That's true if you ignore the fact that trillions have been raided from the trust fund by congress over the years. Remember what Paul O'Neil said, "Social Security has no real assets." Congress will be unable to return the money they took, and when expenditures start to exceed revenues, the shit will hit the fan.
"According to the Social Security Administration, the effective interest rate on the $1.6 trillion Social Security trust fund was 5.7% for calendar year 2004. http://www.ssa.gov/OACT/ProgData/effectiveRates.html The government must find new financing for Social Security trust fund in order to pay the promised benefits for the Baby Boom generation. Instead of asking foreign governments or other wealthy individuals to buy these bonds, we could add a pension component to the Social Security system that would allow working Americans to take over this investment. These personal add-on accounts would either supplement or replace the traditional employer based pension program. By refinancing the Social Security trust fund, American workers could immediately start earning 5.7% on their retirement savings. Furthermore, these workers would then be protected against a loss of pension due to corporate layoffs, scandals, or bankruptcies. Therefore, the PACT America program would finance the Social Security benefits for the current generation while providing future generations with a solid investment." http://www.pactamerica.com/quickversion.htm
By private accounts, I don't think anyone was implying that all the revenues be invested in the stock market. Rather that each individual account would simply purchase marketable bonds from the government and a small portion -- maybe 10% of the SS tax -- be invested in more risky instruments such as mutural funds and the stock market. That way it would end the governemnt from dicking around with retirement funds: spending it then rasing the retirement age when it comes time to pay and such. And a young person today would never have to worry about contributing 12.4% of their income most of their life only to find out the system goes bankrupct when it comes time for their retirement. I'm beginning to think this whole SS debate between Liberals and Conservatives exists due to lack of communication. No one - not even congress - is saying that private accounts would allow 100% of a persons SS funds be invested in the stock market - that would be just stupid. Where the Liberals do have a point is that private accounts are more expensive to administer, and it does not solve the problem for all Americans, particular the Baby Boomers who are getting ready for retirement. So Private Accounts are not perfect but it's better than the Liberal system which is a return to the pay-as-you-go. The young get fucked since the retirement age would have to be raised to 99 and benefits slashed in order for SS to stay outta bankrupcy and Social Security payroll taxes would have to rise significantly as more and more begin to retire.
. Afterburner: The government must find new financing for Social Security trust fund in order to pay the promised benefits for the Baby Boom generation. Instead of asking foreign governments or other wealthy individuals to buy these bonds, we could add a pension component to the Social Security system that would allow working Americans to take over this investment. These personal add-on accounts would either supplement or replace the traditional employer based pension program. **** SouthAmerica: It is a very bad idea to allow working Americans to take over SS investment. The average American does not know how to invest money, and they are very conservative on their direct investment â 25 year history of actual figures for 401 kâs return on investment = 3 percent return.
The american people should demand the gov replace the money that has been raided throughout the years... Can anyone put a $ amount on that...curious how much has been taken out... Oh, and we want our interest on the money as well. Nick
The one point that I keep trying to explain is that it is all about the transition. ALL contributions (12.4% of income up to $90,000) are needed in order to fund the obligations of the current program until 2042. There is NO extra money, because even the trust fund surpluses have been figured into this projection. We cannot divert ANY revenue out of the traditional Social Security system without cutting years off this projection. Furthermore, Social Security CANNOT go bankrupt. Even after 2042, there will still be people working and paying into the system. These contributions will then be used to pay benefits. 2042 is simply the date when the system will no longer be able to pay FULL benefits. Politicians are trying to convince people that when the trust fund is exhausted that Social Security will go bankrupt. Not at all. The trust fund as we now know it was created by a commission led by Alan Greenspan. The idea was to raise the payroll tax above what was needed to pay current benefits. The surplus would go into a trust fund, and this trust fund was to be used to help pay for the retirements of the Baby Boom generation. If the trust fund lasts until 2042, most Baby Boomers will be either dead or close to it. The trust fund only needs to make it through this period. After that, the workers to beneficiaries ratio should reach a natural equilibrium and the program will once again be able to sustain itself.
That is the whole point. By "taking over this investment" I meant that they could start buying the bonds that will be used to pay back the trust fund. Since the trust fund is currently earning 5.7%, these workers would then be able to start putting money into a secure savings program that earns 5.7%.
The American people can "demand" anything they want, but what money does the government actually have? If the government has so much money lying around, then why do we have a $7.8 trillion national debt? http://www.gpoaccess.gov/usbudget/fy06/pdf/spec.pdf Federal Government Assets: page 218 Sure the government has assets such as $601 billion in land and $801 billion in mineral rights, but what do you want them to do? Should they sell Alaska so that the wealthiest generation in the history of the world will get every single penny that they have been promised? ftp://ftp.publicdebt.treas.gov/opd/opdm062005.pdf Federal Old-Age and Survivors Insurance Trust Fund: page 8 The government has borrowed a total of $1.598 trillion from Social Security over the years, and this is earning an effective interest rate of 5.7%. The bottom line is that the government's main source of revenue (money) is taxation. Since our tax dollars represent the only money that the government really has, maybe we should start taking greater responsibility for the actions of our government. This is our government. Of the people, by the people, for the people. The trust fund money did not disappear overnight, and this borrowing was not a secret. The bottom line is that the government has run up a big bill in your name, and now you don't want to pay it. Ignorance is bliss. "If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be." - Thomas Jefferson Here's the good news: "Whenever the people are well informed, they can be trusted with their own government; that whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights." - Thomas Jefferson
My correction, the young are putting in 12.4% of their total life earnings only to find out that they will receive a fraction of that when it comes time to retire. Not to mention a significantly higher retirement age.