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Politics : Sharks in the Septic Tank -- Ignore unavailable to you. Want to Upgrade?

To: Don Hurst who wrote (21426)	8/10/2001 6:26:15 PM
From: TimF	Read Replies (1) \| Respond to of 82486

As I said, the SS Trust Fund will never go "broke" because it has the good faith of the US Government behind it and the elderly vote in greater and greater numbers and their children, and grandchildren etc., who also vote will not let the government stop payments.....unless the sun stops rising from the east. 1 - To the extent the trust fund actually exists it will at some point run out of funds. Social Security will presumably still have funds because it will grab from the general revenue but the accounting item of the trust fund will be broke. 2 - It is quite possible that the burden of social security will simply become unsustainable. It will become unsustainable if we have a big decade or two with little economic growth. If we have something like the great depression then all bets are off. If it hurts the children enough they will vote against the interests of the elderly. Or if things get really bad the government will be unable to raise enough revenue to pay for SS even if everyone wants it. If the worst happens and it does become unsustainable then trying to force it to continue without cut backs and reforms could cause horrible damage to the US economy that could take a generation or two to recover from. I don't actually think things will get this bad, I'm just saying that not even SS is as inevitable as the sun rising. So what does Bush do? He says we have a SS problem therefore lowers taxes predominately on the wealthy (who probably won't need SS anyway) so any chance for a government surplus disappears. It would be unfair not to cut their taxes more as a dollar ammount. They pay more, and when taxes are increased their taxes are normally increased more as a % and always are increased more as a dollar ammount. Taxes go up and down. If the rich have to pay more every time taxes go up but don't get a break when they come down eventually you just have a socialist country. Then he next says we should allow the current payers to "invest" a portion of their SS tax "privately", which means that the existing SS system will lose its' ability to pay recipients sooner. One year sooner. The benefit schedule goes down a bit, but less then the normal return this money would get in normal prudent investments. The one year earlier is because the private investments start right away while the reduced benefit schedule is phased in (for example current retirees and those withing 10 years of retirement age are not effected) other wise there would be no effect along these lines at all. Now we bring into the mix a greedy and sometimes less than honorable group of wall street types who will never have to pay any SS payments to those who choose to use them for long term "investing" (In Vegas they call it "gaming"). A diverisfied portfolio of stocks, private bonds, and government bonds will outperfrom the expected returns for social security over any period of time except perhaps the short run. It might be gambleing if it is dumped into options or dirivitives or in to one risky stock but that is not the plan. Read the details. Karen posted a link to them. Some "smart" people may decide to invest their funds into "safe" Treasury Bonds (also through an unnecessary middleman who wants his cut and was not there before) supposedly backed by the same good faith US Government who cannot pay current SS recipients because the SS System has no funds but will somehow have the funds to pay bondholders...HUUUUH!!!!! Even if the investment is made in these bonds the investor has a better deal because they are actually in his account. There is just a small bit less political risk, and they can be inherited rather then having their value to the individual and his estate disapear on death. However they share the risk of possibly having a negative real return which is why the smart investor would not put all of his money into them if he is counting on this for his retirement esp. because the part of the fund he can't control is in effect invested in similar government debt. Tim