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Social Security Reform:
Let's Cut to the Chase

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By readyteddy
January 7, 2005

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It has been transparent from the beginning that conservatives want to dismantle Social Security. I have never met a true conservative who doesn't think it is one of the worst ideas ever hatched. They would like to flush the whole New Deal and everything that came out of it.

That being the case I have viewed with suspicion rhetoric from these people about "saving" Social Security. What they want is to blow up Social Security. If enough other people feel that way, then that's what we should do. I am cool with that; my issues are about the fairness of the demolition process.

In this regard, my employers and I have, to date, contributed $161,866 to Social Security and received $0 from Social Security. For this, I am advised by my most recent Social Security statement, that I am entitled to $1365 a month for life beginning in about 4 years.

As we all know, there is no Social Security Trust Fund. The money I have put in over the years has been paid out to recipients (my parents among them) and, to the extent there have been surpluses, has gone into Treasury Bonds; in essence, loans to the government.

So, what "return" have I made?

Well, I can go to Fidelity today and buy a $1365 a month annuity for life beginning at age 62 for $220,446, so some might argue that my return on the $161,866 has been $220,446 - $161,866 or $58,580.

That sounds like a lot, but keep in mind I started contributing in 1964 and finished in 2003 when I retired for good. $161,866 invested in a good index fund (say, VFINX) would have earned $46,131 in 2003 ALONE. This supports the idea of privatization except....

The Bush deal is about privatization for the young fools, not me. My money is going to provide the guarantee. So, the Bush deal is to give the old fools the real risk and the young fools the real benefits. I therefore conclude that the President's chief actuary Karl Rove has determined that the Republican Party will be better off in the long run using old fool's money to buy young fools' votes than it would be using young fools' money to buy old fools' votes, which is how Social Security works today.

Fine. I understand why the young fools don't like the current system. I just wish they could understand why I don't like the proposed solutions I see trickling out of the White House.

Like, recently there was a trial balloon floated whereby the President supposedly endorsed selling something like a $1 trillion of new debt to finance future Social Security liabilities (which would be unfunded since the money that would have funded them would be diverted to the young fool's private accounts).

Now, I am thinking "That's a great idea! You float those bonds, Mr. President. Then you take the proceeds and you start by giving me my $161,866 back and I will call us even for 39 years of interest free loans to the government and you can blow up the system and the young fools can have their private accounts or whatever."

See, I don't like the system much either, but nobody is talking about making it better for me. They are talking about making it better for the young fools at my expense. Guess what? I could give a crap about their problems, like they don't give a crap about mine.

You folks want private accounts? What do you call these 401Ks and IRAs and such that weren't available to me until I was in my mid 30's? I mean, how many tax-incentives �that-you-don't-use-anyway do you folks need? Who do you think is making up the difference for Uncle Sam, the tooth fairy?

It almost seems like the young fools are so financially illiterate that they don't realize that the likely long term result of private accounts will be a pay cut for most workers of 6% or something, which will happen when employers stop contributing to Social Security, which is philosophically consistent with blowing it up. If you don't think privatization is the camel's nose under the tent for this then there's no hope for you. Cash me out so I can put the money in a different currency.


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