Bush plan to privatize Social Security still a good idea

There has been plenty of talk about how a significant chunk of retirement funds have disappeared during the past month or so, but that does not mean that we should not consider moving towards getting government out of the retirement funding business.

Ed Morrissey over at Hot Air writes today about the stock market decline and the Bush administration’s plans to offer the option to take some of your social security cash and invest it in the market. Of course, many like to speak of seniors this winter who would have died of starvation if the Bush plan went into place. Of course, it’s a complete lie.

First, the people who were close to retirement weren’t eligible for privatization anyway.  In fact, the first stock purchases under the 2005 plan wouldn’t have been made until next year, and those only for people whose retirement dates were still years away.  Anyone within ten to fifteen years of retirement had to stick with Social Security with Bush’s transition proposal.  Having that money flowing into the markets now would have provided some welcome capital flow during a recession, and the portfolios could have bought some real bargains.

The real problem will be the one that has been ignored for more than 15 years. Over at Conservative247 back in October, I wrote about the next big bailout on the horizon.

I’ve been thinking about the bailout again. I’ve been busy, it makes me mad, so I write a little about it and leave it at that. Now I’m thinking about the next government emergency bailout – Social Security.

It will come up on us quickly. It will be a crisis. We may only have days to respond. Congress will be forced into immediate action. If you think $700 billion was a crap sandwich, what do you call a $6.5 trillion dollar emergency bailout? A crap Las Vegas-style buffet?

I went on to discuss the 2008 Social Security Trustees Report Continues to Show the Urgent Need for Reform that was written by David C. John from the Heritage Foundation. It’s a good, detailed read. Enjoy.

17 replies
  1. Bill
    Bill says:

    "Privatize Social Security" is a phrase used by liberals and the fear mongering media to demonize a plan to empower citizens. It became a pejorative euphemism for the evils of private enterprise and risk for reward. I don't remember any conservative defending the concept while attacking the negative connotations inherent in the phrase. I'm surprised conservatives use the term.

    Because Mr. Bush and those promoting individualized retirement investment allowed the opposition to dictate the tone and define the argument, the concepts of freedom of choice and self determination never were aired fairly. The specter of the rapacious market ravishing the future of helpless automatons was always present in the discussion because of the way it was framed. Sadly, it is a trap to which conservatives often fall victim.

  2. Steve
    Steve says:

    Excellent point concerning my wording. I should not use "privatize Social Security" since that infers that the entire thing is moving out of government control.

    Thank you.

  3. Gene
    Gene says:

    Actually Bill, you have it reversed. The "conservatives" are the ones who have a history of marketing their agendas by creating appealing sounding slogans to deceive the public. Paulson's "we need to do this today" bailout emergency reminded me of Bush's "the sky is falling" pitch on social security (which he quietly dropped) and his "we can't wait" approach to invading Iraq.

  4. Bill
    Bill says:

    Bush a conservative? Paulson a conservative? Bush acted to topple Saddam without support from the left? Are you delusional?

  5. Gary the socialist
    Gary the socialist says:

    Sure go ahead and lets now turn over Social Security to private enterprise and watch the fun debate's as all this money goes to oversears corporations bashed in The Caymens because all the American ones went under in the great american robber of 2008…. Hey after all if 8 trillion did not work to keep the world from going under this surely will. Or maybe since America is now broke but the wall street beast still needs to feed lets give them this money too.Enjoy the ride folks because it has only begun.

  6. Gary the socialist
    Gary the socialist says:

    Just for ha's ha's. Why not leave SS1 alone and start a SS2 program . Maybe the exact same way SS1 is you have 5 percent of your wage base matched by your boss and put into a sperate account that is worked out with the hows and whys and fees and plans etc etc. But for the love of all that is good do not ruin such a good program as SS1 to feed the beast.

  7. Dimsdale
    Dimsdale says:

    One only needs to look at the results of Galveston's "Alternate Plan" to SS to see what could have been. For a nice summary, go to http://www.ncpa.org/ba/ba215.html. Read it and weep. Bottom line: *

    A retired $20,000-per-year worker with the personal retirement account would receive $2,740 each month at current interest rates, while Social Security benefits would be about $775 per month.

    * A $50,000 per year worker would receive $6,843 from the private plan, compared to $1,302 from Social Security.

    I am sure there will be a pithy retort about "how are they doing now?" One only need look at the performance of the stock market since the 20's, and you will see an average of 11% (if I recall correctly) average increase over the course of time, including the Depression years. All the Alt. Plan accounts are exceeding safe, conservative accounts administered by the plan, not the employees.

    I would rather take my chances with the market than politicians.

    http://www.tsp.gov

  8. David in EH
    David in EH says:

    Gary: "Why not leave SS1 alone and start a SS2 program . Maybe the exact same way SS1 is you have 5 percent of your wage base matched by your boss and put into a sperate account that is worked out with the hows and whys and fees and plans etc etc. But for the love of all that is good do not ruin such a good program as SS1 to feed the beast."

    Gary, do you actually *KNOW* anything about how Social Security operates? Do you even know what it was designed to be?

    SSI is a Ponzi scheme — past "investors" are paid off using the current investor payments — if a private citizen or corporation operated a fund in this fashion, they would be arrested for fraud.

    The rate of return is pathetic — you'd do better taking that money and putting it in an interest-bearing checking account, let alone investing it in something that might generate real return. Likewise, with a real investment, your survivors would inherit your investment, as opposed to the government pocketing it upon your death.

    In short, Gary, SSI *isn't* a good program and its failure / reduction is a statistical inevitability as it is currently constituted.

  9. Gary the socialist
    Gary the socialist says:

    In short, Gary, SSI *isn’t* a good program and its failure / reduction is a statistical inevitability as it is currently constituted.. Sure and its a statiscal fact that you will die also. But in the end Social Security is a good program that has made many lives better. Yes so if it's in danger of going under in what 2050 so then fix it fine toon it and charge everybody payroll taxes and get rid of the wage cut off… Please go ahead and teach me and tell me all about Social Security and when it came about and why and it's orginal puposes and more I so love to learn..Please do tell me how much is collected and paid and where the exess money goes and who gets it. What happens when it will get less and less and when you feel it will end and what you consider a worker cut off age to get rid of it and how much you feel a worker and there employer both should pay into an new spearate goverment controlled retirement program or should it be voluntary and or all mandated.. Please do teach me. Just please do not tell me that story of the little old lady in kanasa who once thousands of years ago was the first to collect it.

  10. David in EH
    David in EH says:

    Gary: "Sure and its a statiscal fact that you will die also. But in the end Social Security is a good program that has made many lives better."

    It is a bad program that forces citizens to invest monies at a lower rate of return than they could get on their own through the simple expedient of putting it in a bank account, Gary.

    Gary: "Please go ahead and teach me and tell me all about Social Security and when it came about and why and it’s orginal puposes and more I so love to learn…"

    As demonstrated by your embrace of your own ignorance as a defense in our conversations…

    Perhaps if you expect to be taken seriously, you should go learn something about what you would lecture us about, Gary.

    Hint: No one was ever meant to live off of SSI as their sole mean of support. It is a supplemental savings program, and a poorly designed one at that.

    The fact of the matter is that an ordinary citizen could do far better for themselves investing privately the same monies as the government takes by simply putting the money in a savings account.

    The fact is that there is no excess, no "trust-fund" — the government spends it as fast as it comes in, blowing Trillions over the years, putting an IOU in place of the money they squandered, paying a sub-market rate of return. It has become a government slush-fund,with a day of reckoning coming soon.

  11. Gary the socialist
    Gary the socialist says:

    As demonstrated by your embrace of your own ignorance as a defense in our conversations… Yes I am ignorant and am seeking your wisdom and vast statiscal knowledge in educating me. Teach us,
    don't insult me. You claim that you are an educated statiscal anaisaies(sic) so explain I am not unwilling to learn.Hint :we all know that our goverment is a trillion in debth each year now and would be another half a billion more if not for SS1.. So please tell what age would you cut benifits and how you with decades of statiscal facts at your disposel would redo private SS2 so it does not become as you say another poorly designed one. Maybe even ask why have any sort of retirement program.Let the masses and sick and old fend for themselves.I really do want to learn. So please Teach me.

  12. Wyndeward
    Wyndeward says:

    Reiterating something that you claim almost as a badge of honor cannot reasonably be considered an insult, Gary. Nor is asking you to know something about the topic you presume to lecture the rest of us upon an unreasonable request.

    Gary: "we all know that our goverment (sic) is a trillion in debth (sic) each year now and would be another half a billion more if not for SS1."

    SSI, not SS1. Short for "Social Security Insurance."

    Second, your mathematical ability rivals your spelling. The debt that that the government, all of their accounting chicanery aside, is still a debt, so there has been no prevention of debt by plundering SSI.

    Gary: "So please tell what age would you cut benifits (sic) and how you with decades of statiscal (sic) facts at your disposel (sic) would redo private SS2 so it does not become as you say another poorly designed one."

    To do that, I'd have to drag you from middle-school mathematics through at least college level algebra and Calculus for business majors. I have better things to do with my time than try to correct your errors in juedgement.

    Like your education, I fear it may be too late for a SSI fix, Gary. As a matter of fact, I have prepared my finances under the assumption that the rotten barn that is SSI will collapse long before I come of an age to collect. Of course, liberals are floating notions of undoing that by confiscating 401K programs, with IRA's being likely the next source of private income for the government to plunder, so my hard work and sacrifice to secure my future is likely to be undone.

    In a perfect world, the program would have been continuously correcting, with the eligibility age being floated to be actuarially consistent as the population changed, for starters. The monies would have been held in trust, rather than squandered for Johnson's "Great Society" welfare state. Those two changes would have been a good start… too bad Dems decided that buying votes was a much better use for that money than the reason they'd collected it for.

    But the program has always been a scam — a slush fund for free-spending liberals in Congress to fund their socialist notions without actually raising taxes. Social security was originally a narrowly focused program, with past bankruptcies being avoided by dragooning new population segments into the pool, reducing the program to a Ponzi scheme.

  13. Gary the socialist
    Gary the socialist says:

    Wyndeward — I would like to disagree with you on all of your statements above… I as I say do love to learn and over the last year have taking classes in mass on my job classes in ct for my job.Class for my side bussiness, a class at my union wall on business,another class on a way to improve my business, a class on spanish so I can talk with others for pleasure and business. Several classes on religion and opps I can not spell so do you thing you can hurt my feeling with shots like that not. If you thing my spelling or math is bad here you should see some of the thousand letters to the editor of the Hartford courant years ago talking about and commenting that everything going on how was going to happen and is going to get a lot worse, and as it does I do want this program here as it is.

  14. Gary the socialist
    Gary the socialist says:

    Wyndeward.. I do still stand by the fact that I would love to see a SS2 as I above talked about and asked Seator Lieberman and Nancy Johnson years ago to try and start. But SS1 has to stay as is and as I said with little theaks as has been done over and over and as I said one way is to raise the tax level and you say raise the retirement leval whice has been done to what 68 now and maybe soon to go up more.

  15. Gary the socialist
    Gary the socialist says:

    Wyndeward– I know you feel it is helpless for me to ever learn them big number thingees in these algebrs and calaclous thingees.. But as I say I love to learn and I did shoot over to the Social Security web site and read the histroy of it and how it evolved and if anything it is becoming into what it was orginal meant to be not just the oppiste as you say.I was fasinated by the fact that it was hundreds of years in the making and of all the histroys going back to Old england and France which brought up that other topic about our countrys roots and the make up of our founders and where and how they were inspired and how less then 2 % were Catholics and No Jewish people were mentioned and how Churchhill and I thing it was FDR meeting to discuss this and the old scrlett letter for the p by wearing a P as a sign but in the end the system was put together as a safty measure to help retirees in the new modern world as it is and it is working just fine and I say again Please do leave it only and if you want more moneys then the trillions borrowed and ginig to Wall street these last three months then Start a new program but leave this alone… Peace and Happy Holidays

  16. David in EH
    David in EH says:

    Gary the Socialist: "I do still stand by the fact that I would love to see a SS2 as I above talked about and asked Seator (sic) Lieberman and Nancy Johnson years ago to try and start. But SS1 has to stay as is"

    Which it *can't* do, Gary. The metaphorical "iceberg" will tip over, with recipients outnumbering payers in the not-too-distant future. Having spent the trust-fund already, the government will have no option but to change the program. This horse has already left the barn.

    Gary the Socialist: "if anything it is becoming into what it was orginal (sic) meant to be not just the oppiste (sic) as you say."

    How do you figure, Gary? The program was designed and intended as a supplementary savings program for blue-collar workers. Of course, this was in an era when there were many more contributors than recipients. How is forcing millions of more payers never intended to be part of the program "becoming into what it was orginal (sic) meant to be."

    The program has become a Ponzi scheme — a fraud where current recipients are paid off by current payers. I'm fairly certain, having read the authorizing Act, that a fraud wasn't what the "orginal (sic) meant to be."

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