Saturday, April 30, 2005

Personal Versus Private

Just wondering, what's the difference between personal and private social security accounts?

The spin post 28 April speechifying is dizzying.


What did I miss? The president offered no specifics at all. He still says some portion of Social Security must be phased out and replaced with private accounts. And just as it has been since the beginning of Bamboozlepalooza, pretty much every thing he said was meant to deceive his listeners.

End Slice:

I suppose I am not the only one left unrequited on the in, those things within which the devil lies. It is always easier to be vague than specify them thar details, "fella."


SheaNC said...

Lots of smoke and mirrors, and in the end the rich will be richer, the poor poorer, and the people of my acquaintance who swear loyalty to BushCo will be no smarter.

Anonymous said...

Bush's Social Security ''plan''

For future payments out of the plan, the poor will be no poorer, the middle class will be poorer; as for those who are rich, they don't need SS. Bush wants to turn SS into a means-tested welfare program.

SS is already slightly means tested by way of the income tax. Once your income exceeds a fixed amount, your SS ''income'' is taxed. (Other variables apply.) Bush said previously that the rich pay no taxes. If he's correct, what needs fixing is the US tax system, not SS. Warren Buffett said that his secretary pays taxes at a higher rate than he does. There's no plan on the table to fix the tax system.

Private accounts are to be funded by diverting money from current SS taxes, most of which goes to pay current SS recipients. The current recipients are still going to get their money. New Treasury borrowing ensues. There's never a problem with borrowing, the problem is always with repaying the debt. Borrowing only postpones pain, at a price (interest), until a later date. Guess who is going to repay the debt? the then current workers who will be fewer in number as a percentage of SS beneficiaries, which is the reason for the planned diversion of SS taxes to private accounts in the first place.

Not even Wall Street has been able to figure out how private account smoke and mirrors benefit young people who might ''invest'' in the optional private accounts. The plan is to tax the accounts at the treasury borrowing rate as the accounts go forward. For the conservative private account investor, Bush said that they'll be able to buy Treasury Notes, completing a perfect circle netting exactly ZERO return long term. This! in return for accepting a lower SS payment, a requirement for joining the private account plan.

Anonymous said...

Circular Firing Squad


If you are 45 and if Bush's plan were available today...

Follow George W. Bush's advice, divert $1,000 into your private account, invest it in TIPS, and at the 1.85% per year interest rate you will indeed by able to collect an extra amount worth $10.11 a month in today's dollars when you retire at 65...

But the clawback would reduce your normal Social Security benefit by $14.16 a month. You're $4.05 a month behind.