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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19222  
Subject: Soial Security changes Date: 2/9/2005 3:38 PM
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I don't call it "reform", not based on what I have heard proposed. What do you think?

http://story.news.yahoo.com/news?tmpl=story&cid=571&ncid=571&e=6&u=/nm/20050209/hl_nm/retirement_aarp_dc_2

Smaller Fixes Could Bolster Social Security -AARP

“The U.S. retirement system does not need a major overhaul or private accounts and can be stabilized through a series of smaller fixes, the nation's largest lobby group for the elderly said on Wednesday.

“The AARP, formerly known as the American Association for Retired Persons, said the amount of wages that can be taxed for Social Security should be raised from $90,000 to $140,000. The change could be phased in over about 10 years and would cut the projected shortfall by 43 percent.
<snip>
“Health and Human Services Secretary Mike Leavitt has called the program, which serves about 52 million Americans, inefficient.”

He is dreaming. Social Security has been (and remains) by far one of the most efficient federal programs. Compare to Aid for Dependent Children, Food Stamps, or just about any other welfare program.

cliff
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9634 of 19222
Subject: Re: Soial Security changes Date: 2/9/2005 4:51 PM
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I don't call it "reform",

Proposed changes eminating from Washington are always called "reforms" by their proponents. Always have been, always will be. What's actually proposed can be anything from burying the muthah to making it the best program ever. The truth, which can't be distinguished until someone proposes some legislation, usually falls somewhere in between.

Phil

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9635 of 19222
Subject: Re: Soial Security changes Date: 2/9/2005 4:59 PM
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<<<“Health and Human Services Secretary Mike Leavitt has called the program, which serves about 52 million Americans, inefficient.”

He is dreaming. Social Security has been (and remains) by far one of the most efficient federal programs. Compare to Aid for Dependent Children, Food Stamps, or just about any other welfare program.

cliff>>>

I agree SS is pretty efficient. However, you have to realize that no one serves in the Bush administration if they don't 100% toe the administration line.

For example, today we learned the 10 year cost of the Medicare drug program will be not $400B as Congress was told when they passed it, not $534B which the administration admitted was the true cost after it passed, but $720B. When writing the legislation Democrats wanted to allow Medicare to negotiate drug prices just as the VA already does. Republicans forced a provision that forbids negotiated prices. Now former Bush HHS Secretary Tommy Thompson says he wished Congress had given him authority to negotiate drug prices. Did you ever hear the SOB say a word about that while he was HHS Secretary? No, because he would have been quickly replaced for telling a truth that conflicted with the party line. How many billions could have been saved if Thompson had some balls and spoke up for the right to negotiate drug prices for Medicare? Think about that when they start raising your premium for Medicare drug program.





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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9636 of 19222
Subject: Re: Soial Security changes Date: 2/9/2005 5:37 PM
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A basic underlying problem with the Medicare drug program is "selection against the insurer". The premiums and deductibles are high enough that helthy people with relatively small or average current drug costs will not buy into it; they can easily measure their present costs versus all the premiums and deductibles. On the other hand, anyone already paying for drugs in exdess of the deductibles and premiums will immediatly take the coverage to save money. Immediately, the costs will outweigh the income premiums, and I wonder if the jokers in DC have counted on healthy seniors to voluntarily suppport the program until before their personal presription costs outweigh the Medicare costs.

This is an inherent problem with "insurance" that is really swapping dollars, with no risk being taken (or insured) by the insureds. The pool of participants are composed of either immediatele losses, or they won't bother to insure.

The Veteran's Administration program charges a $7 per month per prescription "co-pay" and they insist on using generic drugs and negotiate with the drug companies, and buy in bulk. There is no "Pre-cost" or premium to join. There is talk of doubling the co-pay and chaging a $250 annual fee. I doubt if any senior vets joined the plan until they had enough permanent prescription costs to make it worthwhile to travel to the VA Center, but this was not a loss to the program funding, it just reduced the per-petrscription cost the participant would have caused. The higher co-pay and annual fee will only discourage participation by vets who would have added costs to the program.

Note that the VA plan anticipates per-prescrition costs and it does not depend on subsidizing it with premiums from non-users, as the Medicare program undoubtedly is. Adding the annual fee will reduce the VA's costs and if it discourages a user from participating, the VA saves.

With the VA program as a model WHY did those idiots dream up the Medicare Program? ed

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Author: tomotr38 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9641 of 19222
Subject: Re: Soial Security changes Date: 2/12/2005 11:05 PM
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Fellow Fools: Why is the AARP out against the Presidents plan? It will certainly not effect the currently retired or soon to be retired people. In every case where private accounts have been tried they have been far more successful and beneficial than the current ss program. How much is "far more successful"? Ask the retired public employees of Galveston, Tx? They are receiving three times the benefits that they would have received under SS. Yes, It's going to cost a lot of money to make the transition but your grandchildren will be far better off. I may not be as old as some here but at the tender age of 67, I say Give our young people a chance to do better than we are doing. Thanks for the chance to express my views.---Tom

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Author: abbagirl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9642 of 19222
Subject: Re: Soial Security changes Date: 2/12/2005 11:56 PM
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Yes, It's going to cost a lot of money to make the transition but your grandchildren will be far better off. I may not be as old as some here but at the tender age of 67, I say Give our young people a chance to do better than we are doing. Thanks for the chance to express my views.---Tom

I feel the same way. I've heard that it's those now on SS who are most against the private accounts. The only thing I'm upset about is that, at 69 and already receiving SS, I won't be able to take advantage of the private accounts. Rats.

Abba


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Author: BrerBear Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9643 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 10:33 AM
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tomotr38
Fellow Fools: Why is the AARP out against the Presidents plan?
==================================
Best answer I can think of is because the plan smacks of the Feds walking away from their responsibility in the big scheme of things... and of course, it does NOT do that...

Bottom line, the Congress canNOT be trusted with having access to massive amounts of money that are intended for such as the retirement income and medical needs of Americans over 65... they simply can't... and we don't need to foist the blame on just the Republicans or just the Democrats, they ALL have a piece of the blame... with many of those responsible for the gigantic mess being long gone from the halls of Congress... in many cases they are long gone from this Earth...

So, for the time being, Congress has us, thee and me, to take care of by whatever means possible... we and our employers paid our "SS" taxes, paid the increases as we were told to "keep the plan solvent", on and on... [Does anyone remember the words used back in good ol' boy Carter's days how if we just can pony up this stiff increase, EVERYTHING would be okay?... I, for one, remember the time well, if not the exact words...]

Long term, long term being within the next 20 or 30 years, the whole damn plan has to be pulled away from our stickey-finger politicians, and handed over to people who will handle the money with fiscal sanity...

[Personal side note: Take a look at what you and your wife paid to SS + medicare last year, or the last year both had full wages. DW and self contributed ~~$25,000 last year... I wonder what kind of half-vast package a Met Life or NY Life could cobble together for such a piddley little premium...]

End of rant... gotta go take some blood pressure meds now...

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Author: wcfenton Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9644 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 12:35 PM
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Tom wrote:

Fellow Fools: Why is the AARP out against the Presidents plan? It will certainly not effect the currently retired or soon to be retired people. In every case where private accounts have been tried they have been far more successful and beneficial than the current ss program. How much is "far more successful"? Ask the retired public employees of Galveston, Tx? They are receiving three times the benefits that they would have received under SS. Yes, It's going to cost a lot of money to make the transition but your grandchildren will be far better off. I may not be as old as some here but at the tender age of 67, I say Give our young people a chance to do better than we are doing. Thanks for the chance to express my views.---Tom
------------------

This particular topic of discussion really gets around - I guess because it is important and touches everyone's lives. I have posted the following comments about privatization on the "Retirement Investing" Board, so those who frequent that board can click on by if you wish:

...
It is really hard, at least for me, to discuss the pros and cons of a proposal that has no details. All we know for sure is that the President likes the idea of individual accounts as his way of helping to fix the monetary short-falls of the Social Security System and is against anything that looks like additional taxation. He seems to be making things up as time goes along. Not good!

I have my own ideas, like most of us, about what I think is the right way to go on this issue. Privatization certainly is not my first or even my last choice. All I have to do is think about all the young people, like my own children, that don't have a clue about how to invest and don't want to be bothered with it. I have seen a lot of eyeballs rolling back into their heads whenever I have attempted to educate my family about investing. I wonder how many there are like that out there that would have the same attitude?

What percentage of a person's account would be available for investing? Will the investing be left entirely up to the individual's discretion or will there be limitations? How much will it cost the tax payers, in addition to what we already pay, to administer and keep track of individual investment accounts? What happens if bad choices are made and the individual ends up with little or nothing in their private account? Will they have to bite the bullet upon retirement or will the system bail them out? These are only a small sampling of the questions brought about by the prospects of individual accounts.

I'm certainly not anything close to an expert on anything - let alone Social Security, but I do think that there could possibly be a very simple answer. It's certainly not a very original idea, but I would raise the ceiling for taxable income from the current $90,000 to whatever it takes to make the system well. It would only affect the people making the most amount of money in this country and not affect the little guy at all. I'm sure that there would be a lot of controversy about this suggestion from those affected, but then we can't get everything without it costing us something.
...

I think the English aren't very happy with privatization of their similar social benefits program. As I understand it, it is a mess. The same holds true for some South American Countries as well. The "Social Security Network" has some interesting commentary on the subject, if anyone is interested:

http://www.socsec.org/publications.asp?pubid=503#4


Regards,
Bill


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Author: Bobcatkitty Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9645 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 12:43 PM
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All I have to do is think about all the young people, like my own children, that don't have a clue about how to invest and don't want to be bothered with it. I have seen a lot of eyeballs rolling back into their heads whenever I have attempted to educate my family about investing. I wonder how many there are like that out there that would have the same attitude?

What happens if bad choices are made and the individual ends up with little or nothing in their private account?

+++++++++++++++++

I guess I sound a little radical after the thoughts above, but what on earth happened to some personal responsibility???? Is it really my job to see to it that people are taken care of in their old age...based on the fact that THEY THEMSELVES didn't want to?

Well, I don't want to take care of your kids Bill, especially when they're not interested in helping themselves now. This is nothing I would be proud of or bragging about....and certainly would't tell anyone.


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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9646 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 1:19 PM
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Aside from concerns about whether a large segment of our population would have a clue about how to invest, the private accounts do absolutely nothing about the shortfall in SS funds for those in the existing system. In fact, if they lead to borrowing $2 trillion, as has been suggested, the situation may get worse. And when it does, if the younger generation has been pushed into private accounts, there will be fewer protests when they slash benefits for those already retired under the old system.

Privitization as currently proposed is a back door to dismantling the safety net that conservatives have hated for 70 years. Certainly the existing system needs adjustment. 35 years ago my father thought the income ceiling should be abolished. Dad was in SS from day 1. For years only $3000 of income was taxed. Even when I started working in 1969 my SS deductions stopped in September. Kind of ridiculous when you look at the benefit I'll draw at 62 in 2 1/2 years. I also like the idea that Rep. Bill Thomas has expressed that we look for other revenue sources besides payroll taxes. But let's get over the idea that the system is in crisis and can only be saved by destroying it.

When I was 30 I was certain I'd never collect SS. We made adjustments over the years and I will collect my benefits. Can't say the same for the promises of my private pension plan. 40% of that evaporated when my job disappeared a few years ago. Fortunately I'd saved and invested on my own and will have a good retirement, though SS will be a significant part of it. Private accounts are fine as a supplement to SS but millions of low income Americans, who have worked hard all their lives, still need that guaranteed benefit.


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Author: BrerBear Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9647 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 2:19 PM
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Well, I don't want to take care of your kids Bill, especially when they're not interested in helping themselves now. This is nothing I would be proud of or bragging about....and certainly would't tell anyone.
BCKitty
========================================
Sorry, but for one I was disappointed to read the 'tone' of these words... again, sorry, but I would have liked to have seen a different way to express the idea of personal responsibility, etc... [I agree with the theme, if not the tenor...]

All that said, I believe that it IS a fact of life that there are MANY, from virtually ALL walks of life and backgrounds, and [high] mental capacity who just DON'T want to have to "think about it"... yeah, it is important, but I'm fine with having the details handled by others...

What's wrong with the vanilla answer?... Participants don't HAVE to be actively involved. Their 13% FICA dollars plus the Medicare dollars are handed over to closely watched and regulated Met Life's, NY Life's, NorthWestern Life's, YouNameIt Life's, and THEY handle the arcane details?...

Per my earlier rant, I'd wager the private but closely watched operations would EASILY outperform the dismal scenario of the currently presented SS / Medicare fiasco.

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Author: fingfool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9648 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 4:10 PM
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What most politicians and posters here fail to discuss is the combined deficits that the Ponzi-like scheme nature of Social Security and Medicare portend for the future (see excerpt and table from Trustee 2004 Report below).

Having the government bargain for lower prices for drugs and health costs has been tried in Europe yet their Ponzi-like schemes are facing an earlier crisis than ours is.

In the US government bargaining for better Medicare drug prices will only put more pressure on prices for non-Medicare purchasers or drug companies will simply reduce costs by curtailing efforts to find newer drugs and drugs that can reduce other health care expenses.

Social Security does not by itself provide a secure retirement yet more people are depending on it for a large portion of their retirement income. In the way that SS has made more people dependent on government is not considered a good thing by anyone except perhaps some true believers in state power.

The degree to which the retiree income quintiles depend on SS for their total income http://www.cato.org/pubs/ssps/ssp4.html :

Bottom 20% derive 80% of the total from SS
Lower Middle 20% derive 75% of the total from SS
Middle 20% derive 65% of the total from SS
Upper Middle 20% derive 45% of the total from SS
Top 20% derive 20% of the total from SS

Here's some information from 2004 Trustee's Annual reports that seems to spell out clearly a problem from the combined Medicare and SS trust funds shortfalls that have already occurred if one uses the funds that go from the general fund to pay for SMI deficits.

http://www.ssa.gov/OACT/TRSUM/trsummary.html

The Social Security tax income surplus in 2004 is projected to be more than offset by the shortfall in tax and premium income for Medicare, resulting in a small overall cash shortfall that must be covered by transfers from general fund revenues. This combined shortfall is projected to grow each year--such that by 2018 net revenue flows from the general fund to the trust funds will total $577 billion, or 2.6 percent of GDP. Since neither the interest paid on the Treasury bonds held in the HI and OASDI Trust Funds, nor their redemption, provides any net new income to the Treasury, the full amount of the required Treasury payments to these trust funds must be financed by increased taxation, increased Federal borrowing and debt, and/or a reduction in other government expenditures. Thus, these payments--along with the 75- percent general fund revenue contributions to SMI--will add greatly to pressures on Federal general fund revenues much sooner than is generally appreciated.



The following table presents the plot points for the data in Chart E--Combined OASI and DI, HI and SMI Income Shortfall to Pay Scheduled Benefits, and the 75-Percent General Revenue Contributions to SMI (as a percentage of GDP). The data is shown on a calendar year basis for the projection period (2004-2078), under the intermediate set of assumptions.


Plot points
Year 	OASDI 	HI 	SMI 
2004 -0.56% 0.02% 0.90%
2010 -0.66% 0.10% 1.54%
2020 0.35% 0.42% 2.35%
2030 1.37% 1.06% 3.26%
2040 1.66% 1.76% 3.85%
2050 1.68% 2.29% 4.33%
2060 1.81% 2.82% 4.95%
2070 1.95% 3.53% 5.66%
2078 2.04% 4.14% 6.22%


It is also evident from Chart E that currently projected benefit costs for Medicare and Social Security pose a far more serious long-term financing problem than is generally understood. There is a big increase in the shortfall of dedicated payroll tax and premium income in the 2010 to 2030 period as the "baby-boom" generation reaches retirement age, but this shortfall continues to grow rapidly after that point due to expected faster-than-GDP growth in health care costs and to the increasing life expectancy of beneficiaries. In 2003, the combined annual cost of HI, SMI and OASDI was about 7 percent of GDP, or two-fifths of total Federal revenues. It is projected to more than double to 15 percent of GDP by 2040 and then to rise further to 20 percent of GDP in 2078, at which time it would exceed total Federal revenues at their historic share of 19 percent of GDP. We do not believe such a long-term rate of growth for the two programs can be sustained.

In summary, the projections for Medicare and Social Security under current law manifest mounting draws on Federal general fund revenues, exhaustion of trust funds beginning in 15 years (for HI) that would not permit full payment of currently scheduled benefits, and unsustainable long-term growth in costs. The sooner these problems are addressed, the more varied and less disruptive will be their solutions.



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Author: wcfenton Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9651 of 19222
Subject: Re: Soial Security changes Date: 2/13/2005 4:56 PM
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Bobcatkity wrote:

I guess I sound a little radical after the thoughts above, but what on earth happened to some personal responsibility???? Is it really my job to see to it that people are taken care of in their old age...based on the fact that THEY THEMSELVES didn't want to?

Well, I don't want to take care of your kids Bill, especially when they're not interested in helping themselves now. This is nothing I would be proud of or bragging about....and certainly would't tell anyone.

----------------

I don't blame you...and I certainly don't want to take care of yours as well! Bragging - not a chance - quite the contrary! Not tell anyone - hide my thoughts - let the system do whatever it may - I don't think so. You made my point for me - Thankyou!

Bill

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Author: ep0001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9655 of 19222
Subject: Re: Soial Security changes Date: 2/14/2005 8:01 AM
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"Yes, It's going to cost a lot of money to make the transition but your grandchildren will be far better off."


I believe it will cost less than reported. The cost of the new plan will be offset by the elimination of some of the "unfunded liability" of the old plan.

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Author: ep0001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9656 of 19222
Subject: Re: Soial Security changes Date: 2/14/2005 8:04 AM
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"What happens if bad choices are made"

Bad choices are already be made; Congress is doing it. What the existing system insures is that everyone is equally screwed.

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Author: tomotr38 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9665 of 19222
Subject: Re: Soial Security changes Date: 2/21/2005 1:28 AM
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I may be wrong but I believe the presidents plan for privatization would have the private part of the account go into index funds while the participants were young and then be transferred to treasury bonds as the participant nears retirement age. This would result in protection for the participants as they near retirement age. Market history has shown us that over the long haul (17 years) the market has always had substantial gains. I also believe that once this gets started and people see success with the program, more will want to participate and at a higher contribution level. Yes, eventually the SS program as we know it would completely disappear. I think ,at the outset, the funds invested in should be chosen by an investment panel much like is now done with many 401k plans. This would prevent Bill's kids (and mine) from doing somthing very foolish with the investment. The two big advantages that the young have over us geezers is that they will retire with a lot more than is now being received and it will go to their beneficiary when they die. Expensive to make the switch? Probably so but will cost a great deal less if done now rather than wait till the current system gets into more serious trouble.
Thanks for listening to my babel---Tom

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