Friday, April 15, 2005

Social Security Debatin'

This note appears in the April 15, 2005 Appleton Post Crescent.

Private accounts will doom Social Security

In an April 8 letter to The Post-Crescent, Joseph Cahill declares flatly that private investment will save Social Security.

AARP’s examination of the issues has led us to the opposite conclusion: Any diversion of payroll taxes out of Social Security into private accounts threatens the future of the entire program, introducing risk and uncertainty in place of guaranteed benefits that have protected American families against poverty for 70 years.

Remember, all the privatization proposals now circulating promise everyone age 55 or older that their benefits will not be affected. Draining money out of Social Security into private accounts in order to make good on those promises will force the government to pile up at least $2 trillion in new debt.

Even President Bush concedes that siphoning money out of Social Security into private accounts will do nothing for the program’s long-term solvency. But AARP welcomes Mr. Cahill’s commitment to protecting and strengthening Social Security for future generations of American workers and their families. That’s why we started our campaign in the first place.

AARP believes that retirement security rests on four pillars: Social Security; pensions and savings; current earnings; health insurance. Prudent investment can play a key role in retirement planning, but as a supplement to Social Security, not as a substitute for it.

D’Anna Bowman,

State Director,

AARP Wisconsin,


The most ridiculous quote is "...but as a supplement to Social Security, not as a substitute for it." Whooooaaaa Nellie! Prudent investment is not a supplement to Social Security I would state it the other way around! Social Security is not a whole lot of support. If a retirement is planned for properly then Social Security would be the beer money. That is the sad thing too many people went through life thinking Social Security would make their retirement life free and easy and did not save anything.

There really is not a whole lot of meat in D'Anna's letter. It is full of platitudes and soundbites. In fact the anti-Privatization side has been on the edge of deceitful about their case. Powerline notes:
The Democrats have been talking substance when it comes to social security. But the MSM-oriented Annenberg organization finds that they are doing so dishonestly. Specifically, it finds that the Dems web-based "calculator," which purports to tell people how much they will lose under the president's privatization plan, is "rigged" because it is "based on a number of false assumptions and deceptive comparisons." The "calculator" first appeared on the web site of Minority Leader Harry Reid. Apparently it now appears on the web sites of 16 Democratic Senators, as well as that of Americans United to Save Social Security, a coalition that includes the AFL-CIO and

Among other things, Reid's calculator assumes that the value of stocks will increase at a rate 3 percent higher than the rate of inflation. Over the past century, however, the average rate has been 6.8. It tries to justify low-balling stock gains in this way by claiming to rely on assumptions used by the Congressional Budget Office. However, as the Annenberg piece shows, the CBO actually assumed a 6.8 percent future return on equities.

It is only going to get worse. One cartoon I saw had two old people opening up their checks only to exclaim "Instead of a check, its Enron stock!" simply put a lie.

The baby boomers are not just going to strain our national Ponzi Scheme (whooops Social Security) but they are already straining our medical system. I bet in my lifetime (I am 37 almost 38) I will see a medical services glut, probably about the time I will need it most.

Once again the left shows its mistrust of the people. Very early in my life I do recall when people were not allowed to pump their own gas. Too dangerous (at least that was the excuse given) but we do just fine. Same with our money.

Too dangerous for you to care for your own money, give it to us, your friendly government. We will invest it wisely, no we will not spend it! We plan to invest it in treasury notes!

Do you know what a treasury is? Do you have any "envelope funds"? I do, I take money from my bank account and segregate it (for whatever purpose). The existence of my fund does nothing to increase my wealth. In fact I borrow from that fund from time to time, and when I pay it back I pay it back with interest (simple and the rate is 50%). Does that make me wealthier? No it doesn't and this is exactly what happens when the government buys treasuries with Social Security, it is loaning money to itself that it has to pay back with interest.

If we could invest a portion of our social security funds even in our local bank's certificate of deposit (CD) we would be creating wealth instead of playing silly accounting games. A much better proposition for the owner of the funds and the nation as a whole!