Thursday, December 09, 2004

Bush's Social Security Reform

Social Security's "running out of money". How do we "save" it?

Why we allow people to divert their money somewhere else!

Social Security was designed to lower risk by providing everyone with a basic retirement. As much as one ingnores or even appreciates risk as a 20 year-old, most are not entertained to wake up on their 62nd birthday to find out someone else just "appropriated" his or her lifetime nestegg.   (Any Enron retirees in the audience?)

Keep in mind that the stock market crash in 1937 and its resulting disasterous impact on American's "savings" was one of the arguments for Social Security.

So how to save Social Security? Putting the money into more risky investments only moves us closer to the original problem.

As much as the Far Right's proposed solution degrades the position of the general populace, moving people into more "lucrative" investments (curiously?) solves two pressing Far Right goals:

1) It will help lessen taxes on the well-off.

In order to pass, it also must spun to appear as a benefit to those far from retirement as well as having no effect on those close to retirement.

A possible upside to the plan is that it will make it more difficult for Congress to dip into our retirement money. Congress is infamous for replacing cash with IOUs.

The likely downside is the solution to the Far Right's second problem:

2) How to get Wall Street's grubby hands into Social Security. Wall Street has been lusting after a piece of Social Security's huge asset pools for years.

I predict a tough fight for what will be in the end very little progress. Hmm... sorta sounds like my prediction for Iraq.

As an experiment, I'll be keeping track of Bush's SS Reform "progress" as reported in the press. I'm interested in tracking his "flip flopping".

Starting out from Rueters we have the first stake in the sand:
UPDATE 1-Bush says no payroll tax hike for Social Security
Thu Dec 9, 2004 11:09 AM ET
(Adds details)

WASHINGTON, Dec 9 (Reuters) - President George W. Bush on Thursday ruled out raising payroll taxes to help pay for Social Security reform, a transition experts have estimated will cost $1 trillion to $2 trillion.
"We will not raise payroll taxes to solve this problem," said Bush, rejecting a solution advocated by some experts.
Bush wants to add personal retirement accounts to Social Security to let younger workers have the option of investing of some their own money to pay for retirement.
Experts believe the transition cost $1 trillion to $2 trillion over 10 years.
Republican Sen. Lindsey Graham of South Carolina had recommended a payroll tax increase on upper-bracket workers to help finance the transition.
Bush made the comment during an Oval Office meeting with Social Security experts.
The White House said this week the transition costs might be borrowed, but Bush said he would not prejudge any solution and would work with members of Congress.
"I think what's really important in the discussions is to understand the size of the problem, and that is we are faced with a present value of unfunded liabilities of about $11 trillion," he said.

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