Saturday, February 05, 2005

FactCheck.org: Social Security "Bankruptcy?"

I subscribe to FactCheck.org's mailing list, just because I like to find out the back story on what is being spun to the public.

Here is the transcript for President Bush's 2005 State of the Union

Read that first.

Okay, done? Good. I like my readers to be informed. Now here's a quick summary of the latest email I received from FactCheck.org:

In his State of the Union Address, President Bush said again that the Social Security system is headed for "bankruptcy," a term that could give the wrong idea. Actually, even if it goes "bankrupt" a few decades from now, the system would still be able to pay about three-quarters of the benefits now promised.

Bush also made his proposed private Social Security accounts sound like a sure thing, which they are not. He said they "will" grow fast enough to provide a better return than the present system. History suggests that will be so, but nobody can predict what stock and bond markets will do in the future.

Bush left out any mention of what workers would have to give up to get those private acounts -- a proportional reduction or offset in guaranteed Social Security retirement benefits. He also glossed over the fact that money in private accounts would be "owned" by workers only in a very limited sense -- under strict conditions which the President referred to as "guidelines." Many retirees, and possibly the vast majority, wouldn't be able to touch their Social Security nest egg directly, even after retirement, because the government would take some or all of it back and convert it to a stream of payments guaranteed for life.


Click the link below for the full article:
http://www.factcheck.org/article305m.html

4 comments:

Anonymous said...

Not a big fan of Bush's idea, but something clearly needs to be done. Sure, Social Security could still do pay outs even if it went bankrupt for the next couple decades, but I just wish Washington would stop passing the buck here. I mean even with 401k and IRA do you really want to retire or be retired when SS hits bottom? And there are some people that don't even have those options for retirement plans.
Hopefully they all get their act together and work something out, and not let it fall apart like the concept of national health care.

Scarlett said...

Bush is nothing but PR to deflect from himself . . . smoke in the mirror is what I call it.

My gripe is people caring enough to leave messages but signing Anon. WTF??

Anonymous said...

Social Security is, nowadays, a direct transfer of wealth mechanism. No more, no less, since previous administrations saw fit to take money out of the trust fund for various things. Both political parties are guilty on that front. The minute the trust fund was touched was the beginning of the end. It may not happen in our lifetimes, but the rate of growth in the payments is not sustainable forever and sooner or later something will have to be done. The situation sucks because whoemever is in power will be lambasted no matter what solution they attempt.

I pretty much have given up on the idea that I will see any $$ from social security, and have planned my future accordingly.

Matt F.

Craig said...

There's no guarantee that private accounts will be profitable.

But, of course, there's no guarantee that a politically-run system like we have now won't be changed by the whims of congress either.

Suppose that a big stock market downturn happens the very year you retire. Disaster? No. You won't withdraw your entire savings that year.

Most of it will remain invested and as the market improves, your remaining investments will grow. You're not ruined because the market went bad for a while.

I won't be part of the group who benefits by a private Social Security account, but I sure wish I'd had the chance to enroll back in the 70s. I'd have some serious money stored up by now.

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