Thursday, January 06, 2011

Republicrats Target Social Security

Written by Graeme Anfinson
Thursday, 06 January 2011

The ruling class has always been telling us that we need to make cuts in order to eliminate the national deficit. They have talked about cutting taxes and government spending in order to accomplish this. In addition to this, they are in favor of cutting "entitlements" such as Social Security and raising the retirement age, thereby making the working class pay for their crisis.

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troutsky said...

The problem with Graeme's analysis is it perpetuates the notion the capitalist government can be trusted to manage these accounts, and then society.

I say, lets watch Wall Street/Washington dismantle every benefit program the people paid for and see how far they will go.

Frank Partisan said...

Troutsky: You might get your wish,

The first Social Security bill in the US, was proposed by Senator Lundeen, of the Farmer-Labor Party in Minnesota.

Capitalists have less room to maneuver for sure.

SecondComingOfBast said...

Social Security should be privatized. I'm going to be working on a post real soon explaining why and how it would be best. Of course I do understand why leftists would be opposed. After all, if you privatize Social Security, there's a pretty good chance the system could go broke. Totally bankrupt.

Oh wait!

Frank Partisan said...

Pagan: After all, if you privatize Social Security, there's a pretty good chance the system could go broke. Totally bankrupt.


It's a myth that it's bankrupt. It needs corrections like Bill Gates only pays Social Security on his first $100,000.

SecondComingOfBast said...

They still need to privatize it. It would pay a higher percentage, plus the fucking government couldn't get their god damn hands on it to spend on other programs. Which, by the way, is exactly why fucking Democrats don't want to see it privatized. That would mean the end of their ability to engage in vote buying by way of social spending programs. Without the ability to raid the social security trust fund, that little scam is out the window for good.

Frank Partisan said...

It was raided during Reagan's tenure.

Not many would openly call for privatizing Social Security. Like Bush they would sugar coat the language.

Calling for privatizing Social Security, during a period of bailouts is odd. Privatization only benefits Wall Street investment firms, the main source of $$ for Obama.

SecondComingOfBast said...

No, the main people it would benefit are retirees, who instead of getting around a two and a half percent return would get at least one whole percent higher than that, and conceivably more. You could start them out at a base amount, say ten percent of their earnings per month, and give them the option of investing more if they want to. People would probably, under that scenario, draw possibly twice as much as they ordinarily do now, depending on how much of their monthly earnings they decided to invest, especially if you gave them the freedom to adapt their contributions on a monthly basis.

Social Security is a fucking dinosaur. That ain't no fucking living behemoth you're seeing, that's a pile of old bones held together with bailing wire and screws.

SecondComingOfBast said...

Oh, and by the way, if Social Security was privatized, then when you die, you can leave it to your wife and kids, and she or they can continue to draw the exact same amount for as long as she lives, as long as the principle isn't touched.

Frank Partisan said...

The principle will be touched.

Stocks go up and they go down as well.

Larry Gambone said...

Just ask the Chileans about the wonders of privatized social security. One month you might have enough to live on, next month you don't.

SecondComingOfBast said...

Sounds to me like they're measuring the monthly payments out as a reflection of the monthly dividends. Yes, the stock market has its ups and down but there are ways to minimize that, basically by paying out a set dividend, which should ideally be less than the monthly average, or no more than that. That way it would balance out overall.

It also depends on what stocks and bonds the money is in. A good, dependable mutual fund is the best way to go. There is another kind of fund, I can't think of the name of it, but it pays better dividends than mutual funds by merely cutting out the middle man I think.

Also Larry, you should bear in mind that the US guarantees bank deposits up to I think 200,000 dollars, though it could be up to 250,000 dollars now. Plus, I think they will guarantee half of any amount over that up to a certain amount. So that too would make a big difference, as I doubt the Chilean system has the equivalent FDIC coverage.

The best thing about privatizing it is, if you are married, you can leave it to your wife. And I mean the full amount, not just half or a third, whatever Social Security allows now. Your wife will be able to draw on that same amount, as long as she lives (in addition to her own if she has one), and when she dies, it can go to your children, divided up to add to their own, etc.

At least, that's how the system should be set up. After all, what's the benefit of setting up a private account if you don't have some kind of assurance that your family will benefit from it after you're gone.

roman said...

Index funds are the funds with the lowest fees structure.
I agree with Pagan, privatization is the way to go. Start with 10%, have only conservative instead of highly speculative funds be allowed and loosen restrictions on passing down this portion to beneficiaries.
I believe Congress members have been enjoying this kind of plan for many years now. Why should'nt we?

SecondComingOfBast said...

Yeah, its index funds. Hell, it took me forever to remember mutual fund. But yeah, the restrictions could be significantly loosened. After all, the government wouldn't have it any more, all they would do is regulate it, just to make sure nobody fucks with it by putting it in high risk ventures.

The ten percent sounds good. People could draw at least as much off ten percent as they draw now on, what-12 1/2 percent? Maybe even more. Plus, you could give them the option of putting in more if they want, as much as they want out of any given pay check up to say as much as twenty percent. I think you should have some limit on what they can voluntarily put in.

Another thing, everybody should have to put in the base amount, otherwise it just wouldn't work. Too many people would opt out, and then we're all stuck with the tab for their care when they get older. Ten percent is reasonable, and twenty percent would be a reasonable limit.

What most people don't get, that aren't familiar with the stock market, is that a good mutual fund will stay secure even in the worst of times, as a general rule. In a good many cases, they will even continue to pay dividends, albeit perhaps not quite as much.

The thing to stay away from right now is bonds, for obvious reasons, especially municipal bonds, in my opeinion. That's a shame, because back in the golden age, municipal bonds could in some cases pay great returns.

Bonds in general don't pay that high a rate however, even in good times, otherwise known as the past. They were steady, and used to provide a bulwark against a bear market.

Now they are as big a gamble as any single stock you care to name.

Ducky's here said...

They are trying to make the working class take the short straw in Tunisia and that looks ready to burst.

Look for Egypt to face the same problem. Somethings got to give.

Ducky's here said...

Giving Wall Street more free chips for the tables ain't the way to go. Got that right, trout.

First the fees then a fun ride for the little guy. Try Space Mountain at Disneyworld, cheaper.

Larry Gambone said...

We have had 25 years of privatization here in Canada and the result is the opposite of what was originally claimed. Costs are higher than inflation and/or and services are worse. Furthermore, much of the income that used to go to workers and thus circulate in the community, is now shunted off to some corporate headquarters say in Paris or NYC. From this experience - and I should add the experience in other countries where the results have been similar, I could only be opposed to privatization of anything. The way to go is not to privatize, but instead de-couple these agencies from the state bureaucracy and make them genuine social institutions. The way to do that is to have them run by elected boards made up of worker, community and user-members.

SecondComingOfBast said...

That could be a possibility, Larry. The monies will still have to be invested in something like mutual or index funds, something that will make a profit on investment. It's just a matter of who is going to manage it, and regulate it so as to prevent misuse and abuse.

Ducky's here said...

Good post, Larry.

roman said...


I'm having a little problem with some of the semantics. You said The way to go is not to privatize, but instead de-couple these agencies from the state bureaucracy and make them genuine social institutions.
I was under the impression that any non-governmental institution would be considered a "private" one. Up to reading your comments, there were only two distinctions in my mind. They were government run (resulting from decisions made by democratically elected individuals for "social" improvements) or privately run. You have introduced a third and called it a "social" institution.
How would there be any difference in the management efficiency and quality and checks on corruption?
Is giving it a different name and selecting from a different pool of management individuals going to insure we don't have the same or worse run system than the one we have now?
I strongly suspect that if we did de-couple the system, the government would still need to "pull the strings" because who would be charged with the responsibility to regulate and more importantly, ENFORCE the rules? Would you then need a de-coupled "fraud enforcement" section and "social" police force? More expensive bureaucracy?
I'm as frustrated by the government's clear lack of social consciousness and sense of responsibility as you but wouldn't it be better to keep fine tuning the system instead of dumping it all for something that might be even worse?

Larry Gambone said...

Stakeholder coops is what is am referring to. And while coops are not perfect - as nothing is - their track record for corruption and undemocratic process is vastly better than either the state or its corporate off-spring. The best defense against corruption is more not less democracy.