1.28.05
Watched a hearing on social security hoted by the Senate Democratic policy committee. A few points raised stuck out in my mind: first, the lack of a credible “crisis” that would drive privatization. that at the current course, with no changes to policies, the system will still remain in good shape at least until 2042, give or take depending on which numbers you use. In fact, the system has been running surpluses, 140B in 2004, and SSA may be the only federal fund that might be running a surplus.
Secondly, the concept of private accounts for retirement benefits is not a novel idea, in fact they are already in place, called 401Ks and IRAs. I liken it to gambling with your retirement. 30% of SS goes to disabled individuals and to families that have lost a parent or loved one. I assume that this would apply to the families of soldiers who die fighting in the war.
Two international examples of privatization were mentioned, Britan and Chile, both of which have been failures. One of the witnesses testified that the Chilean SSA administrator is telling people not to retire until the stock market picks up again. UK has been swamped with administrative costs. Basic limitations and externalities of capitalism and risk. The investment firms that manage stocks are not interested in providing revenue or security for people, only making profit.
Possbile adjustments or changes in policy that could be enacted in lieu of privatization: There is a salary cap on SS, at 90K. 6% of workers are at the 90K+ level. raising this cap to 144K would bring new revenue, especially from a group of taxpayers that have benefitted greatly fromthe recent tax cuts. Another would be to allow the SSA to diversify their investment strategy for the trust fund to include more than US government bonds.
It is a littel strange, coming from a party that won in 2004 based on “morals and values.” It brings up the diea of divide and conquer - drive a wedge between older and younger workers, children and parents. favor the wealthy and rich, people with stock portfolios and wall street brokers against people who rely on wages.