Advertisement

LJWorld.com weblogs Congressional Briefing

Moore backs bill to block Social Security privatization

Advertisement

Here are today's headlines from the Kansas congressional delegation:Rep. Dennis Moore (D) ![][1][(Pueblo Chieftain) Salazar's Social Security bill would block private accounts:][2] Two years ago, President Bush stumped across the country urging the public to consider privatizing Social Security as a way to give retirees more return on their contributions and to avoid future shortfalls in the federal benefit system. At the time, U.S. Rep. John Salazar, D-Colo., sponsored legislation to prevent that, speaking for many Democrats in saying private accounts would divert needed money away from the Social Security trust funds and force a cut in benefits to current retirees. With the Republicans in control of Congress, Salazar's legislation was more a statement of philosophy than anything else. Salazar is back this year, joining with Rep. Dennis Moore, D-Kan., in sponsoring legislation that would block any Social Security contributions from being used to create private accounts. With Democrats in the majority, the legislation stands a much greater chance of being passed by the House and Senate. The Salazar-Moore bill goes a step further, as well, and would prevent either the White House, Congress or federal agencies from using Social Security contributions as an accounting gimmick to cover the size of the federal deficit in budget reports.Sen. Pat Roberts (R)![][3][(Salina Journal) Roberts aims to help military families find homes close to post:][4] In announcing introduction of a bill intended to help military families qualify for low-income housing, Sen. Pat Roberts said Monday that some Fort Riley families "are forced to live further and further away from the post, some as far away as Salina and Topeka." The bill Roberts introduced Monday would remove the "basic allowances" paid to enlisted military personnel from the calculation used to determine eligibility for federal low-income housing. [1]: http://ljworld.com/specials/election04/primary/moore.jpg [2]: http://www.chieftain.com/metro/1173722696/3 [3]: http://roberts.senate.gov/Roberts-020405-18060-080-CFFflipped.jpg [4]: http://www.saljournal.com/?module=displaystory&story_id=10585&format=html

Comments

preebo 7 years, 6 months ago

I worked for both Ken and John Salazar in their 2004 campaign, it is good to see them both (in the Senate and House respectively) working on issues that matter to the working American majority. It is also good to see Moore fighting the good fight as well. I would like however to see Boyda take a stand on this issue.

She ran as a "blue-dog" Democrat AKA a Populist and she expresses her concern for the workers of Kansas, so she should be in lockstep with her fellow (D) from KS.

To protect Social Security should mean to disolve it.

0

blessed3x 7 years, 6 months ago

So what's the answer Mr. Moore?

If I had been able to invest all those social security dollars I paid into the system, I'd be able to retire decades earlier and without having to accept one penny from the federal government. At least privatization was presented as an option. What does Moore suggest? Raise taxes? What will you do when half of the population is retired? Social security is a TERRIBLE investment. It is a burden that we must wean ourselves from. What is the answer? I don't know, but removing options isn't the answer.

0

Richard Heckler 7 years, 6 months ago

Victims of ENRON and the savings and loan rip off were very happy to have Social Security Insurance.

Another fact is the cost of converting will cost a trillion tax dollars or more. Better do a lot more research before jumping on to the Bush bandwagon for the Bush is not an honest person and Wall Street will be the big winner.

Yes. President Bush has repeatedly said that those who put their money in private accounts are "guaranteed" a better return than they'll receive from the current Social Security system. But every sale of stock on the stock market includes the disclaimer: "the return on this investment is not guaranteed and may be negative"--for good reason. During the 20th century, there were several periods lasting more than 10 years where the return on stocks was negative. After the Dow Jones stock index went down by over 75% between 1929 and 1933, the Dow did not return to its 1929 level until 1953. In claiming that the rate of return on a stock investment is guaranteed to be greater than the return on any other asset, Bush is lying. If an investment-firm broker made this claim to his clients, he would be arrested and charged with stock fraud. Michael Milken went to jail for several years for making just this type of promise about financial investments.

0

Richard Heckler 7 years, 6 months ago

What will happen when the assets held in the trust fund are needed to help pay for benefits? The trust will start selling the bonds. Currently it has to sell them back to the Treasury, although the law could easily be changed to allow sales to the same people, institutions, and governments who were buying U.S. bonds this past year. But let's assume the government has to buy them back.

If the government were running a surplus, as it did for the last four years of the Clinton administration, it would use that surplus to pay for them. If, on the other hand, the government were running a balanced budget but not a surplus, it would need to issue new Treasury bonds to pay for the bonds it would buy from the trust fund. In finance, this is called "rolling over" debt, and every major corporation in the world does it every day. At no point would the government need to roll over more than $300 billion in any given year to pay for the trust fund bonds. We already know the federal government can easily sell $475 billion per year in bonds, because it did that last year and interest rates did not even go up--in fact, they remained relatively low.

So there's no problem, right? Actually, there is one thing that could cause a problem: the government running a massive deficit, as it now does. In that case, selling more bonds could put a very real strain the financial system's ability to absorb the creation of this new debt.

This is the issue that Federal Reserve chairman Alan Greenspan has been trying to raise for the past three years. Unfortunately, Greenspan speaks in financial jargon, so it's hard for the general public to understand what he's trying to say.

0

Richard Heckler 7 years, 6 months ago

Bush Social Security advisor Sylvester Scheiber, who works for the corporate benefits consulting firm the Wyatt Group, wrote an article in 1994 predicting that the financial markets are likely to lose as much as half of their value as the baby boom generation retires and starts to sell its financial assets to pay for food and rent. This is why he has been advising his corporate clients for decades to replace their real defined-benefit pension plans with 401(k) plans. It shifts the cost of a financial collapse from the corporation to the employees.

How important are the assumptions being made about economic growth and stock market returns to Bush's privatization proposal? The growth numbers underlying the talk of a shortfall in the trust fund are extremely pessimistic, while the stock market projections behind the privatization proposal are extremely optimistic. Bush assumes that long-term GDP growth will be only 1.8%, yet claims the return on stocks will be 7% per year. Other than the Great Depression, the slowest decade of growth in U.S. history was the 1980s, with a growth rate of 2.4%. If the economy grows at 2.4%, the Social Security trust fund never goes to zero.

But what if we use Bush's own assumptions? In 2004, the GDP was almost $12 trillion, and the value of publicly traded stock was about $40 trillion, a ratio of 3.3 to 1. If, as in the past, half of the return on stocks takes the form of an increase in stock prices, in 60 years the value of the stock market will be a lopsided nine times the size of the economy. If the other half of the return came from dividends, fully one-third of GDP would need to be paid out in dividends at that time. This scenario is impossible. The assumptions don't make sense.

0

Richard Heckler 7 years, 6 months ago

The best way to explain Social Security is to say what it is. It's an insurance system that protects your income when you retire or face disability, and provides income to your children if you die. President Bush wants you to look at Social Security as an investment--but it is a form of insurance that guarantees you a constant stream of income in retirement or in case of disability, adjusted to protect against inflation, for as long as you live.

Social Security can be compared to other types of insurance such as home insurance. You insure your home because if it should burn down, you would not be able to afford to rebuild it with your personal income alone. If your house never burns down, you will pay into the insurance fund and never get a penny back. But fire insurance isn't a "bad investment" because it isn't an investment at all. You are purchasing security.

Unlike fire insurance, Social Security inevitably gives most of us our money back. But the fact that we get money back does not change the fact that Social Security is a form of insurance, not an investment. Only the richest of the rich can afford not to have insurance and to rely solely on their own savings and investments to fund their retirement or risk of disability.

Young people must also understand that financial investments are inherently risky. Many investments fail, and when they do, you lose all of the money you invested. Today's 25 year olds have only seen the stock market go up, except for one (very large) drop. But you don't have to go back to the 1930s to see a different picture: If you put money into the stock market in 1970 and waited until 1980 to take it out, you would have lost money. There is absolutely no guarantee that stock investors will see the high returns Bush is falsely promising.

0

lefthanded 7 years, 6 months ago

"the government were running a surplus, as it did for the last four years of the Clinton administration, it would use that surplus to pay for them"

Does this imply a fiscal year budget surplus, no federal deficit, both, neither? A trade surplus, perhaps? Just curious.

0

Commenting has been disabled for this item.