http://www.washingtonpost.com/wp-dyn/articles/A61708-2005Feb3.html?referrer=email 

Hog

Link doesn't work.

Oh you've got to regester for it... it's free....

I'll post the article...

Hog

Benefit Cuts Would Offset Contributions
White House Explains The Proposal Further
By Jonathan Weisman
Washington Post Staff Writer
Friday, February 4, 2005; Page A09

The White House offered further explanation of President Bush's Social Security proposal yesterday, detailing how contributions to new personal investment accounts would be offset by dollar-for-dollar reductions in Social Security's guaranteed benefits.

Under the current system, retirees are guaranteed a monthly Social Security benefit check, based largely on years worked and payroll taxes paid into the system. Bush envisions a system in which workers could invest some of their payroll taxes in stocks and bonds, accumulating savings and investment returns in personal accounts that would be theirs upon retirement. In exchange, those workers would accept a smaller monthly check from the Social Security Administration.
Specifically, workers who opt for the accounts would lose a proportionate share of their guaranteed payment from Social Security, plus interest equal to the amount that money would have earned if the government had invested it in Treasury bonds. They would recoup those lost benefits through their accounts if their investments realized a return equal to or greater than the 3 percent earned by Treasury bonds currently held by the Social Security system.

The Washington Post incorrectly reported Thursday that the balance of a worker's personal account would be reduced by the worker's total annual contributions plus 3 percent interest. In fact, the balance in the account would belong to the worker upon retirement, White House officials said.

"Individuals get to keep everything they set aside in personal accounts, plus the increased rate of return they'll realize on their investment," White House spokesman Scott McClellan said. "So to suggest otherwise is wrong. It is the individual's account, and the government cannot touch it."

As details about the proposal emerged yesterday, the White House and opponents began sharpening their arguments for and against personal accounts. Opponents argued that reductions to guaranteed benefits that would accompany the accounts would render them all but pointless. Whether those reductions come out of retirees' monthly Social Security checks or out of their personal accounts "is a distinction without a difference," said Gene B. Sperling, a National Economic Council director in the Clinton White House.

White House officials responded that even if the accounts produced no more benefit than the traditional system, they would still be valuable.

"Even if I break even, we would argue I'm still better off because I own the money," a White House official said, speaking on the condition of anonymity. "If I die, it belongs to my estate. If I divorce, it's a marital asset. And it's protected from political risk. Government can't take it away."

It is still not clear how Bush's retooled system would work in total. The White House this week has chosen to discuss only a part of it, the private accounts. But those accounts will not close the projected $3.7 trillion gap between Social Security benefits promised over the next 75 years and taxes expected to be collected. That gap would have to be closed through benefit cuts that have yet to be detailed.

Here is how the personal account system would work under the Bush plan:

If a worker set aside $1,000 a year for 43 years, and earned 4.6 percent annually on investments, the account would grow to $221,552 in today's dollars. That money would be the worker's upon retirement and would probably be paid out in increments of $15,952 a year, according to calculations by the Center for Budget and Policy Priorities, a liberal advocacy group. A White House calculation showed a smaller payout.

But guaranteed benefits over the worker's lifetime would be reduced by approximately $151,990 -- the amount the worker would have contributed to Social Security but instead contributed to his personal account, plus 3 percent interest above inflation. The remainder, $69,562, would be the increase in benefit the worker would receive over his lifetime above the level he would have received if he stayed in the traditional system. That sum -- expressed as an annual payout -- would total $5,008.

But that benefit gain could be substantially smaller. The Congressional Budget Office, Capitol Hill's official scorekeeper, factors out stock market risks to assume a 3.3 percent rate of return and then subtracts 0.3 percent for expected administrative costs on the account. Under that scenario, the full amount in a worker's account would be reduced dollar for dollar from his Social Security checks, for a net gain of zero.

If investments earned less than 3 percent a year above inflation, a worker would do worse in total benefits than he would have done in the traditional system.

In effect, said Democratic economist Peter R. Orszag of the Brookings Institution, the system works like a loan, in which the government grants workers four percentage points of their payroll tax to invest in stocks and bonds. The loan would have to be paid back with interest out of workers' monthly Social Security checks.

Robert Pozen, an investment executive who served on the president's 2001 Social Security commission, disputed that characterization. A worker is simply paying less into the system, so he gets less back.

"This is in no way a loan," Pozen said.

Supporters say the system is far better than the mechanism described by The Post. Between withdrawals from a personal account and a Social Security check, total benefits would be the same, whether the loan repayment comes from the account or from the guaranteed benefit. But by leaving the balance of the account untouched, the White House would impart a sense of ownership in the economy, said Stephen Moore, a conservative Bush supporter and author of a book on the president's "ownership society."

But opponents yesterday came out swinging. "This is like borrowing on a credit card to invest in the stock market," said Jason Furman, a former Clinton White House economist.

Not to keen on registering. But I did hear something on the radio basically saying the same thing. I was at first in favor of the proposal but after hearing the details (specifically, how the money that you earn is what is only in excess of what you would’ve earned if you left it in the fund adjusted for inflation) I don't think that it will help much. Personally, I'd like the option to "opt out" of the whole system. Let me handle my own retirement and if I loose it all I starve or keep working (which I'll probably do anyway - even if I end up loaded).

from what I heard and read up on this prior to the election I am leaning more for this option rather then our defunked SS System.... I've got to get cought back up on the whole thing... but from what I read before and allowing the individual(s) to make their own investments for their future and this could travel with them from employment to empolyment... I liked it....

I was allowed to do something simular in the system when I had my Federal Job... FERS (federal empolyees retirement system) company matched at 5% and your allowed to play the markets with your puts... thus playing the high risk market you could win or lose... I played this high risk... and I am a Happy Camper with my decission!!!!

as I said I'll have to read/listen up on this one more... but I think it may be something worth advantage for everyone....

Hog

this proposal is called the stock brokers relief act.

don't quote me, but i understand from a brief reading that the profits are to be applied to the social security fund.

the purpose of soc sec was to provide a safety net for the unfortunate among us who simply don;t know how to protect themselves or don't earn enough to protect themselves.

the money paid to them is not taxpayer dollars, but the donations from other people that pay into soc sec.

strangely congressmen and senators are not required to participate in the soc sec program.

now we have the average guy with about $50.00 as an example who can buy stock. first he will pay at least a $10.00 transaction, so he has already blown a big percent of his money before he even invest in something like enron, or some other company that will go belly up just about the time they ae going to have to pay indirectly the pention money.

enough prominent economists have said the soc sec system is not going bust and has 20 years or more to have some repairs.

what a great idea to remove the safety net as people are learning to be acrobats.

note your president only listens to people that agree with him so obviously his ecoomists tell him enything he wants to hear and he wants to hear soc sec is going belly up.

who are the financial sdvisors that are giving him "facts" to prove what he already believes. what are their credentials? did they help the young george avoid disclosure of his dui ticket like mr gonzales the man who wrote thae memo that torture is a good thing.

if the democrats and the republicans that are not being investigated for fraud or whatever else, don't stand firm on this, we will be one step closer to chaos.

we know the democrats are big on talk and little on walk.

be careful, be very careful

"the purpose of soc sec was to provide a safety net for the unfortunate among us who simply don;t know how to protect themselves or don't earn enough to protect themselves"

Aggreed. But what about those of us that know how to protect ourselves and invest wisely. Why are we compelled to give our money to these unlucky people. Why can't we opt out and have the ability to use OUR money as we see fit? If I want to donate to charity cases I will write out a check. I don't need the government taking my money for this purpose.

EI I agree in principle with you on opting out. But I can see both sides to this issue. I believe that you currently have to pay into the system to receive benefits from it? This is not the same as welfare. I just have some concerns on how this could potentially affect the bond market which would drive up interest rates which would affect the value of the dollar which would drive up the cost of goods. I think that the SS system needs some work but I can't say how it should be fixed. Like they say, if it were an easy fix it would have already been fixed.

It hard to separate the party politics from the facts.

When Clinton wanted SS reforms all the Dems could talk about was the growing crisis with SS and the Reps said it was hooey.

Now it's the Dems who say the President is full of it.

I do know that SS in it's current constuct is just a big pyramid scheme.

And since I've never been lucky enough to get in on the ground floor of anything, I'm not counting on it.

But I have to keep paying in to it or soon men with guns will come to take my other stuff.

It is very hard for me to believe any of them so I'm trying to look out for my family, come what may.

It's

"the purpose of soc sec was to provide a safety net for the unfortunate among us who simply don;t know how to protect themselves or don't earn enough to protect themselves."

Yep it was at one time.. but we all know what has happened to the System through the years of abuse brought on (as I have seen it) by Politicians who want to borrow today to spend tomorrow... there has been to much take and not enough Give.. who has suffered from this in the long run?? people like you Rick and my Mother and millions of others who keep getting cutbacks in their earnings they invested in...
And one more thing.. it isn't that they simply can't learn to invest for themselves.. it's that their to F**kin lazy to want to learn!!!! Many Americans expect life to be handed to them on a silver plater!!! that is where the mentality is heading these days....

the money paid to them is not taxpayer dollars, but the donations from other people that pay into soc sec.
True... and with the Politicians borrowing from this all the time to bail out this or fund that... Retiries are taking it in the shorts with cuts to their earned income benefits... Somethings got to give.. and in the long run it always seems to be the retired doing the giving...


strangely congressmen and senators are not required to participate in the soc sec program.
This I agree 200%... it is said, Slam them into the System and see how long it takes for them to come up with a solution.. and also how fast they stop viewing the SSS as an open checkbook!!!!

now we have the average guy with about $50.00 as an example who can buy stock. first he will pay at least a $10.00 transaction, so he has already blown a big percent of his money before he even invest in something like enron, or some other company that will go belly up just about the time they ae going to have to pay indirectly the pention money.

I'm lost with how your viewing these investments as costing each person for Transactions?? did I miss something here??

let me break down what I was a part of and how I seen it working for me (simular to a 401K)
a person works and draws a paycheck... out of that paycheck and before taxes or anything else comes out...
they enlist in having a percentage withdrawn for their personal retirement plan.. rules being the company their employed by if this individual adds at least 5% then the company would match...5% at the same time this individual can add up to 10% of their income into their retirement fund... giving them 15% every pay period to do the following
1. invest it into the (A)Fund which only gains a narrow margine gross annually, but is also governement secured..
2. invests in (B) Fund which plays the market well on housing development Social issues etc.. but is not Gov secured with a fluxuating market annually..
3. invests in (C) fund which is High Risk and fluxuates on many options in wide range IE: S&P 500.. Down Jones..ETC... not Gov secured but could win or lose your investments...

I see giving the person the choice as to their future something to gain.. especially if their allowed to transfer this from employer to employer!!! More people would be paying attention to whats going on with their future had they their own money invested to look out for!!!!

enough prominent economists have said the soc sec system is not going bust and has 20 years or more to have some repairs.

I'd like to hear this because I'm hearing different from Prominent Economists Including Greenspan...
what a great idea to remove the safety net as people are learning to be acrobats.




if the democrats and the republicans that are not being investigated for fraud or whatever else, don't stand firm on this, we will be one step closer to chaos.

Your going to be hard pressed to find these Dems and Repubs!!!!

Notice I left out your rants and garbage and got to the meat of the topic?? it would be nice to keep this issue cleanly discussed as adults...
after all it is your childrens future in the topic here and many of ours future livelyhood...

Hog

I forgot one
"what a great idea to remove the safety net as people are learning to be acrobats."

It's not removing the safety net... it's allowing or making people start thinking about their own future rather then relying on someone else to do it for them... time to get their ass's off the couch and start learning how to take care of themselves for a change... then they'll be more apt to be PRO ductive in their lives!!!!

Hog

Buckwheat you don't think it is welfare?

Do the math. calculate how much you have "invested" into SSA (SS sounds so Nazi to me) and then calculate how much per month you will get IF you ever get to collect.
You may be surprised how little return you get for your investment...So where does that other money go?
To people who have not put in as much and in some cases have not contributed at all.

Ei, what I meant is that the SS funds are not used to pay welfare (at least not to my limited knowledge). Really any government program could be construed as welfare. Really this discussion is not a discussion of Bush's proposal but a discussion of if we should have SS at all. We are stuck with it. I just think that the current format of Bush's proposal (and it - the details - will definitely change before it ever becomes law) is basically flawed (because of the affect that it could have on the bond market).

Yea I'm back. Been working 7 days a week so not much time to log on. Okay, from what I have read SS provides 70% of the total income for the vast majority of retired folks. That's the difference between living and dying for these older folks make no mistake about it. The return on SS is low due to its inherent safety. Those of you who know anything about finance/economics know that as the return increases so does the risk. SS is to provide individuals with only a basic living wage, nothing more, nothing extravagent about that.

Personally, I won't need it when I retire, but I certainly can understand how folks like my parents relied upon it during their post working years. To have asked them to make investment chices would have been beyond their abilities, and I believe, beyond the abilities of most Americans today.

As a rich society I believe one of our obligations is to provide some measure of help for those who can no longer do it for themselves. I have no problem contributing part of my earnings to support this cause.

Nuff said,
Wagner

Well, I listened to it and gave it some great thought.
This sounds very familiar. Too familiar in fact.

You see, the State of Oregon's retirement is one that utilizes a similar venture in handling the retirement funds. Annuities and stocks and all that.

Some years, it does pretty good, usually around 8% dividends, even though the media would like the taxpayers to believe it is more, but more often, it loses its shirt. Last year, my retirement lost $4k, this year, it is projected to lose another $2k-$3k.
At this rate, if it continues, it will lose money faster than it gains. Yeah, that is a great idea.

Link below.. but I'll paste it here because some do not want to register with the WP to read it...
Hog

http://www.washingtonpost.com/wp-dyn/articles/A3260-2005Feb6.html?referrer=email 
Cheney: Social Security Plan to Cost Trillions
By Christopher Lee
Washington Post Staff Writer
Monday, February 7, 2005; Page A02

Vice President Cheney acknowledged yesterday that the federal government would need to borrow trillions of dollars over the next few decades to cover the cost of the personal retirement accounts at the heart of President Bush's plan to restructure Social Security.

Appearing on "Fox News Sunday," Cheney said the government would have to borrow $754 billion over the next 10 years, and conceded that the price tag would involve borrowing trillions of dollars more in subsequent decades.

"That's right. Trillions more after that," Cheney said in response to a question.

Despite such costs, the vice president said the price tag of restructuring the system would grow even more expensive if changes to Social Security were delayed.

"The real cost over time is doing nothing," he said. "Because if we do nothing, then the system is going to go belly up. It's going to go broke."

Cheney said that allowing younger workers to divert part of their Social Security payroll tax contributions into personal stock and bond accounts would allow the money to grow more than if it had remained in the traditional system.

Bush has described Social Security, a 70-year-old retirement and disability program, as facing an impending financial "crisis" deserving immediate attention. Many Democrats and a few Republicans say the program's problems are not that dire.

Within 20 years, the retiring baby boom generation will begin earning more in Social Security benefits than workers are expected to be paying in taxes, a shortfall forecast to increase every year from then on. To ease the long-term shortage, the Bush administration wants to slow the growth in benefits but allow people to divert about a third of their share of Social Security taxes into personal retirement accounts, a move that would take billions of dollars from the trust fund that finances the program.

In the years before the slower growth in benefits compensates for the loss in revenue, the government would have to borrow, raise other taxes or cut other spending to maintain benefits for Social Security recipients.

Bush has said all options are on the table except raising payroll tax rates.

On other subjects, Cheney, 64, declared that he would not be a candidate for president in 2008. He described the fiscal 2006 federal budget proposal the White House will send to Congress today as "the tightest budget that has been submitted since we got here."

The $2.5 trillion budget is expected to reduce or eliminate more than 150 federal programs and to hold the overall growth of discretionary spending below inflation. The administration faces projections of a record deficit of $427 billion.

hog...
I think yer thinker's workin good. I am a fed employee and have been in the TSP for several years. It's been good to me. I have 4 more years til I'm eligible but may stay a couple more to sweeten the pot a little more. Best feature is visibility. I know exactly (to the PENNY!)how much is in there at any time, and how much I contribute, how much they match, and can plan accordingly. I think overall the younger workers will do much better with personalized accts. SSA funds have been so mixed up and mismanaged for so many years by so many administrations that it is impossible to get even the vaguest idea what to expect from it other that the platitudes that gov't has put out for years, along the lines of "we'll take good care of you" or something equally insubstantial. Change is ALWAYS scary, and the gov't takes more time and money to do less than anybody else, but the system WILL crash and burn if we don't change it. Better some pain now than a lot more later IMHBTAO.


just my $.02
badger