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Blind faith in Social Security

Whenever I want a bunch of e-mail, all I have to do is write about Social Security. I'm getting quite a few e-mails today from people who are trying to convince me that private accounts are a terrible, terrible idea.

It astonishes me how much blind faith these people place in the federal government. Think about it. What they're saying is, "I don't want to own my own assets in my own account. I'd much rather just have a promise that the government will pay me back at some point in the future, by either taxing someone else or borrowing money on the capital markets."

Well okay, whatever floats your boat, I guess. I don't really understand that mindset, but you should have the right to stay in the current system if that's what you want to do. That's why the private accounts will be voluntary.

And that's the big difference between our two sides. We don't presume to decide what's best for you. Your side, however, does presume to dictate what's best for us. We'd prefer to keep some of our own contributions rather than let the government spend them and then promise to pay us back someday. Call us crazy! But please, don't deny us the option of private accounts just because you wouldn't choose them for yourselves.


If I were writing you an email, it would look like this:

Dear Barry,

It's not that "I don't want to own my own assets in my own account. I'd much rather just have a promise that the government will pay me back at some point in the future, by either taxing someone else or borrowing money on the capital markets", but rather that I don't believe that the government will actually supply a mechanism that allows me to manage money that those doing the governing have taken to thinking of as theirs.

>> but rather that I don't believe that the government will actually supply a mechanism that allows me to manage money that those doing the governing have taken to thinking of as theirs.

Well it won't, if it's up to people like you. ;-)

Seriously, I don't get it. The message you wrote above is not a critique of the policy, but merely a prediction that said policy won't come to pass. Now you may be right about that, but it's a very different thing than saying private accounts are undesirable, which is how my e-mails have been running.

Well, then, I guess that those people aren't critisizing the same thing that I am. What I'm saying is more cynical, really - this plan will *not* let people manage their own money to any significant benefit - it can't without *someone* paying a hefty, hefty price. The concept of private accounts and the reality of what we'll wind up with don't synch up, realistically.

Personally, I'm the crazy one who thinks that we should just take our medicine and pay more taxes. Specifically, that the income cap on SS should be done away with.

Tami, I'll agree with you about one thing: I think SS's financial problems represent a separate issue from private accounts, and Bush was wrong to link them. I suspect you'll get your wish regarding the payroll taxes being raised in one form or another. The only alternative seems to be reduced benefits, which no one wants to do.

Remember this, though. If I contribute a part of my payroll deductions to a private account, not only do you not have to pay a huge price, but the burden on your children and grandchildren will be reduced when I retire.

Personally, I think that they should put out 4-5 different proposals from totally private accounts to the kind of not very private accounts that Bush is proposing to a lockbox system to continuing as we are. Write out ALL the details for each of the plans and then crunch out the numbers both for the stability of the system as well as for how individuals might fare.

The problem with just trusting George Bush is that I don't trust him. Medicaire is in far more trouble than SS and those troubles are going to be worse as a result of the 2003 bill. He says he is going to cut the deficit in half, while war/medicaire costs increase and the tax cuts are made permanent.

Reforming SS is a big deal. If the Republicans are going to operate like Hillary did in 1993, with the idea that we have to trust that she had the best interests of the nation in her heart, then SS reform will fail just like health care reform did in 1993 and Democrats will say just as Republicans did back then.. that bad reform is worse than no reform at all.

PE, the more proposals the better. And you are not alone in not trusting W. I am convinced that is the single biggest obstacle for private accounts with many.

And I also want the actuaries to crunch the numbers. But where does personal choice come into the picture? If it's determined that private accounts provide the best returns for everybody, will people like Tami be forced into them?

At the end of the day, here's one reason why I prefer Bush's plan to the status quo. Bush's plan includes the status quo, because people who prefer the current system can remain there. People who don't, however, have another option. More options are better.

I'm glad you want several options discussed, but let's take that one step further, and offer several options to workers, rather than trying to cram a one-size-fits-all approach for everyone.

I agree with some of what you propose, PE such as choosing 4-5 plans, crunching them and seeing what looks best.

Where you lost me was in the comparison to Hillary's plan which I don't feel is legitimate.

What I do not grasp is why there was a crisis in SS in 1998 as Clinton, Gore and other notable Dems pointed out and yet today, with nothing having been changed, it seems to have healed itself.

How, exactly?

BTW, in all fairness, if Republicans were so sure there is a crisis today, where were they in 1998 when Clinton touched on it during his SOTU speech?

I listened a bit to Hannity today and he pissed me off somewhat by ignoring a key factor in Bush's proposal while he was going on about the remarkable benefits of privatization: we are talking 4% folks.

Not 25%.

Not 50%.


That is not going to either destroy SS as we know it nor is it going to create a generation of "Bet-A-Million Gates".

I guess my question to both sides is this: this WAS broached in 1998, maybe not line-for-line with what Bush is proposing but not all that far off either.

Why did neither side take it up then?

I can see where the Dems would claim that this would be money in the pockets of corporations (not such a bad thing for you all as you seem to forget that WJC drew more from Corporate America than Dole did in 1996).

What is the Dems gain in the status quo?

Only please spare me the cost angle as nobody balked at that with Clinton's proposal.

Altruism and congressional intent are mutually exclusive.

I'm just looking for a "lock-box". Anyone seen my "lock-box"? Anyone? Anyone?

The 4% is 33% of the 12% you and your employer pay into social security. Even if the contriubtion is capped (as some have suggested) at $1000 per person per year, then that's close to 25% of the $4000 the average worker/employer pays into the system.

I can compare Bush's system to Hillary care because like Hillary's plan it involves private companies operating under a government system of rules. From what I have heard of Bush's plan, it is not just going to be a matter of having money to put away. There is going to be strict rules of how to put away the money.

Yes,, there is a long term problem, just as there was with health care in 1993, but what Bush is proposing is a system that will bleed the system and make maters worse, not better.

Indeed, "bleeding" is an apt metaphor because it reminds me of how doctors used to try to cure patients by bleeding their bad blood. What happened, however, is that the patient ended up dying by lack of blood.

Furthermore, while there is a problem, there is not a crisis and, just because there is a problem, there is no need to make it worse under the banner of doing something.

BTW, there are already private accounts. They are called IRA/401Ks. I currently put in about as much to my 401K as is taken by the combined (employee/employer) FICA tax.

Social Security is an insurance program against old age. Just like if my wife doesn't collect my life insurance if I don't die, I don't collect SS if I don't live. Furthermore, I am required by law to have both home insurance and car insurance, of which I will not see a penny if nothing happens to my home or car.

I have no problem with trusting the government regarding SS. Hey, why should I trust the government any less than I trust "Old Line Life" to be there when I die unexpectantly? At least with the government, I get to vote and if the government goes under I am likely to hear about it in advance.

In the end, I find the I feel that people shouldn't depend on Social Security to get them through their old age. I like that it's there, though, for those who weren't fortunate enough to be able to save, or for those who've had their saving wiped out by catastrophic events.

I see that the system is coming up short for the number of people it will have to support in the coming years, and I see more and more details coming out about the proposed changes. All I'm going to say about it for now is that I don't think this is a viable final version of a plan that will succeed.

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