Many on this forum, as well as I, have proposed that this money be put into an actual investment fund"
Did this bill provide an alternate investing plan for social security, or did it simply mandate the Federal Government to stop borrowing from Social Security?
A one sided bill is nothing but an irresponsible publicity stunt.
"and the loans provided ... is guaranteed by our tax dollars"
I don't think that's true. Fannie Maes do not have the backing of the Tax payer and are not a debt of the U.S. government but only the Fannie Mae agency, which could be allowed to fail. See the following
That's why Fannie Mae securities trade at a premium to Gov't securities, because there is more risk involved.
Do you really want to move social security to higher risk securities that do not have the full backing of the gov't?
Sure you could get a little higher interest rate, but the total debt demanded between the U.S. Gov't and Fannie Mae would be the same. So if you shifted Social Security the spread between the two would probably narrow and then the foreigners would simply be buying the U.S. Gov't securities instead of Fannie Mae's. I don't think you make a very signficant difference, except that social security would now be subject to Real Estate market bubbles and those bubbles will be exasperated by the Federal dollars that would now be flowing into Fannie Mae securities.
There is apparently quite a bit of disagreement concerning the FANNIE MAE. I would draw your attention to the following, from the publication "The Free Market", in an article titled "Redistribution of Risk", by David Barnes:
"...Government chartering of these organizations causes risk to be transferred from GSEs to the unknowing American taxpayer. The taxpayer will bear the full cost of Fannie Mae's risk assumptions in the event of widespread mortgage default. Each individual is burdened enough by trying to pay his own mortgage while government is plundering his paycheck...
The burden of millions of other mortgage payments should not rest on his shoulders as well. Fannie Mae preys on the common American's ignorance of financial markets for its own benefit. This would not be the case if Fannie Mae's government ties were removed and it were forced to take part in true free-market enterprise..."
FANNIE MAE is a GSE, or government sponsored organization, just like the Savings and Loans were in the 1980's, I believe it was.
The only reason that the FANNIE MAE can have the influence it was intended to have, in adding liquidity to the secondary mortgage market, is that it removes, (or at least severely attenuates), risk from the bundled securities it sells, commonly called Fannie Maes. If no government backing was implied, there would be no FANNIE MAE. If no government sponsorship was in existence, then no exemption would be in place from the rules of the SEC, the Security Exchange Commission, set up and functioning to insure the solvency of issued securities.
If no government backing were in existence, then the Fannie Maes being increasingly sold to overseas bidders would lay unsold at current interest rates. And since a significant part of the periodic issues of Fannie Maes are purchased by foreign investors, with the understanding that the risk of massive failure is underwritten by the US government... if it is ever determined that the full risk attaches to these instruments, the flood of foreign money pouring into them would dry up like Hilliary Clinton's tear ducts.
I have heard it argued both ways, as I am sure you have, but the predominate view, as I understand it, is that the presumption of good faith that the government will act, just as in the Savings and Loans debacle, is one of the few remaining pillars retaining liquidity in the secondary mortgage market. If that is ever removed, it's Katie bar the doors!
And yet... when challenged in the U.S. Supreme Court, I believe a ruling on Social Security was that the American citizen had no actual "right" to the money he has contributed! This, also, is foisted upon us as a "secure retirement investment" provided by the government! This, however, was refuted in a written ruling of the highest body in the land.
Does it mean, then, that Social Security has been declared dissolved by the Courts? No. This is because any "guarantee" of any instrument or any institution is only as good as the preception of the stability of the guarantor. The guarantee on the amount in your Federally insured FDIC or FSLIC account is ironclad... as long as the US Government has the means and the political mandate to do so.
But what happens when ALL FDIC and ALL FSLIC and ALL debt instruments fail simultaneously?
Americans have been treated to a national disaster, recently, where a City Mayor, and a State Governor stood on the remnants of a failed levy, staring at the partially submerged school buses in a flooded city, and scrambled to explain why they were not at fault for failing to act. The saving grace being that all of the other Mayors and Governors will divert the taxes and increasing debt of all of the other Americans to make good the carnage of that city. And yet, as it becomes apparent to Americans that more money will be involved in the rebuilding than was ever contemplated before, and the certainty of waste and diversion becomes plain- the actual rebuilding is curiously taking much more time than originally thought. Surprise...
Our citizenry now needs to envision the day when EVERY City and EVERY State sees their houses submerged in a flood of debt. Where there will be no "rest of the country" to turn to, because all purses, Federal, State and City now look to each other for salvation from the disaster they allowed to happen.
I have a newsflash for the American family...when that "-moment of the dry mouth and the wet pants-" finally happens, and the horror dawns that there is not the government to save us... that instead there IS only us- it will be far too late.
As to a one-sided bill being a "publicity stunt"- everything, repeat, everything done in the political arena is currently a political stunt. We ceased some time ago doing things because they make prudent financial sense. Why would we concede to the liberals exclusive license to make points in front of the American people through political theatre?
Surely, you cannot believe that the only way to get things accomplished is to maturely propose restructuring Social Security in a sensible speech delivered from the Presidential pulpit? I have news for you- George Bush tried that. He tried explaining that we face a worsening crisis.
Guess what happened? He was answered by the staging of hundreds of immature, silly, Democratic sound bites, amplified and repeated by an irresponsible media, and culminating in the standing ovation that the defeat of Bush's best attempt to finally fix the problem received in his Presidential address before Congress. Publicity stunt?
It has nothing to do with interest rates- it has to do with making Americans understand that this awesome spiral of debt that we are descending into will preclude their hopes of eventually forcing their grandchildren into funding a nice retirement for them. As unconscionable as that is, it pales against the actuality we are preparing for them.
We demanded "no taxation without representation", and fought hard against it twenty four decades ago. But what, exactly, are we handing our descendants with this mad idea that they not only need to pay all of the debt that we have insanely charged up-... but that they also have to pay off the humorously designated "accrued interest" that we demand also on our national "I.O.U.'s", all while also supporting the retirements of those who dropped this cruel yolk upon them?
There is no clearer taxation without representation than this unconscionable, unbearable burden, voted and spent before they were even born, and yet we expect them to meekly submit to what we would don armor and heft our arms against in rage?
The art is not to stop the government from spending money that the citizens have cleverly been conned into thinking is "Social Security Money".
The art, rather, is to somehow alert the citizen that the government has no manifest destiny to take over the financial lives of our children, and has no irrevocable charter to do so.
The art is to let people know, through whatever theatre is necessary, that they are spending not just themselves, but generations yet unborn, into penury and fourth-world status, and that no legislation that they demand will then be able to return the American birthright to them and their grandchildren.
The time to begin building the dikes is NOT when the first raindrops fall, and the first hurricane winds blow. The time to access whether the money diverted from the strength of those dikes, into "social projects" instead, is not when the waters begin lapping at the top of the dike.
It is way too late by then.
And the flood is upon you....