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Banned
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Originally Posted by flstf
Even if you don't agree that the current plan is heading for trouble, what's wrong with giving us a real retirement plan like the bureaucrats have? Congress has exempted themselves and government employees from SS and has given themselves a much better plan. I think it would be only fair that we be given the same consideration.
I don't think we can depend on companies to continue to offer retirement plans, they seem to be cancelling them more and more. We will have to take care of ourselves. The money we put away for retirement including SS should at least be able to be invested and build up and grow. I don't understand how anyone can be against this.
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Doesn't anybody GET IT? Bush gave away the only potential for the federal
government to pay back what it has already borrowed from the SS Trust
Fund, via his outrageous tax cuts that clearly favor the rich. He destroyed
the tax revenue vs. debt obligation that the Clinton administration had put
in place for the country before the 2000 election.
This "PLAN" includes Bush's intention for the government to default on the
repayment of the trillions already owed to the SS Trust Fund. In your wildest
dreams, do you really believe that the criminal thugs of the Bushco are
expending their rhetoric and "political capital" to do something FOR you?
Wake up America !!!! The Bushco thugs WASTED the State of the Union Speech on more of their deceptive wealth redistribution scheme, at a time
of several timebombs of their own making. A crises in the condition of military staffing and in readyness, in energy policy, evironmental policy, and in the rapidly eroding toilet paper of a currency that their fiscal policy is in the process of completely destroying!
Quote:
<a href="http://www.washingtonpost.com/wp-dyn/articles/A41423-2005Jan1.html">http://www.washingtonpost.com/wp-dyn/articles/A41423-2005Jan1.html</a>
washingtonpost.com
Revamping Social Security
Experts Disagree on Severity of Shortfall's Consequences
By Jonathan Weisman
Washington Post Staff Writer
Sunday, January 2, 2005; Page A08
In just 14 years, the nation's Social Security system is projected to reach a day of reckoning: Retiree benefits will exceed payroll tax receipts, and to pay its bills the system will have to begin redeeming billions of dollars in special Treasury bonds that have piled up in its trust fund. <b>To redeem those bonds, which represent money taken in years when Social Security ran a surplus and used for other government operations, the federal government would likely have to cut other programs, raise taxes or borrow more money.</b>
as lifted the elderly and disabled from poverty. To those who wish to preserve the system, it is merely the day when Congress must own up to its past profligacy and begin repaying Social Security for the trillions of dollars it has borrowed to fund immediate tax cuts and spending.
How this debate is resolved could decide the fate of Bush's ambitious plan to revamp Social Security.
"In 2018, Social Security has a legal claim above and beyond the revenues it is collecting," said Charles Blahous, the White House's point person on Social Security. "The question is what is the most sensible policy going forward so costs and benefits are spread out as equitably as possible."
"Many times, legislative bodies will not react unless the crisis is . . . upon them," Bush warned Congress at a news conference late December. "I believe that crisis is [upon them]."
Peter R. Orszag, a Brookings Institution economist who heads the Pew Charitable Trusts' bipartisan Retirement Security Project, countered that there are less drastic ways to cover the cost of trust fund redemptions than Bush is contemplating.
The White House could consider rolling back its tax cuts, the size of which, he said, dwarf Social Security's funding deficit. Over 75 years, the president's tax cuts will cost the Treasury $11 trillion, nearly triple Social Security's gap during that time.
"I do think they are trying to create an artificial sense of crisis," Orszag said.
Few economists or politicians question the demographic challenge to a system that supports 47.4 million Americans. A wave of Baby Boomers will begin drawing Social Security benefits as soon as 2008, putting unprecedented demands on the New Deal-era system that has become the nation's main retirement program. The ratio of workers to Social Security retirees has been declining steadily since the system began, and it is now down to three to one. It is expected to fall to two to one over the next three decades or so.
But there is considerable debate about how dire the problem is. For example, the scope of Social Security's "problem" may be as much as $10.4 trillion or as little as $3.7 trillion, depending on whether the analysis extends infinitely into the future, as the White House prefers, or extends to 75 years, the standard actuarial window.
Also, even by mid-century, when Social Security is likely to have depleted its trust fund of Treasury bonds, it would still be able to pay 73 percent of promised benefits out of the payroll taxes. Bush asserts the system will then be "bankrupt," but opponents question that terminology, since a 27 percent benefit cut would still leave the average payment above today's level, even after adjusting for inflation.
Blahous focuses his attention on the year 2018, when the Social Security payroll tax receipts will not cover benefit payments. "The government does have to come up with more money after 2018; that is the fiscal reality," he said.
By that time, spending on Social Security will have climbed steadily, from the current $492 billion, or 4.3 percent of the total economy, to nearly $1.3 trillion, or 5.3 percent of the economy, according to the Social Security trustees. To finance a bill of that magnitude would amount to a massive shift of wealth from younger generations to the elderly, those who want to revamp the system say.
To those resistant to dramatic changes in Social Security, redeeming the bonds shouldn't be the problem. "These 'IOUs' are Treasury bonds, one of the world's safest investments," said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities. "The Treasury, the White House and Congress cannot choose not to pay interest on the bonds or not to redeem them -- unless they're willing to have the U.S. government default for the first time in history."
The problem, rather, is facing the whole government, not just Social Security. When payroll taxes were last raised, in 1983, Congress knew that new revenue would be used to reduce the budget deficit, not saved to fund future obligations.
But when the time came to pay back Social Security, it was understood that the burden would be shared by taxpayers and the government at large, said Dean Baker, co-director of the Center for Economic and Policy Research, who dubbed Social Security "the phony crisis" in a 1999 book by that title.
"They deliberately raised the Social Security tax, an extremely regressive tax, to supposedly pre-fund Social Security," Baker said. "If Congress had said that money would be used to fund the government, then cut from Social Security when the time came to redeem those bonds, they would have been run out of town."
"Morally, this has to be seen as a burden that falls on the general government," Baker concluded.
"But," Blahous responded, "it's not much consolation to the worker of 2025 that there was an understanding in 1983 that he foot the bill."
<b>
Resolving whether and how to fund the debt owed to Social Security is critical. If the system is allowed to redeem all of its IOUs, it would remain healthy for decades to come. The trustees currently put the date of trust fund "exhaustion" at 2042.</b>
But that date has proven extremely sensitive to economic conditions. In 1994, the Social Security trustees projected the system would run out of IOUs to redeem in 2029, 35 years into the future. But economic growth steadily pushed that date further out. By 2000, the date of exhaustion was 2037. By 2003, it was 2042.
And it could be even further than that. The Congressional Budget Office this summer projected the date of exhaustion to be 2052, a 10-year difference stemming from very small changes in economic assumptions. Many economists -- conservative and liberal -- say the economic future is considerably brighter still.
The trustees assume annual economic growth will slow to a crawl by 2015, and will remain at an anemic 1.8 percent through 2080. That is about half the growth rate the United States has averaged since the Civil War, said James Glassman, senior U.S. economist at J.P. Morgan Chase, who sees no reason why that would happen.
"There still are problems, but it's not the fiscal doomsday that people imagine," said Glassman, who delivered that sanguine outlook at a White House economic conference earlier this month.
Marc Summerlin, a former Bush White House economist, noted that under the current Social Security system, faster economic growth can delay the date of reckoning, but it cannot save the system. Initial Social Security benefits are set by taking workers' average salaries, then raising them by the rate of annual wage growth over their lifetimes. Faster economic growth may push back the day of reckoning, but it raises the size of benefits owed once the date is reached.
But growth does help. Once workers begin drawing Social Security benefits, those benefits rise annually with inflation. If the economy grows faster than the inflation rate, more taxes will flow in to support beneficiaries.
If benefits could be completely unlinked from economic growth -- for example, by setting initial benefit levels according to some combination of wage and price growth -- faster economic performance could go a long way toward saving the system with no other changes to the benefit structure, Orszag said.
Given all these uncertainties, it would be foolish to commit now to dramatic structural changes that may prove unnecessary, Baker argued. After all, lawmakers design and redesign the tax code, knowing full well that future Congresses will undue their work. The Medicare system, which faces far greater financial pressure than Social Security, was bulked up last year with a prescription drug benefit, with the understanding that lawmakers in the future would have to revisit the program. Why then, he asked, does the White House insist Congress in 2005 fix Social Security in perpetuity?
Blahous said such a question only underscores the problems of past congressional efforts.
"In the past, Social Security has been subject to a lot of temporary fixes, and if you make a fix that you know is temporary, by definition you are leaving a gap that some future generation is going to have to step forward to fill," he said. "We have to hold ourselves to a higher standard than a temporary fix this time."
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