#1. Raise the benefits age by 1 year every decade to account for longer lifespan.
#2. Force all state/local municipal employees to participate in Social Security. Some of them don’t, right now, and when they retire, if they’ve worked some in the private sector before moving into state/local civil service, many are treated as low-income earners who get a higher rate of benefits due to earning what SS considers “low income”.
#3. Raise the wage ceiling from the present level.
All three of these together would apparently completely fix S.S. Or so says the authors of the plan.
I don’t have any problem with any of this, as long as the additional tax collected from raising the wage ceiling goes to helping fund at least partial private savings accounts.
Good series on NPR this week. Sounds like a mix of a little of everything (all that you mentioned) would work and be more painless. I am a local gov. employee who does pay SS and that’s fine … Hope we figure it out.
It’s been good, so far. I think today’s (the 23rd) is on the Bush plan to fix Social Security. It’s been pretty even-handed, I’ve got to admit, up to this point.
“All three of these together would apparently completely fix S.S. Or so says the authors of the plan.”
All three of these would certainly NOT fix SS as the problem is not a problem of “available funds” as much a problem of poor effeciency.
Simply stated SS is a money in money out system. As long as the system remain this way the people paying in directly support with current dollars those that are recieving money. As people live longer and the birthrate goes down the burden on the people paying increases or the benefits are decreased.
Fixing the problem will include a system that is based on the well proven track record of interest accumulation and time.
Yes, England’s private accounts have been failures, and I would not support a system such as their’s. I don’t consider it blind loyalty, I consider it a well thought out philosophy.
You are, however, correct, in that the details matter greatly.
I do not under estimate the ability of the government to foul things up. There are, however, lots of good models they could choose. These include various index funds as well as existing plans like the federal thrift savings plan, or even Krugman’s plan he uses for his Princeton retirement plan.
What we need is a debate in this country where all sides step up and hash out a compromise. We seem to be getting it.
As far as private accounts go, I would like to see any investments being restricted to US corporations with >60% of it’s employees on US soil. We’d not only get investment in US companies, but that would make some companies a lot more selective in offshoring and outsourcing as they would potentially cut themselves off from a large pool of investors. A win-win in my book.
I’ve read a boat load of material on this subject and don’t want to type all day as I could easily do so on this topic.
I have yet to find a clear answer…
Private accounts have the potential for much higher returns if you are 20yo. For those who are older (say in your mid to late 30s or older), the current plan will give them equal or greater benefit which as of today is “gauranteed” so to speak.
“As far as private accounts go, I would like to see any investments being restricted to US corporations with >60% of it’s employees on US soil. We’d not only get investment in US companies, but that would make some companies a lot more selective in offshoring and outsourcing as they would potentially cut themselves off from a large pool of investors. A win-win in my book.”
If we’re going to restrict the investment options to underperforming companies for social reasons, I hope we pass on private accounts. Maybe we should only be allowed to invest in companies that have a commitment to developing renewable energy sources, or curing obesity, or saving the rain forests, … no thanks!
“If we’re going to restrict the investment options to underperforming companies for social reasons, I hope we pass on private accounts”
If you’re going to do privtae accounts, then you almost have to do it by some social agreement, like only U.S. companies, or something like that. Otherwise, you run the risk of the companies getting into a bidding war with politicians to be added to the list. The potential for corruption is huge. Say a big company pays so much into a campaign fund or whatever in exchange for which they are added to the list of companies for private accounts. Now the company falls on it’s face and a large number of Americans lose money because a politician took a bribe.
““If we’re going to restrict the investment options to underperforming companies for social reasons, I hope we pass on private accounts. Maybe we should only be allowed to invest in companies that have a commitment to developing renewable energy sources, or curing obesity, or saving the rain forests””
As long as they were truly US companies (by percentage of actual US based employees), any company would be fair game.
There’s a lot of benefit to keeping investment in the US.
"As long as they were truly US companies (by percentage of actual US based employees), any company would be fair game.
There’s a lot of benefit to keeping investment in the US."
Then perhaps we should just make it illegal for US citizens to invest in foreign companies, trade in foreign currencies, or buy foreign debt? I’m not convinced that isolationism is a good economic model.
Do you, or anyone on this board, really restrict your investments to US companies only? no mutual funds with foreign holdings? if so, how has that performed for you?
"agreed, but how is it any less with “US-only” companies? "
I’m not saying that it is, I’m just saying that an objective set of criteria would have to be developed to prevent favotism or bribery. One of those criteria could be “U.S. countries only” and it would be an appropriate one since it’s an American program and it would then benefit both taxpaers and the American businesses.
“One of those criteria could be “U.S. countries only” and it would be an appropriate one since it’s an American program and it would then benefit both taxpaers and the American businesses.”
I thought the goal was to benefit the SS income tax payer by allowing him to earn a better return on his SS “investment”. If that’s the case, why cut off investment options with some of the highest returns?
If the goal is to benefit American businesses, why not make it illegal for US citizens to invest otherwise? (although, for the record, I think that would ultimately be very bad for US companies and US citizens)
First, let me say that I’m not, nor have I ever claimed to be all that financially savvy.
"I thought the goal was to benefit the SS income tax payer by allowing him to earn a better return on his SS “investment”. If that’s the case, why cut off investment options with some of the highest returns?
If the goal is to benefit American businesses, why not make it illegal for US citizens to invest otherwise? (although, for the record, I think that would ultimately be very bad for US companies and US citizens)"
in reply to this, I would say that the goal is indeed to earn the taxpayer more return on his investment. However, that should be balanced with the desire to aid American business. It doesn’t have to be one or the other. Also, I’m not all that sure that it’s a great idea to invest an even larger portion of the U.S. in foreign companies. I’m not isolationist, but i also see some danger in having my SS benefits tied to big money makers overseas, who could then play a large part in govt. policy by flexing their economic muscles.
that should be balanced with the desire to aid American business. It doesn’t have to be one or the other. Also, I’m not all that sure that it’s a great idea to invest an even larger portion of the U.S. in foreign companies.
I like it in theory, but how are you going to define an “American” business?
“I like it in theory, but how are you going to define an “American” business?”
I assume you could easily come up with some criteria. American owned, pays taxes to the U.S., certain percentage of employees in America, certain percentage of manufacturing in the U.S., etc. Obviously someone with some actual knowledge would have to figure all that out.
Yup. My wife and I both do. I also said that I don’t have a problem with that if some of the money is going to go into some sort of WELL-THOUGHT OUT private investment account. Just pissing away good money after bad, in my opinion, isn’t a reason to bump the ceiling up, though.
I assume you could easily come up with some criteria. American owned, pays taxes to the U.S., certain percentage of employees in America, certain percentage of manufacturing in the U.S., etc.
I’d like to assume that it would be that easy, but I don’t think so. Most of the criteria you list above, just for example, would likely disqualify the majority of companies on the market. Companies be global these days, not national. (Though it might be interesting to see what impact this idea would have on businesses- would it encourage them to take a more pro-America stance- by which I mean, could it be used to discourage the flood of outsourcing? Hmmm . . . Interesting. But I think we’re drifting pretty far from our original goal, and besides, using privatized SS as a means to influence the behavior of publicly traded corporations is going to get free marketers all upset. )
If there are any criteria on the kinds of companies that could be included in a portfolio, I would immediately become a strident opponent of private accounts.
One of the most important definitions of fascism is a collaboration between big industry and government.
Allowing the government to set industrial policy via investment black listing is far worse than the current situation. You probably know how much I approve of that.
The last thing we need is a federal version of Calpers.
As Mophal pointed out above, the details of any plan are very important.
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