Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (21285)	1/13/2005 1:52:44 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Details Of Social Security Reform Leaked Wednesday, January 05, 2005 Speaking on condition of anonymity, one of those infamous administration officials revealed some of the details of President Bush's ideas for Social Security Reform. The Associated Press reports the size of the private accounts could be similar to those in a proposal by Senator Lindsey Graham, R-S.C., and the main plan from Bush's 2001 Social Security commission: The White House cautioned Tuesday that Bush had not decided on a specific plan. But the administration is leaning toward letting workers divert 4 percentage points of their 6.2 percent in payroll taxes - almost two-thirds - into investment accounts, up to $1,000-$1,300 a year, the official said. The remainder of the workers' payroll taxes would continue going into the system. Graham's plan calls for annual contributions to be capped at $1,300, while the commission proposed a $1,000 cap. The more difficult aspect of any reform will be the financial tradeoffs. According to the Associated Press, any reform proposal will likely cut traditional benefits for younger workers to help fund the future shortfall, with returns from the private accounts expected to cover, but not guarantee, the difference. Then there is the issue of the estimated $800 billion to $2 trillion shortfall over 10 years caused by diverting payroll taxes into the proposed private accounts: In the main plan offered by Bush's commission, promised benefits would be cut for many workers, with reductions ranging from 0.9 percent to 45.9 percent. Investments in the personal accounts are counted on to make up the income loss. Growth in benefits would be slowed dramatically by tying them to inflation rates instead of wages. The rate of inflation grows more slowly than wages over a person's lifetime. Income from the worker's private account, funded with a portion of their Social Security tax, would be expected to at least make up the reduction in benefits. cayankee.blogs.com