Posted on 03/15/2005 4:05:28 PM PST by AWestCoaster
Discussed on CNBC with Congressman Ryan. This bill is highly rated by the Chief Actuary of Social Security with his opinion shown in the link.
This bill empowers workers with the freedom to choose a large personal account option for Social Security, with no benefit cuts or tax increases.
Summary of the Bill:
· Workers will be able to shift to their personal accounts 10 percentage points of the current 12.4% Social Security payroll tax on the first $10,000 of wages each year, and 5 percentage points on all taxable wages above that. This creates a progressive structure with an average account contribution among all workers of 6.4 percentage points.
· Workers choose investments by picking a fund managed by a major private investment firm, from a list officially approved for this purpose and regulated for safety and soundness, similar to the operation of the Thrift Saving Plan for federal employees.
· Benefits payable from the tax-free accounts would substitute for a portion of Social Security benefits based on the degree to which workers exercised the account option over their careers. Workers exercising the personal accounts would receive traditional Social Security retirement benefits based on the past taxes they have already paid into the program. Workers would then also receive in addition the money payable through the personal accounts....
(Excerpt) Read more at house.gov ...
I also have had a savings plan at work for the last 30 years as a hedge against my SS being stolen by politicians.
I find it incredible that the Democrats are putting themselves at risk with younger American's just to block anything that GWB does!
Senate Agrees Social Security Needs Help
24 minutes ago
Top Stories - AP
By GLEN JOHNSON, Associated Press Writer
WASHINGTON - The Senate unanimously agreed Tuesday that strengthening Social Security (news - web sites) was "a vital national priority" but split acrimoniously along party lines on what to do about it in the first votes on President Bush (news - web sites)'s plans.
SNIP
In one exception to the party divide, five Republicans broke ranks and voted with the Democrats in favor of a resolution declaring, "Congress should reject any Social Security plan that requires deep benefit cuts or a massive increase in debt."
SNIP
The vote on the resolution, offered by Sen. Bill Nelson (news, bio, voting record), D-Fla., was 50-50, with Republicans Susan Collins and Olympia Snowe of Maine, Mike DeWine of Ohio, Lindsey Graham of South Carolina and Arlen Specter of Pennsylvania joining with the chamber's Democratic minority.
Time for a new RINO tagline!
Lindsey GRAHAM ???? What's up with him???
G
"What are they AFRAID OF??"
The fact that Bush really hasn't said what his plan is yet?
"Workers choose investments by picking a fund managed by a major private investment firm, from a list officially approved for this purpose and regulated for safety and soundness, similar to the operation of the Thrift Saving Plan for federal employees."
Government managed accounts. Not "private" accounts. I suppose the brokerage houses are faced with a dilemma. On one side, big bucks spent on campaign contributions will bring billions in returns to handle these non-private accounts. On the other side, this massive increase in socialism brings the government as an controller of American business to unparalleled heights, and more scrutiny of broker misconduct.
As I recall it was presented as voluntary for you to withdraw 2 or 4 percent of your SS tax to a private account.
Could it be that he sees himself in the White House some day?
Over my dead body.
I agree about the DEMS. Clinton said there was a SS crisis in the late 90's. No complaints from his party. Clinton agreed about taking action on Iraq-WMD's, his party for it. With Bush in both cases, the are against it. Figures.
They all have ten-gallon hats, no cattle!
....I am over 55 so whatever they do with SS supposedly will not affect me......
Well, let's think on that statement. What is you live to 95?
John Maudlin says that as the boomers age, they will become conservative, sell stocks and buy bonds. Stocks overall will decline as the sellers exceed buyers.
His thoughts are correct unless there are personal retirement accounts and the "kids" start buying mutual funds that will buy the stocks the aging boomers sell.
If you are old like I willbe, with a portfolio including stocks, I want the market to not decline. The personal retirement accounts will capitalize a new America and my boat will rise with the tide even tho I'm too old to do any thing but mind the mooring lines.
For you trolls out there they are both from Massachusetts!
All of your stocks are my mutual funds.
I am at similar age as you were then when you started your savings plan. I am thinking of starting my own, but it will be part of government induced private account system the government of my country created recently as the third rail in our pension system. I have strangely found myself rather interested in the US social security debate, as an admirer of the cato institute (in some matters at least).
Please answer some of my questions about it, some of whom undoubtetly sound silly to you, but as I am not an American I honestly don´t know these things, and I have not been able to find the answer for these
1. Is it optional to participate in Social Security?
2. If not why are f.e. teachers with other kind of system (if I haven´t misunderstood), and f.e. government employees in some county in Texas?
3. If so, why do so many people participate in it, when they have all these 401k´s and IRA plans awaylable?
4. Those plans are they not some form of individual private accounts like Bush is probably going to propose?
5. If you pay into such an individual account, does it reduce in any way what you get from social security in the future?
Maybe the last quistion is the most silly in your view, but I am honestly asking this if the answer to the first quistion is that it is not optional to participate in the Social security system.
That is because that is how it works in our three tired system I beliewe. If you get good enough pension from the collective investment funds, that started in the 1970´s and have been very succesful, owning over 133 billion ISK in Icelandic stocks and that only beeing around 14 % of what they own, considering that Icelanders are only just under 300 thousand, the government minimal pension drops to zero.
Similarly when the private accounts will start paying off, I beliewe the collective funds can reduce what they have to pay you in pension by some fixed ratio.
I wonder if such a system if not allready existing could help solve the solvency problem of the social security, f.e. by the government deferring the taxes from other kinds of individual accounts (like 401k´s and IRA´s) to the system?
Maybe it does not sound principled enough but the good side of it is that if some of the current systems payrole taxes are allowed to go into private accounts (f.e. what amounts to the surplus in the system), the pressure on allowing more money to be taken from the payrole taxes to individual taxes will probably increase from regular folks, and if people are also allowed to put money voluntarily into them (or 401k´s or IRA´s or what it is all called, maybe some simplification is needed) the solvency crisis of Social security will be solved by mostly making it insificnicant and hopefully eventually abandoned.
Here's a couple of comments:
Some government agencies can opt-out of Social Security for their employees, but for most of us it's mandatory. The program involves both a pension plan and disability insurance, so you can see the need to have it cover a wide range of people.
Most of the proposals for private accounts would do more or less what you described in terms of reducing the government payout by some percentage of the total return on the private accounts. Democrats, who are carefully ignoring the fact that the reductions will be LESS than the total return, so pensioners will end up with MORE, are simply running around shouting, "Bush wants to cut benefits". So far, they've been pretty effective at spreading that half-truth.
Social Security in this country is also a wealth-transfer mechanism, with many being able to draw pensions in excess of what their contributions would justify. For that reason, and because Social Security pays far less than even the most frugal person needs to live on, 401k's and IRA's are a very important part of retirement planning. So, most of us have to carry both Social Security and private (IRA, etc.)programs.
Oh...and...
The way we deal with those who make good returns outside the system is that we tax their Social Security payments. Those with smaller returns pay no tax.
Thank you very much for clearing this, I have been asking this question now for some time but nobody has seen fit to answer me. I seem to have made some mistake, I thought I was diverting my question to the first commentor, probably it was better this way ;). I am surprised to hear that it is not optional, I was sure that this was one of the major differences between US and Europe, that the US government could not dictate you to participate in anything like that or hold a complete registration of its people (wich is neccasery for this to work I presume).
But what surprises me most is learning that the US is much closer to our welfare state than I ever thought, this I will have to use to my advantage in future debates about the "evil America" wich according to the leftists is the most libertarian (classical liberalism) society and see they say, the rich are getting richer and the poor poorer and so many are not health covered and so on and on.
But the trouble is of course that the US is burdened with wealth equalization (distribution) programs just like the rest of us, that are contrary to popular beliew mostly responsible for increasing the divide between rich and poor. The US is much more beurocratistic and even socialistic than I ever thought, but it has also a fearsome champions of freedom, hopefully they will prevail, sadly every time someone gets to Washington they also start to spend...
We have to pay tax on the returns from our pension systems, but similarly to you, there is some kind of taxfree limit (they are very high in Iceland) I beliewe, but we have only recently started private accounts, and I am not sure if they are tax free or not, or if so if it is limitless how much I can put into it.
But at least if I start paying around 3% of my income into it my employeer needs to match it with similar amount. Most likely when people will start to withrdraw money from these accounts they will get less money from the collective accounts, specially as they also bear the burden of disability pension.
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