Posted on 08/19/2004 8:57:31 AM PDT by qam1
President Bush began talking about the need for personal Social Security accounts when he was a candidate. He has continued to advocate that we can save Social Security by using the power of the market to increase savings far better than government can.
Now New Hampshire Sen. John Sununu and Wisconsin Republican Rep. Paul Ryan have introduced in Congress what may become the most sweeping, visionary, breakthrough legislation to help enrich working people in my lifetime.
It is well documented that if nothing is done to fix Social Security before the baby boomers retire, payroll taxes would have to increase by 20 percent or retirees would face a 30 percent cut in benefits. The Ryan-Sununu bill would protect, modernize and expand Social Security in a way that would end the tragedy of seniors retiring into poverty.
The bill would allow workers the freedom to choose to shift what they now pay each week in payroll taxes, an amount that is roughly the same as what appears in the FICA box on their pay stub, into their own personal account.
On average, about half of the current 12.4 percent Social Security payroll tax, or 6.4 percent, would go into a worker's personal account. Workers could choose from a list of officially approved safe and secure investment funds managed by firms regulated by the government in a system similar to the Federal Employee Thrift Retirement System. This makes the system easy and manageable even for new or less experienced investors.
Under the Ryan-Sununu bill, Social Security would not only stay in permanent surplus, it would achieve the largest reduction in government debt in world history by eliminating the current $11 trillion unfunded liability of Social Security, nearly three times the current federal debt held by the public. The bill does this by replacing the current unfunded liabilities of Social Security with fully funded personal accounts. In fact, the bill goes a step further by providing a federal guarantee that workers who choose personal accounts would receive at least as much as promised by Social Security, maintaining the federal safety net for retirees provided under current law and taking the risk issue for workers completely off the table. This feature achieves a key Social Security policy goal for most Democrats - full payment of currently promised benefits.
Saving Social Security from bankruptcy while guaranteeing current benefits without any tax increases - not only for today's seniors or workers nearing retirement but for anyone in the future - is more than enough reason to support this bill. But the most powerful argument is that it would pay substantially higher benefits than seniors now get from Social Security.
A recent study by Peter Ferrara, a senior fellow at the Institute for Policy Innovation, showed that personal accounts of 6.4 percent invested half in corporate bonds and half in stocks earning standard long-term market investment returns would provide workers across the board with roughly two-thirds more in benefits than what Social Security promises but cannot pay. An account invested two-thirds in stocks and one-third in bonds would pay workers over twice what Social Security promises today.
But it gets better. Currently, after a working lifetime of paying into Social Security through the payroll tax, workers accumulate zero dollars. Under the Ryan-Sununu bill the chief actuary of the Social Security Administration calculated that within 15 years, working people across the board will have accumulated collectively over $7 trillion in today's dollars in personal accounts. Over a working lifetime, the average worker with a conservative balanced portfolio invested in both stocks and bonds will have accumulated more than $400,000. Compare that with seniors retiring today who have zero dollars accumulated in the current Social Security system.
Such vast, broad-based wealth ownership would transform America, economically, socially and politically. Capitalism only works when people have capital. For the first time in history, the working poor will have access to wealth creation. Personal accounts will finally give everyone access to the markets that create wealth.
Any amount in the account when the worker dies can be left to loved ones. Every worker would become a personal owner in America's business and industry. There would no longer be a dichotomy between labor and capital because every individual would be both a worker and a capitalist. The personal account would be locked until the worker retired. This vast new supply of capital would be available for investments in new, growing and established business enterprises. The American economy would take another leap ahead into the 21st century, providing along the way broad streams of new jobs and higher wages.
Finally, a key feature of the bill is that the personal accounts mirror the progressivity of Social Security, allowing lower income workers to devote to the accounts a higher percentage of their payroll taxes than higher income workers. This means that lower income workers would proportionally gain as much from the accounts, or even more, than higher income workers. It would be intellectually dishonest to say the rich do better than the poor under this plan because just the opposite is true.
What Ryan and Sununu have proposed is historic. They have fashioned a plan that makes the idea of a personal account option for Social Security not only politically viable but, indeed, politically irresistible.
Paul Ryan Born Jan. 29, 1970
John Sununu Born Sept. 10, 1964 (So very close to being an Xer)
Xer Ping
Ping list for the discussion of the politics and social aspects that directly effects Gen-Reagan/Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
What are the chances that any money left over in this account after death gets passed onto heirs? Or does this just get confiscated by the gov't?
Any amount in the account when the worker dies can be left to loved ones
It's about time!!!
You can bet that the democrats and the AARP will still oppose it, though...because it's not fair to those that don't pay into the system, or those that are already on retirement...or something.
Kalifornia is busy proving that socialism can drive out business and jobs if a competing economic environment exists.
To the extent that this proposed plan causes greater numbers of people to identify with business rather than treating capitalism as a poor competitor to socialism, then it might be a good thing.
To the extent that participation is voluntary, there will be irresponsible people that opt for short term benefit. And if the invested funds are restricted to American equities, the forces of socialism could render them eventually worthless.
The key to the future is not the implementation of alternatives to Social Security and other entitlements. It is the dismantling of the present socialist systems with the consequent visibility of individual responsibility. Those who opt out need to feel the heat of future accountability.
Oh yeah, Expect more of George Bush pushing grandma down the stairs type commericals.
I'm afraid the spineless Republicans will probably cave on this too.
Great idea...................unless you happen to retire into one of those 10-15 year period when stocks and bonds make little if any money. Possibly like the one we are entering now........
That's only if you worked only 10 years then retired, Most people work longer. Even with the "bad" market of today, If this system was in place in 1959 what would be the earnings of someone who started working full time that year and was retiring now vs what they are getting in SS?
Plus even if the market is bad in the future when Gen-X starts to retire, We will still get way more then we would under SS which by then would be ZERO
"SS which by then would be ZERO"
Simple unsubstantiated hysteria. It has never been projected to be zero. It has been projected to be 73% of expected payouts. Yes, time works for this method but you really need lots of time for it to be successful and transitioning people to it cannot be done instantly.
So nice of my loving government of this "free" country to officially approve safe and secure investment funds managed by firms regulated by the GOVERNMENT and FORCE me to put my money there.
How about an OPT OUT program for people, let me invest that % on my own. MY MONEY, MY RISK, MY REWARD (or failure).
Oh, you mean...like what we have now?
As it stands, the 12.5% tax goes to pay for those who are receiving SS now. You (I, all of us) have no account to speak of, so anything like 6.25% of that money coming back is a tax reduction and would be welcome. If the string attached says I can only invest it in gov't approved funds, oh well, that's one hell of a lot better than what I'm getting now and I'll take it, thank you very much.
Socialism was foisted on us incrementally and will be removed the same way. Be patient and keep electing Republicans, cause the Dims won't ever consider anything like this.
All that money they've taken from you is gone. In order for them to "give" you anything, they must rob other people.
Here's my take on the whole SS issue:
http://bigfatroid.blogspot.com/2004/09/abandoning-failed-system.html
I'd appreciate any comments on any changes in argumentation I should make, or, well, anything else.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.