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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Paul Smith who wrote (113187)	5/9/2005 8:44:31 PM
From: Lane3	Respond to of 793640

s that what you personally advocate? I don't know if I can get behind that or not. There's just not enough meat there and no numbers. It's an interesting concept and I'd like to see it fleshed out. I'll admit that I hadn't even considered anything so radical as feasible. You have posted a lot of notes about SS political tactics but am unsure what your stand is. I'd like SS to disappear, but of course that's not feasible, so what I would support is a function of what's doable. I'm long on record as supporting price indexing. I think that's a great idea no matter what else we do or don't do. Bush has only just presented his proposal on the graduated form of indexing. That works for me as well, maybe better than straight price indexing because it effectively makes SS primarily a welfare system rather than primarily a middle class entitlement. I like the idea of private accounts in that they also move us away from the middle-class entitlement mentality and more towards a welfare system. I think, though, that I would prefer using the retirement accounts we already have rather than create a whole new vehicle inside SS. Not sure since I don't have enough detail. The numbers require some additional benefit cuts or tax increases beyond the indexing changes so among those options I would opt for increasing the full-benefit retirement age further. How about you?

To: Paul Smith who wrote (113187)	5/10/2005 2:00:21 PM
From: Lane3	Read Replies (1) \| Respond to of 793640

I would think that the SS alternative presented in Barron's might appeal to you. It's definitely a bird in the hand, which would mollify the, er, folks of your generation. "Real retirement reform ought to build on the existing 401(k) and IRA savings plans so that Congress and President Bush could create individual retirement investment accounts for every American. The president's personal accounts aren't really private; they amount to a mutual fund held in trust by the Social Security Administration. The first thing to put in the private accounts should be a special issue of inflation-protected government bonds representing the present value of all those pseudo-promises of Social Security retirement benefits. Reflecting the terms of today's Social Security benefits, these bonds would be good only for the life of the person to whom they were issued. As with Social Security retirement benefits, death would cancel unredeemed bonds. This would give Americans the good news that the government's full faith and credit at last stands behind their benefit promises, as it should, and it would make visible the enormous hidden liability for those payments, so we could face up to our real financial condition. People who wish to rely on the government for their benefits would do nothing at all; the Treasury would redeem their bonds on the monthly Social Security schedule. Those who believe they could do better in the market could sell some or all of their special Treasuries and choose their own investments, with or without the help of an investment adviser. (To make a market for these unusual contingent bonds, financial institutions would have to pool them and slice the stream of payments from them, just as Fannie Mae and Freddie Mac do when they when they pool mortgages and slice the stream of contingent payments from them. In large numbers, deaths are considerably easier to forecast than mortgage repayments.) After creating the universal retirement accounts and stuffing Treasury bonds into them, the Bush administration and Congress could shut down the Social Security benefit system. The 12.4% Social Security wage tax, half levied on employees and the other half on employers, would become a mandatory deposit into each worker's individual account. The tax has been disguised as a pension contribution since Social Security began; at last this would be true. There would be a big hole left in the budget to pay off all those bonds, but not a new hole. This is a hole we have been digging for decades and pretending not to see. To fill it will require spending cuts and new revenues from an overhaul of the tax system. " Message 21307134