Privatization Heretics
Nick Gillespie at Reason is "not a raving fan of Social Security 'privatization' for a number of reasons. Among them: I don't like the idea of forced savings, period; to the extent that SS taxes go into the general fund and subsidize guaranteed state pensions/minimum incomes, they should be named as such; the amount of money under any plan that will be given back to the payer is minimal (likely 1 or 2 percent in my estimation) and possibly not worth the hassles); there's the possibility of socializing equities markets; etc."
Irwin Stelzer at The Weekly Standard: "[T]he proposal now on the table would have the government limit investment options to stock-index mutual funds, bond funds, and cash--the resulting pool to be converted into annuities upon retirement. The theory of forced conversion into annuities, rather than allowing lump-sum withdrawals, seems to be that retirees and their money might otherwise soon be parted, a folly the government is honor-bound to prevent. So much for freeing citizens from the heavy hand of the state.... [N]o one can be sure of the effect of hitting the markets for a few odd trillion more in borrowing. We can, however, be sure that there is a risk in doing so, making it reasonable to ask whether that risk is worth taking to achieve what seem like the minimal gains in freedom and earnings that might flow from individual retirement accounts."
Comments (5)
One aspect of SS privatization that scares the hell out of me is the inevitable bondage of government and business.
Is it not extremely likely that politicians will be pressured to consider the effects any policy will have on big business and therefore, corporate profits, investor value, equity markets and in turn, the effects on the privatized accounts which comprise SS investments?
Is it not obvious that the 3rd rail of politics will further tie political decisions to the whims and performance of business rather than to american liberty?
Fascism....we're already knee deep......shall we take the plunge?
Published: January 12, 2005 10:04 AM
I agree with the general conclusions here on the proposed social-security "privatization".
Here's my suggestions (essentially a modification of Lew Rockwell's suggestion).
1. All of the taxes that people have to pay in social security (from their side and the employer's side, 15%), should be given to them in a tax-free account (nothing that goes on with this money is taxed).
2. Thus, individuals can save that money, or invest it in whatever they please, or spend it.
3. For those who've already paid into the SS system and are now at the age of retirement; to compensate for the lack of benefits coming in, they should never have to pay taxes again. Depending on the age of someone, how long they've been stolen from, and how much they've received, the age at which they're not taxed forever after will vary.
Published: January 12, 2005 10:49 AM
What scares me is the power AARP has over people. They will take their slanted view and push it over all their millions of members. Some of their members just feel that they only give nonpartisan, good advice and will follow them anywhere.
What will opposing the Bush administration plan do for me? Nothing. What will opposing the administration's plan do for my kids? Nothing. What will opposing the administration's plan do for my grandchildren? Nothing.
People need to see that seniors want is to have a say over what their Social Security is invested in; what workers in general want is to have personal retirement account.
Published: January 12, 2005 12:33 PM
One possible problem with forcing retirees to convert their investment account into an annuity is that it reduces competition that insurance companies face for this product, which will lead to lower payouts. If a million bucks buys a 67 year old man $5000 for life (made-up numbers) on the free market, where he has other options for his money, it might only buy him, say, $4500 where he has fewer options.
In short, insurance companies don't have to offer as high a monthly payment to induce you to purchase an annuity from them, since your only option is to purchase an annuity. More unintended (but not unpredictable) consequences.
Published: January 12, 2005 11:45 PM
1. Isn't the unfunded tax liability of Medicare 10 times that of SS? If so, then why the push on SS?
2. We are never threatened that the U.S. Army will go broke. Why SS? The money all goes into the same pot and comes out of the same pot. The Treasury will write any ckeck the Congress instructs it to.
3. Why do people think SS is some sort of savings account which should earn interest? The payroll tax has always gone into the Treasury to be spent for current budget needs.
Published: January 13, 2005 12:09 PM