Stefani D. Carter writes in USA Today:
Even worse, the program, as it stands, is an inefficient way to save for retirement: It has a decreasing rate of return. And many workers, like my uncle, don’t get back what they paid in. Minorities get the least because they generally have a lower average life expectancy than whites (age 72 for blacks vs. 78 for whites). They are being cheated out of years of payout.
The poor are hurt disproportionately, too. Lower-income Americans also have a shorter life expectancy than the well-off, meaning a smaller overall payout.
Change on this scale is frightening. What’s more frightening is the thought that we’ll do nothing at all.
Heritage Policy Weblog has more and more.
Update: Heritage Policy responds to Krugman.
Update: Heritage Foundation responds to Krugman.
Update: The Conspiracy To Keep You Poor And Stupid has more.
Update: Cafe Hayek has more.
Update: Marginal Revolution has more.
Update: The Eclectic Econoclast has more.
Update: Heritage Policy has more and more.
I guess i am not following the entire propsal regarding privitization of social security. Will people be able to take their entire pay out on privately invested social security upon attaining retirement age like an IRA? Will these benefits be taxable at this point? Will you be able to designate beneficiaries to inherit your benefits like an IRA? Or will this remain like social secuirity and you are SOL if you die before you receive total benefits equaling your Future Value of total contributions?
“In about 13 years, Social Security will begin to pay out more in benefits than it receives in taxes.
• At that point, the program will be forced to cut benefits or increase taxes, either of which will negatively affect minorities and the poor. ”
This is an outright lie. In 13 years when total payments exceed receipts, the program will not be forced to cut benefits or increase taxes. This is just a deficit, it does not mean the system is bankrupt. There is a large surplus sitting in reserve right now saved just for that day 13 years from now. This is Al Gore’s lockbox. The amount in that lockbox would be much greater if the current administration didn’t raid the social security trust to fund its overspending on the rest of the government breaking the trust. It is not like the government doesn’t run deficits every once in a while.
if you want to make the wealthy pay a fairer share of their income towards social security, wouldn’t it be wiser to raise the ceiling on income taxable for social security above $90K a year. After all a guy like Donald Trump makes 10X that every time he says your fired.
Not all the details of how privatized social security will be are completely hashed out yet…but the gist of privatized social security is that, atleast the young, will have the *option* to invest part of that social security money in private venues. The limitations and application are yet to be completed.
As far as social security running out…the actual date when the pay in will fall below pay out is highly debated…but it is generally believed that there is a point where that will happen. Whenever that is, you either have to raise taxes, or as you imply, push it onto the deficit to overcome the negative cash flow.
Privatizing social security will (admitedly, to a small degree) help ease the pain of that.
In order to resolve this inequity, the plan will have to include the allownace that a worker will get to withdraw his entire account upon retirment or if you die before you retire, your benificiaries receive the amount you contributed plus the appreciation on your investment. Of course this will further increase the deficit on social security since right now if you die before you retire the money is kept in the system. Except of course the benefits already paid to surviving dependants of social securuity recipients.
I believe you are right there is a third option at the date expenditures exceed receipts. Miller failed to mention this in her letter. If this letter writer were an everyday citizen I would look at it as excusable ignorance. However the fact that this writer is a fellow at the Heritage Institute a leading conservative think tank and a graduate student at Harvard to boot, I have to wonder if this was an honest ommision or an outright lie to scare any readers of the USA Today that the day of reckoning is coming a lot sooner than it actually is. After all this is obvious to a state school graduate like myself who is not a fellow in anything.
You might be interested in this debate on the topic. It was between a liberal and (somewhat) conservative economist…sponsored by the Wall Street Journal.
Want to see how a hysterical, left-wing columnisyt treats the claim that minorities are ill-served by the current Social Security system? See Paul Krugman’s latestt rant in the NYT (http://www.nytimes.com/2005/01/28/opinion/28krugman.html?oref=login). Among his insightful points “the deal African-Americans get from Social Security turns out, according to various calculations, to be either about the same as that for whites or somewhat better. Hispanics, by the way, clearly do better than either.” Why? Because they earn less, die sooner and are more likely to receive disability benefits than whites. Message from Krugman: relax African-Americans and Hispanics; you are already covered!
I think that it would be a bad idea to privitize SS. The reason is that like for the disabled, where would the money come from to make disability payments each month.
Social Security is a great idea and a great thing. The problem with it is the politicans. They start dipping into it and the next thing you know it is gone. Typical politicans at work. Everything they touch goes to heck in a hand basket.
The problem with it is the politicans. They start dipping into it and the next thing you know it is gone. Typical politicans at work. Everything they touch goes to heck in a hand basket.
This is precisely why privatizing social security is such a good idea. Unlike social security today, privatizing it guarantees that politicians can’t touch it. Read this for more.
As for your concern, the government will always make good on its promised payments, whether social security is privatized or not.