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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (212636)	12/4/2004 10:06:30 AM
From: RetiredNow	Read Replies (3) \| Respond to of 1572942

John. The Social Security problem is very similar to a home loan. Let's say you (aka the government) owe the bank (aka retiring people) $100K. You have have $100K in a savings account earning about 2%. Unfortunately, with the way things are set up now, you will end up oweing the bank more than you can pay, because the bank is chargin you loan interest of 4%, which is higher than what you're earning in the savings account. You have a choice how you pay the bank back. You can continue along your current path, which will lead you to bankruptcy. Or you can do something different. Another option for you is to take your money out of the savings account earning 2% and stick it in a conservative, but balanced portfolio of investments that will earn you 7% over the long term. In that way, you are able to pay the loan back and have a little left for other things. Privatizing social security is very similar. The government needs to estimate all social security owed to everyone and compare that to the trust fund. Then the gov't needs to sell bonds to fund the unfunded balance. Afterwards, if we start tagging a portion of the money you pay into the system, then that money can be invested more wisely than the crappy returns your social security gets now. That diversion of funds will be funded completely by the lower social security payout you get from the interest earned on your non-diverted funds. The reason we need to do this is very simple to anyone who has Finance 101 or basic finance skills. The current social security system is a ponzi scheme. The only way to save it is to eventually tag the money each individual puts in to that individual's social security number. Ultimately, that will require the political will to recognize how much is unfunded and borrow that amount in order to put a stake in the ground on the current system. Then we simply need to elminate the current system.

To: Road Walker who wrote (212636)	12/6/2004 8:27:21 PM
From: TimF	Read Replies (1) \| Respond to of 1572942

re: To the extent that the fund has any meaning at all it was "raided" by every president since social security started. Then you are in agreement that Bush lied. The situation is a little complex to grab a statement and call it a lie. Its one of those situations where there is more then one way of looking at things. Bush (like most other politicians) took an interpretation that was both simple and politically useful. I happen to think its a less accurate one. You would have to increase FICA by 50% to avoid a $1Trillion to $2Trillion deficit. Is that simple enough? The basic idea is simple but it seems to imply that FICA would have to be increased 50% because of Bush's plan. Apparently the current estimates are for about a 40% change without any change. The statement makes its seem that 1 - The 50% estimate is really solid, and 2 - That the 50% estimate, or most of it is due to the change. Neither of those are true. We simply can't afford it. Get it through your think libertarian skull. If we can't afford it its only because we can't afford social security without the change. Bush's plan is a change at the margin, most of social security taxes and benefits will operate just like they do now. Tim