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| SSA 1 %, Privatized, 13% Or 20%; Take your pick... | |
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| Tweet Topic Started: Feb 19 2005, 03:38 PM (142 Views) | |
| BuddyIAm | Feb 19 2005, 03:38 PM Post #1 |
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SSA 1 %, privatized, 13% or 20% Take your pick... 13% and 20% administration cost for current up and running, ‘Forced Savings Plans’... Advocates of privatization assume that a privatized retirement system would be more efficient and cost effective than a government managed program. But in reality, Social Security's administrative costs are very low, at less than one percent of income revenues. In comparison, the Chilean system, which often is cited as a model for privatizing Social Security, has average administrative costs of about 13 percent of worker contributions. In Great Britain, administrative costs consume up to 20 percent of contributions. Unlike private accounts, Social Security has no hidden fees or extra charges that can deceive workers and divert money needed for their retirement. The newspapers are filled with stories about Wall Street investors playing fast and loose with people's money, even in supposedly “safe” mutual funds. Special deals abound, and practices such as market timing put money in the pockets of speculators at the expense of long-term investors. Placing trillions of dollars more at the mercy of these industry practices, with little ability to effectively monitor how they're treating worker's money, is a disaster waiting to happen. http://www.ncpssm.org/news/archive/ssprimer/ |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| tomdrobin | Feb 19 2005, 11:02 PM Post #2 |
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buddy says: "Unlike private accounts, Social Security has no hidden fees or extra charges that can deceive workers and divert money needed for their retirement. " Tom says: No, they just divert 100% of SS contributions to the trust fund to the government to spend as they see fit, and issue non negotiable bonds to cover it. |
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| BuddyIAm | Feb 19 2005, 11:46 PM Post #3 |
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WRONG SS buys Fed bonds.. Those bonds are marketable on demand.. The day SS starts paying out more than is coming in.. The fed must pay or market those bonds.. Period. Those Bonds are backed by the full faith and credit of the USA. If nothing is done. When the Bonds are marketed. Interest rates will soar. And the equity market will fail.. IT IS THE EQUITY MARKET THAT IS IN CRISES.. The SS fund is solvent until 2053.. But the Feds will have TO start marketing those bonds around 2023.. The market will start to realize this before that time... And convert equities to safe investments. Like property.. |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| BuddyIAm | Feb 20 2005, 12:37 AM Post #4 |
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“The president’s plan does nothing to raise national savings,” said Jason Furman, a senior fellow at the Center on Budget and Policy Priorities and former Kerry campaign adviser. “It is at best a wash. I worry that people will see they have $100,000 in their account and think they don’t have to save as much.” Furman has developed a spreadsheet to calculate potential Social Security benefits based on the limited details that have been disclosed about the program favored by President Bush. The results, published this week in The Wall Street Journal, are eye-opening. Take a worker born in 1990 who earns a higher-than-average $58,400 in today’s dollars for his entire career and sets aside the maximum 4 percent in a personal account. He would qualify for a guaranteed benefit of only $2,191 a year at retirement, with the rest coming from his personal account, according to the article by WSJ deputy bureau chief David Wessel. If his stock and bond investments earned an average of 3 percent a year plus inflation, the worker could convert the fund into an annuity that would bring his total retirement income to $18,406 a year. The account would have to earn a steady 4.6 percent a year over inflation to bring his annual benefit up to $28,863. That is the amount guaranteed under current law, |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| jrf | Feb 20 2005, 11:11 AM Post #5 |
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Are you talking about just the personal account component of SS reform or are you talking about privatization of the entire SS system? "Chilean system often sited as a model"?? |
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| BuddyIAm | Feb 20 2005, 11:45 AM Post #6 |
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The decision to entire a Forced Savings Plan. At least at it's onset. Would be voluntary.. It is not even clear, ANYONE, would chose to take that route. Because there is no plan.. SS component at retirement.. $2,191 a year at retirement privatized funds at retirement.. $18,406 a year. Guaranteed funds through SS if SS is fixed.. $28,863 THE CHILEAN PLAN OPERATES WITH A 13% ADMINISTRATION COST.. Some one help me out here.. First, gains must be reached that overcome inflation. Second a constant 4.6% gain MUST be reached EVERY YEAR. for 45 or more years.... Thirdly, a administration fee of 13% must be paid.. In Britain it is a 20% fee.. A economy growing at the rate described above.. Would have high inflation rates.. This would mean a gain of greater than 20% would have to be seen every year. Year after year.. for 45 or more years... JUST TO BREAK EVEN WITH SS... |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| pulsar | Feb 20 2005, 05:15 PM Post #7 |
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BuddyIAm, How can one argue that there is no plan and then state this is what will happen under that plan (that doesn’t exist)? I would like to crank the numbers myself, but so far have been unable to find an authoritative description of the plan. (Perhaps you could provide a link to that.) Originally, I had heard that the guaranteed SS benefit would be reduced by 1/3, since the worker would be allowed to invest 1/3 of his annual contribution (tax). The example that you posted (Jason Furman quoted by David Wessel in WSJ) would have the reduction at more that 92%. If that is the way the numbers fall out, then you will have your wish - no one will ‘buy’ it. Since the David Wessel article is a subscription article, I’m not able to examine it. I have read a Jason Furman analysis before. I have read a revised 2/8/05 article by Furman (see Furman Memo) in which he claims the reduction is two-thirds. Although better than the 92% reduction you report, this still will not fly. I wonder how Furman can produce a 92% reduction in one article and a 67% reduction in a second article. I guess he is just reinforcing that we don’t know yet. If the reduction differs very much from the one-third value the White House initially put forth, I don’t believe there is a chance that it will pass Congress. In another thread you stated: CATO selected the items presented and truncated comments to fit their needs. Later, you gently took me to task for pointing out that you claim that SS trust money is invested in marketable government bonds is false. The facts are, that the bonds are not marketable. By law, they are redeemable on demand. There is a difference. If the SS trust fund started redeeming the bonds, it is up to the Treasury (and Congress) as to how they will be paid. Wouldn’t it be nice if the budget had a surplus and that could be used to pay bonds? BTW. So that we are clear, I have not supported the Bush’s privatization proposals. One, I don’t the details, and two, it won’t effect me directly. In a much earlier thread, I did argue (and still do) that there is a problem with SS that needs to be addressed. I am glad that Bush has forced the issue. Currently, I would like to see SS run like our state retirement fund. I have contributed 6% of earnings to the fund for all of my career. For most of it, my employer, the state, or taxpayers, if you prefer, has contributed a like amount. In recent years, the state has greatly reduced their contribution. As of our last report, the retirement plan is funded at 115 percent, and that both the retirement income and medical plan. Another feature of the plan is that one is guaranteed to receive all of his contributions plus 4% interest. If a retiree dies before the employees contribution and earnings are expended, the remainder goes to his designated beneficiary. Tom |
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| BuddyIAm | Feb 20 2005, 05:38 PM Post #8 |
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Buddy says; I argue the piece meal plan that is given to me.. Pulsar says: The facts are, that the bonds are not marketable. By law, they are redeemable on demand. Buddy says: Read the transcripts from Greenspans testimony last week.. He was grilled in depth on this issue. They are marketable. The day social security funds coming in. Are less than funds going out. Let’s take your suggestion and carry it through. Does the Fed have the money to redeem those bonds. Bonds that are backed by the full faith and credit of the USA? If not. How will they pay the cost. They will have to privately market bonds... You can twist words any which way you wish.. But a huge debt will be transferred from the Feds to the private market.. This is going to drive interest sky High.. I don’t want to hear this junk about trusting the government We have members of this board. Who will place faith in our leaders to send our troops to die in nations half way around the world.. But these same members.. Will not trust our leaders, AND THE FULL FAITH AND CREDIT OF THE USA, to make a payment on SS retirement insurance.. SS is a annuity in every sense of the word.. I don't make up definitions.. an·nu·i·ty n. pl. an·nu·i·ties The annual payment of an allowance or income. The right to receive this payment or the obligation to make this payment. A contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years. annuity A stream of equal payments to an individual, such as to a retiree, that occur at predetermined intervals (that is, monthly or annually). The payments may continue for a fixed period or for a contingent period, such as for the recipient's lifetime. Although annuities are most often associated with insurance companies and retirement programs, the payment of interest to a bondholder is also an example of an annuity What guarantee Does a PRIVATE ANNUITY PROVIDE.. ABSOLUTELY NONE And private annuities are REQUIRED under the Bush, ’Forced Savings Plan‘... Private Annuities are rife with fraud and corruption.. YOU CAN NOT SUE A BANKRUPT CORRUPT CORPORATION. THAT PACKED UP IT’S BAGS AND MOVED TO A TAX SHELTERED ISLAND IN THE PACIFIC.. SS is funded through 2053... And is backed by the full faith and credit of the USA.. There is NO SS IOU‘s. There are bonds that become marketable the day SS funds coming in. Are below those going out.. EVEN IF NOTHING IS DONE TO SS.. IT WILL NOT HAVE TO REDUCE BENEFITS UNTIL 2053. I WILL BE 104 YEARS OLD. THE BABY BOOMERS WILL ALL BE DEAD. AND THE POPULATION CRISES WILL BE OVER.... Bush’s Forced Savings plan, IS THE SAME GOVERNMENT COLLECTING MONEY. THAT MANY CLAIM IS COLLECTING SS... Under Bush's Forced savings plan.. You will be FORCED TO PURCHASE your annuity from regulated and approved Funds. It will have to meet specific standards. AND YOU WILL HAVE TO PAY THE GOING RATE. AND THERE IS NO WAY TO DETERMINE WHAT THE GOING RATE WILL BE.. This Forced Saving plan Annuity.. Is a CAPTIVE MARKET.. The rate will be the highest funds can get away with.. These funds are not in the business of cutting breaks.. THEY ARE IN THE BUSINESS OF MAKING MONEY.. AS MUCH MONEY AS THEY CAN.. I am not saying that is bad. It is just a fact of the Capitalist market... A minimum wage income.. Something most Americans enjoy for at least a portion of their youth. Would have a total Annual income of 10,800/year.. In the first year that will amount to a contribution of 108 dollars/year into his Forced Savings account. Later a maximum of 432 dollars/year will be possible under the plan being put forth today.. FORGET TRANSACTION FEES.. An Administration fee of $50/year. Would be a 50% administration fee for this individual.. AND THERE WILL BE TRANSACTION FEES. AND YOU CAN NOT MAKE MONEY IN THE MARKET WITHOUT MAKING TRANSACTIONS.. The biggest problem SS has. Is the poor Bush economy. From: http://www.taipeitimes.com/News/edit/archi...2/19/2003223704 Bush says that reform is urgently needed, because the system will be insolvent in about a quarter-century. But the problem depends on the US growth rate: if the growth rates of the late 1990s return, there is no problem. |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| Gabbie | Feb 20 2005, 05:57 PM Post #9 |
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Lets cut to the chase! The Bush S.S. plan will be voted through the house and senate OR there will be even lesser "dems" in those seats next time around. I'll bet my S.S. on it! Since I don't and won't get it anyway. |
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| pulsar | Feb 20 2005, 06:39 PM Post #10 |
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You counsel the forum, “You know Greenspan’S double speak.” and then you cite him as the authority that proves your pronouncements. Why don’t you read what Social Security has to say about it.
What suggestion of mine are you carrying through? I said it would be up to the Treasury (and Congress) to decide how the bonds in the SS trust fund will be paid off. That wasn’t a suggestion. I did suggest, “Wouldn’t it be nice if the budget had a surplus and that could be used to pay bonds?” But that doesn’t seem to be the suggestion that you are addressing. Do I believe that the Treasury will sell bonds to redeem the bonds held by the SS Trust fund? Unfortunately, yes. |
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| jrf | Feb 20 2005, 06:48 PM Post #11 |
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Buddy are you putting stock in an article full of errors? "The main question is whether privatizing pension systems, as President George W. Bush has proposed for Social Security in the US, would solve the problem or merely make matters worse." George Bush has only suggested a few things. Some guidelines and personal accounts. He has not set forth a plan for privatizing the SS system. "By itself, privatization is clearly not the solution. The US' troubled private pension system -- now several hundred billion dollars in debt -- already appears headed for a government bailout. [and on and on and on]" We do not have a US private pension system. The system we have is not in debt. Just the opposite, it has a surplus. The pension system is not being bailed out by the government, the pension system is a ready source of cash for the government' |
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| BuddyIAm | Feb 20 2005, 07:24 PM Post #12 |
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Puls No personal jabs intended. Just a little fiery response. J says: Buddy are you putting stock in an article full of errors? Buddy says: No. The article is accurate.. J says: George Bush has only suggested a few things. Some guidelines and personal accounts. He has not set forth a plan for privatizing the SS system. Buddy says: Bush has proposed a forced savings plan.. The article accurate.. J says: We do not have a US private pension system. Buddy says: The article does not suggest a unified U.S. pension system. Rather a collection of private pension systems in U.S. The article is accurate.. J says: The system we have is not in debt. Just the opposite, it has a surplus. Buddy says: Pension Deficit Gets Worrisome  By "mailto:rebecca.byrne@thestreet.com" Staff Reporter 09/06/2002 08:01 AM EDT "http://find.thestreet.com/cgi-bin/texis/author/?au=A1562793" Mounting pension liabilities have become the latest bogeyman on Wall Street recently, and for good reason. As the stock market has continued to sink lower, more and more companies have seen their pension surpluses from the late 1990s transformed into deficits, making it increasingly difficult for them to meet their obligations without making a large infusion of cash. "The losses in 2001 wiped out the previous year's gains, so the cushion is gone," said John Ehrhardt, a principal and consulting actuary at Milliman USA. Sweet and Sour During the height of the bull market, investing pension assets in the stock market proved to be a successful strategy. As prices soared, gains from pension plans almost equated to another revenue stream. But as the market crumbled, many firms found themselves with less money in their coffers than was needed to pay their retirees. Because federal law requires firms to keep their plans adequately funded, companies could be forced to shell out billions of dollars in the next few years, draining precious cash flow and lowering valuations even further. The article is accurate.. J says: The pension system is not being bailed out by the government, the pension system is a ready source of cash for the government' Buddy says: From: http://www.jerrymarlow.com/pbgc.htm Pension Benefit Guaranty Corporation's risk model calculates 1-in-20 chance that in 2011 the corporation's financial position will be $22 billion or more in deficit. Established by the U.S. government in 1974, the Pension Benefit Guaranty Corporation currently guarantees pension benefits to about 44 million workers in slightly more than 35,000 defined-benefit pension plans. When plan sponsors are unable to meet pension obligations, PBGC steps in. Further down the article... If PBGC goes bust, does the U.S. taxpayer pick up the tab? If PBGC goes into deficit, that does not mean it runs out of cash. It means the present value of its future liabilities exceeds the value of its assets. In other words, the insurance against underfunding would become underfunded. The question arises: If a catastrophic scenario comes to pass and PBGC becomes unable to meet its obligations from its assets, will the U.S. Treasury and taxpayer become liable for those obligations? Steven Boyce of PBGC says, "When PBGC has had large deficits in the past, we've gone to congress for authorization to increase premiums and/or to tighten funding rules. There is no legal provision for Treasury to relieve PBGC should those measures prove inadequate in the future." Professor Bodie says, "The answer is yes. The US taxpayer will get stuck with the liability— as was the case with the now defunct FSLIC or would be the case with FDIC." The article is accurate.. |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| wolfe59 | Feb 20 2005, 07:49 PM Post #13 |
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Buddy, What part of my tax buys bonds and which part does Washington throw around to the diff. pork projects? |
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| BuddyIAm | Feb 20 2005, 07:57 PM Post #14 |
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FICA is not part of the General tax fund.. If you want to stop borrowing. You either have to collect more revenue or you have to stop spending.. The liberal Republicans can’t seem to get that through their heads.. If you don’t want to pay interest and pay back FICA owned bonds. Then don’t sell FICA, bonds.. You either have to collect more revenue or you have to stop spending.. The liberal Republicans can’t seem to get that through their heads.. FICA’s bonds are backed by the full faith and credit of the USA |
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"The truth lies in a man's dreams... perhaps in this unhappy world of ours whose madness is better than a foolish sanity." "Facts are stupid things." - Ronald Regan "Ideas are more dangerous than guns. We don't let our people have guns. Why should we let them have ideas?" --Josef Stalin | |
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| jrf | Feb 20 2005, 08:23 PM Post #15 |
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"Buddy says: The article does not suggest a unified U.S. pension system. Rather a collection of private pension systems in U.S. The article is accurate.." So now the bungee jumping has taken us out of Social Security and to the subject of private pension plans? I'm not following you. The article started with inaccuracies and was not worthy of reading. |
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8:20 AM Jul 11