Personal Accounts Can Help Social Security Keep Promise (Positive Editorial)

A powerful but phony argument against creating personal accounts within Social Security is that the retirement program cannot afford it. The so-called transition cost to go to a partially private system is often estimated to be $2 trillion.

Per person, that's about $6,700, not counting babies and others who don't pay tax. But instead of getting angry, taxpayers should be wondering why it costs so much to get some folks partially off Social Security and how much more it's going to cost for everyone to stay aboard.

They'll find that letting a younger worker own a tax-funded retirement account is a solid first step toward enabling Social Security to keep its promise to workers that no matter what happens, they'll have a steady income.

President Bush's concept of voluntary, regulated accounts for younger workers is worth supporting. Details are yet to be clarified, but a good plan would allow at least half of every worker's payroll tax to go into a private account, and rules would prevent overly speculative investments. Congress should not allow an economy-dampening increase in payroll taxes for anyone.

A transition to more transparent accounting will help fulfill Social Security's retirement promise, not break it. A worker who is allowed to put some of his payroll taxes into the equivalent of a personal safe deposit box will send fewer dollars to the federal government. In exchange, the worker will get a smaller guarantee from Social Security.

It's a fair deal because conservative investments over time will grow. County workers in Galveston, Texas, have long been on a private retirement plan instead of Social Security. They contribute 6.2 percent of their pay and also have disability insurance. Someone retiring there after 37 years with average pay of $25,596 gets a monthly benefit of $1,250, The Associated Press reports. Under Social Security, the retiree would get only $669. A $75,000-a-year worker gets $3,663 instead of a Social Security check of $1,301 - a significant difference.

The story on the Galveston plan included a retiree who gets only $640 a month because she had made a big withdrawal from her retirement account. Social Security allows no early withdrawals, and now, neither does the Galveston plan.

The woman's plight is instructive because Congress has done the same thing with the Social Security Trust Fund. Every excess cent in payroll tax revenue has been withdrawn, as one expert put it, to buy everything from paper clips to battleships. Taxpayers borrowed the money from themselves and eventually must pay it back, private accounts or not.

When current taxes on wages become insufficient in 2017 to fund current retirement benefits, the shortage must be made up from income taxes or some other taxes, or benefits must be cut. The creation of personal accounts would make some of this debt due sooner rather than later, because the revenue stream from the payroll tax would be reduced by perhaps 25 or 30 percent. That's the $2 trillion.

But it's not a new debt. Payroll taxes in years ahead are inadequate to pay benefits to a larger group of retirees who are living longer and longer. That's why there's a Social Security crisis. This unfunded obligation is growing larger every year, so it makes sense to start paying it off sooner rather than later.

Another advantage of a personal account is that the taxpayer would own it. The Social Security safety net would remain, as would disability and survivor benefits. An account owner would have an incentive to hope for a stronger economy. The present pay-as-you-go system has no liquid reserves, no ownership, and it cannot be sustained unless benefits are reduced or taxes (or debt) increased. If no changes are made, retirees in years ahead will be forced to push for higher taxes just to keep their benefits coming.

Private accounts wouldn't add to the generational debt, but they would stop the trick of using Social Security taxes for other things. That's why Congress doesn't want to talk about it, and also why it must.

A polite way of stating the real purpose of letting people keep thie OWN MONEY to keep it out of the hands of the government. Dealing strictly with facts and reality, the government, under highly socialistic guidance, made itself nanny to the public, with their money. Nothing less that a typical socialist power-grab decades ago. Now, as history has proven, people could have done a much better job of protecting, saving, and earning upon their own money, than the corrupt government ever wanted to do. The government squandered OUR money for their own political purposes, without our permission to do so leaving nothing but a pile of empty IOUs of our hard-earned money. And even today, after the liberal socialists enacted legislation which allowed them to SPEND the annual SS taxation surplus (which they do each and every year), we have nothing other than what is taken from the working class each year to pay the growing demand by those that paid all the original bills to begin with...and have depended, and do depend, on the SS funds being there for them in their retirement. Thus, the idea of getting control of your money out of the hands of Washington is the best thing that has happened to this ponzi scheme, in decades. Thank you George Bush for this, and let the radical lefitist-socialists who care about nothing other than taking your money, just keep on whining and belly-aching --- let's take care of the people's money as the top priority.

It looks like the town meetings with the President, Ginny Brown-Waite and Andy Putman, are having an effect on even an editorial board that couldn't muster an endorsement of GWB for President. Please join generationstogether.net to keep the campaign for reform on track.

County workers in Galveston, Texas, have long been on a private retirement plan instead of Social Security. They contribute 6.2 percent of their pay and also have disability insurance. Someone retiring there after 37 years with average pay of $25,596 gets a monthly benefit of $1,250, The Associated Press reports. Under Social Security, the retiree would get only $669. A $75,000-a-year worker gets $3,663 instead of a Social Security check of $1,301 - a significant difference.

One thing I like about the Galveston plan and personal accounts are their proportionality. The $75,000 worker made almost 3 times as much as the $25,596 worker, pays almost 3 times as much and gets almost 3 times as much as benefits. No screwing around with disproportional payments for lower income people.

Here's an email that I rec'd from a strong demoncRAT OH childhood friend. Yes, the childhood friend is a member of moveon.org unfortunately.

Subject: Thanks for Helping Protect Social Security

Dear friend,

Thank you. Your name has been added to the petition and your comments will be delivered to your Senators and Representative.

Please take a moment to invite your friends and colleagues to sign. You can just forward the sample letter below.

Spreading the word is critical, but please only pass this message along to those who know you, of course -- spam hurts our campaign.

Thanks, for all you do.

Sincerely,

--The Team

Here's a sample message to send to your friends:

Subject: Tell your friends: Save Social Security.

Dear friend:

George Bush and Republican leaders have made phasing out Social Security through privatization and massive benefit cuts their top priority for 2005. Members of Congress are choosing sides over the next couple of weeks.

We need to make sure they choose correctly now--before a massive election-style campaign by George Bush and the Wall Street interests gets to them including what might be a $100 million TV ad campaign.

MoveOn PAC is collecting signatures to present to lawmakers. You can sign the petition now at:

http://www.moveonpac.org/socialsecurity/

Thanks.

So in the US system, you are not obliged to pay into the Social Security System? I have also heard that the teachers have some kind of different system, but is it possible to opt totally out of the SS system and just pay into your own private accounts?

I was posting in another thread about the Icelandic system, wich is in very good shape, although not private enough, but it is going there, although slowly:

http://www.freerepublic.com/focus/f-news/1381082/posts

Why does the newly posted thread not pop to the top of the freerepublic front page?

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