Wednesday, February 23, 2005
NYT on "Passing Private Accounts on to Your Kids"
Atrios and Yglesias dealt with this three weeks ago, and now the NYT's editorial pages chimes in:
Under the president's proposal, when you retired, your traditional Social Security retirement benefit would be cut by an amount equal to all the deposits you had made into your private account plus interest. (The interest would be three percentage points higher than the rate of inflation.) The benefit cut would be each person's contribution to repaying the huge debt the Bush administration would take on to "pay for" privatization. But if you died before you retired, you would have already used some of that borrowed money to set up the private account and yet would never have made any contribution to repaying the debt. So in that case, how would the government recoup your share of the amount it had borrowed? Well, it could let your share of the debt go unpaid - in effect bequeathing to your heirs and their fellow citizens ever-higher deficits. Or your spouse could inherit your private account and the benefit cut that went with it. Or the government could take its cut from your private account before the money went to your survivors - a grab that could wipe out your stash. The White House would hotly deny that the last alternative could happen. Nothing freaks out the Bush administration more than the suggestion that the government would ever tap someone's private account - even for money that is owed to the government. It doesn't, however, seem too bothered about gutting your traditional benefits. Go figure.
Comments:
<< Home
But if you died before you retired, you would have already used some of that borrowed money to set up the private accountNo money is being borrowed to set up a private account. 30% of the social security taxes a person is charged goes directly into his private account, and 70% goes to the government to pay the benefits of current retirees.
The only borrowing that might take place would occur when expenses paid to current retirees exceeds the money coming in from current workers, and the government has to tap into the "Trust Fund" and finds that it contains only IOUs (Federal Bonds). The money represented by those IOUs has already been spent by the Government, so in order to redeam those bonds the government must either raise taxes, borrow from others, or cut benefits.
If you admit that money must be borrowed (or taxes raised) to get the money, then you are admitting the government stole the money from the "Trust Fund", and that is why current workers need to have at least 30% of their SSI taxes put into private accounts where the government can't get its hands on them
The only borrowing that might take place would occur when expenses paid to current retirees exceeds the money coming in from current workers, and the government has to tap into the "Trust Fund" and finds that it contains only IOUs (Federal Bonds). The money represented by those IOUs has already been spent by the Government, so in order to redeam those bonds the government must either raise taxes, borrow from others, or cut benefits.
If you admit that money must be borrowed (or taxes raised) to get the money, then you are admitting the government stole the money from the "Trust Fund", and that is why current workers need to have at least 30% of their SSI taxes put into private accounts where the government can't get its hands on them
No money is being borrowed to set up a private account.Then why does Bush want all those extra trillions, Don? That sure sounds like "borrowing" to me. And it would to any other sane human being.
As for Social Security containing only IOUs -- oh, you mean Treasury Bonds? Because guess where George W. Bush has his money stashed? Yupper -- those "worthless IOUs" known as Treasury Bonds!
Oh, and guess what? Even the Republicans admit that under Bush's plans, benefits would drop like a stone.
Meanwhile, how do you explain that Bush and his Cato/Heritage/Club for Growth buddies use two wildly different economic forecasts, depending on what they're trying to argue?
When they want to diss Social Security, they use the extremely pessimistic (and usually extremely wrong) projections of the SS Trustees, who assume that the US economy will grow at 1.9 percent per year for the next 75 years. By the way: The average growth per year over the last 75 years -- years that include the Great Depression -- was 3.6 percent, almost twice what the trustees project for the next 75 years.
In other words, in order for the 2042 "doomsday" number to hold, we'd have to be in a depression for the better part of the next century. Do you really think that will happen? (Well, under Bush, it could.)
But wait! When the privatizers want to talk up private/personal accounts, they claim rates of return of 7 percent or more per year. Those are rates seen only during the height of boom times, such as when the budget-balancing, not-afraid-to-tax-rich-people Bill Clinton was in office -- and they're predicting them for the next seventy-five years.
And they're predicting the Big Boom at the same time they predict the Big Depression.
So which is it, Don? Permanent Boom or Permanent Recession? If it's a Permanent Boom, the economy grows so much that Social Security is solvent forever. (Actually, so long as we average 2.7% growth per year over the next 75 years, Social Security is solvent. In other words, there is no crisis. Period.)
If it's Permanent Depression, then who the hell wants their money in the stock market?
Post a Comment
As for Social Security containing only IOUs -- oh, you mean Treasury Bonds? Because guess where George W. Bush has his money stashed? Yupper -- those "worthless IOUs" known as Treasury Bonds!
Oh, and guess what? Even the Republicans admit that under Bush's plans, benefits would drop like a stone.
Meanwhile, how do you explain that Bush and his Cato/Heritage/Club for Growth buddies use two wildly different economic forecasts, depending on what they're trying to argue?
When they want to diss Social Security, they use the extremely pessimistic (and usually extremely wrong) projections of the SS Trustees, who assume that the US economy will grow at 1.9 percent per year for the next 75 years. By the way: The average growth per year over the last 75 years -- years that include the Great Depression -- was 3.6 percent, almost twice what the trustees project for the next 75 years.
In other words, in order for the 2042 "doomsday" number to hold, we'd have to be in a depression for the better part of the next century. Do you really think that will happen? (Well, under Bush, it could.)
But wait! When the privatizers want to talk up private/personal accounts, they claim rates of return of 7 percent or more per year. Those are rates seen only during the height of boom times, such as when the budget-balancing, not-afraid-to-tax-rich-people Bill Clinton was in office -- and they're predicting them for the next seventy-five years.
And they're predicting the Big Boom at the same time they predict the Big Depression.
So which is it, Don? Permanent Boom or Permanent Recession? If it's a Permanent Boom, the economy grows so much that Social Security is solvent forever. (Actually, so long as we average 2.7% growth per year over the next 75 years, Social Security is solvent. In other words, there is no crisis. Period.)
If it's Permanent Depression, then who the hell wants their money in the stock market?
<< Home
More blogs about politics.
