mill went bankrupt that I worked at for thirty years, if I wouldn't have had a 401(k) account that I could fall back on for awhile I would have been in financial trouble. I was only forty eight when it all happened, and I know many people that wroked there longer than I did, and made more money than I did, but were completely destitute after the shut down.

My biggest concern is the transition from SS to no SS, and that the folks that paid into the program for so many years would get some benefit. The main problem with having the government in charge of anything is that the rules keep changing. And every time the rules change, the tax payer gets the short end of the stick. It would be unfair for so many that have paid so long to end up with nothing when the 'rules' during their working lives said something else.

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