One of the most common assertions of today is that when the baby-boomers generation begin to suck up large quantities of social security that they will effectively bankrupt the country. Between 2007 and 2040 the huge increase in seniors and their requirements will strain the Social Service State imposed by FDR to breaking point. However economists like Michael Boskin think this has become an accepted myth – and can refute the best way – with very simple maths.
I like this article, and I like Boskin so here you go -
- One of the hottest documents circulating around Washington today is a highly technical, statistics-laden, 131-page paper by Hoover Institution economist Michael Boskin. First reported by Jim McTague in Barron's on June 16, it estimates the taxation of pension assets, including individual retirement accounts and 401(k) plans, will yield a $12 trillion (in today's dollars) windfall to the federal government between now and 2040.
Business Week followed up with a major story in its June 30 issue. It noted that if Mr. Boskin's numbers are correct, this unexpected revenue stream would make up the entire shortfall in Social Security and Medicare through 2040. This possibility led Rep. Jim Saxton, New Jersey Republican, to declare that gloom over the government's long-term fiscal imbalance is "exaggerated." -
http//www.washtimes.com/commentary/20030629-103823-5306r.htm
Ok, haven't read the article yet, but just by what you mentioned here goes a snippet.
Whilst I don't argue with what you say, because traditional IRA's will potentially HUGE windfalls for the gov't when the owner reaches 59 1/2. I did hear a rumour that the government wanted to do away with traditional IRA's to the ROTH equivalent so it would get the taxes now and not later thereby jeopardising that aforementioned windfall. (the rumour was from a financial journolist, not a member of the administration so I don't know how accurate it is)
There has been a similar scare about the Social Security Pension in Canada. This is the one that everyone gets, whether you work or not. Fortunately we also have a mandatory Government pension that is funded by employee/employer contributions. This is run by an independant investment department. This is a clip from last year regarding the funding of that.
TORONTO (CP) -- Ottawa's plan to almost double Canada Pension Plan premiums means Canadians will never face another contribution hike, says Finance Minister Paul Martin.
"The increase in CPP rates we've announced is not some first instalment with more still to come," Martin said Friday. "They are not going to go up, period."
Martin's projection, made to a business audience of the Empire Club in Toronto, is the most unequivocal since he introduced legislation to change the pension plan last Friday.
The legislation calls for a rise in the CPP contribution rate, on which the premium paid by employees and employers is based, from 5.85 per cent of pensionable earning to 9.9 per cent by 2003.
If Parliament passes the bill, the increases will begin next year.
Martin said the purpose of his plan is to build up the reserve that funds CPP.
"CPP is not a tax. It is an investment in retirement savings and the government cannot spend this money," he said.
"It's money Canadians will get back, and more, at their retirement."
We also have the eqv of IRA's/401's (RRSP) and I personally was able to retire early (61) because of the CPP and RRSP's. Also I didn't have to worry about Medical bills. :grin:
One of the most common assertions of today is that when the baby-boomers generation begin to suck up large quantities of social security that they will effectively bankrupt the country. Between 2007 and 2040 the huge increase in seniors and their requirements will strain the Social Service State imposed by FDR to breaking point. However economists like Michael Boskin think this has become an accepted myth – and can refute the best way – with very simple maths.
I like this article, and I like Boskin so here you go -:
- One of the hottest documents circulating around Washington today is a highly technical, statistics-laden, 131-page paper by Hoover Institution economist Michael Boskin. First reported by Jim McTague in Barron's on June 16, it estimates the taxation of pension assets, including individual retirement accounts and 401(k) plans, will yield a $12 trillion (in today's dollars) windfall to the federal government between now and 2040.
Business Week followed up with a major story in its June 30 issue. It noted that if Mr. Boskin's numbers are correct, this unexpected revenue stream would make up the entire shortfall in Social Security and Medicare through 2040. This possibility led Rep. Jim Saxton, New Jersey Republican, to declare that gloom over the government's long-term fiscal imbalance is "exaggerated." -
http://www.washtimes.com/commentary/2003...-5306r.htm
maybe it's time to revive this topic.
Well, I'd like to ask a few dumb questions. What about those who are under 55 by a little bit? Who have paid into the system for 30 odd years. Are they going to get screwed? Any report I've read today doesn't make this clear.
Secondly, does anyone actually know anybody who retired at 65? Most people I know here and in the UK either get grandfathered off with early retirement through restructuring, or happily retire early anyhow. And though these people have made plans for their retirement through private pension accounts or IRA's, they did also figure on having social security to supplement that. Which they are entitled to, as they paid into it for so many years.
So part of the Bush plan is to "discourage" early retirement. Perhaps he can "discourage" business from throwing older, experienced personnel on the scrapheap then?
Have any safeguards been put in place to prevent another Enron/Mirror Group retirement fund theft? Is Ken Lay in prison? roll
Briefly put this is another crock put out by The Bushies.
Business Week,Latest Issue Feb. 3rd, 2005, Robert Kutner,Economist says in his article
Headed" The 2 percent solution to fix Social Security."
"President George W. Bush' initiative to make Social Security private is in startling disarray.In recent days prominent Republican legislators have publicly distanced themselves from the Bush approach......"
Kuttner says restore the-pre Bush tax rate on the very richest US taxpayers. This would onlyaffect 2 per cent of taxpayers 98 percent would not be affected and Social Security with it's good benifits would be fixed permanatly.
I hope the American people are not going to be led again by this idiot into another fiasco and they have the sense to tell him to go to @@@ on this Social Security kick he is on.
Paul Krugman, economist on the NYT also considers Bush's ideas on SS fit for only the Trash Bin.
Well done John. For a moment there I thought the only people that gave a flying f()ck about this were me and Manc.
I'm not counting on anything from these people. I know you can keep paying your stamp in the UK for a UK pension so I'm going to look into that. I also have a 401k going and my RN pension to look forward to...
yes, I too, am now gonna look into seriously paying my NI Stamp again because of all this.
From what I can gather, this is what Bush wants to do.
He wants you to save money (or a proportion of your SS) in a Mutual Fund or other private Retirement account kinda thing.
At age 65, you take your lump sum, give it to the government and they dole it out to you in small increments.
This to me sounds like an annuity, that screws you if you die early and the government gets to keep your money.
(whereas private annuities offer differing payout options)
Also, the government is still getting the same money they would anyhow, sure you may get a decent rate of return, but they are still gonna control your handouts after 65........ I don't see how this is any better or worse.
And what if you become disabled at age 40?
I don't think this'll get through, mainly because congress has a mid term in 2006 and the Repubs will be seriously screwed. So I think moderate Repubs will bring it down. There is also a filibuster opportunity be the Dems in the senate.
yes, I too, am now gonna look into seriously paying my NI Stamp again because of all this.
From what I can gather, this is what Bush wants to do.
He wants you to save money (or a proportion of your SS) in a Mutual Fund or other private Retirement account kinda thing.
At age 65, you take your lump sum, give it to the government and they dole it out to you in small increments.
This to me sounds like an annuity, that screws you if you die early and the government gets to keep your money.
(whereas private annuities offer differing payout options)
Also, the government is still getting the same money they would anyhow, sure you may get a decent rate of return, but they are still gonna control your handouts after 65........ I don't see how this is any better or worse.
And what if you become disabled at age 40?
What happens in the stock marhet goes arse up just as you're about to retire, and you actually have less than you would have in a normal plan....do you owe the government money? Do they give you less benefits?
Do they give you less benefits?
I think this is gonna happen either way
Do they give you less benefits?
I think this is gonna happen either way
True, but if you lose on the stock market, do you get even less than the going rate? Personally I think the whole plan is a cover for reducing benefits.
Three quick things.
1 - Why is Bush so adamant this be done so damn fast? The consensus is it won't get thru, so if for some reason it gets painted as an absolute disaster, all is forgotten before 2006. So it looks like its being intentionally pushed early. That seems to me like the policy isn't the important thing, it's the attempt to do something that is. The Bush/Rove team is extremely smart, and I'm sure a failed attempt to fix this can be pinned on Dems.
2 - Fix Social Security? My arse. What I mean is relax, as far as alot of Republicans are concerned the admin "fixed" Medicare and Prescription Drug problems last term with a pretty naff set of porky-policies. So if that level of fixing is attempted on SS then sod all will happen and they'll call it a sucess anyway.
3 - Harry Reid, Dem Senate Minority Leader (who by the way was very good in his SOTU rebuttal wasn't he? - very pro, unlike deer-in-the-headlights Pelosi) HAS to attack the SS plan and private accounts. Oddly, he proposed a very similar plan himself in 1999. How's this for a quote - "Most of us have no problem with taking a small amount of the Social Security proceeds and putting it into the private sector." Of course now he has to pretend he didn't do any of that.
So in sum, Bush doens't give a toss, and won't do anything anyway and will just pretend he's great, and the Dems man DOES believe in it, and has to pretend he isn't.
How naff.