I'd still privatize it. 40 yrs of working with a minimum of 12.4% of your money going into retirement.
To your point, don't you think it's time we called a spade a spade and just absorbed it into the general budget and got rid of the FICA. I readily admit that this would be deficit spending, but I think that ship has sailed. I think that it could potentially be part of a fiscal stimulus package. For liberals, income caps would be abolished and funding would be more progressive. For conservatives, the tax code could be simplified and taxes on all businesses would be effectively cut by 6%.
Look I not sure if you read this in some sort of conservative op ed piece and actually believe this, or are like many conservative activists and Wall Streeters you are just trying to scare people. Please try to seek out some alternative views on this matter. The fund is totally solvent for about 40 years and could probably pay out 90% or something for 80 years. Forgetting about the numbers for a second, think logically or politically. If the fund needed to be bailed out, it would with virtually 100% certainty. (As an aside if the US could not do so, we would be talking about the complete collapse of the dollar etc. and social security would just be one of many unbelievable problems.) Social security is very popular because the vast majority of Americans like to have their retirement or a significant portion of it not subject to massive gyrations like we see in the market.
LOL, had we privatized under GWB's 2005 plan the amount "holy **** we are the ****edness" now, which is huge, would be even huger.
I would institute a graduated plan. The people that are retired now wouldn't be effected. You would have time to save up your money. People would easily have the same amount of money as they receive from SS now. But raising taxes to help the country isn't a very popular idea, so it wouldn't come to fruition, but I wish it would. Some generation is going to bite the bullet for this, and I don't mind if it is mine.
It's not that the fund will be insolvent, it's the government that will be insolvent. Medicaire on top of snowballing interest payments from our national debt would be the reason why. Social Security is the fat ugly little 5 trillion dollar brother everyone picks on. So yeah, I thought it was amusing to discuss this when our economy has been shot to hell and back.
So then why do we allow state governments, local governments, teacher's unions, etc. all operate pension funds with significantly more freedom in their asset allocation than social security. I can understand that individuals shouldn't necessarily be making these type of decisions, but why wouldn't social security at the portfolio level manage its investments like every other successful pension plan? I mean even adjusting after what the funds have lost this year, over the long term they have done very well because they are diversified investors. Or is this all mute b/c the social security funds isn't really a fund of $, and hence really can't be invested - i.e, govt just uses it and gives back IOUs or essentially forcing it to invest in Tresauries.
You are right, Medicare is the big issue. Medicare will be a non-issue when we have national health care, which is coming whether investors, medical CEO's, their lobbyists or very successful specialists want it or not. Retirees will be treated along with everyone else. The very crisis you mention is what may be the final straw for the economically inefficient system of having the private insurance company middleman skim/ waste off one in four health care doctors or more. In the future as the country just tightens its belt we just won't be able to fund such inefficiency, market ideology will have to cede to economic reality as it is currently doing in the financial system.
Because SS isn't a retirement plan. It's a security blanket. Unlike pension plans, 401Ks, IRAs, etc - this isn't money that you have a right to that is designed to be your retirement. It's a system where the current generation of workers helps supplement the retirement of the previous generation of workers with the implicit promise that the future generation will supplement the retirement of the current generation. It's built on an entirely different premise than other retirement plans. Privatizing it makes no sense unless you want to eliminate the idea of SS (which is fine) - but if you want do that, just reduce how much you pay in SS taxes and increase the amount people can contribute to their IRAs - the system is already in place for privatized, investible retirement accounts; there's no need to create yet another one.
The medical industry should not be entirely for-profit. It's a finite quantity, and the way things are now, the system pits the rich and young against the poor and old. If what I'm proposing is rationing or socialism, then I'm a rationer or a socialist. We shouldn't be preoccupied with labels and dirty little names with so much at stake.
You're asking why social security shouldn't be managed like pension funds which are getting absolutely decimated over the last two months? And you're asking this today, at the apex of the erasure of trillions of dollars of capital investment in the span of 12 months? Do I need to answer this?
I don't think I'd be comfortable with an IRA type system as the only one - way too much room for fraud through bad advisors, etc. The way I thought about SS is that you're right its an implicit promise. However, in that nature its no different than say if your municipality says this is your pension payment. If there is a shortfall, its basically going to be funded by future taxes... Do city workers or federal govt workers collect SS? or is it some sort of modified pension plan? I guess what I struggle with is that I see some of this as semantics whether you call it a pension or not. Person X puts $ into govt hands every year, and after 40 years, they get $ back...whether we call it a govt pension or SS. Ultimately, its guaranteed by future taxes if need be. I'm just thinking in the interim, it can earn a better diversified return.
Even if they lost a ton of $ over the past 2 months, what is their long term performance? I mean if anyone can have a long term perspective, its a pension fund. One could argue they have a longer perspective than an individual person since you will need your specific retirement $ when you retire. Whereas if the pension fund invests 10% in the S&P, it knows it can leave that 10% in there for 200 years since its doesn't have to touch that (akin to principal). I agree 100% that IRA type accounts shouldn't be managed like pension funds..but I can't see why you wouldn't manage a SS fund like one since its timing of cash flows is very similar. Yeah the timing of this conversation is as bad as possible..but we shouldn't throw out the baby with the bath water on this.
There are actually two types of pensions - defined benefit and defined contribution. The former is what you describe, and yes, it would be funded by taxpayer money. The latter though has become far more popular over the last 20 years or so, and that is not funded additionally. If they lose your money, too bad - your retirement is based on the value of the investment. Much of this change was that there was too much risk on the municipality, so the solution was to shift the risk to the pension recipient. Which is fine and all, but that's the opposite of the supposed purpose of SS, which is a security blanket for all.
Made my last car payment today. Only debt is mortgage. Light Christmas... good stuff, but not a lot. Cut up all credit cards except one gas card, one credit card, and a spare credit card never to be used except in case of emergency. Making sure everything is in good repair. Got lots of fire wood stacked out by the garage. Cut the satellite TV package. Dropped Netflix. Ditched Sat radio. Family night out is now every other week. Took a bunch of stuff to the migrant farm workers charity, which has expanded greatly beyond their original charge in recent months. Upped the charitable giving at church. Donated to the local food bank. We will hoard, invest in the kids, and give to charity. Bring it you bastards.
