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

To: Road Walker who wrote (225818)	3/22/2005 7:03:13 PM
From: i-node	Read Replies (3) \| Respond to of 1571871

>> A wash. It isn't a wash. The entire concept is that private accounts will earn more than trust fund dollars. Thus, the savings in trust fund dollars will be greater than the payments that would otherwise have been required.

To: Road Walker who wrote (225818)	3/23/2005 1:24:56 PM
From: TimF	Read Replies (1) \| Respond to of 1571871

Of course there is. The reduction in the payments will be matched by the reduction in the benefits. A wash. The reduction in benefits will be more than the reduction in SS tax payments. The percentage cut should be the same (or might even be larger for the benefit reduction depending on how the details are worked out) but since the planned benefits are higher than the planned tax payments it isn't a wash. If interest rates stay reasonably low the reduction in benefits will be higher then the reduction in payments (which is the "transition cost") + interest. But we can't really anticipate long term interest rate trends or the exact level of benefits (because they get adjusted by the rise in wages, and also because the adjustment method itself might change) so its hard to predict the exact net result. All of which leaves us with no way to be certain that the reduction in tax payments + the interest cost will be lower than the reduction in benefits, but also with no particular reason to think the costs to the government (SS tax income reduction plus interest) will be higher than the benefit to the government (reduction in benefits from the government to SS recipients). Tim