Obama creates bipartisan fiscal commission on national debt

[MannyPim]

"Money has to go out to pay current benefits, and that money comes in from curent contributions"

Ah, you have just described the classic Ponzi scheme....

 

[MasterComposter]

Then WHY NOT let people have the choice ??? According to your logic, no one would take that option anyway... so what's the harm ?

Personally, I don't really have a fundamental disagreement with the basic idea of allowing an option, but there are potential problems. One is that people will potentially make bad choices, or will lose their nest eggs in the markets despite having made good shoices, and the government will end up having to pay to support them anyway, without having recieved their contributions to pay for that support.

But back to the topic, how does allowing people to divert contributions from Social Security into private accounts help with the deficit and the debt?

 

[MasterComposter]

"Money has to go out to pay current benefits, and that money comes in from curent contributions"

Ah, you have just described the classic Ponzi scheme....

Ponzi schemes, annuities and insurance.

 

[MannyPim]

Then WHY NOT let people have the choice ??? According to your logic, no one would take that option anyway... so what's the harm ?

Personally, I don't really have a fundamental disagreement with the basic idea of allowing an option, but there are potential problems. One is that people will potentially make bad choices, or will lose their nest eggs in the markets despite having made good shoices, and the government will end up having to pay to support them anyway, without having recieved their contributions to pay for that support.

Why would you assume that the government has to pay for them anyway ? An "opt out" option is just that: you opt out of receiving government benefits. If you make bad decisions, tough for you... go see your friends and family and see if they will help you out.
By the way, it is NOT the government's role to keep us or save us from making bad decisions. Believing the government has or shoudl have any say in how we run our lives is a fundamental logical flaw in a Nation based on Freedom.

But back to the topic, how does allowing people to divert contributions from Social Security into private accounts help with the deficit and the debt?

SS, as you know is going bankrupt. It is a FAILED experiment based on faulty logic, bad assumptions, corrupt practices and anti-Constitutional ... It MUST be shut down before it crashes our economy... How does one shut it down ?
First off: promises have been made and people have forcibly contributed over decades of their work lives in order to be eligible recipients of those promises. Promises made must be kept. But new generations must be given the option to opt out of this program... In my opinion, opting out, should be implmented immediately at 100% of yoru contribution. But I can accept doing it gradually over one or two generations to avoid the expected problems with a sudden shift in policy and to adjust to the new environement over time.

 

[abq_farside]

Then WHY NOT let people have the choice ??? According to your logic, no one would take that option anyway... so what's the harm ?

Personally, I don't really have a fundamental disagreement with the basic idea of allowing an option, but there are potential problems. One is that people will potentially make bad choices, or will lose their nest eggs in the markets despite having made good shoices, and the government will end up having to pay to support them anyway, without having recieved their contributions to pay for that support.
....

I never had a huge problem with being able to take a percentage of my contribution and allowing me to invest it where I wanted. The problem I had with the Bush plan was they were telling me who I could invest it (a limited number of players in which they decided) with while I wanted to add it to my 401K or some other plan I may have already had in place.

 

[MannyPim]

Then WHY NOT let people have the choice ??? According to your logic, no one would take that option anyway... so what's the harm ?

Personally, I don't really have a fundamental disagreement with the basic idea of allowing an option, but there are potential problems. One is that people will potentially make bad choices, or will lose their nest eggs in the markets despite having made good shoices, and the government will end up having to pay to support them anyway, without having recieved their contributions to pay for that support.
....

I never had a huge problem with being able to take a percentage of my contribution and allowing me to invest it where I wanted. The problem I had with the Bush plan was they were telling me who I could invest it (a limited number of players in which they decided) with while I wanted to add it to my 401K or some other plan I may have already had in place.

That doesn't make much sense...
A LITTLE BIT of choice is ALWAYS better than no choice at all...
If you didn't like the investment vehicles available under his plan, then you were perefectly able to NOT TAKE advantage and keep paying your full share of SS taxes.
The reason that he limited the investments available was precisely so that the government could closely watch and regulate those investments so that people would not put their money at risk in hopes of higher gains and end up loosing it.
As I said, I don't agree that the government's job is to make your decisions for you or keep you from making bad decisions and suffering the consequences, but the net result of Bush's plan was an EXPANSION of choice....

 

[bearack]

This thread is about the bipartisan fiscal commission on national debt and the budget deficit. Are these ideas about privatizing social security or allowing people to invest some portion of their social security withholding related to reducing the deficit and the debt? If so, how much will it save? How do you achieve it politically?

When you have more going out than coming it, that would be considered a "deficit" or if you like, "in the red" if that is better suited.

I understand the concept of deficits and being "in the red." I'm asking how "privatizing" Social Security or allowing people to invest some portion of their social security withholding reduces the deficit and the debt. How much does it save?

For example, if starting today you allowed everyone to divert all of their Social Security contributions to a private account instead of to the Social Security system, how would that affect the deficit and the debt? Seems to me it would balloon the deficit and debt astronimically. Without new contributions, where is the money going to come from for paying current benefits? Money has to go out to pay current benefits, and that money comes in from curent contributions. Wothout current contributions coming in, more goes out than comes in, and as you said "When you have more going out than coming it, that would be considered a "deficit" or if you like, "in the red" if that is better suited."

Explain to me how this idea helps with the deficit and the debt.

The debt is eliminated from the government coffer but not transfered. The investment then will be the on the hands of the individual and done right (give them the tools to make it right), an individual investment could grant greater returns than any SS program ever would. Right now, we have some seniors that paid about 1/4 to what has been paid out to them. That's great for the comsumer getting a 1000% plus return but bad, BAD for the government.

The current SS system is tainted to where is will always operate in the red. By 2035, 2 - 3 trillion in the red that is while not providing enough to seniors to even live off of.

 

[bearack]

Then WHY NOT let people have the choice ??? According to your logic, no one would take that option anyway... so what's the harm ?

Personally, I don't really have a fundamental disagreement with the basic idea of allowing an option, but there are potential problems. One is that people will potentially make bad choices, or will lose their nest eggs in the markets despite having made good shoices, and the government will end up having to pay to support them anyway, without having recieved their contributions to pay for that support.

But back to the topic, how does allowing people to divert contributions from Social Security into private accounts help with the deficit and the debt?

People make bad choices even under a SS program. There are and will always be idiots. Some will go out and buy a 50k Cadi while getting a $1,500 monthly check. Not matter what you do, there will always be those out there. Some will have a $2,000 a month crack habit and some will spend their money wisely.

There are AMPLE safe investments out there. I have 3 WLP that have at it's lowest a 0 return and max's at 11%. My average interest over the last 7 years has been 8% and that's with earning 0% the last 2 years. In about 10 years, these become self sufficiant policies, meaning, I no longer have to contribute while it grows. Isn't that a better retirement policy that hoping for SS?

 

[MasterComposter]

[SS, as you know is going bankrupt. It is a FAILED experiment based on faulty logic, bad assumptions, corrupt practices and anti-Constitutional ... It MUST be shut down before it crashes our economy... How does one shut it down ?
First off: promises have been made and people have forcibly contributed over decades of their work lives in order to be eligible recipients of those promises. Promises made must be kept. But new generations must be given the option to opt out of this program... In my opinion, opting out, should be implmented immediately at 100% of yoru contribution. But I can accept doing it gradually over one or two generations to avoid the expected problems with a sudden shift in policy and to adjust to the new environement over time.

Social Security does have problems. I think they can be fixed with minor tweaks as they were under Reagan. I think that by changing how cost of living adjustments are made each year so that benefits don't rise as quickly and raising the cieling where payroll tax deductions stop so that contributions increase for those that currently top out, the program could be made to work perpetually. This would represent a spending cut and a tax increase to bring the program's budget into balance and elimiate the program's deficit (the program itself does not currently have a debt). I think it is politically achievable.

I don't think your idea actually deals with the budget deficit --- I think it increases the deficit. It may be politically achievable, but I don't know for sure, and I tend to doubt it.

This thread is about the commission. They are tasked with finding real solutions to the deficit and debt, not ideological or philosophical approaches to programs -- this is why it is bipartisan. They are tasked with finding solutions that are politically achievable -- this is why it is bipartisan. Social Security is on the table, so it is a fair topic for discussion, but please approach the issue from the point of view of how to reduce the budget deficit and debt and how your proposed change would be achieved politically. Otherwise your discussion is off topic. For example, arguments that social securioty is wrong becaseu it is wrong to force people to participate in a program against their will are for a differnt thread, because those arguments are philosophical and ideological, not based in how to reduce the deficit.

 

[MasterComposter]

For example, if starting today you allowed everyone to divert all of their Social Security contributions to a private account instead of to the Social Security system, how would that affect the deficit and the debt? Seems to me it would balloon the deficit and debt astronimically. Without new contributions, where is the money going to come from for paying current benefits? Money has to go out to pay current benefits, and that money comes in from curent contributions. Wothout current contributions coming in, more goes out than comes in, and as you said "When you have more going out than coming it, that would be considered a "deficit" or if you like, "in the red" if that is better suited."

Explain to me how this idea helps with the deficit and the debt.

The debt is eliminated from the government coffer but not transfered. The investment then will be the on the hands of the individual and done right (give them the tools to make it right), an individual investment could grant greater returns than any SS program ever would. Right now, we have some seniors that paid about 1/4 to what has been paid out to them. That's great for the comsumer getting a 1000% plus return but bad, BAD for the government.

The current SS system is tainted to where is will always operate in the red. By 2035, 2 - 3 trillion in the red that is while not providing enough to seniors to even live off of.[/quote]

I still don't see how your idea deals with the deficit. I don't know what you mean by "The debt is eliminated from the government coffer but not transfered."

It seems to me that if you eliminate SS contributions by allowing people to divert them to private acounts, but still pay out the benefits to current SS recipients, then that INCREASES the defict, not decreases it.

 

[R1]

I think there are two different situations for contributions:


A) In one, the government continues to take the donations (contributions) from U.S. workers.
The government then invests the pool as it sees fit. During market lows, in puts money into
stocks and U.S. companies, and during market highs, it takes profits and invests in U.S. bonds.
It's a shortened story. What I mean is that the government invests the money in the private sector.

B) In the other situation, the government would not get the donation contributions from U.S. workers, but
merely a yearly proof that each worker has put in a certain percentage of his/her income into an
investment which cannot be used until retirement age, unlike IRA's, which can be raided by paying a small
10% penalty.

 

[abq_farside]

I never had a huge problem with being able to take a percentage of my contribution and allowing me to invest it where I wanted. The problem I had with the Bush plan was they were telling me who I could invest it (a limited number of players in which they decided) with while I wanted to add it to my 401K or some other plan I may have already had in place.

That doesn't make much sense...
A LITTLE BIT of choice is ALWAYS better than no choice at all...
....

Sorry, but in my world one is allowed to agree with a idea but disagree with its implementation.

But back on topic - I am not sure if allowing people to invest a percentage privately would help or hinder the SS deficit/national debt unless corresponding cuts to current SS benefits were made across the board.