Social Security panel Discussion
Tonight I attended a panel discussion on Social Security reform - organized by U.S. Representative Martin Sabo, with Skip Humphrey representing AARP, and Mitch ____ supporting President Bush's reform approach of personalized accounts.
As usual statistics offer new levels to the art of lying, or at least projecting finances 50 years in the future leads a lot of room for alternate interpretations.
Skip supported raising the SS income cap from $90k now to $140k. He said that would raise the tax coverage BACK to 90 percentile of income, (from current 85%), AND that would allow SS to be viable into the indefinite future.
Congressman Sabo offered a different approach - raising the returns rate for SS surplus borrowing from current inflation+4.1% to inflation+4.7% and said that would do the trick.
President Bush's nebulous proposal towards "Personal Retirement Accounts" (shhh don't call it privitization), would magically allow the multitrillion dollar costs from a "pay-as-you-go" system to private accounts to be funded by the gained investment income in stocks or whatever.
A disturbing argument used by Mitch X-X, was a race argument - saying basically that black men have a lower life expectancy than whites and therefore don't get the same returns as whites over their live-times, and that the personal accounts would allow family of an apparently young-dying black man to get his account balance when he dies.
He also brought forth a statistic that the "average returns" rate from SS is 0.8% for someone born in 2000. That means an average retiree, had she put the same amount of money into an interest bearing account at the fixed rate of 0.8%/year, would get the same returns as Social Security projections. He mentioned that when the program started there were 40 workers for every retiree, while now there's 3.4 workers/retiree.
Overall I respect his being willing to speak in a largely left-leaning audience, but I found none of his positions convincing.
For me the "weakness" of Social Security is NOT in the fund itself, but in the reality the current SS surpluses are "borrowed" into the general budget, while they'll need to be repaid some day.
Sure, the government can promise to give any return it likes on SS borrowing, AND it can apparently print money as it likes to pay off that debt. I accept that the government investments might be SAFER than the stock market, but I don't accept the smooth sailing financial projections. Okay, no one is projecting smooth sailing, but neither no one has any idea how we can run a government without spending more than it takes in by taxes.
I don't know if the government can "default" on its debt, but I expect if it DID, the economy would be much more messed up than anything we want to imagine.
Overall I wanted the question answered "How can we accumulate SS surpluses without allowing them to reduce and hide our declared deficits?"
Unfortunately the question was not answered. Sabo seemed quite happy about this surplus availability and seemed unconcerned how we'll budget our federal spending when it is no longer available.
I'll be attending an up coming MN Independence Party "meetup" on the federal debt - should be very interesting!
http://independence.meetup.com/1/events/4212887/
Oh a few links mentioned at the end of the discussion for further research as you like:
http://www.aarp.org/ Retirees - nonpartisan
http://www.cato.org/ Conservative
http://www.heritage.org Conservative
http://www.cbo.gov Congressional Budget Office
Enjoy!
As usual statistics offer new levels to the art of lying, or at least projecting finances 50 years in the future leads a lot of room for alternate interpretations.
Skip supported raising the SS income cap from $90k now to $140k. He said that would raise the tax coverage BACK to 90 percentile of income, (from current 85%), AND that would allow SS to be viable into the indefinite future.
Congressman Sabo offered a different approach - raising the returns rate for SS surplus borrowing from current inflation+4.1% to inflation+4.7% and said that would do the trick.
President Bush's nebulous proposal towards "Personal Retirement Accounts" (shhh don't call it privitization), would magically allow the multitrillion dollar costs from a "pay-as-you-go" system to private accounts to be funded by the gained investment income in stocks or whatever.
A disturbing argument used by Mitch X-X, was a race argument - saying basically that black men have a lower life expectancy than whites and therefore don't get the same returns as whites over their live-times, and that the personal accounts would allow family of an apparently young-dying black man to get his account balance when he dies.
He also brought forth a statistic that the "average returns" rate from SS is 0.8% for someone born in 2000. That means an average retiree, had she put the same amount of money into an interest bearing account at the fixed rate of 0.8%/year, would get the same returns as Social Security projections. He mentioned that when the program started there were 40 workers for every retiree, while now there's 3.4 workers/retiree.
Overall I respect his being willing to speak in a largely left-leaning audience, but I found none of his positions convincing.
For me the "weakness" of Social Security is NOT in the fund itself, but in the reality the current SS surpluses are "borrowed" into the general budget, while they'll need to be repaid some day.
Sure, the government can promise to give any return it likes on SS borrowing, AND it can apparently print money as it likes to pay off that debt. I accept that the government investments might be SAFER than the stock market, but I don't accept the smooth sailing financial projections. Okay, no one is projecting smooth sailing, but neither no one has any idea how we can run a government without spending more than it takes in by taxes.
I don't know if the government can "default" on its debt, but I expect if it DID, the economy would be much more messed up than anything we want to imagine.
Overall I wanted the question answered "How can we accumulate SS surpluses without allowing them to reduce and hide our declared deficits?"
Unfortunately the question was not answered. Sabo seemed quite happy about this surplus availability and seemed unconcerned how we'll budget our federal spending when it is no longer available.
I'll be attending an up coming MN Independence Party "meetup" on the federal debt - should be very interesting!
http://independence.meetup.com/1/events/4212887/
Oh a few links mentioned at the end of the discussion for further research as you like:
http://www.aarp.org/ Retirees - nonpartisan
http://www.cato.org/ Conservative
http://www.heritage.org Conservative
http://www.cbo.gov Congressional Budget Office
Enjoy!
posted by Ares Olympus at 8:09 PM
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