HawthorneWingo,
Then there's the issue of poverty among the elderly. Privatizers who laud the Chilean system never mention that it has yet to deliver on its promise to reduce government spending. More than 20 years after the system was created, the government is still pouring in money. Why? Because, as a Federal Reserve study puts it, the Chilean government must "provide subsidies for workers failing to accumulate enough capital to provide a minimum pension." In other words, privatization would have condemned many retirees to dire poverty, and the government stepped back in to save them.
The same thing is happening in Britain. Its Pensions Commission warns that those who think Mrs. Thatcher's privatization solved the pension problem are living in a "fool's paradise." A lot of additional government spending will be required to avoid the return of widespread poverty among the elderly - a problem that Britain, like the U.S., thought it had solved.
Britain's experience is directly relevant to the Bush administration's plans. If current hints are an indication, the final plan will probably claim to save money in the future by reducing guaranteed Social Security benefits. These savings will be an illusion: 20 years from now, an American version of Britain's commission will warn that big additional government spending is needed to avert a looming surge in poverty among retirees.
So the Bush administration wants to scrap a retirement system that works, and can be made financially sound for generations to come with modest reforms. Instead, it wants to buy into failure, emulating systems that, when tried elsewhere, have neither saved money nor protected the elderly from poverty. And a last fact, one third of the present social security recipients were either forced to leave the work force early from disability or are survivor dependents that may never had an opportunity to save do to a short working career. See Social Security is more an insurance plan for the family as it is also a retirement account, which is something a private saving account would find hard to match. If Bush gets his way it will certainly be a big time loss for anyone born after 1943. I'm talking to all you in particular that make up the group known as," Generation Debt"
HawthorneWingo,
Privatization dissipates a large fraction of workers' contributions on fees to investment companies.It leaves many retirees in poverty.Decades of conservative marketing have convinced Americans that government programs always create bloated bureaucracies, while the private sector is always lean and efficient. But when it comes to retirement security, the opposite is true. More than 99 percent of Social Security's revenues go toward benefits, and less than 1 percent for overhead. In Chile's system, management fees are around 20 times as high. And that's a typical number for privatized systems.
These fees cut sharply into the returns individuals can expect on their accounts. In Britain, which has had a privatized system since the days of Margaret Thatcher, alarm over the large fees charged by some investment companies eventually led government regulators to impose a "charge cap." Even so, fees continue to take a large bite out of British retirement savings.
A reasonable prediction for the real rate of return on personal accounts in the U.S. is 4 percent or less. If we introduce a system with British-level management fees, net returns to workers will be reduced by more than a quarter. Add in deep cuts in guaranteed benefits and a big increase in risk, and we're looking at a "reform" that hurts everyone except the investment industry.
Advocates insist that a privatized U.S. system can keep expenses much lower. It's true that costs will be low if investments are restricted to low-overhead index funds - that is, if government officials, not individuals, make the investment decisions. But if that's how the system works, the suggestions that workers will have control over their own money - two years ago, Cato renamed its Project on Social Security Privatization by replacing "privatization" with "choice" - are false advertising.
And if there are rules restricting workers to low-expense investments, investment industry lobbyists will try to get those rules overturned.
For the record, I don't think giving financial corporations a huge windfall is the main motive for privatization; it's mostly an ideological thing. But that windfall is a major reason Wall Street wants privatization, and everyone else should be very suspicious.
HawthorneWingo, there is much to be said on this and where Bush is comming from it's mostly BS.! The likely scenario;
Privatization would begin by diverting payroll taxes, which pay for current Social Security benefits, into personal investment accounts. The government, already deep in deficit, would have to borrow to make up the shortfall. This would sharply increase the government's debt. Never mind, privatization advocates say: in the long run, they claim, people would make so much on personal accounts that the government could save money by cutting retirees' benefits. The government would, in effect, confiscate workers' gains in their personal accounts by cutting those workers' benefits.
There is, by the way, a precedent for Bush-style privatization. One major reason for Argentina's rapid debt buildup in the 1990's was a pension reform involving a switch to individual accounts - a switch that President Carlos Menem, like President Bush, decided to finance with borrowing rather than taxes. So Mr. Bush intends to emulate a plan that helped set the stage for Argentina's economic crisis.
If Mr. Bush were to say in plain English that his plan to solve our fiscal problems is to borrow trillions, put the money into stocks and hope for the best, everyone would denounce that plan as the height of irresponsibility. The fact that this plan has an elaborate disguise, one that would add considerably to its costs, makes it worse.
A fact you must consider,is that many books ending up on the shelves of our public libraries, are donated from private collections and therefore these statistics may very well represent the previous generations popular taste.
Four More Fears
This may be the year when we finally come face to face with ourselves; finally just lay back and say it -- that we are really just a nation of 220 million used car salesmen with all the money we need to buy guns, and no qualms at all about killing anybody else in the world who tries to make us uncomfortable.
Fear and Loathing on the Campaign Trail (November 1972) Hunter S. Thompson
(( Snagged From Billmon. "Which was once the best forum or polemic about the daily political spin filtering through the press and blogosphere", sadly he seams to have burned out, "perhaps the price one's tribute in gaining success".))
I suppose if you do away with social security in the years ahead you can look forward to a declining life expectancy, in what was once the wealthiest country on earth. The thing that bothers me is when you look at the unified budget and realize that the current yearly ss surplus is covering another 400+ billion not covered in the deficit. At what point do deficits affect the average person, "perhaps when you need a wheelbarrow of cash just to buy a loaf of bread!".
HawthorneWingo, Then there's the issue of poverty among the elderly. Privatizers who laud the Chilean system never mention that it has yet to deliver on its promise to reduce government spending. More than 20 years after the system was created, the government is still pouring in money. Why? Because, as a Federal Reserve study puts it, the Chilean government must "provide subsidies for workers failing to accumulate enough capital to provide a minimum pension." In other words, privatization would have condemned many retirees to dire poverty, and the government stepped back in to save them. The same thing is happening in Britain. Its Pensions Commission warns that those who think Mrs. Thatcher's privatization solved the pension problem are living in a "fool's paradise." A lot of additional government spending will be required to avoid the return of widespread poverty among the elderly - a problem that Britain, like the U.S., thought it had solved. Britain's experience is directly relevant to the Bush administration's plans. If current hints are an indication, the final plan will probably claim to save money in the future by reducing guaranteed Social Security benefits. These savings will be an illusion: 20 years from now, an American version of Britain's commission will warn that big additional government spending is needed to avert a looming surge in poverty among retirees. So the Bush administration wants to scrap a retirement system that works, and can be made financially sound for generations to come with modest reforms. Instead, it wants to buy into failure, emulating systems that, when tried elsewhere, have neither saved money nor protected the elderly from poverty. And a last fact, one third of the present social security recipients were either forced to leave the work force early from disability or are survivor dependents that may never had an opportunity to save do to a short working career. See Social Security is more an insurance plan for the family as it is also a retirement account, which is something a private saving account would find hard to match. If Bush gets his way it will certainly be a big time loss for anyone born after 1943. I'm talking to all you in particular that make up the group known as," Generation Debt"
posted by ScrewDriver 20 years ago
HawthorneWingo, Privatization dissipates a large fraction of workers' contributions on fees to investment companies.It leaves many retirees in poverty.Decades of conservative marketing have convinced Americans that government programs always create bloated bureaucracies, while the private sector is always lean and efficient. But when it comes to retirement security, the opposite is true. More than 99 percent of Social Security's revenues go toward benefits, and less than 1 percent for overhead. In Chile's system, management fees are around 20 times as high. And that's a typical number for privatized systems. These fees cut sharply into the returns individuals can expect on their accounts. In Britain, which has had a privatized system since the days of Margaret Thatcher, alarm over the large fees charged by some investment companies eventually led government regulators to impose a "charge cap." Even so, fees continue to take a large bite out of British retirement savings. A reasonable prediction for the real rate of return on personal accounts in the U.S. is 4 percent or less. If we introduce a system with British-level management fees, net returns to workers will be reduced by more than a quarter. Add in deep cuts in guaranteed benefits and a big increase in risk, and we're looking at a "reform" that hurts everyone except the investment industry. Advocates insist that a privatized U.S. system can keep expenses much lower. It's true that costs will be low if investments are restricted to low-overhead index funds - that is, if government officials, not individuals, make the investment decisions. But if that's how the system works, the suggestions that workers will have control over their own money - two years ago, Cato renamed its Project on Social Security Privatization by replacing "privatization" with "choice" - are false advertising. And if there are rules restricting workers to low-expense investments, investment industry lobbyists will try to get those rules overturned. For the record, I don't think giving financial corporations a huge windfall is the main motive for privatization; it's mostly an ideological thing. But that windfall is a major reason Wall Street wants privatization, and everyone else should be very suspicious.
posted by ScrewDriver 20 years ago
HawthorneWingo, there is much to be said on this and where Bush is comming from it's mostly BS.! The likely scenario; Privatization would begin by diverting payroll taxes, which pay for current Social Security benefits, into personal investment accounts. The government, already deep in deficit, would have to borrow to make up the shortfall. This would sharply increase the government's debt. Never mind, privatization advocates say: in the long run, they claim, people would make so much on personal accounts that the government could save money by cutting retirees' benefits. The government would, in effect, confiscate workers' gains in their personal accounts by cutting those workers' benefits. There is, by the way, a precedent for Bush-style privatization. One major reason for Argentina's rapid debt buildup in the 1990's was a pension reform involving a switch to individual accounts - a switch that President Carlos Menem, like President Bush, decided to finance with borrowing rather than taxes. So Mr. Bush intends to emulate a plan that helped set the stage for Argentina's economic crisis. If Mr. Bush were to say in plain English that his plan to solve our fiscal problems is to borrow trillions, put the money into stocks and hope for the best, everyone would denounce that plan as the height of irresponsibility. The fact that this plan has an elaborate disguise, one that would add considerably to its costs, makes it worse.
posted by ScrewDriver 20 years ago
In "Top 1000"
A fact you must consider,is that many books ending up on the shelves of our public libraries, are donated from private collections and therefore these statistics may very well represent the previous generations popular taste.
posted by ScrewDriver 20 years ago
In "Thought For a new PolyFilter"
Four More Fears This may be the year when we finally come face to face with ourselves; finally just lay back and say it -- that we are really just a nation of 220 million used car salesmen with all the money we need to buy guns, and no qualms at all about killing anybody else in the world who tries to make us uncomfortable. Fear and Loathing on the Campaign Trail (November 1972) Hunter S. Thompson (( Snagged From Billmon. "Which was once the best forum or polemic about the daily political spin filtering through the press and blogosphere", sadly he seams to have burned out, "perhaps the price one's tribute in gaining success".))
posted by ScrewDriver 20 years ago
In "Give Up The Dough, Working People."
I suppose if you do away with social security in the years ahead you can look forward to a declining life expectancy, in what was once the wealthiest country on earth. The thing that bothers me is when you look at the unified budget and realize that the current yearly ss surplus is covering another 400+ billion not covered in the deficit. At what point do deficits affect the average person, "perhaps when you need a wheelbarrow of cash just to buy a loaf of bread!".
posted by ScrewDriver 20 years ago
(limited to the most recent 20 comments)