Social Security R.I.B Should be Privatized

REBUTTALS: 1: Yes/No: SS might go into the red due to baby boomers retired/retiring against the low numbers supporting their retirement, but there are other contributing factors. Issues affecting SS Old-Age and Survivors Insurance OASI (RIB when paid out), is more insidious than ratios. First, the gov borrowed $2.5T from the fund between 1970-1983 [19] issuing Treasury Bonds against the loans. From 1983-2000 the SS Trust Fund TF was at a surplus [20] and could fund the boomer’s retirement into the future. G.W. Bush saw the surplus and cut taxes reducing influx of finds [21]. Despite decreases funding to OASI it is self perpetuating with its balance and funding at current rates. TF depletion will not start until 2024. In 2015 the fund ran at 308% above cost, by 2024 it’s expected to be at 171% [22]. Pro’s cit.#2 states this. Projected short fall is due to Disability Insurance DI, a separate fund from OASI, soon to be depleted. The Trustees recommend OASI merge with DI so funds are available for DI future liabilities. The pooling of funds resulting in depletion of both systems by 2035; combined factors increase of boomers retiring and DI outlays [22, 23];robbing Peter to pay Paul. There’s no denying there’ll be an issue with OASI/RIB in the future. It’s probable the 2 funds will be merged, but privatization is not the answer. Pro’s cit.#3, the NCPA, “The NCPA’s solutions promote private alternatives to government regulation and control”. The author, Pamela Villarreal is a NCPA analyst/writer, not unbiased. Privatization at whose expense? Who will profit and benefit? The gov does not have a profit motive. Present admin expenses of SS is at 1% [24]. 2: Choice is good, but who will determine what the options will be? Which system will be chosen; a centralized gov system or private financial? As stated in R1, There’s no denying that the financial sector will have sway [15,16,25]. They have a poor track record in protecting the public interest, remember 2008? Please explain how a larger investment is made at a cheaper cost? In the par.1, Pro’s cit.#5, 2001 states, people will pay into a new system but also it’s “assumed future increases in contribution rates that would fully finance the benefits of present law,”echoed in Actuary Report [14 p.29] That’s paying both sides of the benefit, you pay into a Individual Plan (IP) for yourself and pay toward maintenance of the current system. #5 further states “Social Security benefits are not fully adequate for making comparisons with private-sector plans, since many features of Social Security benefits are not typically available in private-sector plans” then concludes “scaled pattern results in slightly higher internal real rates of return under the OASDI program, and slightly lower accumulations for individual accounts.” Current tax is 12.4%[31] and it’s recommended there be a raise in SS tax by 1.1%. Let’s assume that it will be split equally between SS and the new IP. You start in the red by almost 60%; 50% gone to current/future liabilities which you cannot claim against due to your IP. Your claim of 11.5% return in TX/FL is not in cit.#5. Where did this number come from? Pretending this as true, the returns don’t look attractive considering ½ of what you put in is gone to liabilities at a lower rate than at present, crashing SS even quicker. Remember, it’ll take 75 yrs for SS to be solvent. Pro’s cit #6 requires subscription, a headline is not a whole story. Pro’s cit.#7, 2001 reflects what Martin Feildstein stated in the 1990s. Then the article moves into review of G.W Bush’s plan, in office at the time, hence the title “President’s Commission to Strengthen Social Security.”It’s assumes the IP would be similar to the Thrift Savings Plan that gov workers have with a RoR of 6.5%. But here’s the catch, SS OASDI “would require additional revenues in perpetuity in order to pay scheduled Social Security benefits”With his plan, only 2% paid in goes to an IP, the rest to liabilities of the old SS. BTW, you cannot claim benefits from SS because of your IP. The math: pay $10 pr/wk in SS taxes, $2 for me at 6.5% interest, $8 for current/future liabilities at 2.5%. At the end of 30 yrs compounded my 2% grows to $11,725. The rest at $8 pr/wk for 30 yrs at 2.5% is $23,008. Your kids can inherit the funds if you die young, but there’ll be 0 to inherit should you live for a time after retirement. Also, depending in what state you live, inheritance can be taxed. The Fed does not tax below 5.4M. With cash flowing out of IPs, will it remain so? Or if after a time will the Feds decide not to allow the IP money to pass to family? They’ll have 75 yrs to futz with it. Pro’s cit.#8, 1996 On personal accounts benefiting the poor with a greater return and increase savings, but it does not addresses how the current/future liabilities of SS will be funded during attrition into all IPs. Pro:“The first part is that people are mishandling their money…”Just a reminder, you brought this up “Posted by: lannan13, No counter plans. Wednesday, May 04, 2016 @ 12:43:03 AM.” You have a plan? It’s great! You can up your own tax deduction into the present Pay As You Go system for possible early retirement. How is this an IP? The current PAYG system is not paying for your retirement. It’s paying for those already or soon to be retired. And your public option has no details. How long will you phase out the current system with 9.6-15.7T in liabilities over 75 yrs [26]? You’ll do it in 10? Pro’s cit #9, 1995. Chili isn’t the US. At the time of AFP implementation 1981, their ratio of workers to retirees was 9-1, the US 4-1. To offset transition costs the gov. sold off state owned enterprises (Socialist), the US has no such assets. The US can only issue Treasury Bonds increasing the national dept. Also, Chili incentivized workers to join with an 18% pay increase. Many employers failed in payments due to dual taxes for the old/new systems; underground employment resulting. By 1994 only 55% of the work force was a part of the plan; 22% of the remaining failed to make payments. Also, the AFP RoR has fluctuated greatly with economic ups and downs. Chili took over AFP in 82-4 through buy backs and lost money in 1995 [27].The funds are in for profit institutions which cut deeply into profits with admin fees. 70% of the work force only works 6 mo. of the yr resulting in uneven contribution rates. 25% will not have saved enough for retirement. In addition, there is no system of equity for women or low wage workers to bring them up to a minimum benefit. The system does not work [28]. Galveston cit.#10, 1998 is a commentary. The Galveston plan does not offer a guarantee to surviving spouse or dependent children if death should occur prior to retirement or an adjustment for inflation. Single and high earning individuals reap more than under the current SS system; mid and low earners collect less. Workers are assigned an individual account but have no choice on investment decisions. Wealth building at the top but not at the bottom [29, 30] Pro’s cit.#11 op-ed:Pablo is a high paid economist, not typical. It also mirrors what I stated earlier.“The biggest problem in Chile is that many workers don't contribute regularly to their pensions because they're unemployed or working off the books.” Pro’s cit #12 requires a subscription, moot. Pro’s cit.#13 1997, regarding the Chilean system, which does not work and leaves out large swaths of the population. Most of your citations are old, more recent material tells a different story [28]. 19. http://tinyurl.com... 20. http://tinyurl.com... 21. http://tinyurl.com... 22. http://tinyurl.com... 23. http://tinyurl.com... 24. http://tinyurl.com... 25. http://tinyurl.com... 26. http://tinyurl.com... 27. http://preview.tinyurl.com... 28. http://tinyurl.com... 29. http://tinyurl.com... 30. http://tinyurl.com... 31. http://tinyurl.com...