Bush Eyes Plan Using Bulk of Payroll Taxes

[papau]

Per Michael Tanner, director of the Cato Institute's Project on Social Security Choice, the plan will allow younger workers to invest nearly $2 of every $3 from payroll taxes in private accounts, up to $1,000 to $1,300 annually, as it cuts traditional benefits for younger workers (Bush Commission cuts were 0.9% to 45.9%, but Bush has no numbers now) hoping but not guaranteeing great returns will cover the difference (they have not even shown how great those returns must be to break even!), and as $2 trillion over 10 years is found for "transition costs. Add in the move from wage growth adjustment to benefits to CPI adjustment and a worker retiring in 2075 will see a cut of 45.9% percent in benefits - With SS private accounts maybe paying a large fraction of the difference - all this to fix a system that is not broken.

If they want voluntary add on private accounts via the payroll tax system, why not - heck Clinton was promoting these 401k like options. But this carve out by Bush is just a cover for not paying back the Social Security Surplus that was stolen to finance the tax cut for the rich(meaning avoiding redeeming the SSTrust fund Bonds in 2018-2042 period)


http://hosted.ap.org/dynamic/stories/S/SOCIAL_SECURITY?SITE=FLTAM&SECTION=POLITICS&TEMPLATE=DEFAULT
http://story.news.yahoo.com/news?tmpl=story&cid=513&ncid=716&e=6&u=/ap/20050105/ap_on_go_ot/social_security

Bush Eyes Plan Using Bulk of Payroll Taxes

Jan 5, 9:13 AM EST

By LEIGH STROPE Associated Press Writer


WASHINGTON (AP) -- President Bush is expected to unveil his plan for a Social Security overhaul in late February, with administration officials eyeing investment accounts that would hold two-thirds of workers' annual payroll taxes.

An administration official, who spoke on condition of anonymity, said the size of the private accounts could be similar to those in a proposal by Sen. Lindsey Graham, R-S.C., and the main plan from Bush's 2001 Social Security commission.

The White House cautioned Tuesday that Bush had not decided on a specific plan.

But the administration is leaning toward letting workers divert 4 percentage points of their 6.2 percent in payroll taxes - almost two-thirds - into investment accounts, up to $1,000-$1,300 a year, the official said. The remainder of the workers' payroll taxes would continue going into the system.

Graham's plan calls for annual contributions to be capped at $1,300, while the commission proposed a $1,000 cap.<snip>

[gatorboy]

1. Someone smarter then I help me here...

What sort of "investments" would my money be going towards, anyway?

[LynnTheDem]

3. Whatever you bet on...just don't put your future nestegg on another ENRON

Coz gee, then you'd just be shit out of luck!

Well hell, maybe you can manage on 45% of the bennie retireds get now. That would be what, some $400-$500/mth? Yeah that's doable.

Of course, if we actually DID NOTHING to SS, you'd still get 81% of your promised pay-out from 2052 onwards.

And to get 100% for everyone until the year 2100? That would cost 0.54% of our GDP. Less than what we're spending now in Iraq.

Yep. Wall Street LOOOOOOVES bush's SS plan.

[Mountainman]

9. Basically you will be trading a sure thing for a risk at no guarantee of

a return. The only ones to benefit from this will be the investment brokers who will charge you a fee which you currently don't have to pay.

Follow the money. You probably are not sophisticated enough to make trades that will protect your nest egg and if it's gone it's gone. Also you will have to actively manage your account which you don't have to do now.

[Kagemusha]

2. Btw, that's $2 out of every $3 from the worker contribution

There is of course, also an employer contribution which they don't want to touch under this plan.

Just so it's crystal clear. Because otherwise Freepers will hand you your lunch in an argument.

[74dodgedart]

4. As long as you don't invest in companies that hire gays or do stem cell

research

[74dodgedart]

5. How much of a burden will this be on bookkepping for a small company?

Sounds like more work to me...

[papau]

6. Expenses are expected to increase by 30% of the amount set aside

but what the hey-

you will have "choice" - of index funds.

[antigop]

7. papau--some questions/comments

1) >>But the administration is leaning toward letting workers divert 4 percentage points of their 6.2 percent in payroll taxes — almost two-thirds — into investment accounts, up to $1,000-$1,300 a year, the official said. The remainder of the workers' payroll taxes would continue going into the system.

>>


What about the employer contribution? When it says "The remainder of the workers' payroll taxes would continue going into the system", does that include the employer contribution?


2) Where does the money come from to fund the Medicare prescription drug bill scheduled to take effect in 2006? I haven't seen anything as to how they will pay for this.

[papau]

15. Since they do not say what they will do with the empoyer portion, I

assume that there is no change

But there is always the chance that they are chasing a 4% across the board cut in the wage level in the US (SS employer portion is really just part of your wage) and planning a huge benefit cut to offset - or huge borrowing.

As to the medicare 2006 new drug benefit -

the only real solution is single payer universal health - but the Bush plan is to scream crisis (there are no new taxes scheduled)- and "mondernize" Medicare out of existance, telling folks to save money each year in a Medical Savings Account with your local Insurance company -

and GOOD LUCK if you get sick!

:-)

I love having Grover Norquist as my neighbor down the street - I can drive by and focus evil thoughts on his place each day! (these ideas are his "growth" group proposals)

[antigop]

17. Yes, the REAL solution is single payer universal health..

but they passed this Medicare prescription drug bill, scheduled to take effect next year, and they never passed a payroll tax increase to cover the expense.

I think the proverbial you-know-what will hit the fan next year (if not before) because of the deficits these guys are building.

[antigop]

8. Notice what they DIDN'T SAY

>>
Also, the administration must identify $800 billion to $2 trillion over 10 years to continue funding retiree benefits once the payroll taxes are diverted into accounts.
>>

They DIDN'T SAY how much they will have to raise taxes to pay off the debt and interest for the $800 billion to $2 trillion that they borrow.

[Cobalt Violet]

10. I hope the 20 somethings supporting this acquire a taste for dog food.

They will be living off of it.

[Lerkfish]

11. they'll be lucky to find dog food.

consider that health care will be inaccessible to larger and larger groups of people, so maybe the silver lining is not many will survive to retire. (/sarcasm)

[LynnTheDem]

14. Now THAT sums up bush's ss plan perfectly.

Absolutely perfectly.

And if bush gets his way, a whole buncha Americans are going to discover that for themselves.

[noshenanigans]

12. Can I put my money in a mattress instead?

I feel about 1,000 times better sitting on top of it yelling at kids to get off my lawn than I do even attempting to navigate that plan.

[TahitiNut]

13. This "plan" is chock full of maggots.

What's to prevent a "younger worker" from choosing a (so-called) private account and then changing to a full-coverage option soon enough to 'game' the system?

What happens when that "younger worker" reaches 67 and is penniless? Does anyone really believe we, as a nation, will just throw them to the curb?

What I find particularly fascinating is that the proponents of this fraud are quick to assure anyone over 50 that they won't be afftected (which is total bullshit anayway). Well, if their proposal is such a great deal then why would they tacitly agree that it'd be a disaster for older workers - workers largely at the height of their earning power and among the largest payers into the current system?

[papau]

16. penniless private account problem hit Brits - and they are increasing

welfare - so dignified retirement becomes begging the Gov for handout.

The gaming of the system is prevent via the "voluntary" option being a one time choice - once you make it - and you must make a choice - you are locked in.

Indeed Bush lower disaster estimates are based on hoping few folks will actually go to private accounts - while he really hopes for 100% and has designed the system to make staying in a very bad choice economicaly for the worker. But if he assumes 100% take private accounts, he as a $2 to 4 trillion transition cost over 10 years to discuss.

So the media let's him lie - repeating the silly $800 billion low ball number that Rove puts out - not realizing that is the price only if very few actually take private accounts.

[maddezmom]

18. duplicate topic

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=1121501