Posted on 01/21/2005 3:25:17 AM PST by ajolympian2004
President Bush must really be on to something with his proposals to reform Social Security. The liberals are circling the wagons and hunkering down for a desperate defense. You'd think these self-described "progressives" would be more receptive to an overhaul and modernization of a 70-year-old program that was designed during the Great Depression. This vehement opposition is over more than the mechanics. It's ideological. The left regards Social Security as the cornerstone of FDR's New Deal socialism.
Privatizing it is nothing short of blasphemy.
A Ponzi scheme can only survive as long as the number of suckers grows. With the ratio of workers-to-retirees dropping precipitously from 40-to-1 in 1945 to 2-to-1 20 years from now, the jig is up. When Social Security was spawned, life expectancy was 57. Today it's nearly 80. The numbers don't work anymore.
Social Security is simply a transfer of income from current workers to current retirees. The so-called "trust fund" is nothing more than an accounting fiction. Think of it this way: government takes money from you and your generation now to pay for an earlier generation's retirement benefits. There's money left over, so the government spends it on something else, leaving an IOU in a "trust fund," collectible from the grandkids to pay for your retirement. But you live a long time after retirement and the kids don't fruitfully multiply, leaving fewer grandkids to pay for your generation's retirement. That's their tough luck.
Liberal defenders of the current system argue that the Treasury bills in the Social Security trust fund are as good as gold; that there's no chance the U.S. government will default on them. That's true; it won't. But it's not a question of a legal claim; it's a question of cash flow. And that's the problem! Where is the money going to come from to honor those T-bills? It can only come from increases in future taxation on a shrinking population of workers relative to retirees or future borrowing. If we monetize the debt to accommodate that borrowing, we can pay off the IOUs with inflated dollars that are worth a lot less. Think of Weimar Republic Germany and buying a loaf of bread with a wheelbarrow full of cash.
The Bush administration, based on the recommendations of the bipartisan Moynihan Commission, envisions a gradual conversion of Social Security from an intergenerational transfer-scheme to an individually-vested savings program based on tangible investments in private-sector, income-earning, appreciating real assets producing far greater returns to investors than the current system could possibly provide.
This is what Bush means by an "ownership society." It will create a great incentive for Americans to increase their anemic savings rate, take responsibility for more of their own retirement and produce an investment boom the likes of which we've never seen.
This is capitalism at its best with little long-term risk. Over no 20-year period, even during the Great Depression, has average annual growth in stock values been less than 3 percent, a much better return than Social Security offers. If the stock market defies this history and goes in the toilet for a protracted period in the future, we'll have far greater problems than maintaining Social Security benefits.
Besides doing nothing, the preferred option of liberals, not surprisingly, is to hike Social Security taxes solely on the top 10 percent of Americans by raising or eliminating the cap on earnings (currently $90,000 a year) subject to the tax. The reason there's a limit on earnings subject to the tax is precisely because there's a corresponding limit on benefits. Removing the cap would result in a tax hike of $50,000, on top of income taxes already paid, on a family earning $500,000 a year. This isn't a solution to Social Security insolvency; it's just a punitive transfer of income, which, given the leftist mentality, would be reason enough to do it.
Liberals say the Bush administration is resorting to scare tactics to justify Social Security reform. They say there is no imminent crisis. This is semantical sleight of hand. Bush hasn't claimed there's an "imminent crisis." But that's hardly a reason to do nothing. What we have is a serious Social Security problem that portends a crisis in the future.
Dealing with it sooner rather than later will reduce the ultimate pain and cost.
Mike Rosen's radio show airs daily from 9 a.m. to noon on 850 KOA.
Seems like the dems in congress have decided to emulate the crazies in the streets yesterday protesting the president.
So what would be needed? Basically, a major push between now and 2006 with the 2006 election putting us over 60 seats.
The on;y problem I see with privatizing Social Security is the fraud. There would have to be a punishment that is so great that the crime would not be worth committing.
Privatizing Socialist Insecurity would correct the greatest fraud that has ever been perpetrated on the American people: The Ponzi scheme that the current system is.
I was thinking more along the lines of private investment firms ripping off all that money and then the goverment does nothing and we get screwed ala Enron, global crossing.... etc.
Social Security was nothing more than a big . . .
Pyramid Scheme ! ! !
My suggestion to help soften the cash flow problem of privitization is to require all future money paid back to Social Security, which has been borrowed by the government, be invested in the stock market for a period of years before being released as Social Security payments.
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