A simple reason why Bush's SS plan is stupid

[Maquiladora]

Bush's SS plan

[Odin]

Bush's SS plan is another reason that Neo-Liberals like DanS should be tarred, feathered, and flogged.

[MRT144]

Originally posted by Drake Tungsten
I don't really care if his plan is good or not. The important thing is that he's attempting to break down the resistance that has prevented any sort of reform in the past. The best possible scenario would be to have that resistance broken down and also have Bush's plan amended into something more useful, but I'd settle for just the former at this point. The vital thing is to stop the treatment of Social Security as an untouchable third rail; if we do that, we can always fix any problems Bush's plan introduces.

or wait for a different solution.

[Whoha]

Re: A simple reason why Bush's SS plan is stupid

Originally posted by Boshko

I see numbers and a long post, I was lied to about this thread.

[Whoha]

Re: A simple reason why Bush's SS plan is stupid

Originally posted by Boshko
Now, unless I'm missing something this is how things stand:

1. $s that are currently going to support people on SS are diverted into government-supervised private acount thingies.

2. Since that money is now going into private acount thingies instead of supporting people on SS there's going to be a huge-ass shortfall.

3. To cover the shortfall, the government prints huge stacks of treasury bonds and sells them to investors.

4. The private accounts then make a ****-load of money, since stocks have a higher return than treasury bonds and all this money makes everything happy and wonderful.

So basically the whole thing is based on the premise that stocks are a better investment than government bonds (the current content of the SS trust fund) and that by having SS taxes go into buying stocks everyone's going to make a ****-load of money, right? So basically the government is gambling that stocks will have a significantly higher future return than treasury bonds? Or am I missing something?

But in order to make this whole thing work you need someone to buy all those HUGE stacks of treasury bonds that will be needed to fund the SS checks of the current retirees while the money that's going to them now is diverted into private account thingies. These are the very same treasury bonds that are apparently a crap investment.

So, in short, for Bush's SS plan to work you have the smart government buying the high yield stocks and the stupid private investors buying the low yield government bonds. The whole plan doesn't make any sense unless it assumes that the government is a smarter invester than private investors who'll need to buy ****-loads of treasury bonds in order to fund the whole thing.

WTF! Isn't that kind of thinking supposed to be punishable by death by republicans or something?

ok after having read your post:
In addition to being a pyramid scheme SS is being used to cover for government shortfalls in other areas, so yea any attempt to protect people's money is going to hurt on both accounts.

[Kidlicious]

Re: A simple reason why Bush's SS plan is stupid

Originally posted by Boshko
Now, unless I'm missing something this is how things stand:

1. $s that are currently going to support people on SS are diverted into government-supervised private acount thingies.

2. Since that money is now going into private acount thingies instead of supporting people on SS there's going to be a huge-ass shortfall.

3. To cover the shortfall, the government prints huge stacks of treasury bonds and sells them to investors.

4. The private accounts then make a ****-load of money, since stocks have a higher return than treasury bonds and all this money makes everything happy and wonderful.

So basically the whole thing is based on the premise that stocks are a better investment than government bonds (the current content of the SS trust fund) and that by having SS taxes go into buying stocks everyone's going to make a ****-load of money, right? So basically the government is gambling that stocks will have a significantly higher future return than treasury bonds? Or am I missing something?

But in order to make this whole thing work you need someone to buy all those HUGE stacks of treasury bonds that will be needed to fund the SS checks of the current retirees while the money that's going to them now is diverted into private account thingies. These are the very same treasury bonds that are apparently a crap investment.

So, in short, for Bush's SS plan to work you have the smart government buying the high yield stocks and the stupid private investors buying the low yield government bonds. The whole plan doesn't make any sense unless it assumes that the government is a smarter invester than private investors who'll need to buy ****-loads of treasury bonds in order to fund the whole thing.

WTF! Isn't that kind of thinking supposed to be punishable by death by republicans or something?

Essentially the net addition in investment will be in the bonds of course. That makes sense because there will be more bonds, not more stocks. People invested in stocks will take profits and invest that in the low priced bonds.

[Vanguard]

The Republicans have apparently decided to destroy the government with unsupportable debt, working on the theory that, when the Revolution comes, all these fat-cat welfare mothers and exploitive union organizers will be swinging from the lampposts and that the streets will run blue with liberal blood!

They may not be entirely realistic in their envisioning of those consequences however.

[chequita guevara]

Originally posted by Drake Tungsten
I don't really care if his plan is good or not.

Out of the frying pan, into the fire, as long as it's change it's good? My respect for you diminishes daily.

[Dinner]

Here is a compelling reason why Bush's plan is stupid.

Doing nothing and just paying for the current system - $1 trillion over 50 years.

Bush's plan to phase out Social Security - $2 trillion over 40 years.

Currently upper income people don't pay one red cent of Social Security taxes on money made over $90k per year. If that cap was removed and these people actually paid taxes on all of their earnings, as middle and lower income people must, then Social Security is completely balanced at least until 2100. Source for all figures is the Congressional Budget Office.

You won't hear Bush mention these facts though because he's a whore for the stock brokers and money managers who want to fleece American seniors and charge them billions to manage their private accounts.

[Ned]

I thought Bush's plan was to take 4% of the payroll tax and place that into private accounts. 96% percent would still go to fund retirement payments.

I think one of the reasons dems oppose the plan is that it favors blacks. Blacks now don't live long enough to get much benefit from SS. If they had these personal accounts, at least that would go to their heirs.

[Dinner]

Sure... Democrats hate blacks. Nedaverse alert!

Ned if you were a doctor would you recomend a cure which is worse then the original disease? Currently we'll have to borrow $1 trillion over 50 years (starting in 2052) to fund social security but Bush's plan will cost $2 trillion (starting in 2013). Bush's plan is worse then doing nothing! It costs twice as much and causes the system to go broke 40 years sooner!

[Ned]

Oerdin, no. They take advantage of them. Further, they will not permit the Republicans to do anything that will get Blacks to vote Republican. Thus all the smoke and mirrors and downright lies coming out of the Democrat camp that is designed to keep the Blacks confused and in the Democrat camp.

[Agathon]

Let him do it. It will only hasten the inevitable.

[Dinner]

Ned, the smoke and mirrors are all coming from Republicans. The Republicans control Congress but the CBO still says Bush is full of crap with his Social Security phase out plan.

[Kidlicious]

Originally posted by Ned
I think one of the reasons dems oppose the plan is that it favors blacks. Blacks now don't live long enough to get much benefit from SS. If they had these personal accounts, at least that would go to their heirs.

Young black males in gangs die young. Black people who work live as long as everyone else.