Social Security Reform - the hard number comparison
Patrick Ruffini has posted a web based Social Security calculator that compares the performance of your SS contributions in the 'standard' system and with a Personal Savings Account.This calculator is based on the details from President Bush's proposal and position papers, while the 'standard' portion is based, well, on the non Reformed Social Security System.
As a point of inquiry, MSM/interviewers of all those decrying PSA's should ask them how many have failed to invest in Keogh/401K accounts because the market place is 'such a gamble'. One should also ask how many federal workers have failed to take advantage of their access to PSA's for this reason.
One 'fact' that is being overlooked (intentionally?) by all the negative MSM reporting and Dem's raving, is that all employer/employee funded retirement accounts (outside of SS), are invested in a mix of bonds, stocks, and money market accounts. It is big business and big money, and these accounts are the 'elephants' on Wall Street. They are so lucrative, and generate so much profit, that anytime corruption in labor gets investigated, this is one area that is looked into almost automatically.
I have been a participant in my own employer's 401k plan since it became available over 20 years ago (in response to the increasing liquidity concerncs about SS among both mangement and employees). In all that time, my account has shown a net loss only once, and that was in the two years of market depression immediately following 9/11. It has sense rebounded and recovered all of its losses and moved on to further gains. I contribute to this account about the same amount as my SS withholding. Suffice to say, if my SS were also part of this or a similar fund, I would retire a at the SS retirment age (if I wanted to wait that long) with more than enough money to continue my salary at that time I retired (without touching the principal)rather than considering a reduction in means that anyone who depends primarily on SS must face.
I believe the 'real' issue to AARP and Dems, is loss of control. Loss of control of the political process, and more importantly, loss of control of people who might not be dependent on government dole/handouts any longer.
Non of this takes into accout the surge/drive this much capitol coming into the investment market would give our economy. SS withholding, as currently constituted, is a drag on the economy since it is a direct pay - what is withheld from you paycheck goes directly to current recipients and whatever govenment programs are being funded with the 'surplus'.
There is no trust account, in the common understanding of the term. SS witholding earns no interest, invests in nothing, provides barest sustenance level support for those who do depend on it for their entire retirement (something it was never intended to do, if you read much of the historical documentation on the creation of SS). It forces those at lower income levels, who have accumulated anything, to divest that to avoid compromising their benefit (if they are in dire need of it).
As the SS becomes income negative in the next decade, the funding 'borrowed' from it for other programs will have to be diverted back to cover the shortfall. That will require a redistribuion of the federal budget (ie cuts in programs) or tax hikes. The outlook for Medicare is worse. The Federal Reserve has concluded in a study referenced by Bruce Bartlett, that taxes as a proportion of the GNP, are where they need to be - the economy is in balance to provide the most return. Any increase in tax rates, would slow the economy down to an extent that tax revenues would decrease despite the higher rates. One of the most under reported consequence of President Bush's tax cuts, is that current federal tax revenues are actually increasing in response - his tax cut is income positive for the government rather than income negative.
You won't read about this in MSM...
0 Comments:
Post a Comment
<< Home