Thread: The Problem With Privatizing Social Security...

Originally Posted by JoeTheEconomist

The Social Security debate contains a lot of noise, where people argue in great earnest with the worst of cliches. Arguments are repeated over and over until people accept them out of volume rather than reason.

The idea to privatize Social Security deserves more consideration than it gets from either side. Opponents - with a straight face - will warn you about the risk of the stock market, when the money today sits in a system that is insolvent by any measure of the insurance industry. Proponents - with equal ardor - will promise you that a privatized Social Security system would create a pool of capital on which the economy will grow as though Social Security would be a magical money tree.

Um....no, not magic...investment.

Before we replace, the eggs with sausage, someone should ask why is it that a new Social Security will perform the job of accumulating wealth better than the savings programs that we already have, and already subsidized. Virtually every American has access to personal savings accounts. They may be 401Ks, IRAs, brokerage accounts. If savings accounts with tax incentives are not getting the job done, how is throwing more money at them going to work any better?

Well, you make an assumption that just isn't true. Most people don't have 401Ks or IRAs. They rely solely on Social Security. They are under the impression it will be enough.
Study shows most Americans have inadequate savings - World Socialist Web Site

This is what happens when you tax everyone for anything they do. Plus, everyone has multiple cell phones, high speed internet, 5,000 tv channels and at least 3 flat screens, 2 tablets, a lap top or two and several ipods. Add it all up, and savings aren't possible for most.

Originally Posted by ksu_aviator

Um....no, not magic...investment.

Invest what? Social Security has about 2.7 trillion in cash and about 26 trillion of liabilities held against that reserve. It is magic if you think you will generate 23 trillion in wealth.

Originally Posted by jaeger19

My facts are right... how about you come to my clinic and explain it to may 23 year old paraplegic patient how he is going to do worse, now that he is getting his social security.

Then you can explain it to my 95 year old patient that's been retired for thirty years (after being a manual laborer) and now is only living on social security as he has played out all other investments. You explain to him how he would be better off with the money that he sent to social security.

Now.. if the 23 year old dies at 65.. yeah.. he is going to lose money on average.

And here is a funny thing... its because on AVERAGE you lose money on the deal.. why it pays for itself. If we were all making money on the deal,, and all getting back more than we put in.. then it would not run a surplus would it. That's why its insurance, that's why its a safety net.

but the facts are that



Now.. for guys like me.. its probably a losing proposition.. UNLESS I get disabled or a myriad of other things that can happen in ones lifetime.

We don't have any facts. We have your word. The Urban Institute says that you are wrong, and so does the SSA's moneys-worths studies.

Of course they measure the return on insurance correctly, which includes the possibility of getting nothing.

Originally Posted by JoeTheEconomist

Invest what? Social Security has about 2.7 trillion in cash and about 26 trillion of liabilities held against that reserve. It is magic if you think you will generate 23 trillion in wealth.

What is the unfunded liability of the DoD? You see, when it's convenient using accrual accounting versus cash accounting principles the argument can go in many different directions...

Originally Posted by jmotivator

Age 46 to 65 would be excluded from the divestment. Twenty somethings are on the low end of the earning spectrum so the actual hit to SS in year one would be 3% or less even if there is a 100% buy in from everyone eligible, but likely that would be a lot less.

Any short fall that can't be covered by minor adjustments to benefits can be explained to the recipients that we already spent that money on them when they raided the trust fund.

Today with everyone paying 12.4%, not anyone leaving the system, Social Security cannot pay full benefits to anyone 64 or younger. Any money that is removed will only mean that the collapse happens faster. If we do not have a good economy, the collapse happens faster. The Trustees provide estimates which say that the system will not be able to pay full benefits to someone 72 today. Those 47 and younger today do not expect to ever collect full benefits. So without a massive tax increase there we will not be able to achieve even a baseline of your model.

I don't sense you realize the depth of the problem.

Originally Posted by AlabamaPaul

What is the unfunded liability of the DoD? You see, when it's convenient using accrual accounting versus cash accounting principles the argument can go in many different directions...

The comparison with DoD suggests that you aren't familiar with the operations of Social Security. Social Security gets revenue from a dedicate revenue stream. It is suppose to be a contributory benefits system. DoD is funded from the general fund by appropriation. Instead of turning Social Security into a welfare program. Why don't you suggest increasing the funding of actual welfare programs.