Social Security Compromise Watch

First, I would like to thank everyone today for the work they did in contacting Senator Lieberman's office. Keeping our caucus in line when it comes to opposing Bush's plan is one of, if not the, key to success in this fight. Good work everyone, and a big thank you goes to user Teaser, who came up with the idea.

Second, I'd like to talk a little about the Santorum Social security event that I attended today. It was quite eventful and well attended, although I am pretty sure it was well attended because around six or seven different activist organizations had turned out in force. Outside the hall before the event, Philly DFA began chanting "Hey-hey, ho-ho, Riock Santorum has got to go!" Local college Republicans, who are just about the only Republicans in West Philly, responded with a chant that beautifully was captured live by CNN: "hey-hey, ho-ho, Social Security has got to go!" I love it when the other side does your campaigning for you!

Inside the hall, the biggest applause line of the event was generated early on when Santorum asked a rhetorical question about demographics and funding: "what happens in 2008?" Before he could answer his own question, someone shouted "Bush leaves office," and the room went wild. A little while later, less than two minutes apart, a couple of LaRouche people made some noise and comments about Pinochet, before they were forcibly removed. I think every Democratic activist in the room turned their eyes to the floor when this happened. Maybe we should fund a Republican LaRouche.

For a while, and especially during the question and answer session, the room was choked with facts and figures from both sides as many Democrats in attendance were given the microphone. I was actually able to ask the final question. Going into the event I had planned to ask Santorum about the slime attack on the AARP in the hopes it wold get some press coverage, but something he said during the presentation gave me an idea for an even better question. He claimed that some Senate Democrats agreed with Bush's proposal, so I went up and asked him to name names. He backed down and said that none of them support it now because it has become so politicized, which is a very hypocritical comment to make when you are on a campaign tour of your own.

However, after he backed down, he said that because no Democrats supported the plan, it would be necessary to find a compromise plan. Not only was it amazing to have Santorum literally say to my face that Bush's plan wasn't going to pass, but it was even more interesting for him to admit that a compromise was actively being sought. Considering this, I was particularly stunned to see this story hit the wires only a few minutes ago. It is about a "compromise" plan proposed by Paul O'Neil and openly supported by Harold Ford, Kent Conrad and, you guessed it, Rick Santorum:

To move away from Social Security's chronic funding problems, O'Neill suggests that the government put $2,000 in a special investment account for every newborn American. The government would invest $2,000 more each year until the child reaches 18.

The money would be invested in a conservative index of stocks and bonds and couldn't be touched until retirement. The investment would grow at a compounded rate, meaning that as the value of assets in the account grows, profit would be reinvested so the account would grow even more. Without adding a single cent beyond compounding after the child turns 18, he or she would retire at age 65 with $1,013,326 in the account, O'Neill reckons.

"If you do the arithmetic, the $1 million would provide an annuity of $82,000 a year for 20 years," O'Neill said in an interview.

O'Neill assumes a 6 percent annual return on investment. He calls that figure conservative since it represents the worst performance to date of any 25-year cycle on Wall Street.

His program would cost $8 billion in the first year: $2,000 times the roughly 4 million children born annually in the United States. Each year thereafter, another $2,000 would be deposited into each account until the child reaches age 18. Each year's crop of children ultimately would cost the government about $144 billion, he estimates.

O'Neill says his approach would eliminate the need for Social Security and Medicare - which together will cost about $815 billion this fiscal year - but not for 65 years, at which point all Americans would be millionaires upon turning 65.

"It's a way to think about creating financial security for the entire population and growing into it," O'Neill said. "It hastens the pace to convert the whole society into what I think is a hell of a lot more equitable system."

Some lawmakers in Washington are listening to him.

"I like the concept a lot, because it really takes the power of compounding and gets you a longer run at it. And for financial people, that's the real power of compounding, that you stretch it out over a more extended period," said Sen. Kent Conrad, D-N.D., the ranking Democrat on the Senate Budget Committee.(...)

Last year Rep. Harold Ford, D-Tenn., introduced a bill that amounts to a scaled-down version of O'Neill's proposal. Ford would have the government open special investment savings accounts for newborns worth $500. For children born to families with annual income below $22,000 the government would invest $1,000. Families also would be encouraged to put their own funds into the investment accounts, which he'd let them tap to pay for college or to purchase homes.

Sen. Rick Santorum, R-Pa., the third-ranking Republican in the Senate and a leading conservative, backs Ford's measure because it attacks what Santorum calls the "instant gratification culture" and promotes individual savings and an ownership stake in one's future.

Is this the future of the debate? This plan would eliminate Social Security and Medicare entirely in sixty-five years, while funneling hundreds of billions of dollars annually into Wall Street. I also have to wonder exactly what "conservative index of stocks and bonds" it would be necessary to invest in order to turn a $36,000 investment into more than a million dollars in forty-seven years. O'Neil's projected 2900% rate of return seems, at best, wildly optimistic to me. Still, be on the lookout for this plan as the prospects of Bush's proposal fade even further.

Tags: Money (all tags)



Compromise plan?
Funneling taxpayer dollars into investment banking, where actual government officials get to decide which corporations get massive financial windfalls is a compromise?  

$2000 per child is a lot of money, and if the argument is that social security is becoming insolvent, this is just as bad as Bush's plan in terms of transition costs

by Valatan 2005-02-22 12:43PM | 0 recs
Re: Compromise plan?
-- The mistake that we keep making is to keep the discussion about "reforming" or "fixing" social security alive at all.  We (Democrats) should be using all of our muscle to take social security off the table alltogether.  There is no compromise and we should not even talk about it.  Just block it at every turn.  Risky - yes.  Absolutely necessary - also yes.  We cannot let them into the meat of this program and start dinking around with it.  Next thing you know we have a jiu jitsu moment where they are in control and running the table instead of shut down on this issue. We cannot "let them into our body" so to speak to use a fight term.  The whole point of the Democrats' approach should be to take it off the table and stiffle any ability to open and examine it.
by SwimmereToFreedom05 2005-02-22 12:54PM | 0 recs
Re: Compromise plan?
I've heard about this before.  What about the kids who were born LAST YEAR?????   They get nothing?  But the government is going to give $500 - $2,000 to each of the kids born this year?  

Its assinine.  

by Rowena 2005-02-22 05:33PM | 0 recs
Ford's a clown.
I don't think this idea will take off at all.  Ideas that explicitly advocate the destruction of SS will be harder to sell than even the Prez' privatization scam.
by Teaser 2005-02-22 12:47PM | 0 recs
This idea has nothing to do with Social Security
Ford and O'Neil just tacked Social Security on to a plan that has been floating around in several versions for a couple of years. Bob Kerry and Santorum have both had similar plans that are totally unrelated to Social Security. As stand alone plans at far reduced amounts they allow low income children to build a nest egg. I think the Kerry and Santorum plans were going to provide an $80k nest egg at age 18 for education or job training or a small business  type fund to advance entrepreneurship.

$2,000 per year for 18 years is very extravagant. I don't know what Ford's agenda is. He's been very silent every since he made the Fainthearted Faction. Has he issued a statement on this?

I don't recall Ford being such a shrinking violet in the past. Does anybody have a contact with this guy? What's his story and why is he so closed lipped?

by Gary Boatwright 2005-02-22 01:26PM | 0 recs
The idea should be discussed on its own merits
and it could fly perhaps in the scaled down Ford version. However, only as an addition and not an ALTERNATIVE to SS.  How to pay? How about revising obscene fatcat tax breaks and defunding crusades?
by Doc Allen 2005-02-22 01:30PM | 0 recs
Re: The idea should be discussed on its own merits

It does not offer a guranteed benefit.

Social Security offers a minimum (just above povery) retirement income to all people in america(and their dependents)who have worked (performed labor vs. capital gains.)

This plan invests money in the stock market and pays you whatever it earns minus inflation MINUS FEES to the fund managers.

No gaurantee you wont be making less than povery income when you retire, and certainly none of the added benifits to dependants you get with Social Security.

If you believe we live in a society where we all work together to make it work better, than you agree that looking after those less fortunate or less able is part of the deal.  The promise of social security isnt that you will retire in splendor, it is that if, even after a life time of work you have nothing to show for it, Americans won't lets you eat dog food and live in the streets BECAUSE your effots helped us all get along better than if we lived in a truly dog-eat-Dog world.

by David in Burbank 2005-02-22 05:29PM | 0 recs
I actually like O'Neil's plan
It is certainly an acceptable replacement for Social Security, IMHO.  If everybody got a check for a million dollars on their 65th birthday, Social Security would absolutely not be neccessary (or changed it to an 82 grand annual payment, whatever).

Getting rid of Medicare as well is pushing it, although you could set it up so a portion of the million goes to pay for it.

by Geotpf 2005-02-22 01:50PM | 0 recs
Re: I actually like O'Neil's plan
If it was affordable and in addition to Social Security, it's a great plan. The cost of this is way too great for GOPers to sign off on, unless they are trying to pull money out of S.S.

This is some kind of bait and switch with some monkey business going on in the fine print.

by Gary Boatwright 2005-02-22 02:12PM | 0 recs
Re: I actually like O'Neil's plan
Why in addition to Social Security?  There's no need for Social Security once this thing is in place.
by LoganFerree 2005-02-22 02:23PM | 0 recs
well, for one thing, you may live longer than 20 years.

For another, it depends upon a certain rate of constant market return, which as has been documented is in doubt.

For a third, you're talking about around $5.2 trillion over the next 45 years.  Fixing a worst-case Social Security shortfall for the next 75 years, by contrast, would run $3.7 trillion.

Social Security is a defined benefit program.  That means it will be there for you no matter what, regardless of how long you live.

This system is sorely lacking as a SS replacement.

by jonweasel 2005-02-22 03:48PM | 0 recs
Baby Accounts Idea has Appeal
I would not dismiss the appeal of this plan out of hand. I am of course deeply suspicious of hidden gotcha's, but the idea intrigues me. If it intrigues me, imagine what a sales job they can do on the general public!

Dems had better scramble to find the holes and hidden payoffs here because if this is the pivot away from the President's "plan" that everyone has been waiting for we will be hearing much more about it.

It has built-in rhetorical advantages. Who can possibly be against giving babies money? It's a give-away program and if they say they can pay for it then it is going to sound very good to many people.

Can they pay for it? I'd be shocked if it wasn't a budget buster. But that's not the point is it? The point is it sounds good, can be easily reduced to sound-bites and is something they can sell. While selling it they will mercilessly hammer Dems for obstructing a plan that gives money to babies! They'll say it's just more negativity from the party of 'No' and that the GOP is the working mans best friend.

Democrats better take this seriously or they will get runover by the GOP train.

by Curt Matlock 2005-02-22 02:11PM | 0 recs
$1M in 2005 dollars or 2070 dollars?
by weakboson 2005-02-22 02:11PM | 0 recs
Re: $1M in 2005 dollars or 2070 dollars?
That would be in today's dollars. Figuring 3% inflation, the $1M would be equivalent to only about $150,000 of today's dollars. And the $82,000 annual per year referred to would only amount to about $12,000 in today's dollars.
by blueheron 2005-02-22 03:39PM | 0 recs
Re: $1M in 2005 dollars or 2070 dollars?
by jonweasel 2005-02-22 03:49PM | 0 recs
Re: $1M in 2005 dollars or 2070 dollars?
Sadly, it's 1MM in today's dollars (6% was claimed as the conservative, worst 25yr, case.)

If you want a real 1MM at retirement, you need a 6% portfolio growth rate over inflation.  TIPs are yielding about 2%,  so you need a huge equity component to hope reach the target.  And if everyone needs it, various interesting, and not good, effects will become apparent.

by gorobei 2005-02-22 05:40PM | 0 recs
Re: $1M in 2005 dollars or 2070 dollars?
oops, that was meant to read "in non-inflation adjusted dollars"  I.e. the 2070 penny kind.
by gorobei 2005-02-22 06:30PM | 0 recs
Correction, it's 2070
Sorry about my confusing post. That would be 2070 dollars. You would actually have $1M in 2070, but that would only be worth about $150,000 in today's dollars.
by blueheron 2005-02-22 07:31PM | 0 recs
Thirty-six thousand at 6% over 47 years
Doesn't add up 1 million, actually it adds up to about $550 thousand.  
by Painter2004 2005-02-22 02:17PM | 0 recs
Re: I get even less
My financial math is rusty but, using a basic Future Value calculation:

2000 payments over 18 periods at 6% -->


Then, that amount at 6% over 47 more periods -->


Using a solve-for payment calculation gives you an annuity for 20 years of:


Per year, or a little over $2000 a month. We'll live like kings!

And that doesn't include inflation or any increase in life span (requiring a longer pay-out period than 20 years past retirement)

I welcome any correction to my math.

by daunte 2005-02-22 03:05PM | 0 recs
Re: I get even less
You are forgetting the mandatory maintenance fees and other transactions costs which might cost you 10-20% of your principal. Salt in a couple bursts of inflation...and you realize why Social Security is such a "good deal".
by risenmessiah 2005-02-22 03:17PM | 0 recs
Re: I get even less
$61,811 is right, but then you need:

(expt 1.06 48) => 16.3938

Which seems about right - 70/6 means our money doubles every 11.6 years or so, for approx 4 doublings = 16 times.

Pity about the inflation, tho.

by gorobei 2005-02-22 05:47PM | 0 recs
Re: I get even less
If we compound yearly at 6% (which is an unlikely assumption, but I'll try not to digress too much), I exactly match your calculation of $61,811. I can't for the life of me figure out where the number $334,918 came from, though. If I continue compounding that account for 47 more cycles, I get $955,968.50.

...D'oh, I figured it out. The 315,960 figure is the value on the 47th total year, not 47 years after the contributions stop - i.e., the 65th total year.

Other than the faulty compounding schedule and the questionable assumption that a constant 6% return rate, starting now, is reasonable, I think the raw math works out within a few percent margin of error. As some others were saying, though, the implied assumption - that a million dollars is going to be a lot of money in 2070 - is just ridiculous.

I did the numbers in Excel. All my work is below.

Unfortunately, I can't drop this into an HTML table here, apparently, so the formatting is hosed:
Cycle	contrib.	return	interest		balance
1	2000	0%	 -		 2,000.00 
2	2000	6%	 120.00 		 4,120.00 
3	2000	6%	 247.20 		 6,367.20 
4	2000	6%	 382.03 		 8,749.23 
5	2000	6%	 524.95 		 11,274.19 
6	2000	6%	 676.45 		 13,950.64 
7	2000	6%	 837.04 		 16,787.68 
8	2000	6%	 1,007.26		 19,794.94 
9	2000	6%	 1,187.70		 22,982.63 
10	2000	6%	 1,378.96		 26,361.59 
11	2000	6%	 1,581.70		 29,943.29 
12	2000	6%	 1,796.60		 33,739.88 
13	2000	6%	 2,024.39		 37,764.28 
14	2000	6%	 2,265.86		 42,030.13 
15	2000	6%	 2,521.81		 46,551.94 
16	2000	6%	 2,793.12		 51,345.06 
17	2000	6%	 3,080.70		 56,425.76 
18	2000	6%	 3,385.55		 61,811.31 
19	0	6%	 3,708.68		 65,519.98 
20	0	6%	 3,931.20		 69,451.18 
21	0	6%	 4,167.07		 73,618.25 
22	0	6%	 4,417.10		 78,035.35 
23	0	6%	 4,682.12		 82,717.47 
24	0	6%	 4,963.05		 87,680.52 
25	0	6%	 5,260.83		 92,941.35 
26	0	6%	 5,576.48		 98,517.83 
27	0	6%	 5,911.07		 104,428.90 
28	0	6%	 6,265.73		 110,694.63 
29	0	6%	 6,641.68		 117,336.31 
30	0	6%	 7,040.18		 124,376.49 
31	0	6%	 7,462.59		 131,839.08 
32	0	6%	 7,910.34		 139,749.42 
33	0	6%	 8,384.97		 148,134.39 
34	0	6%	 8,888.06		 157,022.45 
35	0	6%	 9,421.35		 166,443.80 
36	0	6%	 9,986.63		 176,430.43 
37	0	6%	 10,585.83		 187,016.25 
38	0	6%	 11,220.98		 198,237.23 
39	0	6%	 11,894.23		 210,131.46 
40	0	6%	 12,607.89		 222,739.35 
41	0	6%	 13,364.36		 236,103.71 
42	0	6%	 14,166.22		 250,269.93 
43	0	6%	 15,016.20		 265,286.13 
44	0	6%	 15,917.17		 281,203.30 
45	0	6%	 16,872.20		 298,075.50 
46	0	6%	 17,884.53		 315,960.03 
47	0	6%	 18,957.60		 334,917.63 
48	0	6%	 20,095.06		 355,012.69 
49	0	6%	 21,300.76		 376,313.45 
50	0	6%	 22,578.81		 398,892.25 
51	0	6%	 23,933.54		 422,825.79 
52	0	6%	 25,369.55		 448,195.34 
53	0	6%	 26,891.72		 475,087.06 
54	0	6%	 28,505.22		 503,592.28 
55	0	6%	 30,215.54		 533,807.82 
56	0	6%	 32,028.47		 565,836.28 
57	0	6%	 33,950.18		 599,786.46 
58	0	6%	 35,987.19		 635,773.65 
59	0	6%	 38,146.42		 673,920.07 
60	0	6%	 40,435.20		 714,355.27 
61	0	6%	 42,861.32		 757,216.59 
62	0	6%	 45,433.00		 802,649.58 
63	0	6%	 48,158.98		 850,808.56 
64	0	6%	 51,048.51		 901,857.07 
65	0	6%	 54,111.42		 955,968.50 
by ThatGuy 2005-02-22 06:11PM | 0 recs
Compromise is a Trojan horse
Atrios points out that in a House Senate committee, even a good compromise, were such an option conceivable, would be twisted like a pretzel by DeLay allies so that the Right wing agenda will continue to advance.  Chris, you have some clout- are the Democratic ;leaders in the House and Senate smart enough to see through this and to keep the troops in line?
by KDMfromPhila 2005-02-22 02:20PM | 0 recs
Re: Compromise is a Trojan horse
I should be lmore specific: "in a joint House-Senate  committee" tpo reconcile the 2 version of the bill.
by KDMfromPhila 2005-02-22 02:22PM | 0 recs
More Corporate Welfare
O'Neill suggested this idea weeks ago in the NY Times with no real logistical definitions but stated "everyone could be a millionaire".

Don't believe any of this crap. It's just another way to get people reliant on these two-bit brokerage houses who are trying to get customers back after the Enron debacle and stockmarket crash scared them away.

If you want to encourage real savings, you allow every person to open a "life account" at 18 and you allow them to put in whatever they want so long as the value of the inclusions meet the guidelines. O'Neill plan and the others is just more corporate welfare we don't need.

It's fine to suggest that people ought to save more and that wealth creation is important. But the real reason they spend so much and borrow so much is that we are dependent on technology and things like cars are very expensive.

Secondly, what O'Neill is purporting to argue is that the there is such a thing as a conservative mix of stock n' bonds. If EVERYONE owns the same thing, guess what does to the earning potential for that particular thing?

P.S. Great question, Chris. Revenge is dish best served cold.

by risenmessiah 2005-02-22 03:14PM | 0 recs
How many years are Baby Boomers
They say SS will have a problem because currently 3.2 workers support 1 retiree.  

Baby Boomers start retiring in 2010 and by 2025 or 2045 there will be 2 workers per retiree.

How long will this last.  After the last of the Baby Boomers die then will SS be normal again and go back to average?

Also with less workers per retiree will there be a push for immigration to fill the labor shortage thus more workers contributing SS premiums?

by jasmine 2005-02-22 03:31PM | 0 recs
Remember, though
SS supports far more than retirees.  If I recall correctly, the number of dependents per worker in the SS system peaked in the 60's or 70's at almost .8 dependent per worker, and is currently falling.

The biggest challenge SS faces isn't the number of baby boomers; it's the fact that people will be living longer.

by jonweasel 2005-02-22 04:51PM | 0 recs
Sign the petition to stop social security privatiz">

by maximus7 2005-02-22 03:48PM | 0 recs
Guys, in my mind this plan doesn't fly. In fact, I would strongly oppose anything clost to this. It's falsely appealing because it flashes "1 million dollars" in front of people and doesn't tell you the pain involved.

First of all, the calculations.  Discount 6% for one year is v=1/(1+.06) = 0.9433962264.  Calculating the future value of 18 payments of 2000 is 2000/v^65 + 2000/v^64 + ... + 2000/v^(65-17) = 2000(1 - v^18) / ((1-v)v^65) = $1,013,326.61.

An annuity of that amount for 20 years is 1,1013,326.61 = X (1-v^20)/(1-v) where X = $83,345.

Those are amounts in terms of dollars 65 years from now. Inflation (see CPI index.) tears that down. Our grandparents recall when postage stamps cost 3 cents and a newspaper 5 cents. The CPI has grown 10.4 times over the past 58 years. That's an average compounded rate of over 4.13% per year. That 83,345 payment, assuming prices grow at a 4.13% rate (which is low compared to what medical expenses are growing at), is $83,345 / (1.0413)^65 = $6,117 per year (today's dollars).

The supporters will parade the power of compounding when they trumpet the $83,345, but then conveniently forget to mention the power of compounding with what that actually buys. The republicans have never given all details upfront. Why expect this time to be any different?

Not to mention, this amount ends when you're 85.  Today white females have a life expectancy over 80 years, so a great many of them (not quite 50%) will see this $6,117 yearly annuity run out.

The current Social Security is a much better plan.

But most importantly, these generations will still bear the burden of paying the Social Security for the current generations. Call it tax, call it payroll tax, call it what ever you want, there are trillions of dollars owed in a (mostly) paygo system, and under O'Neil's plan, these kids will still pay trillions for us and in return get the 20-year annuity worth $6000 per year. That is a real raw deal for the kids. They're already being socked with our national debt growing at $1 trillion every 18 months (soon to be annual if Bush's tax-cuts are made pernament). I hate to add this onto their burden, and possibly have devaluation hit their already meager annuity.

To add insult to injury, I hate the idea of a near-fascist administration deciding in a subjective way which companies are "conservative" to fund. Forgget the fees to the investment bankers. This is too much money to allow them to use as an axe to swing in the stock market. It's a way to force the corporate world into submission when further tax cuts cannot be waved as a carrot.

by zigzig 2005-02-22 04:39PM | 0 recs
A quick spreadsheet confirms the above.  I figured 3.5% annual inflation, though.  Which means the value of the annuity, in today's dollars, would be around $108,300.

Either way, it doesn't sound so nifty anymore, does it?

I'm a federal employee who participates in the federal Thrift Savings Plan.  My wife and I are going to be depositing a good deal more than $2000 per year until we retire.  Granted, that will be in considerably less than 65 years, but it also includes ongoing deposits.  $2000 per year for the first 18 years just wouldn't do the trick.

by jonweasel 2005-02-22 05:01PM | 0 recs
it's really not that bad
The numbers he gave were of the worst case scenario, where the US suffers from 65 years of economic weakness.  If you use the S&P returns over the past 60 or so years, the growth rate should be 13%.  This gives much better numbers.

The future value in this case is $43,577,002.54, much larger than 1 million.  And if you adjust it for inflation with a 4.13% inflation rate as you did in your post, you would retire with $3,584,160.56 of today's dollars.

3.5 million seems like enough to me.  Now there may be other reasons not to support this idea.  But the numbers themselves aren't that bad.

Personally, I think something like this would be great on top of social security.  Social security should be the baseline insurance.  Then you can get some extra based on how the market does.  The problems are in implementing it.  I just can't see how all this money would be managed efficiently without some corrupt money managers charging excess fees.

There's also the problem that if you throw the right wing a bone, they chew your arm off along with it.  They'd probably do this and then 10 years later claim the baseline social security is no longer needed.  That's the real threat.

by hotshotxi 2005-02-22 07:20PM | 0 recs
by the way
You don't need a government or money managers to say what is a "conservative" fund.  The strategy could be dictated as invest in the entire S&P 500 and some bond index.  That's a conservative strategy not subject to manipulation.
by hotshotxi 2005-02-22 07:21PM | 0 recs
Yeah, inflation is the only problem with this plan-but it may be a fatal one.  Lately inflation has been relatively low (with certain exceptions).  But there's no guarantee.  I did a calculation, and a million dollars in 2003 was only worth 81 thousand in 1983 (65 years earlier).
by Geotpf 2005-02-23 12:07AM | 0 recs
Another Problem???
If you have a lump sum of $1,000,000 at age 65, and you want to turn that into an $82,000 per-year payment for 20 years, (if my calculations are right) you have to put that initial million into some investment that generates over a 5% rate of return, guaranteed, for 20 years.

In my limited knowledge, money market investments (the lowest-risk kind) will generate something like 3% to 4% per year.

Any investment-savvy types out there care to comment (or, hopefully, point out where I am wrong)?  

by tgeraghty 2005-02-22 07:32PM | 0 recs
Re: Another Problem???
You would have to put the money into an annuity that pays 5%.  The problem is there are too many baby boomers, we need the government to stop taking money from the SS trust fund to raise the debt ceiling.  These problems will fix themselves once a majority of boomer die off.  The other problem with these accounts is what if your child is born with special needs like autism or mental retardation.  Those children now receive SSI but what would they get if you eliminated Social Security?  And what about people on disability?  You would still need a system to account for that or will we just go back to early 20th century when if you were disabled at work, you just were poor and starved to death?
by catholicdemocratmd 2005-02-22 10:09PM | 0 recs
Statement from Congressman Harold Ford
Wednesday, February 23, 2005
Contact: Zac Wright, 202-225-3265
Statement by Congressman Harold Ford
Regarding efforts to link the ASPIRE Act with President Bush's Social Security privatization plan

WASHINGTON - Congressman Harold Ford issued the following statement regarding some efforts to link his legislation providing $500.00 accounts at birth to every American.  

"We spend billions every year on housing, health, education and nutrition programs for hard working Americans earning under $50,000 a year.  We spend very little, if any, to encourage this same group of Americans to save or invest. To put it simply, those earning $500,000 a year have a number of savings vehicles and options subsidized and encourage by the government.  Conversely, those earning $50,000 a year, which is more than 60% of households in the state of Tennessee, have few, if any, of those options.  

"ASPIRE will change that while at the same time preserving Social Security and Medicare.  Any assertions to the contrary are just wrong. ASPIRE would not be subsidized by Social Security, nor would it replace Social Security, despite the rhetoric of those who say it would.  Those of us who support creating savings and investment vehicles for hard working Americans should not link those efforts with President Bush's plans to privatize Social Security.  Any effort to link the funding of aspire to replacing Social Security or diverting funds from Social Security or Medicare to fund ASPIRE is not true.

"In recent days, former Treasury Secretary Paul O'Neill has urged the creation of private accounts that would replace Social Security.  His proposal is very different than President Bush's plan, but equally wrong in that he seeks to end Social Security as we know it.  In short, the ASPIRE Act is very different than what former Secretary O'Neill is proposing.  In our zeal to oppose President Bush and his Social Security privatization plan, let us be careful to not oppose savings and investment vehicles that will supplement Social Security, not destroy it."

For more information on the ASPIRE Act, go to

by markschuermann 2005-02-23 01:06PM | 0 recs
Interest Component
I think part of the piece that is being forgotten here is the interest component.  O'Neill talks about a 20 year annuity which is not quite the sensible route.  It would make more sense to allow people to take out up to a certain amount each year.  This is because having a million in the bank is a powerful tool.  At 6% interest you are getting $60,000 a year without touching the principal.  Even with an inflationary rate of 3% that amounts to $8,800 a year in real dollars.  I think the max social security you could draw last year was around $12,600 (I could be wrong on this) but it wasn't a whole lot.  Plus, no matter how you slice it I would rather have a huge lump sum like that in the bank versus a defined benefit plan.
by MikeTremonti 2005-03-01 08:31PM | 0 recs
Re: Social Security Compromise Watch

I think this is just a trick. Something does not look bright here. After doing anything I suggest we should check it out very well, because one little problem could do us a lot of harm.

stock trading programs

by andreea360 2008-03-18 11:26AM | 0 recs


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