Question about Bush's social security plan

[Guest Loss]

I know he mentioned doing away with social security over time in his 2000 campaign and also alluded to it in his speech a few weeks ago. I actually think that's a wonderful idea, as long as it doesn't take affect immediately. I have some questions about it, though, that I was hoping someone here could help answer for me.

 

1. Under his plan, is investment required? Or is it just encouraged? I think it's a great way to boost the economy -- to put money back in the hands of people and businesses and out of the hands of the government. But is some sort of investment to be mandated under his plan? Or will we have the option of just pocketing the money?

 

2. Has this issue actually made it past being a campaign platform at this point? I only ask because I know he mentioned this in his first campaign, and I hadn't heard the issue resurface until the RNC.

 

3. What will happen to the money currently in the treasury? If this passes, will someone who already has money built up collect what has already been collected? If so, will that amount be deferred until they reach retirement age or given back now to speed up the process of getting rid of the program?

 

If the answers are what I'm hoping they are to these questions, I may have to bite the bullet and vote for Bush.

[Special K 0]

I'm also intrigued. The current plan obviously isn't working too well. Change can probably only be for the good, though I agree it would have to change over slowly.

[Styles 0]

Here is the rhetoric straight from the GOP:

 

President Bush is committed to ensuring that the promise of Social Security is kept for current seniors and those nearing retirement – and that we fix the Social Security system for our children and grandchildren.

 

The Challenge

 

Social Security is sound for today’s seniors and those nearing retirement, but it needs to be fixed for younger workers. In 1950, there were 16 workers to support every one beneficiary of Social Security. Today, there are only 3.3 workers supporting every Social Security beneficiary. By the time our youngest workers – those just entering the workforce today – turn 65, there will only be 2 workers supporting each beneficiary.

As a result of these demographic changes, the current system will not be able to afford to pay the benefits scheduled for our children and grandchildren without enormous payroll tax increases. The Social Security payroll tax, which was once 2%, is now more than 12%. Economists calculate that under the current system, the payroll tax would have to rise to more than 18% if our children and grandchildren are to receive their scheduled benefits.

Women – especially widows– are particularly affected by the problems in Social Security. The current Social Security system cannot fund the benefits promised to future widows – and, while widows would benefit disproportionately from inheritance rights in Social Security, the current system has no inheritance rights. Divorced women can also be disadvantaged by the Social Security system. If a woman leaves the paid workforce to stay at home with children, and then is divorced in less than ten years, she does not have a Social Security earnings record to entitle her to benefits on her own, nor has she become entitled as a spouse.

The President’s Vision for Social Security

 

By acting now, we can ensure that our children and grandchildren are not saddled with high taxes that would limit their economic opportunities and their ability to achieve the American dream. The President will keep the essential promise that Social Security has represented since its founding – while ensuring that the retirement security of 21st Century retirees is not limited by the shortcomings of a financing system that was designed in 1935.

 

To ensure its long-term future, Social Security needs to be fixed soon. Any fix will require choices, bipartisanship, and public discussion.

 

The President will work with Congress to determine the best elements of the proposals that have been put forward, according to these principles:

 

President Bush will not change benefits for today’s retirees or near-retirees.

The President wants to see Social Security permanently strengthened for our children and grandchildren, without raising payroll taxes.

The President favors voluntary personal accounts for younger workers. Personal accounts provide ownership, choice, and the opportunity for workers to build a nest egg for their retirement and to pass on to their spouse or their children.

Those who do not choose to have a personal account would continue to draw their benefits as they always have from the Federal Social Security program. President Bush believes that those who choose to have a personal account should have increased personal ownership and control of their nest egg within Social Security.

Establishing personal accounts does not add to the total costs that Social Security faces. The obligation to pay Social Security benefits is already there. While personal accounts affect the timing of these costs, they do not add to the total amount obligated through Social Security. In fact, every plan scored by SSA that contains personal accounts would, according to actuarial analysis, reduce the costs of permanently fixing the system.

 

Doing nothing to fix our Social Security system will cost us, as well as our children and grandchildren, an estimated $10 trillion, according to the Social Security Trustees. Leadership means recognizing that these costs already exist, and that passing such a debt on to our children and grandchildren is irresponsible.

[Guest MikeSC]

3. What will happen to the money currently in the treasury? If this passes, will someone who already has money built up collect what has already been collected? If so, will that amount be deferred until they reach retirement age or given back now to speed up the process of getting rid of the program?

 

If the answers are what I'm hoping they are to these questions, I may have to bite the bullet and vote for Bush.

Only question I can answer is this one. And the answer, sadly, is that nobody has money "saved" in the system.

 

In fact, the system's big problem is that with its current set-up, current workers pay for current retirees (which is how retirees back when it was first passed were able to get any money). This has become a financial crisis because, as everybody knows, the baby boomers are of greater numbers than subsequent generations, so you'll have retirees, quite possibly, outnumbering the people paying into the system.

 

Every dime you pay in FICA taxes and the like goes straight into the general budget.

 

To do this, they'll simply have to decide to take a chunk out of the general budget and invest in various market funds and the like.

-=Mike

[Guest Loss]

It makes perfect sense.

 

Looks like I'm voting for Bush. Please, just don't tell anyone.

 

[Styles 0]

It makes perfect sense.

 

Looks like I'm voting for Bush. Please, just don't tell anyone.

 

Karl Rove welcomes YOU to the darkside!

 

[Rob E Dangerously 0]

wouldn't increasing the payments from the younger people help make up some of the difference when it's paid to the retirees?

 

Investments work, until the market goes down and people get mad because their retirement money has vanished. That's the big risk.

[Guest MikeSC]

wouldn't increasing the payments from the younger people help make up some of the difference when it's paid to the retirees?

 

Investments work, until the market goes down and people get mad because their retirement money has vanished. That's the big risk.

Thing is, if the money has been invested in the most conservative funds out there, the returns would have been several times greater than the current Social Security system. There isn't a fund of more than one company that has as low a return as the present system.

 

"Increasing the payments of the younger people" = tax hike; and it'd take a MASSIVE one to make up the difference.

-=Mike

...Medicare isn't in much better shape...