Social Security needs to be fixed because its racist

Expect plenty of disagreement. Just keep it civil.
Dob
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Social Security needs to be fixed because its racist

Postby Dob » Wed Jan 26, 2005 2:55 pm

Here's the latest tactic from the Bushies. From the LA Times, edited by me for brevity.

WASHINGTON -- Race became a significant factor in the debate over Social Security on Tuesday as President Bush told African American leaders that the government retirement program shortchanged blacks, whose relatively shorter lifespan meant that they paid more in payroll taxes than they eventually received in benefits.

Bush's comments came during a private White House meeting with 22 black religious and business leaders who backed his reelection last year -- marking a new line of argument in his attempts to win support for adding worker-owned investment accounts to Social Security. The conversation demonstrated the White House's determination to build on outreach efforts to blacks that proved effective in battleground states last year, adding Social Security to issues -- such as opposition to same-sex marriage and support for faith-based social programs -- that Republicans believe can provide common ground with black conservatives.

White House officials did not release a transcript of the hourlong meeting, but several participants said Bush was adamant that his Social Security plan had special appeal to blacks -- and that he intended to make that point in public.

He brought to our attention that African Americans in particular need to understand how Social Security in its present condition affects the African American community, said Michelle D. Bernard, senior vice president of the conservative Independent Women's Forum, a Washington policy group.

Underscoring the rift among black leaders, the president's remarks are likely to meet resistance today when members of the all-Democrat Congressional Black Caucus are expected to visit the White House.

Caucus leaders contend that blacks rely disproportionately on disability and survivors benefits paid by Social Security, and that Bush's changes would jeopardize the entire system -- hurting black beneficiaries far more than the private accounts might help them. Furthermore, the White House's opponents argue, the vagaries of the stock market could leave holders of private accounts with fewer benefits than the current system guarantees.

Rep. William J. Jefferson (D-La.), a Black Caucus member, estimated that 68% of disabled African Americans were kept out of poverty by the current disability benefits, while almost 80% of African Americans 65 and older depended on Social Security for more than half of their income.

Deep cuts in guaranteed retirement, survivors and disability benefits are likely under any plan to privatize Social Security, and African American families cannot afford any cuts due to the disparities in income and unemployment, Jefferson told reporters in a conference call last week.

But Bush and his aides made clear Tuesday that they intended to circumvent the caucus and other black Democrats in an aggressive public campaign to build support for their Social Security proposals.

White House spokesman Scott McClellan said Bush did not support altering the disability or survivors' benefits of Social Security -- only the retirement benefits.

This will enable [African Americans] to build a nest egg of their own and be able to pass that nest egg on to their survivors, McClellan said.

The race question adds fuel to an already politically explosive debate that, to date, has largely focused on disagreements over when and if Social Security will go broke.

In a television appearance Sunday, Rep. Bill Thomas (R-Bakersfield), chairman of the House Ways and Means Committee, suggested that Congress consider whether gender and race should be factors in calculating Social Security benefits in order to deal with inequities on who you are and how long you live. Women, he said, benefit the most because they have the longest life spans, while blacks benefit the least.

Opponents of private accounts have seized on Thomas' comments. Two Democratic members of the Ways and Means Committee asked Thomas to clarify how his goal of privatizing the Social Security program makes it easier, not harder, for people of color to achieve the financial security they have earned through a lifetime of hard work.

Also Tuesday, Republican Senate leaders meeting with Bush at the White House urged him to move cautiously on Social Security, citing the political dangers of tinkering with the program ahead of competitive congressional campaigns next year.

Among those in the meeting was Sen. Olympia J. Snowe (R-Maine), a member of the Senate Finance Committee who has expressed concerns about how the diversion of payroll taxes into private accounts could undermine the current system. Both the senators and the black leaders told Bush that he needed to improve his public relations efforts on Social Security, participants in both meetings said.

It's a PR issue, and you've got to project in a way where the money would come from, said Eugene Rivers, a Boston minister who supported Democrat Al Gore in 2000 but backed Bush last year.

Recent polls show that although many African Americans oppose private accounts, a substantial number -- as high as 40% -- are open to the idea, said Michael Tanner, a Social Security expert at the Cato Institute who is familiar with White House strategies on the issue.

Let's put it this way: Social Security reform is more popular than [Bush] is with black voters, Tanner said.
Dob
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Rspaight
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Postby Rspaight » Wed Jan 26, 2005 3:11 pm

Race became a significant factor in the debate over Social Security on Tuesday as President Bush told African American leaders that the government retirement program shortchanged blacks, whose relatively shorter lifespan meant that they paid more in payroll taxes than they eventually received in benefits.


I look forward to Bush's speech to gays telling them that they need to support his SS reform beause they're all going to die of AIDS, anyway.

Ryan
RQOTW: "I'll make sure that our future is defined not by the letters ACLU, but by the letters USA." -- Mitt Romney

Dob
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Postby Dob » Thu Jan 27, 2005 11:49 am

At this point I think it's safe to assume that Bush is in a "whatever it takes" mode, similar to the one that got the US into Iraq.
What is his (hidden) agenda this time, I wonder? Why is privatization of SS so freakin' important? I have yet to hear a convincing explanation of how privatization will fix SS, let alone why it is considered the preferred fix.
Dob

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Postby dcooper » Thu Jan 27, 2005 11:58 am

His agenda is pretty transparent. SS privatization benefits the investment bankers on Wall Street, since these firms will collect fees on all transactions made to these accounts. As a result, the average Joe who opts for a private account will run the additional risk of losing his savings in a bear market, and a good percentage of his money will be siphoned off the top by the firm handling the transaction. There is no advantage to the individual to privatization, which is why the administration must paint the plan with a cynical brush to convince people it's a good idea.
Dan

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Dob
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Postby Dob » Thu Jan 27, 2005 12:22 pm

dcooper wrote:His agenda is pretty transparent. SS privatization benefits the investment bankers on Wall Street, since these firms will collect fees on all transactions made to these accounts.

IIRC that issue has been brought up and addressed by the Bushies (not to worry, the fees will be minimal and fair).

However, I don't think this is the "real" reason, but perhaps it is on the right track. Maybe the urgency is to prop up the stock and bond market with SS money, as the stock market is about where it was in 1999 (and stalling) and the bond market, which is extremely high, is threatened by the falling dollar and interest rate increases. IMO Wall Street would be more interested in a scheme to keep the markets high, or drive them higher, than capitalizing on a fee opportunity (though both would be nice).

Due to the proliferation of 401ks, a stock market collapse may actually be more damaging to nation's retirement plans than the "worst case" projections of SS, and it might end up costing the government more money than a SS privatization, due to the inevitable assistance monies that people would demand and the steep decrease in tax revenues.
Dob

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the 801
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Postby the 801 » Thu Jan 27, 2005 12:28 pm

What about the government paying back the money 'borrowed' from the SS trust fund?

I wish I could be as cavalier with my mortgage commitment as the feds have been in that instance...

Dob
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Postby Dob » Thu Jan 27, 2005 12:55 pm

the 801 wrote:What about the government paying back the money 'borrowed' from the SS trust fund?

The government replaced the borrowed money with bonds (IOUs). They would argue that those bonds are equivalent to cash, as US bonds are the most liquid, safest "interest bearing debt instruments" on earth. Most investors actually do consider obligations of the US government to be as good as cash. The Japanese and the Chinese (among others) have been eager buyers of treasury bonds for years, hundreds of billions of dollars worth, almost without letup.

If those IOUs in the SS account turn out to be nearly worthless, the dollar will be nearly worthless as well (due to price inflation). If you think of the dollar as identical to a US bond (or "note," same thing), other than the fact that it doesn't pay interest, you have the right idea. Of course, all of this paper shuffling is just a big game. These are claims on future goods and services (which is what gives them value) and someday someone is going to want to turn those claims into goods and services. Which is where the price inflation will come in.
Dob

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Patrick M
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Postby Patrick M » Thu Jan 27, 2005 3:04 pm

Could someone remind me how SS will remain solvent if it's privatized?
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Postby dcooper » Thu Jan 27, 2005 3:31 pm

Dob wrote:
dcooper wrote:His agenda is pretty transparent. SS privatization benefits the investment bankers on Wall Street, since these firms will collect fees on all transactions made to these accounts.

IIRC that issue has been brought up and addressed by the Bushies (not to worry, the fees will be minimal and fair).

However, I don't think this is the "real" reason, but perhaps it is on the right track. Maybe the urgency is to prop up the stock and bond market with SS money, as the stock market is about where it was in 1999 (and stalling) and the bond market, which is extremely high, is threatened by the falling dollar and interest rate increases. IMO Wall Street would be more interested in a scheme to keep the markets high, or drive them higher, than capitalizing on a fee opportunity (though both would be nice).

Due to the proliferation of 401ks, a stock market collapse may actually be more damaging to nation's retirement plans than the "worst case" projections of SS, and it might end up costing the government more money than a SS privatization, due to the inevitable assistance monies that people would demand and the steep decrease in tax revenues.


Excellent point, and I agree we are both on the right track. The bottom line is the administration does NOT have the needs of the public in mind when promoting privatization.

Patrick M wrote:Could someone remind me how SS will remain solvent if it's privatized?


Well, the government won't be able to keep using the money invested in the SS trust fund for other purposes (such as paying down the budget deficit) so theoretically at some point they will have spent all that money earmarked for SS, and the fund will have nothing more to draw from. Someone who uses private accounts would not be loaning money to the government over the course of their life; they would be investing that money themselves. SS was always meant to be a safety net, and the funds are protected by the full faith & credit of the US gvmt., so no matter what happened that money was there when you retired. Under privatization, individuals would be forced to manage the account like they would a traditional investment account. If you are as bad at analyzing the stock market as I am, you can see where the problems lie.
Dan



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Patrick M
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Postby Patrick M » Thu Jan 27, 2005 3:49 pm

Given that the funds that are being paid in now are being given to retirees now, how can they continue to provide for all the retirees when a chunk of the money coming in is pushed off into private investments?
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Postby Rspaight » Thu Jan 27, 2005 4:12 pm

By adding to the deficit. I've heard a few trillion ought to do it.

Ryan
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Postby Dob » Thu Jan 27, 2005 8:05 pm

The number I keep hearing is 2 trillion. But the spin is that some borrowing by the government would've had to be done regardless, and it's cheaper to do it now than later. If the SS debt is "settled" now, in one lump sum, the amount is 2 trillion. If it is settled over the span of the next few decades (without privatization), it would be substantially more than 2 trillion. So it's supposedly a win win.

What I keep running into when I think about this privatization idea is that it seems to be a "robbing Peter to pay Paul" situation, and no one knows who Peter is. The government comes out ahead by spending less money, and we come out ahead (most people, anyway) by actually getting more in benefits. Somewhere in the fuzzy math of this scheme there's an assumption that money is going to magically appear out of nowhere.
Dob

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Postby Rspaight » Thu Jan 27, 2005 8:33 pm

Faith-based retirement, in other words.

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Postby Rspaight » Fri Jan 28, 2005 9:20 am

RQOTW: "I'll make sure that our future is defined not by the letters ACLU, but by the letters USA." -- Mitt Romney