Posted on 02/19/2005 9:25:50 AM PST by johnny7
Everybody, quick, cash in your 401(k) retirement accounts. Don't even think about opening an IRA. Are you crazy? Don't you realize the stock market is far too risky? In fact, it would probably be best just to leave the country entirely, since the health of the stock market is linked to that of the American economy. So if the market is too risky for your assets, well then, the American economy must be too risky as well. Head for Canada. Head for Mexico. Anywhere but here.
That is the absurd logic that proceeds from the U.S. Senate minority leader, Democrat Harry Reid of Nevada, in response to President Bush's proposal to reform Social Security. Reid says Bush's proposal to let younger workers — and only those who want to — divert some of the Social Security taxes they pay into their own private investment accounts would turn that program from a guaranteed retirement safety net into a "guaranteed gamble." I guess Reid ought to know about gambling, given that he represents Las Vegas, where I have personally witnessed hundreds of American retirees giving away some of that safety net to the slot machines. But that, so far, seems to be the best scare tactic the Dems can muster. Bush wants to allow you to control some of your own money. Be afraid. Be very afraid.
I swear, the Democrats should just switch mascots — replace the donkey with the Cowardly Lion. It's not just that they want to help the helpless. They want to force all of us to think we're helpless — that we can't be allowed to choose to manage our own money, or decide what kind of risks we want to take with it. As if keeping things the way they are doesn't involve risk. In spite of soothing reassurances from Reid and company that Social Security is sound, that there are billions piling up in Al Gore's lockbox, that there won't even be a problem, let alone a crisis, until 40 or more years from now, Democrats more sensible and sober than Reid have called it a looming crisis. Among them was the late Daniel Patrick Moynihan, former U.S. senator from New York, who issued his warning in 1998. Moynihan's proposed solution was to raise taxes and cut benefits, but even he wanted to encourage private savings accounts as well.
The risks of the current system ought to be clear by now:
• When it began, there were 16 workers paying into the system for every retiree. Now there are a bit more than three, and the number is heading down to two. Meanwhile, people are living longer, and therefore collecting longer.
• When it began, the maximum Social Security tax was $60. Now it is $11,000 — an 18,300 percent increase. How's that for inflation?
• There is no lockbox with a Social Security trust fund in it. Government has borrowed the entire surplus to finance other programs. As President Clinton (a Democrat) put it, the so-called trust fund amounts to "claims on the Treasury," not an actual asset.
• Social Security benefits are not guaranteed. The Supreme Court has already ruled as much.
In the face of this, do Bush's opponents really want to say that since the crisis is decades away, Bush is being alarmist? Most of them admit that without significant structural changes, or major tax increases and benefit cuts, Social Security will take in enough to pay only about 73 percent of promised benefits starting in 2042. As if that's a good thing. Does that mean they would endorse a 27 percent cut in their benefits now? Or is that just OK for their kids? Sure, there are so-called "transition costs" to allowing younger workers to put some of their taxes into their own accounts — as much as $2 trillion by some estimates. "How is the president going to pay for that?" his critics ask. But the cost of waiting and doing essentially nothing will leave a gap in the $12 trillion range. And we all know how that will get paid — with crushing tax increases. Can you say "generational warfare?"
There are risks in the market, of course, but there has never been a 20-year period that the stock market lost value. Indeed, its average rate of return has been better than 6 percent annually, compared to less than 2 percent for Social Security. And even if the market is in a trough when some people retire, it is not as though they are going to take out all their money at once. Indeed, I think the greatest fear Dems have is not that elders will return to poverty, but that more of them actually might be able to lift themselves out of it over their working lifetimes. Democrats need poor people who think only government will save them, and they need them to stay poor.
That is not some right-wing insult. Former Democratic U.S. Sen. Bob Kerrey recalls Moynihan telling him that the reason Democrats are so afraid of Social Security reform is because it might make people wealthy, "and they worry that wealth will turn Democrats into Republicans."
That, I suspect, is what scares Harry Reid more than anything.
Taylor Armerding is a staff columnist. He may be reached at 978-946-2213 or at tarmerding@eagletribune.com.
This is the nightmare the Dem's are trying to avoid. Just like Iraq and the possible appointment of conservative Justices, the Dems have their world crumbling around them.
It's falling from the top on down... and they're working feverishly, against America's better interests... in order to maintain the status quo!
It was a nice juxtaposition against the article regarding Congressman Tierney scaring his constituents to death down in Peabody and making his "...case for rejecting Bush Social Security Plan".
I have been saying this of dem tactics for years. I asked a friend (die-hard lib) that if tax reductions were going to ruin the economy, wouldn't signs of that come slowly and allow for tax increases (and the ccompanying "I TOLD YA SO" from Dems)?
Reluctantly, he said "Ya". So I said then dems should allow the cuts just for the opportunity to say "I TOLD YA SO".
So I said it was another indication that dems were afraid that republican/conservative ideas would work and show the dems for what they are.
Same with SSI reform. The dems are doomed, literally, if the pubbies get reform and it works. The dems are ended as a viable politial group as it is but anything that will hasten it is ok with me.
How far away the crisis looms is also the subject of debate. What the Democrat party seems to hope for (the nightmare they are trying to NOT avoid) is the chance to use what seems to be their favorite tactic -- stall, obstruct, or shut down the government while they blame Republicans for not doing what needs to be done to "help the (add your favorite victims group title here)" Fixing something BEFORE it's a crisis doesn't give them the chance to play their doomsday game.
They would need enough collateral to ensure the return. For example, if they were given $1M in Personal Account funding, they would have to have enough collateral so that the current value of their investments plus the collateral is greater than $1M + 3%. If they drop to where it's equal, their fund is terminated and the $1,030,000 is reclaimed. The 3% taken off the top from the fund manager is the price of getting all that leverage from Personal Account investors.
That would call the bluff on both sides. Obstructionists - the return is guaranteed so no risk. For people who believe the stock market can outperform SS, here's a chance to put up or shut up.
Tierney and Olver were at the top of this manure pile. Olver is not a 'lib'... he's a socialist... and often runs unopposed.
I blame the people... they're docile, predictable and contrary to popular opinion... sadly uninformed.
The government is in essence stealing your money. How? They take your money in the form of taxes at gun point. No they don't? Don't pay them, see what happens. The tax collector will send notice to the magistrate who in turn sends a sheriff armed with a summons and a gun to arrest you for non payment.
Tax cuts are like this, you come home to find a thief has gotten into your safe and taken the $2000 you had in there. When he's caught, he says "well I was going to take this, but here you can have it back, it is yours after all." How is that a give away? The money was yours in the first place.
Another nail in the Coffin of Socialism and the Democratic Party.
Strategery + Schardenfreude = Stratenschardenfreudery
Did they OPT OUT of Social Security....?
Us plebeans want the same
Dilbert, that is a brilliant idea.
Gents, ping.
d.o.l.
Criminal Number 18F
If investing is a risky scheme.....then I challenge Harry Reid and ALL THE DEMON-crats (TM Bagman) to fully divest themselves from all equity holdings. Not only their private pensions, their sweet government deals....but the money they've undoubtedly socked away in average brokerage accounts.
John Corzine (D- New Jersey) was on Fox yesterday...explaining why this is a risky scheme.....he was a former muckety-muck at Goldman Sacks (bio here: http://corzine.senate.gov/bio/index.html ). Talk about hypocritical....
I could put my money in a mason jar and bury it in the backyard and have more security than what the current scheme offers.
Nice article BTTT
I think it's spelled "Schadenfreude". :^)
Well of COURSE the Dems are hating this! Now look, I have a serious question here. That is, what do you say to the people on both sides, who state that they truly believe in a good, healthy, two-party system?
I say, yes. That is a truism. For the country to run efficiently and fairly for the American people. (and all of its parasites). (sorry) But, from what I learned during '03 - '04, we need a completely different and new opposing party that would replace the sinking DNC.
The maggot would be more appropriate. Cockroaches come to mind also.
if "We the People" suddenly became enlightened and understood the "basics" of the constitution they would fix the problem for their own self interests..http://www.c4cg.org/republic.htm ..the Democratic party wouldnt exist in the form it is today...
I listen to the argument bantoring back and forth. They are similar to the ones I heard in 1977 when my college political science class had to do a study on what our options were when SS drops from 5 workers to 3 workers supporting one retiree and the increase in life expectancy. Our conclusion was that we have to make concrete structural changes by 1997 otherwise the solutions would be financially and politically too painful to enact. I think we have reached the point of no return. I don't think GWB plan nor the Democrat plan will save Social Security without screwing the middle generation. That is why reform will not happen because the baby boomers will pressure the politicians not to act (which I think will be the most likely outcome). Personally I think the government should create a "lifeboat" option by quadrupling the tax deductions for IRA, 401k, etc so middle age people with less than 10 years to retirement can sock away as much money into a personal pension plan, and the government should do nothing to structurally reform Social Security, thus letting it collapse in 2040 or beyond. By then the young and most of the middle age people will have saved enough that they will not rely on Social Security for retirement. There will be a fraction of the population who will not save for retirement. Unfortuately for them and us, they will be put on welfare.
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.