If it ain't broke . . .
There are some simple but important facts that everyone should know about President Bush’s demand that we must “overhaul” the Social Security system.
1. There is no crisis! Under the present plan we are good until at least 2052, according to the Congressional Budget Office. This means that even without any adjustments, there will be no reduction in benefits to retirees; those benefits are presently about 42% of their working salary. Under the President’s “reform,” however, benefits will be reduced to 25%.
2. The President can call it “voluntary” all day long, but guaranteed benefits will decrease for those who do not choose to participate, just as they will for those who do.
3. Likewise, he can say we “get to manage our own money” but the truth is that there will be severe restrictions on investments, to protect us from ourselves. Think how much you love HMOs!
4. Our Texas State teachers’ pension fund is “not quite where it needs to be,” one well-informed State legislator observed last week, “because of what happened in the stock market awhile back.” This would be the same stock market, boys and girls, into which the President proposes to move our hard-earned social security contributions.
5. Ignoring for the moment the risk, consider this: The big winner if this proposal goes through may well be the brokerage firms on Wall Street. If you do participate in the program and invest in the stock market, do you honestly believe those guys will offer free transactions?
6. The cost of changing to the President’s plan will, sooner rather than later, be about $3 trillion in “transition costs,” whereas under the worst case scenario if we keep the system we have and make no adjustments, we MIGHT have to borrow SOME money in forty or fifty years to cover shortfalls IF they occur.
7. There are several “tweaks” to the system that could mean we wouldn’t have to borrow at all:
a) Raise the retirement age: It is already raised to 67, so that will already add to the fund;
b) Raise the cap: People who earn over $90,000 or so per year don’t pay social security on the amount over that cap; the cap hasn’t been raised in some time, though earnings have gone up.
Since the very well-to-do still seem to feel they need that $1,900 or so per month along with their pensions and investment income, I say, “Absolutely! Wouldn’t have it any other way!” But it would certainly be fair to ask the folks with the tax cuts to pay a little longer. (We might need to remind our affluent friends that the tax is only on earned income, not investment income, so they don’t worry too much!
8. Finally, remember that Social Security was never designed to be an investment, but rather insurance against an old age of abject poverty. We don’t expect our payments for home and auto insurance to grow into a fund we earn profits on, and we should not expect our FICA payments to do so, either. Still, for most Americans the amount paid to us upon retirement will far exceed the amount we’ve paid in, something no stock market investment can guarantee!
Ordinary Americans should pay attention — this is no ordinary proposal, for it most certainly will do away with the Social Security program altogether. Unless you are very fortunate, you should be worried; fortunate or not, fairness says you should do everything you can to keep this safety net from being pulled out from under hard-working Americans.
Copyright 2004 at Waxahachie TX
1. There is no crisis! Under the present plan we are good until at least 2052, according to the Congressional Budget Office. This means that even without any adjustments, there will be no reduction in benefits to retirees; those benefits are presently about 42% of their working salary. Under the President’s “reform,” however, benefits will be reduced to 25%.
2. The President can call it “voluntary” all day long, but guaranteed benefits will decrease for those who do not choose to participate, just as they will for those who do.
3. Likewise, he can say we “get to manage our own money” but the truth is that there will be severe restrictions on investments, to protect us from ourselves. Think how much you love HMOs!
4. Our Texas State teachers’ pension fund is “not quite where it needs to be,” one well-informed State legislator observed last week, “because of what happened in the stock market awhile back.” This would be the same stock market, boys and girls, into which the President proposes to move our hard-earned social security contributions.
5. Ignoring for the moment the risk, consider this: The big winner if this proposal goes through may well be the brokerage firms on Wall Street. If you do participate in the program and invest in the stock market, do you honestly believe those guys will offer free transactions?
6. The cost of changing to the President’s plan will, sooner rather than later, be about $3 trillion in “transition costs,” whereas under the worst case scenario if we keep the system we have and make no adjustments, we MIGHT have to borrow SOME money in forty or fifty years to cover shortfalls IF they occur.
7. There are several “tweaks” to the system that could mean we wouldn’t have to borrow at all:
a) Raise the retirement age: It is already raised to 67, so that will already add to the fund;
b) Raise the cap: People who earn over $90,000 or so per year don’t pay social security on the amount over that cap; the cap hasn’t been raised in some time, though earnings have gone up.
Since the very well-to-do still seem to feel they need that $1,900 or so per month along with their pensions and investment income, I say, “Absolutely! Wouldn’t have it any other way!” But it would certainly be fair to ask the folks with the tax cuts to pay a little longer. (We might need to remind our affluent friends that the tax is only on earned income, not investment income, so they don’t worry too much!
8. Finally, remember that Social Security was never designed to be an investment, but rather insurance against an old age of abject poverty. We don’t expect our payments for home and auto insurance to grow into a fund we earn profits on, and we should not expect our FICA payments to do so, either. Still, for most Americans the amount paid to us upon retirement will far exceed the amount we’ve paid in, something no stock market investment can guarantee!
Ordinary Americans should pay attention — this is no ordinary proposal, for it most certainly will do away with the Social Security program altogether. Unless you are very fortunate, you should be worried; fortunate or not, fairness says you should do everything you can to keep this safety net from being pulled out from under hard-working Americans.
Copyright 2004 at Waxahachie TX
posted by The Voice | 11:04 AM
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