Insurance isn’t a good stand alone investment. The concept of “portfolio” is the key to understanding the value of insurance. Insurance is meant to make a portfolio of investments stronger. So, a portfolio consisting of a house and homeowners insurance is a good investment. A homeowners policy on it’s own is a bad investment.
Social Security is both insurance and an investment, as I have already stated. However, more people actually use the investment portion of the program than the insurance part. Also, most people rightly think of the program as an investment, rather than insurance.
If you wanted to cancel the insurance aspects of Social Security such as disability or death bennies, then people would probably grumble, but not too much. If you tried to cancel the investment aspect of the program where retirees get benefits then you would see an army of elderly advance on Washington and burn the place down.
The difference which makes SS a Ponzi scheme is that the people who got in first were not putting enough money in to pay for their retirement - they relied on more people coming into the program and using their money to supplement their own retirement income. After the baby boom retires, the number of people entering the system will begin to shrink, making it an increasingly bad deal for late arrivals. That is exactly how a Ponzi scheme works - it depends on future particpants to pay money back to earlier entrants. Eventually, you run out of new participants, and the system collapses.
To be fair, it didn’t start out as a Ponzi scheme, because no one saw the baby boom coming. And it doesn’t have to finish as a Ponzi scheme - at some point we’ll reach a minimum, and probably start increasing again.
The true nature of the problem with social security is that it’s not a true investment vehicle - it’s an entitlement program which makes guesses as to how many people will be in the workforce a generation or two from now, and sets current deduction rates accordingly. That’s guaranteed to cause either overages or shortages in the system. Of course, overages will never happen because if the government found that a demographic shift caused the system to be flush with cash, that money would be spent.
Arguing about whether or not SS is a Ponzi scheme is really just a distraction. It would be more fruitful to debate the merits and shortcomings without using controversial terms like “Ponzi”. If someone is really stuck on that issue, please open a thread devoted to that topic.
The problems with SS, other than what Sam Stone outlined is that it’s a one-size-fits all system that ties up HUGE amount of capital in ultra-consrvative investment vehicles. The rich aren’t really affected, because they have lots of alternatives to invest their money in other places. The poor are stuck with an effectively low rate of return. If that’s what they want, fine-- they can choose US Treasury notes for their Private Accounts. But if they want to invest in other vehicles, they should be able to do so. On that general basis, I’m all for Private Accounts.
But Bush’s “plan” is really only a partial plan, and until he and Congress can come up with a way of addressing the transition costs, it’s hard to say yeah or nay to it. Presently the Dems are stonewalling discussions and (from a political standpoint) why shouldn’t they-- the President isn’t getting much help from his fellow Republicans. It’s that latter part that points to a failure of party leadership.
Isn’t this true only if Social Security is an investment program? When examining the program based on its actual purpose (maintaining a modicum of security for elderly Americans) it seems incredibly successful. The only question is how do we ensure that it continues to be as successful as it is, not how do we scrap it because it isn’t the best vehicle for investing in oneself.
It really appears that folks look at this program in two very different ways, and many seem to regard the well-being of retired Americans as a valuable outcome. It is sad that things have come to this. I wish more people who speak about their love for America had more love for Americans.
Fair point; while I consider that allegation to be absolutely absurd, I’ll drop the argument.
Debaser, yes, my cite included Bush’s name in the questions; that’s a fair point. However, Fox’s polling questions talked about people’s “right” to put “their contributions” into a private account; surely you can see how their own language influenced the answers they got, especially given that most folks don’t understand that the money they put into SS isn’t the same as the money they’ll be getting out of SS?
Even so, remember that Bush won the election this time. If you’re correct–if attaching his name to SS reform is what’s poisoning it–then it speaks of a significant malaise in the administration. Which is what the OP is about.
Honestly, I don’t think that’s the case. I don’t think Bush’s name is dragging SS change down.
You’re right. I knew we were highjacking the thread, and didn’t want to derail things too much. However, when people call me out as a liar, I feel I need to defend myself.
But, Social Security is a ponzi scheme. Just because certain people on the left throw a temper tantrum every time they hear the word “ponzi”, why should we stop calling the program what it is? Sometimes it’s difficult to rise above the level of one’s opponents.
I’ll drop it now, so that the thread has a hope of continuing without sidetrack.
I don’t think the words “right” and “their contributions” are inflammitory. If people disagree with the “right” in question, then they can say so. Putting “their contributions” into private accounts is exactly the matter at hand. Can you think of a way to re-word it that is less influential? It seems pretty matter of fact to me.
Bush is a lightning rod. After the close election anything associated with his name is going to be controversial. This doesn’t speak to the success or failure of his second term. There’s nothing he can do at this point to stop a certain segment of the population from hating him.
A question like “Do you prefer private accounts for your social security contributions to the existing system?” is obviously going to get a much higher response rate than “Do you prefer Bush’s handling of Social Security?” By naming Bush you are limiting the question in a number of ways. Maybe the reader hates Bush. Maybe he loves him, but disagrees with his handling of Social Security reform. There’s a hundred things that can muddy the waters when you make the questions specific to Bush. The fact remains, every cite I can find shows big support from younger workers for private accounts.
Young people want private accounts for their SS contributions.
What is the problem here? Ponzi schemes are illegal because they are fraudulent because they are doomed to crash. You, and the similarly-misinformed Sam, have offered no explanation of why SS is *necessarily * doomed. It is not. It is therefore not fraudulent, and to use the name of a famous fraudster to describe it is inaccurate at best and well-poisoning at worst - if done unknowingly. Now that you know better, for either of you to continue to make that assertion is worse than that, it’s simple lying. Clear now? Or are you willing to take the time to go find out what the term means before using it again? You too, Sam.
What part of “It isn’t your own money” don’t you understand? It’s a transfer tax, not an investment plan. Where the fucking hell did you get the idea that it was? You’re passing on some of your money to other, generally older people, and someday others will do it for you. That’s it.
You can still stubbornly insist that “Young people want private accounts for their SS contributions” if you like, but you’ve already been shown polls more recent than your 1999 ones that show the opposite. Can you do any better, or do you still plan to keep on railing?
I can think of about two dozen ways: the other polling questions asked on my previous cite used different language.
“Right” isn’t inflammatory: it’s influential. Phrase something as a right and Americans are unlikely to be against it. Phrase something as an option, and you’ve got less weighted language.
“Their contributions” makes it sound as if the contributions belong to the person contributing. They don’t. They’re a tax, not a contribution. Consider an AP phrasing of the same question:
At the same time, there’s a certain segment of the population that loves him. That’s what “controversial” means: there are folks on both sides. I don’t think what you’re describing is going to have a strong effect.
In any case, as President surely his overall influence on issues should be positive: he’s got a better bully pulpit than literally any other single human being on the planet (with the possible exception of the Pope). If his use of the bully pulpit is having the net effect of driving people away from his viewpoint, then the Republican party is in delightful disarray.
I see your point. I don’t think the word “right” is nearly as influential as tying Bush’s name to the question, but it is a bit of a loaded word. However, I do think people should have a “right” to make their own investment choices, including how thier Social Security funds are invested.
But, they should. That’s what sucks about the existing program.
That phrasing is horrible. It ties Bush’s name to the subject at hand, which is highly inflammitory (one way or the other). It states “Depending on what happens to those investments in stocks and bonds, their Social Security benefit could be higher or lower.” This is worded very poorly. The amount will vary with the swings in the market. But, it will not be “lower” than the existing payouts. When you are dealing with a 20 year or longer timeline the stock market has never had a negative return. Bonds are even more sure of a postive return. The return might “vary”, but saying that it might be “higher or lower” implies that regular social security payments might overperform a privatized account. This simply isn’t possible.
You make it sound as if the president exists in a vacume. He’s trying to convince poeple that private accounts are a good thing. But, at the same time there is a whole left wing out there sending the opposite message. They have most mainstream media sources behind them still and are effectively countering the president’s message. Also, huge groups like the AARP are opposed to any change in the status quo of Social Security and are fighting hard on this.
It’s impressive to me just that Bush has gotten this far with Social Security. The issue wasn’t even on the table before and now it’s at the forefront. Polls show it’s of top importance for Americans now and most young people are in favor of private accounts. The fact that Bush hasn’t gotten a 100% immediate success doesn’t mean that the Republican party is in disarray. It’s to be expected. This is going to be a tough fight, and we’re just getting started. I’d be wary of underestimating Bush on this.
I understand you believe that; however, the fact that the wording matches your opinions doesn’t mean the wording is unbiased :).
I’m no economist, but I seem to recall certain retirees losing their entire retirement fund in the S&L crisis of the eighties and the Enron debacle of the late-90s/early Naughties. Why would folks who divert SS taxes into private accounts not face the same peril?
Again, other polls show that most young people are NOT in favor of private accounts. Whether or not you agree with the wording of these other polls, I think the issue is sufficiently unclear that you ought to quit repeating this statement as if it’s settled.
All he’s succeeded in doing is increase the size and solidity of those of us who think it’s a bad idea, detailed or not. Before, there was some general willingness to consider the issue. Now, there is not. The drown-the-government ideologues are in *worse * shape on this now, not better. Bush has succeeded in making any substantive changes politically impossible. I will agree that’s an achievement, though.
Bullshit. Your only cite for that is from 1999. All *recent * ones presented to you here show exactly the opposite. Do you consider yourself an honest debater?
Of course. A good question might be: “It should be a right for a person to invest portions of their social security payments into private acccounts.”
Then the reader could choose for themselves if they agree that it should be a right.
The S&L scandal involved banks going under. This isn’t really applicable to social security. These days you would only be adversly affected by a bank insovlency if the bank in question is not FDIC insured, which is rare, or if you have a crapload of money in the bank and are over the insured amount.
A company going under like Enron would only have a big negative effect on an investor if they were holding a single stock that accounts for a large percentage of their portfolio. No one that I’m aware of is advocating individuals be allowed to invest social security funds into single stocks. They would buy index funds, or regulated mutual funds. These funds never have more than a fraction of a percent invested in any one company. A single bad apple like Enron going under would not have an effect on such types of funds.
All the polls I’ve looked at do. The one poll that didn’t was more about Bush than about private accounts. I’ll try and find some more relevent polls later…
[quot]Bullshit. Your only cite for that is from 1999. All recent ones presented to you here show exactly the opposite. Do you consider yourself an honest debater?
[/quote]
Bullshit yourself. Check out the page I cited earlier: it lists Fox results from LAST WEEK that support his contention. You may object to the wording of Fox’s questions, but it is patently false to claim that all recent cites have shown Debaser to be wrong.
Hmm. You may be right. Nonetheless, I’m not convinced that it’s an impossibility for people to lose money via the proposals that Bush has set forth. We didn’t predict Enron before it happened, and we can’t predict what future scandals will plague Wall Street. I’m not confident that anything is 100% safe, not even index funds.
Oh, c’mon. It wasn’t more about Bush than about private accounts: that’s just hyperbole. It mentioned Bush, but it was clearly about Bush’s proposals.
