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 think there should be a "shot across the bow" to AARP. Since they do have so many members from 50-65.. Many are conservative who are going to DROP their membership. I AM an AARP member and I think all other ppl who want the system fixed should make known this is going to happen if there is massive AARP opposition to SS reform..
They are worried because they have known for a long time that YOU were never going to benefit from this. Although you personally seem willing to bear this unfair burden, they worry that the majority of your generation will not be willing and will pull the plug. A house of cards can only wobble so long before it completely collapses.
During the best of times, it may be that people like yourself will contribute at a rate such that each two workers supports one beneficiary. The problem will come when the "worst of times" arrives.
When energy prices spike but do not retreat, making US businesses less competetive, leading to layoffs, wage reductions, and reductions in working hours.
When hundreds of millions of Chineses and Africans and Indians work long hours for a pittance, resulting in a lowering of US standards of living.
When disasters IN THE US have to be addressed, creating tax surcharges to make ends meet.
When Islamic Jihadists take over Spain without another shot being fired and are making known their demands to France and Germany, backed by a threat of repeating the anthrax attacks which crippled Italy.
IT can happen here and in our lifetimes. There are no doubt Freepers who remember the hopelessness of the Depression, the carnage of World War II, and the insecurity of a Cold War that could be heated by Hydrogen Bombs in a flash.
It was designed to buy votes for Democrats. When it was instituted, most people didn't even live to age 65. It was a nasty Ponzi scheme from the beginning. If it had really been an individual retirement account, *as it was sold to the American electorate*, it would be far different than it is today.
It's my kids' generation that we'll have to worry about. Mine isn't feeling the pinch quite yet, and we still have some respect for our elderly parents. Unfortunately, those attitudes are changing. In our case, both our parents are gone. My Daddy died at the age of 64, and didn't collect a DIME of his own Soc. Sec. money. Mama got survivor's benefits, but it wasn't much. She got a little from her own Soc. Sec. when she turned 65, but my sibs and I supplemented her income. Sir SuziQ's parents were able to collect some benefits, and fortunately had put some money aside because his Dad worked a little longer before he retired.
One BIG difference these days is that my generation did not have as many kids as our parents' generation did. We have four kids; Sir SuziQ's parents had 6 and mine had 8. That means we have half as many paying in to Soc. Sec. to support us as we had to support our parents, and fewer to help out if there's a shortfall.
It will be a major upheaval because things have gone on so long with everyone paralyzed with fear about doing anything. The system cannot be maintained as is has been, so things will HAVE to change, and we'll all have to figure out what we need to do to adapt to the changes. If we have strong feelings, we need to contact our Congressional Reps., but we need to inform ourselves of the options before we go off bitching about it. The idea of putting some of your own money away is great; it won't help SSQ and me much because he is closer to retirement than our kids are, but it might help make a difference in disposable income later on and possible eliminate the need for help from our kids.
Yes, and benefits to current recipients are unaffected. The leftist AARP leaders know this full well and are lying through their teeth to scare their members.
AARP is being run by socialist democrats. I dropped them back in the early 90s when they came out with a scam support for a Clinton program.
See..
THE AARP DECLARES WAR ON YOUNGER AMERICANS
&
“Young People Be Damned!”(Reactionary AARP)
Why on earth are those 2 folks quoted in the beginning of this story so worried? They wouldn't be able to become part of the new program anyway.
Propaganda, ignorance and greed, It's sure not concern for their kids & grandkids.
I'm glad you see the light, my brutha---so to speak.
I just wonder how old the people are that are making the decisions re: running the ads and fighting all of these new innovations that Bush has talked about? Remember last year when the Prescription benefit for Medicare was being debated, the AARP were against it!!
Now, don't get me wrong, I am for less govt., but when the poorest senior citizens would go from having to pay full price for medicine, to having to pay next to nothing for it, I don't get why they thumbed their collective noses at the plan.
It has to be YOUNG lobbyists that are doing this because I know that one doesn't turn DUMB at the same time you turn 50. Also, like me, I'm sure that 99% of seniors think in terms of what is best for their children and grandchildren and I certainly don't want them paying one more dime to a program that will be totally worthless when they retire.
Shoulda done your own retirement planning instead of relying on the government, grandpa. Anything I get from the government I plan on using for vacation, not to live on. And even then, I'm sure I'll be lucky to afford the bus fare downtown.
Right on. I began funding, to the max, mine and my wife's IRA's the first year they were allowed and am still funding them to the max each year even though I am retired (wife still works, do I have it made or what?) Although I never planned on needing SS, now that I am receiving it, it is pure gravy.
Basically by a bunch of Boomers
What goes around comes around? What will your kids decide needs a name change because Congress stole from you--so semantics make a difference and your thinking correct?
Yes, the Slick Willie bunch.
That proves it is NOT about anything other than POLITICS. A FREE $600 the FIRST YEAR for prescription drugs. This is the AARP NOT the everyday retired person. Selective interviewing at the least.
Besides the FACT that the AARP is a RADICAL LEFT WING GROUP hiding behind the elderly. Once they find out what the AARP supports more and more of the retired drop them like a rock.
Is there an alternative conservative group for seniors? Sort of an anti-AARP?
If not, it's a good idea...
The seniors will get their social security, which is more than I can say for myself and everyone else my age. I'm sure we will endure rate hikes and benefit decreases before they finally scrap the whole thing. Of course, government would not give up that hold on everyones' lives for any cost, so perhaps we will get benefits after all.
The 60 Plus Association is a non-partisan seniors advocacy group with a free enterprise, less government, less taxes approach to seniors issues. 60 Plus has set ending the federal estate tax and saving Social Security for the young as its top priorities. 60 Plus is often viewed as the conservative alternative to the American Association of Retired Persons (AARP).
http://www.60plus.org/about.asp
Thank you for the information.
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