Thursday, June 09, 2005

social security and women: not just for your dad anymore

this is why being a policy wench is a good thing. never assume that all policies fit all populations the same way.

what's good for some middle aged white guy in the suburbs is not the same for a brown single mom in the city, or a brown family in the suburbs, or a single white woman or an Asian middle aged woman. different social contexts, needs, and exigent circumstances require different solutions.

pass it on and when the president visits your town with the specious argument that social security privatization will help save your family, know that he's mistaken.

and, yes, i work for them. it's still a cool piece of information.


jesus chick said...

under Bush’s plan you can choose whatever % you want private and vice a versa, right? if it's my money and i think i can do a better job managing it then i may go the privatized route. however, if i don't think i can, i go the "as is" route. no?

Xpatriated Texan said...

Bush isn't mistaken, he's lying.

The idea of investing in private accounts is something you already have - through an IRA, through a 401k, or through a straight-up investment account.

Bush is pushing his plan based on the idea that 2 workers supporting 1 retiree is too burdensome. How is allowing either one or both of those two workers to divert a portion of their tax away from supporting that one person supposed to help that math? It doesn't. In fact, it forces the system to collapse all the faster.

Your decision on whether or not to leave your money in the system directly effects whether or not the system remains solvent. You take your money out, the house comes down about our ears. Bush has not once acknowledged this problem. In fact, he avoids answering it at all costs.

The same type of program has been tried in several countries - and it has not worked a single time. In fact, it generally reduces average benefits while forcing enormous debts onto the government - which leads to devalued money and runaway inflation. Eventually, it leads to higher and higher taxes.

Social Security does not exist to create wealth. It operates as the logical first step of financial planning - it keeps you from losing the bare necessity needed to survive. After that, you have all the money you take home to manage effectively.

If the stock market was such a "no risk" deal, then everyone in the US would already be millionaires and no one would need Social Security.

It's a bad plan.


ding said...

as far as i understand it (which is difficult since the goalposts seem to move frequently) only people 55 and over will have a choice to choose which plan to use when SSN will switch over.

if you're my age or younger, most likely we'll be forced to take some weak version of a 401k - which will greatly reduce benefits, disability and survivor benefits will shrink to nothing and what's the point?

as for managing the money better - i doubt people in the past have been unhappy with how social security has been handled. it's only been since this administration squandered the surplus that suddenly there's a crisis. hm, funny, huh?

Xpatriated Texan said...

The DOA plan is that people 55 and over will not be effected by any changes at all. They will have only the traditional Social Security available to them.

Younger workers could opt into moving a portion of their funds out of the Social Security system (which makes no sense to take money OUT of a system that desperately needs more money) and put it into private funds that will be managed by the government.

What the President doesn't say is that it isn't YOUR money. Social Security will loan you money to put into your private account. When you retire, you will have to pay back the loan principle - which is every dollar you invested - plus the three percent interest the SSA lost from you taking that money out of their funds. You are left with a fraction of the interest you gained in the investment.

You still don't get that money. Instead, you must use it to buy a privately funded annuity. An annuity (which you can already buy from any insurance company) is a reverse insurance policy that pays you a monthly amount for a specific number of years or until you die. Some annuities offer inheritability, but you have to pay extra for that.

The problem with an annuity is that if you outlive it, you are simply SOL. You get nothing.

Congressional research indicates that at least 75% of all participants in Social Security will LOSE benefits from the President's plan whether they opt into the accounts or not. Why? Because the diversion of funds necessitates reduced benefits.

It's bad policy. It's a bad plan. It has a zero chance of being enacted.


greg said...

The important thing to remember about SS is its name; XT alludes to this. It is not called "National Retirement Investment System" or any such thing. It is an insurance policy that we force all Americans to carry, because the alternative (allowing people to starve in the streets, etc.) is considered unpalatable by many people.

As such, the SSA is far more efficient than any private insurer at providing this service - numerous studies have shown this, and it makes sense if you consider that there are no shareholders, no executive compensation plans, and no marketing departments to divert funds. (For those of you who belive that private industry is *always* more efficient than government, go read Hegel. Too much of a good thing is almost always a bad thing). Furthermore, SS operates in the same fashion as term life insurance: current claims are covered by current contributions. There is no investment component, and hence no risk (recall the name: Social *Security*).

Having observed this, it follows that just as it is not smart to buy more term life insurance than you really need, neither is it smart for us to buy more "aging" insurance than we really need. Hence, proposals to raise the retirement age, make benefits need-based, etc., are not unreasonable on their face. Unfortunately, there are "issues". FDR's primary motivation for creating Social Security in the early 30's was to remove older workers from the work force, thus easing unemployment among workers who were trying to raise families (this was at the height of the Depression). FDR also understood that there were sufficiently many Americans who were perfectly happy to let their neighbors die in the streets that if he didn't provide benefits for everyone (regardless of need), then the program would soon lose support and the benefits would fall to zero.

These two issues are as relevent today as they were in the 30's, but that doesn't mean that we shouldn't be trying to come up with some new and clever way to address them. I do not believe that simply refusing to allow discussion of modifications to the system will serve liberals (or anyone else) well in the long run. What is required is a frank discussion of the *real* issues and an openness to possible solutions.

Of course, Bush's plan has nothing to do with this. He is not trying to come up with a better way to provide aging insurance: he is trying to use the idea of SS as an investment (which it never was and was never intended to be) as a way of eliminating the insurance. As I said above, "many" people (not all) regard letting Americans starve in the streets as unpalatable.

LutheranChik said...

Xpatriated is right...Bush is lying. And I wish the media would pick up on the fact that, when this was tried in other countries, it hasn't worked. The only people this plan will benefit are those in the banking industry.

I would also take issue with the idea that individuals can manage their money better on their own. How many of us lost big bucks on our 401(k)s several years ago? I was an educated person who did everything I was told; had a diversified portfolio; and my savings were halved.

Purechristianithink said...

Actually, NPR did a story a month or so ago about how privitization worked, (mostly it didn't) in Great Britain. But I haven't seen anything on the commercial networks.

ding said...

getting anything from our commercial media is a lost cause. and when they try to do hard news they suck at it, like they've forgotten how to do journalism. is it any wonder our public is so stupid?

jesus chick said...

"is it any wonder our public is so stupid?" do you really mean stupid or do you mean ignorant?

ding said...

i guess a little of both.

the american public is both slow to learn and ignorant - unaware or uninformed. we'd rather believe in easily digested myths where everything is neatly laid out for us instead of doing the work of being skeptical and asking who benefits, whose interests are served by certain things. we forget our history so easily; the things said in October 2001 are suddenly called into doubt, as if they never happened, as if they were never said - and when someone refers to the record, to what was actually said it makes no difference. it might as well have never happened.

not only do we forget our history (what we've done and said in the past, both good and bad) we don't believe in numbers, in facts, in what's staring us in the face.

the past four years of this administration might well be called a mirage, for all the hindsight that's not happening.

what are we supposed to call deliberate denial?

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