Actually, Bush's plan has the following problem:
SS has built up a large liability in the form of promises of future payments.
SS has always been a 'current workers pay for current retirees' system. The money current workers put in does not go to pay for their eventual retirement.
Instead, they recieve a promise that they will be cared for by the workers when they are old.
Bush's plan is to divert money going into social security into a privatized system of personal accounts.
Social securities problem is that it lacks the revenue/capital to pay for it's liabilities in the long term. Reducing it's income won't help solve this problem.
After the changes to the payroll tax in the 80s (for this very reason), Social Security should be liquid until 2038*. With Bush's change, it runs out around 2024**.
* those that believe social security taxes are just part of general revenue claim 2016. Those that believe Bush's circa 2001 economic predictions would believe that it wouldn't run out until 2075.
Finally, note that the social security shortfall shouldn't be any larger than the modest tax cuts Bush has pushed for.
Lastly, if you want to fix SS, set the SS payout start date at a certain percentile of the population (oldest 20%?), as predicted 5 years in advance, moving no more than 1/2 a year per year.
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BTW - the SS surplus isn't really what everybody likes to think. It is more a trick of accounting than anything else. If I have the time, I will put something together on it, but is not something one can "whip out".
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Huh, how is it a trick of accounting?
First question: is SS tax a part of general revenue or not?
Second question: has the SS tax not generated enough surplus to last well past 2038?
What you have to realize is, the US government is running
massive deficits. This is your fault. It owes money to SS, it owes money to China, it owes money to American investors. And the American People voted the politicians in who did this.
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There is no SS pension fund. Your SS taxes go into the general fund. Polititians do not have the dicipline to keep from using SS money for everything else.
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Then, there is no SS shortfall. You can spend general revenue on SS.
If SS is part of general revenue, then
1> Over 40% of Bush's tax cuts have been aimed at the richest 1% of America
2> In many states, the tax burden on the working poor has increased since 1980 -- no tax cuts for them.
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C'mon, SS is sitting at a rate of return of 1.3% right now. Even the stock market, over a period of time, can do much better than that, even if the market isn't doing well.
If you took the money I put in and will put into SS and invested it in the market, my final payout would be many times more than anything SS has to offer me, and that is an absolute fact. Look at averaged rates of return on the market, recession or boom, bull or bear, it always goes up over the long-run.
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First of all, if you took your money, and invested it in the market, there would be a good chance you'd have next to no money, right now. Many people lost their shirts and went bankrupt.
Alternatively, you could have had the government making these investments. The government owning large chunks of the US
private economy, politicians making decisions on whose stocks to buy, whose ventures to fund. This is a bad idea.
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I see no need for us to keep thinking of SS as a separate fund when it isn't. Just another government outlay.
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Why shouldn't it be a seperate fund? That is how it was run, and why they changed it in the 80s. The fact that Republican congresses, 2 Republican presidents and 1 Democratic president have run pretty horrible fiscal policy doesn't change things. It is general US government revenue and expendatures that is fucked up.
Accounting 'tricks' include the entire US economy. Money, credit, ownership, the US banking system -- all just accounting 'tricks'.
The US government needs to stop spending more money than it is entitled to.