Social security is not socialism but it needs to be privatized

The way I understand it our SS taxes go into the general fund and are spent ( squandered) on whatever politicians feel will get them votes.

 

Amen!!!

 

That's why it would be a private annuity based system not a private investment system

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No privately run insurance company annuity has ever gone broke and couldn't or wouldn't honor their obligations to investors.

 

They go into a separate fund. That fund does invest in special securities (federally secured loans) to other U.S. programs.



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That's nothing more than a shell game. The money is spent.

 

While it's fun to whine about the way government spends money, every dime the government spends finds it's way into the cash flow that powers our economy.
Millions of small businesses rely on government contracts or have clients who rely on government contracts. Your own income stream at some point relies on
money spent by the government. Is it all spent wisely? No. Does the majority of it end up in the hands Americans who then spend it on goods and services that
power the economy? Yes.

 

It's not a Ponzi scheme; that's simply an inaccurate use of the word. By that definition, all taxes are Ponzi schemes.

Government routinely takes in money in taxes from one group of people, and then spends it disproportionately on another group of people. That is how government spending works: we all pay taxes, and the government spends it where needed. Where the money goes rarely matches up precisely with where the money came from. That's why my state, Minnesota, pays more in federal taxes than we get back in federal spending.

Why is SS money not invested? Because on the day Social Security was enacted, retirees started receiving benefits. Retirees who had never paid a dime into the system. On Day Two, anyone who retired after Day One started receiving benefits -- after having paid in just one day's worth of SS taxes.

I'm not sure how you would expect it to work otherwise. Pass Social Security in 1930, but it only applies to people who start working after that date, with full benefits not being paid out for decades? Really?

That initial startup cost (where people were paid benefits that far outstripped what they paid in) was necessary, and affordable at the time because working-age Americans outnumbered retirees by 16-1 or something like that.

Good news! The startup costs have been paid. All we need to do now is pay the operating costs. And in that regard, SS operates on an insurance model. Everyone pays premiums, and if you live long enough, you get benefits. It's little different than life insurance or, as you point out, an annuity.

Would it be a good idea, in theory, for the government to invest Social Security taxes? Sure. But that ignores several things:

1. That would have required higher Social Security taxes from the outset -- raising enough to both pay current benefits and invest for future benefits.

2. That would make the government the single biggest investor in the markets -- essentially giving the government control over the financial markets. Does that sound like a good idea to you?

3. It would mean that when the stock market fell, the value of SS holdings would fall, as well -- and fall hugely. Thus producing cyclical crises where Social Security appears to be underfunded by trillions of dollars. The nice thing about Social Security is that it is a stable base of income you can count on regardless of what the markets do. That makes it a good complement to a 401(k). If both were invested in the stock market, what would be the point? They would just be two versions of the same thing. Might as well take the SS money and stick it in your 401(k) instead.

As far as privatizing it, your argument commits a common conservative error: assuming everyone is middle class (and thus can afford to buy an annuity), and assuming everyone makes good financial decisions (and thus would choose to buy an annuity rather than spending the money on pizza, or cars, or clothes, or whatever). The whole purpose of SS is to guarantee a certain minimum standard of living for retirees, regardless of how much money they earned while working, or how smart they were about retirement planning. And you do that by forcing everyone to contribute, so that everyone can benefit.

You also ignore the political genius of Social Security. People gripe all the time about "welfare", because they feel like its something that benefits someone else. Welfare is always politically vulnerable, because it benefits the most powerless people in society, and is paid for by the most powerful.

With SS, however, everyone pays in, and everyone benefits. Same with Medicare. Which is why many people who complain about "welfare spending" are strong defenders of SS and Medicare -- they don't see those as welfare, and are invested in it, because they see the personal benefit they get from it. That structure -- everyone pays, everyone benefits -- has underlain the decades of staunch political support for SS/Medicare.

So good luck with privatizing it. Not only does that miss the point of safety-net programs like SS and Medicare, but you'll have to come up with several trillion dollars to pay for the transition, all in the name of ending a program with widespread public support.

 

So remove the government from it, otherwise we'd have an 0bamacare version of SS, with the feds mandating investment in private institutions and, most likely, making extra rules for them and handing them tax money for various reasons as well.

 

You make some good points, better than ones previously offered for "privatization."

Investments in general have not made a lot of sense to most investors in recent years. They now tend to be based upon bets of future expectations without so much as a rumor. A big factor in recent years has been the value of the dollar rather than fundamental stock market analysis. Dollar valuations are highly dependent upon the state of our economy and political policies. Therefore, the risk of loss is greater than it has ever been in the past.

Young investors can afford to take greater risks than older folks who have been consistently investing year after year. So over time, the retirement investment should automatically change to safer investments. Unfortunately, many people are greedy or don't consider the risks involved. Most are basically uninformed in a market that already doesn't make a lot of sense, fundamentally. I would have said it would have worked many years ago, but not today.

Also, it is important to know, many fund managers become overwhelmed and less effective when the size of their portfolios become huge. And as far as computers go, garbage in equals garbage out. The markets have too many variables for computer designs today and human intelligence still far exceeds them.

In other words, the federal government is going to have to share the responsibility for the shortcomings of it's bad political policies, more specifically, Obama's policies. Maybe, if we could sue the politicians . . . naaaw, ya can't get blood out of a turnip.

Steve

 

Money invested is usually spent by those to whom you loan it.



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This is my main beef with SS. The money is not earmarked and is fiduciarily a joke. The gubt just takes any surplus and puts an IOU into the mason jar. If interest was accruing it might have been insolvent 50 years ago.

 

So your evidence is a question?

 

Basically, it would just create another bureaucracy to ensure that Americans are saving properly for their retirement. There would probably be rules and
regulations on approved methods of saving - rules and regulations that would be exploited by the usual suspects.

And saying, "Well, if Americans don't save, then they deserve what they get," may be truth - but having 30 or 40 million Americans starving in the streets in their
old age has economic repercussions for everyone. Foreign investors place billions of dollars into American institutions because they see America as have a stable
society ... having millions of extra old people dying homeless does not cry out, "prosperous and stable".

 

It could well happen. I remember back when Bush was pushing it, there was a stark difference between polls depending on how the question was asked. When it simply asked if people would like to privatize social security, it was a pretty overwhelming no (I think about 60% no), but that's largely because of messaging. Democrats were very, very good about messaging (still largely win in that arena), and they characterized the proposal as giving your SS over to big corporations who would screw you over. But when the proposal was explained in a poll, as keeping half your SS contributions in the current system and allowing you to invest the other half for retirement as you see fit, then clear majorities favored it.

I don't know how views have changed over a decade, but I suspect it would still have enough public support to get done, if people understood the actual proposal.

Edit: I googled a poll for reference - it's really old, tracking in the early 2000s, but at least you can see what I'm talking about.
http://www.gallup.com/poll/6091/privatization-paradox-americans-social-security.aspx

 

I don't see privatization ever happening. For reasons you listed, and political suicide. They do need to put the money into a trust account, and invest it in the safest vehicle available. Had this been in place all along we wouldn't be having this discussion.

 

Might be nice to have an exemption from Social Security by investing in other ways. If there's one thing I don't like about SS, it's the high cost of it. Being self-employed means I pay like twice as much as regular employees since employers normally cover a portion of that for their employees, and I don't get any automatic withholding either, so the illusion that employed people get of tax time being "refund" time doesn't apply, either. :/

Absolutely agree about the possible, even probable effects of not having SS, though. In the end, I think it's fine that we have a program of this kind. I'm glad that people can reach a certain age and count on a pension of some kind and coverage for their health care needs.

 

I agree with you 100%. Despite Trump's claims that SS will not be touched, I am not holding my breath. Privatization of SS has been a GOP wet dream for decades. GWB took the last stab at it -- and failed. The GOP controlled house and senate are just waiting for the right time to take another attempt. And who would Trump be to stand against that. He doesn't care since he and his heirs won't have to think about getting a $1,000 per month SS check or not. Most of his supporters, however, do, and they are digging their own grave pushing for this issue.

 

That's pure speculation.

Steve

 

There's no reason to privatize it. It's a radical solution to a small to nonexistent problem, and something clearly favored by the wealthy as a way to help themselves. That's how it is with investments now - people who invest will have some money to count on in the future, while those who manage those investments are themselves filthy rich for it.

 

You obviously didn't read my opinion on the subject FIRST.

Steve

 

Look at http://paulryan.house.gov/issues/issue/?IssueID=12227

Do you see Ryan painting SS as a failing program? How do we save it: The free market is the GOP answer to all problems.

Of course, he doesn't outright mention SS privatization (for fear of blow back), but the effort has already openly started for Medicare.

http://www.npr.org/sections/health-...to-change-medicare-looks-a-lot-like-obamacare

 

It pains me to have to agree with some of you libs. I don't see privatizing it as a viable solution. It's a tax, a ponzi scheme, and not an investment account. I'm not sure what is to be gained here. The money SHOULD be escrowed and untouchable for anything other than it's intended purpose. That part needs fixing. Putting the money into investment houses won't make me sleep better at night. Just look at how many public pension funds that are managed by private firms. Most of them are financially upside down. Managers used "actuarial sound practices" in the past to fund them but using WRONG assumptions. Some pensions called for zero contributions to the match and it came back to bite them in the azz during the recession. Companies and governments went along their merry way not funding a cent to these pensions based on a faulty rate of return for their defined benefit retirement programs. My city is now scrambling to solve the problem by raising taxes for their incompetence. They kicked that can down the road until it got kicked off the cliff.

 

There are MANY WAYS to fix social security without privatization. Paul Ryan has an economics background. Let them present a plan before you criticize it.

Steve

 

I'm not exactly a "lib", but I tend to agree with them when they're not being race-obsessed, bleeding-heart, SJW twits.

And yeah, I don't think I posted it before, but possible failures of private investments to perform adequately would be another issue with privatization, as you point out. As with the 2007/08 "crisis," we'd probably end up bailing them out with tax dollars at some point anyway.

 

there we go... i knew you had that grudge against the private sector just waiting to rage into the forefront. as you yourself have clearly stated, what they do is legal. it is the result of regulation put in effect by that government in which you place so much trust. and it isn't "predation on the weak", legal or otherwise. it is the result of investors being too lazy to do their homework and actually find out a little bit about what they're getting themselves into. this may surprise you, but nothing in this life is easy. it isn't supposed to be. anything of value comes from work and the value we place upon what we get out of life is dependent on how much effort we put into it. those who fall for most financial cons are complicit in their own destruction, just as those who willingly invest their personal power into the labyrinths of bureaucracy deserve the slavery they are rewarded with. you seem to want to blame someone else whenever we fail to see the obvious pitfalls before us, but that is the alternate reality of fools. we can try to keep the dogs from eating each other with laws and regulations, but fault for what happens to each of us must ultimately be laid at our own doorsteps.