Posted on 01/02/2005 9:41:12 AM PST by qam1
Some elderly shudder at thought of privatization
PITTSBURG, Kan. - Merlin Zollars and friend Lila Hudson like to sweeten their spaghetti by squirting a little ketchup on it. Other than that, their fruit pudding, salad and toast are ready to eat.
The two often sit next to each other for lunch at the nutrition center operated by the Southeast Kansas Area Agency on Aging. Each pays $1.65 for lunch. It's a way to get a good, hot meal five days a week and catch up on the news with friends.
Zollars and Hudson also share something else. They're both nervous about the president's plan to privatize Social Security, letting workers put part of their Social Security taxes into private investment accounts. And the largest organization in the country representing seniors - the AARP - is weighing in on their side.
Zollars shuddered at the thought of privatization.
"I would say do not privatize it," he said. "Don't mess with it at all, and put the money you stole from it back in it. If they would leave it alone, there would be plenty of money there. It's not going in the hole. It's the way they manage it."
Zollars, 79, retired in 1987. He has been living off his Social Security check and a pension he receives from the state of Kansas for his 25 years as a teacher. And, as a Navy veteran of World War II and Korea, the costs associated with his prescription drugs are covered through the Veterans Administration.
Zollars said he is not participating in the Medicare drug-card program that recently was offered to the nation's seniors. He describes it as "a fiasco in which we (seniors) were sold down the river to help the pharmaceutical companies. The system has gone crazy with greed. But, I will survive."
Like Zollars, Hudson, 69, is struggling to stay afloat on her Social Security check, which amounts to $800 a month. She, too, is a Navy veteran who receives help from the VA to cover her prescription costs.
She recently sought additional assistance but was turned down.
"I could not qualify for commodities because my income was $30 a month too much," she said. "I'm not griping. It doesn't do any good to gripe. I can take care of myself, and that's what I'm going to do."
The frustration and irritation with the system expressed by Zollars and Hudson is something that Melvin Potts, 83, a retired professor at Pittsburg State University, would like to channel into a nationwide movement.
Potts is a local chairman of the AARP, one of the most powerful lobbies in Washington. Early in December, the association informed its 35 million members that it was coming out against Bush's plan to reform Social Security with private, individual accounts.
"Social Security is worth strengthening, not replacing," Potts said. "Private accounts would not strengthen Social Security. They would make the problem worse.
"It would be expensive to initiate. The estimate is it would cost $2 trillion. There would be benefit cuts, additional risk for retirees and a bigger national debt. Wall Street would be the real beneficiary."
Asked whether he would have opened such an account early in his work history, he said: "If anyone has followed the stock market over the last few years, they know that stocks can become worthless, and that could happen again. No, I would not want a private account."
The AARP argues that Bush's plan would damage the most successful program in government history and go back on a promise made to future retirees who have paid into the system.
"Taking some of the money that workers pay into the system and diverting it into newly created private accounts would weaken Social Security and put benefits for future generations at risk," the AARP said in a statement.
That statement, fired like a shot across the bow of Congress, comes as the White House is gearing up to take on the issue, one that until now has been politically untouchable. Emboldened by his Nov. 2 re-election, Bush two weeks ago said, "This is an issue on which I campaigned, and I'm still standing."
Fund full of IOUs
In recent statements, Bush has suggested that Social Security is in a crisis. Advocates of reform say the system is in imminent danger of collapse and have predicted that the program will go into the red in 2018. But, critics of the president's plan say the crisis is being fabricated to give Congress the pretext to further the politics of privatization.
Social Security is not in a crisis, according to the Center for Economic and Policy Research. Mark Weisbrot and Dean Baker, with the center, recently wrote "Social Security: The Phony Crisis."
The researchers argue that Social Security can pay full benefits as promised until 2042, based on this year's Social Security trustees' report. The Congressional Budget Office, using similar projections, extends full benefits to 2052. Thereafter, Social Security would be able to pay 75 percent to 80 percent of promised benefits, the CBO says.
According to the Social Security Administration, the system now collects more in payroll taxes than it pays in benefits. The excess is borrowed by the Treasury Department, which in turn issues special-issue Treasury bonds to Social Security. The bonds totaled $1.5 trillion at the beginning of 2004. The borrowing started in 1983.
By 2018, officials say, the system will start to receive less in payroll taxes because of a shrinking work force and the retirement of the baby boom generation. When that happens, the system will need to tap the surplus, which is held in U.S. Treasury notes. By 2042 or 2052, depending on whose research is being cited, that surplus would be used up. At that point, the payroll taxes would cover a portion of the system's obligations.
The problem, according to Olivia S. Mitchell and Thomas R. Saving, professors of economics who served on the President's Commission to Strengthen Social Security in 2001, is that the trust fund is full of IOUs because the government has not saved the surplus payroll taxes.
The trust fund, they say, boils down to the promise that the Treasury Department will find those dollars when they are needed by the Social Security Administration. The economists say the IOUs are now worth about $1.9 trillion. To come up with that money, the economists say, government programs will need to be cut, taxes will need to be raised or new money will have to be borrowed.
Those calling for the creation of private accounts say the longer Congress waits to make changes, the more painful the changes could be.
Weisbrot, with the Center for Economic and Policy Research, said a tax increase on higher income earners in the next five to 10 years could cover the shortfall in 2018. In 2005, the cap on income subject to Social Security taxes is set at the first $90,000 in wages.
Social Security relies on payroll taxes deducted from workers' checks to pay benefits. Currently, wage earners pay 6.2 percent of their wages into the system. That is matched by a 6.2 percent contribution from the employer.
Bush has yet to provide any specifics about his plan. Some White House observers are saying he could propose allowing workers to divert 2 percent of the 6.2 percent payroll tax on wages into private investment accounts.
'New business opportunity'
Scott Haar, 29, Duenweg, thinks people should be able to control their Social Security dollars.
"Anytime, especially for young people, when we can get some of our tax dollars back and put them to work in our community, I think it's a good thing. We can impact our communities in ways that are much better than the current system."
Responding to the question of individual responsibility, Harr said that when people have a vested interest in the system they will make the responsible decision.
"People are going to do the right thing with it when they have a vested interested in their own future.
Larry Cowger, with Arvest Asset Management in Joplin, said investment products exist that "guarantee return of principal no matter what. These products would work very well in a self-directed, investment account. They would protect the principal from a downturn in the market.
"For young people, who would have so much more time in the market, maybe 25 to 40 years, a mutual fund with a 10 percent return on it would be awesome. I would advise them against picking individual stocks."
Cowger said he understands why some might be reluctant to invest in stocks for their retirement.
"Absolutely, I understand the concern because many people lost money when the bubble burst in tech stocks," he said. "If I were, let's say, 55, I would be very concerned about the risk."
Cowger said that if the Bush plan gets through Congress, virtually every financial company in the nation "will be ready to roll on that. It will be a new business opportunity."
It's an issue that could pit generations against generation, but not necessarily.
Mark Peron, 21, a senior political science major at Missouri Southern State University, said he would not want a private investment account, because he feels that Social Security is the government's responsibility.
"The current system has a lot of flaws in it," Peron said. But I still think the government should be responsible instead of having the individuals do it all themselves. The government, I feel, would be more informed and better able to handle the situation with Social Security."
Potts, the local AARP chairman, said: "It has always been emphasized to me that Social Security is only one part of your retirement program. You should try to work for a company that gives you a pension, and you should be investing some of your own money on the side.
"If you do that and stick with traditional Social Security, you should do OK. If it's not broken, why fix it?"
-"I would say do not privatize it," he said. "Don't mess with it at all, and put the money you stole from it back in it. If they would leave it alone, there would be plenty of money there. It's not going in the hole. It's the way they manage it."-
YOU IDIOT! "It's the way they manage it" is the ENTIRE KEY. We want to manage our own money!!! Nobody's going to take away your $1.65 lunches - how dare you try to dictate how future generations use their money. How dare the gubmint tell us we can't keep what we earn! AAAAAAAAAARGH!
He's a lazyass.
Families aren't going to hold together very well if they've got 5k in credit card debt and $800 social security checks coming in.
These people didn't plan very well.
Can't put it back? BUT they can give $350M out in charity to a foreign country??? Makes no sense to me. Take Congress' retirement as payment--they stole from the fund.
No, it was designed as a supplemental 'retirement' fund.
Perhaps, but check this article that was printed in Money Magazine a few months ago:
Let's say that in January you'll turn 62 (the age at which every worker who qualifies for Social Security is entitled to begin taking benefits), and that you will qualify for $13,500 a year immediately or $18,000 if you wait until your full retirement age of 66. (Both amounts are in 2005 dollars and would be adjusted each subsequent year for inflation.)
Given those figures, you'll have pocketed $54,000 by the time you reach your 66th birthday. Holding off until 66 will boost your payments by $4,500 a year, but it would take 12 years of those bigger payments for you to break even.
What do these people not get about 1) it wuld be optional and 2) it would not effect seniors currently receiving Social Security? Apparently they haven't been paying attention.
I got an enrollment form from AARP the other day in the mail with a card with my name on it and wanting me to enroll.
I drew a hugh black line through the whole page and wrote a note in big print telling them that they could take their AARP and shove it because I would never enroll or pay dues to an organization that would spend those dues on full page ads denouncing any program that would go against an attempt to put more of my children's and grandchildren's money under their own control.
Thankfully, they included a postage-paid envelope so I didn't have to waste a stamp on that scam organization.
Not gonna happen, but good idea
AARP has many more members under the age of 60 than over the age of 60. Membership age starts at 50 and AARP is being run by the younger members.
Probably followed the now honored tradition of screwing the system for a disability retirement.
I agree with you. I don't think it does any good to talk to AARP members, though. I read my dad the riot act about being a member of AARP the other day (as is my wont) and he reacted more fiercely than he ever has in the past. This is the email he sent me:
All good points. Do something about it, get involved and help your generation. Personally, I can stay in one, nice hotel room for one night and more than recover the cost of belonging to the old-timer's club for a year. How can you fight it, son?
Yes, it's an issue but only one of many. Your Mother and I will be out of work soon because, for reasons I can't understand, politicians of both parties are allowing this country to lose it's identity. They're allowing our once industrial base and what was once industrial dominance to go to third-world or emerging countries. God forbid, if we should ever be faced with a nation-wide challenge as was forced on us that Decenber in 1941, there is no longer a place for Rosie to go rivet!
Just a perspective: My company just past three years without a lost time accident. Of the 139 Federal-Mogul plants World-Wide, we have the best Quality record, we have had the lowest scrap as well as the lowest ppm of all but one of those 139 plants. We have visitors in our plant, weekly, to review and take to their plants our 6S, 6-Sigma, TPM, Lean Manufacturing initiatives and so on an so on because we're known as, no shit, "the show place of Federal -Mogul!" Oh, did I mention our machinery is going to Mexico and China? Remember the "x" in Mexico is pronounced like a "h."
Remember how your Mother and I would correct your English? Suggestion. Learn to speak Spanish. I don't know, I'm just past the point of really caring any more. If the two Johns had won the election? OK, the people that voted for them deserve what the get but, truly? I'm bitter, they are all the same and see both parties having an agenda that suits their platform. AARP? Turn 50 and join. You'll save money and our government will be the same with our without them.
See #27 for that answer.
The system HAS to be fixed, or there will be nothing at all when my kids retire. I have no problem with folks being able to put money in a private account. It will be theirs to pass down to their families when they die, without the constraints that come with their Soc. Sec. benefits. Given the long term economy, their money will grow, something that DOESN'T happen with Soc. Sec. unless some future Congress decides to 'bless' folks with an increase.
Instead of bitching and trying to scare old folks, AARP ought to either shut up, or get on board and do something constructive!!
Well sleuth, I've been an AARP member for quite a few years. NOW I'm considering dropping my membership. I think it is a stupid thing for them to do those ads. I think all of my children are in favor of being able to invest some of their own SS money. And I don't believe my share will be affected one bit. AARP just has to have a "cause" to keep up their membership and pay their well paid Staff. I think I can do without their Rental Car Discount from now on.... that's about all I get from them.
I think that the "greedy geezers" are going to last a lot longer than you may realize.
Today's Social Security benefits are being paid from Social Security contributions by employees. There is apparently a net surplus beyond what is required for present benefits. That surplus is then loaned to the Federal government in exchange for these special-issue bonds. The government then spends the cash, every thin dime of it.
This has been going on long enough to have built up a "Social Security Trust Fund" consisting of 1.5 trillion dollars in bonds. There is no cash in this "fund".
It sounds as if much of the public national debt is owed to the Social Security Trust Fund.
At some point in the future, contributions to Social Security will be less than benefits being paid, and it will be necessary to begin redeeming the bonds in the "Trust Fund". To do this will require taxing the public at a higher rate than otherwise to pay off the bonds, or selling some other debt instrument to raise the cash.
The important point is that every single dime which is paid from the Social Security Trust Fund must be raised by taxes or creation of some other debt. There are no dollars there. The only "assets" are bonds, which are just government IOUs.
The liberals are careful to downplay the significance of the fact that public employees are NOT participants in Social Security. And that any private company which created a program, funded the way Social Security is, would be guilty of criminal conduct.
Wasn't it an insurance? Old Age Security Insurance? Can't remember.
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