Sadly the republicans are already backing off social security reform which is too bad since it should be by far THE most important thing on their domestic agenda and the one with the most long lasting positive impact on this country.
Dems don't want to lose the ability to spend other people's money, that is all.
Changing this program will NOT damage the democrats, they still have the legalized murder of the unborn.
An "Ownership Society" severely depresses if it does
not outright destroy the class warfare mantra; it also
takes out of the hands of the govt and puts into the
hands of the people. The calls of "we will take care
of you" begin to resonate among a smaller and smaller
section of the population.
MV
TRUE!
Good article.
If we throw this out and change the tax system, the Dems will have nothing to run on! What can they 'promise' people anymore?
The danger of an entire nation putting investment money all at once into the stock market?
Anyone know?
Seems it might artificially drive prices up during those initial years.
Seems it might artificially prop up companies that otherwise would go broke.
Why do Republicans support the concept of "social security" in the first place?
It's socialism, plain and simple.
Up to now, Social Security has been nothing but an additional source of revenue for the general funds in the US Treasury. This is what is making the Democrats so crazy - the total revenue by the Federal government will be reduced.
Which is the whole point. The money out in private accounts is not available to the Federal government except by borrowing it on the open market, in competition with other entities that also offer to borrow money. And as such, the interest rate that would be paid would have to be competitive, and not just what the Government Accounting Office thought was a reasonable rate of return (if any return on the individual's investment is taken into consideration).
If the Federal government had been taking even a portion of the funds paid in on behalf of the Social Security program, and investing in the Fanny May and Ginny May real estate mortgage purchase funds, every one of the mortgage insurance programs would have been fully solvent by now. And mortgage foreclosures could be seen as stiffing Grandma, so there is an additional guilt factor at work.
Here is the core:
The reason this will destroy the modern Democratic party is due to the concept of universal ownership of a growing retirement account by all working Americans. Consider this: the scuttlebutt is that President Bush will propose allowing working Americans to invest 2% of their wages that is now paid into the present antiquated Social Security system, to instead be put into their own private retirement account. Working Americans would still pay a 15% Social Security Tax, but 2% would be yours to invest in your own account. For a 26 year old making $30,000 a year, this 2% would amount to $600. I can hear you now - "heck, that's not much".
But remember, the money is likely going to be invested and earn a return. Assuming a modest return of only 5%, AND that the 2% didn't increase over time (as it should), AND that the 26 year old didn't earn a higher salary as he got older (as he will), then he will have a nest egg of $10,000 in about 12 years. He'll have $20,000 in 20 years. and at 65 years old, he'll have his own retirement fund worth $70,000.
And that's with only 2% being used for his own account. Remember, the government today takes 15%. If, as I hope, the President's plan allows this 2% to be gradually increased over time, every American who works a lifetime, will have a secure retirement fund far in excess of what the Democratic Social Security program ever provided. One more group of numbers for you. If our hypothetical 26 year old was allowed to invest 5% of her wages, AND her average salary was $40,000 over her life, her retirement nest egg would be $240,000. Remember, this assumes a rate of return on investments of 5%. The stock market has traditionally provided a return of just about 10%.
Without trying to run the numbers in any greater detail, the bottom line is obvious and striking - working Americans who are allowed to own a portion of their own retirement taxes will be radically different from the ones who live now.
And they will act differently, think differently, and vote differently. This is what will bring down the Democrats.
By the way, I hope the list of proposed choices for these accounts is broad. If choices are limited to a short list of government approved stock and bond indexes, getting your company into the S&P 500 will become a corrupt Washington lobbyist's game that will greatly damage our capital markets.
This one change will make all the difference for the American people. It's FAR more important than suffling the deck chairs with tax reform. Go for this first, have a gigantic nationwide debate, and ramrod it thru. As the article says, when Americans see their own private monthly statements start to add up, "they will act differently, think differently, and vote differently. This is what will bring down the Democrats."