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

To: Road Walker who wrote (212823)	12/7/2004 7:31:33 AM
From: Amy J	Read Replies (1) \| Respond to of 1572839

RE: "Why is it capped at $1,000 savings per year?...That's a pittance." I agree. If the savings cap is $1k, then this isn't worth it at all. If the savings cap is $3.6k, then it is worth it. People in their 20s and 30s can grow this 3X (when corrected for inflation), so 3.6*3 = 11k, so that's a fair deal. But agree, the 1k is not. It's pittance. RE: That would be inviting disaster Okay. RE: "What if there is an emergency " Make it exactly like the rules for the IRA, but even more conservative. They've already done the thinking on this. RE: " you have to figure out how to pay for it." Graham's proposal pays for it, which is why it's better than Bush's. Regards, Amy J

To: Road Walker who wrote (212823)	12/7/2004 7:41:13 AM
From: Amy J	Respond to of 1572839

Here's a 'small' detail about Bush's proposal - he ties payout to inflation, rather than rate of wage growth. Today, benefits are tied to wage growth. So what this means: While Congress would get their 4% raises even if it's during one of the worst economic downturns, the retires would get a raise of 2% because CPI doesn't include gas, food and real estate (the stuff you can live without). But I would still be for the plan, if savings weren't capped at 1k. 3.6k savings cap would be acceptable, but nothing less. "That's because starting benefits would be tied to the rate of inflation, rather than to the rate of wage growth" money.cnn.com

To: Road Walker who wrote (212823)	12/7/2004 8:04:35 AM
From: Alighieri	Read Replies (3) \| Respond to of 1572839

Inventing a Crisis By PAUL KRUGMAN Published: December 7, 2004 ARTICLE TOOLS E-Mail This Article Printer-Friendly Format Most E-Mailed Articles Columnist Page: Paul Krugman Privatizing Social Security - replacing the current system, in whole or in part, with personal investment accounts - won't do anything to strengthen the system's finances. If anything, it will make things worse. Nonetheless, the politics of privatization depend crucially on convincing the public that the system is in imminent danger of collapse, that we must destroy Social Security in order to save it. I'll have a lot to say about all this when I return to my regular schedule in January. But right now it seems important to take a break from my break, and debunk the hype about a Social Security crisis. There's nothing strange or mysterious about how Social Security works: it's just a government program supported by a dedicated tax on payroll earnings, just as highway maintenance is supported by a dedicated tax on gasoline. Right now the revenues from the payroll tax exceed the amount paid out in benefits. This is deliberate, the result of a payroll tax increase - recommended by none other than Alan Greenspan - two decades ago. His justification at the time for raising a tax that falls mainly on lower- and middle-income families, even though Ronald Reagan had just cut the taxes that fall mainly on the very well-off, was that the extra revenue was needed to build up a trust fund. This could be drawn on to pay benefits once the baby boomers began to retire. The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem. But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending - less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts - roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year. Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come. It's true that the federal government as a whole faces a very large financial shortfall. That shortfall, however, has much more to do with tax cuts - cuts that Mr. Bush nonetheless insists on making permanent - than it does with Social Security. But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one. My favorite example of their three-card-monte logic goes like this: first, they insist that the Social Security system's current surplus and the trust fund it has been accumulating with that surplus are meaningless. Social Security, they say, isn't really an independent entity - it's just part of the federal government. If the trust fund is meaningless, by the way, that Greenspan-sponsored tax increase in the 1980's was nothing but an exercise in class warfare: taxes on working-class Americans went up, taxes on the affluent went down, and the workers have nothing to show for their sacrifice. But never mind: the same people who claim that Social Security isn't an independent entity when it runs surpluses also insist that late next decade, when the benefit payments start to exceed the payroll tax receipts, this will represent a crisis - you see, Social Security has its own dedicated financing, and therefore must stand on its own. There's no honest way anyone can hold both these positions, but very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success. For Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it. E-mail: krugman@nytimes.com

To: Road Walker who wrote (212823)	12/12/2004 7:40:00 PM
From: TimF	Respond to of 1572839

I said "the devil is in the details". We can agree on that much. And with the $1000 limit the program doesn't look like it will be all that effective. re: They need to give people the freedom to invest in individual securities. Good grief. That would be inviting disaster, and will NEVER become law. If it is only up to $1000 a year (or 4% whichever is less) than it isn't unduly risky to allow investments in individual securities. The other part that you should look at is the back end; how do you get your money out of the system? Is it lump sum (with all the danger that represents) on retirement, or incremental payments? My guess is you probably wont be allowed to take it out in one lump sum at the end. What if there is an emergency and you need cash, before or after retirement? I'm not sure any early withdrawal will be allowed. You certainly can't withdraw regular social security payments early. and very, very important that you get it exactly right. I think that it is important that the program is well designed but I don't think it is possible to get every detail exactly right. What would be right for many would be not right for many others. If you limit flexibility it will be exactly right for almost no one, even if it gets close for some or even many. If you allow a great deal of flexibility then you have to expect that some people are going to make mistakes, even major mistakes with that flexibility. The current program is very far from perfect. It isn't reasonable to think that any modification of or replacement of it will be, or even can be, perfect. Tim