White House: Social Security "Plan" Will Add Billions To Deficit

[blueturk]

I almost feel sorry for the Republican politicians that will have to deal with this shit if it passes. Almost.

Mon Feb 7, 2005 04:18 PM ET
WASHINGTON, Feb 7 (Reuters) - The White House acknowledged on Monday that President George W. Bush's top legislative priority -- adding private accounts to the Social Security retirement system -- would add tens of billions of dollars to the nation's budget deficit starting in fiscal 2009.
The increase is not reflected in the fiscal 2006 budget that Bush submitted to the U.S. Congress.

But the White House Office of Management and Budget said transition costs associated with setting up the private accounts would add nearly $80 billion to budget deficits by 2010 alone. The impact would grow after that.

Joshua Bolten, the White House budget director, said the increase "is still consistent with the president's goal to cut the deficit in half by 2009," and that it will not hurt the economy.

White House officials estimated it would need roughly $754 billion over the next 10 years to set up the private accounts.

When these transition costs are factored into the administration's budget forecasts, the deficit would grow by $23 billion in fiscal 2009 to $256 billion, and by $56.5 billion in fiscal 2010 to $263.5 billion.

Bolten said the impact on deficits would grow in the years that follow, but he offered no specifics.

"I expect it would ramp up. I don't have numbers for that, but I expect it would become larger as a nominal figure beyond 2010," he said.

On Sunday, Vice President Dick Cheney acknowledged the need for trillions of dollars in future borrowing to cover the cost of private accounts in future decades -- on top of the administration's 10-year, $754 billion cost estimate.

Bush bases his call for a broad overhaul of the 70-year-old Social Security program on his contention it is headed into a financial crisis, a characterization Democrats, and many of his own Republican Party, say exaggerates the problem.

Bolten sought to play down the impact of the projected "transition financing" on the budget and the economy.

"Every dollar the government borrows to fund the transition to personal accounts is fully offset by an increase in savings, represented by the accounts themselves," he said.

"In addition, the transition financing does not represent new debt. These are obligations that the government already owes, in the form of future benefits."

[Big Train]

I'll take billions in conversion costs to trillions in unpaid benefits to workers. The "ME" generation better realize as they age, there isn't enough money for their Social Security, Medicare etc.. Do for yourself, save for yourself. Whether or not this thing gets settled, you better have your own ducks lined up.

Pure and simple.

[FORD]

Junior's failed congressional bid in 1978 was based on this very same fake Social Security "crisis". It's another scheme for corporatists to raid the public treasury, nothing more.

[LoungeMachine]

I can't believe there's a snowball's chance of "privitization" with a national approval rating hovering around 28%

The more this thing is put under the microscope, the clearer it will become that this is just another scam [see Bush energy policy] to throw OUR money to his friends on Wall St.

With Kenny Lay and Enron soon to be back in the spotlight what little support for this will start to unravel like a cheap sweater.

[ODShowtime]

Originally posted by LoungeMachine
The more this thing is put under the microscope, the clearer it will become that this is just another scam [see Bush energy policy] to throw OUR money to his friends on Wall St.

There are two objectives to this manuever:

1. to put more taxpayer/gov't money into Wall Street (may have beneficial side effects)

2. to appear to have accomplished something

[Big Train]

Would you prefer they just gave you a lump sum? Either way that money is gonna be going through wall st. in order to make it grow. Whether that is in a privatized government account or in your own private bank account, it's still going through Wall St., my friends.

There is no scam, although there certainly is a crisis, whether or not anyone wants to believe it. If social security were absolutely fine, there STILL would be a crisis because most americans have jack shit saved for retirement. That useless check they send every month doesn't cut it as is, so why would you bank on it cutting it in 2050?

[Nickdfresh]

Originally posted by Big Train
Would you prefer they just gave you a lump sum? Either way that money is gonna be going through wall st. in order to make it grow. Whether that is in a privatized government account or in your own private bank account, it's still going through Wall St., my friends.

There is no scam, although there certainly is a crisis, whether or not anyone wants to believe it. If Social Security were absolutely fine, there STILL would be a crisis because most americans have jack shit saved for retirement. That useless check they send every month doesn't cut it as is, so why would you bank on it cutting it in 2050?

Nobody said Social Security in not a problem that needs to be attended to. But it is certainly NOT A CRISIS by any means. This is merely the result of corporate lobbyists trying to shirk more of their responsibility to their workers, and a president that is sending the fucking BILL TO 2050! Two more $trillion in debt added to the Nat'l Deficit. What kool-aid have you been drinking? Deficit spending is the crisis! How come nobody worries about 35 years into the future on that issue?:confused: :rolleyes:

[Big Train]

Kool-Aid? Grape naturally...

It is a crisis, our attitude towards. Most workers have their heads in the sand about it. When it hits 2050 and they want their measly checks, we won't have the money. Then they will be demanding care in the trillions.

2 trillion..the article above mentions 754 billion.

Is it shifting the burden? Absolutely. However, the system is being used be workers for a purpose other than what it was intended to be, which is going to create economic disasters all around that will far exceed any numbers we are currently discussing...

[Mishar_McLeud]

By 2050, if US is still using oil as a major energy source, Mexico will be the first country to land on Mars :cool:. Does that ring a bell?

[lois]

If they just took the trillions they admit they need to make the conversion happen, and put that into the existing system as is, there would be no problem at all.

[Big Train]

The "System" would then be fine, but at present savings rates, the population would be still as fucked, which is the BIGGER ISSUE here.

[Nickdfresh]

Originally posted by Big Train
Kool-Aid? Grape naturally...

It is a crisis, our attitude towards. Most workers have their heads in the sand about it. When it hits 2050 and they want their measly checks, we won't have the money. Then they will be demanding care in the trillions.

2 trillion..the article above mentions 754 billion.

Is it shifting the burden? Absolutely. However, the system is being used be workers for a purpose other than what it was intended to be, which is going to create economic disasters all around that will far exceed any numbers we are currently discussing...

Oh yeah, I forgot this, but I was listening to NPR's 'All Tthings Considered' on the car radio today. And they had a guest on that brought up a few good points no one likes to consider, such as the fact that private/personal accounts (I love semantics & euphemisms) will come with three or four time the overhead costs in administrative fees which will sap much of the benefit of having a personal/private/individual account.

Also, let's ask the British. Privatization was all the buzz word there about twenty years ago. Many felt they were duped and have lost a significant amount of their retirement in falling markets or underperforming funds.

[Big Train]

So again I ask you, would you just prefer a lump sum? Or perhaps the abolishment of the system altogether, thereby saving you money NOW which you can invest and save as you see fit.

[ODShowtime]

Originally posted by Nickdfresh
the fact that private/personal accounts will come with three or four time the overhead costs in administrative fees which will sap much of the benefit of having a personal/private/individual account.

Again, the money is going to Wall Street. Not to be invested, but to pay Wall Street.

[ODShowtime]

Originally posted by Big Train
Or perhaps the abolishment of the system altogether, thereby saving you money NOW which you can invest and save as you see fit.

Either way it sucks that people need to save for retirement and that inflation will eat up savings. That's just life. The situation is just screwed as far as I can tell. It's every man for himself.

But it's not a crisis that we need gw to solve. He'll only make it worse.

[Big Train]

So then your saying the general principles of my argument are correct. The idea of avoiding that is to set up investment vehicles that beat the rate of inflation, using compound interest. Either way, the money HAS to go through Wall St.

GW knows that most Americans have no fucking concept of how to save or desire to do so. As a conservative, I'm actually for abolishing the system entirely. I think it's an outdated idea entirely.

[Nickdfresh]

Originally posted by Big Train

GW knows that most Americans have no fucking concept of how to save or desire to do so. As a conservative, I'm actually for abolishing the system entirely. I think it's an outdated idea entirely.

Gee, I wonder whose example they are following?


U.S. NATIONAL DEBT CLOCK

The Outstanding Public Debt as of 08 Feb 2005 at 09:11:34 PM GMT is:
http://www.brillig.com/debt_clock/debtc.gif

The estimated population of the United States is 295,538,025
so each citizen's share of this debt is $25,801.09.

The National Debt has continued to increase an average of
$1.88 billion per day since September 30, 2004!
Concerned? Then tell Congress and the White House!

If you were really a conservative, you'd be more worried about the Nat'l Debt!

[Big Train]

By the people, for the people..



Whoever said I WASN"T worried about the national debt? I see waste everywhere, I see things everywhere that need to be changed. In fact, I GIVE ideas to the opposition about what they ought to be railing against...battles they can win.

[Nickdfresh]

Originally posted by Big Train
By the people, for the people..




Whoever said I WASN"T worried about the national debt? I see waste everywhere, I see things everywhere that need to be changed. In fact, I GIVE ideas to the opposition about what they ought to be railing against...battles they can win.

Social Security is pretty much staying as is. In fact I would say Bush has given the Democrats a unifying issue they need.

[blueturk]

Originally posted by Big Train


GW knows that most Americans have no fucking concept of how to save or desire to do so.

Give me a fucking break! How in the hell would Dubya know this? Did he learn it from his high school days at the woefully under-funded Phillips Andover Academy? Or did the hard knocks of life at Yale make young Bush think about the value of saving? Or almost losing money in his many oil ventures? Maybe it was the realization that the trust fund he was born into was actually being decreased by inflation.
Please fucking tell me how Bush would be able to delve so deeply into the mind of the average American, and be able to know what they are thinking about their fucking money.which Dubya has been more than happy to spend.
More than ever before, you sound like a true sheep.

[Big Train]

Its fuckin pure and simple pal. 90% of Americans have negative net worth and are leveraged to the hilt. Any moron (and I know you think he is any moron) can read a piece a paper and notice that.

[LoungeMachine]

Originally posted by Big Train



GW knows that most Americans have no fucking concept of how to save or desire to do so.


.


Quite possibly the most ridiculous supposition I have EVER read in here, with all due respect, BT

You're a bright guy. Well informed. Well read.

Tell me you HONESTLY think this has ANYTHING to do with President Dolt's desire to see this country "save" money:rolleyes:

Bullshit. utter bullshit.

He is playing politics, pure and simple. And he'll lose this one.

The "Crisis" ?????

The crisis is tax cuts during war time, and record deficits.

As a "conservative", how can you possibly shill for this guy?

[ODShowtime]

Originally posted by LoungeMachine

The "Crisis" ?????

The crisis is tax cuts during war time, and record deficits.

As a "conservative", how can you possibly shill for this guy?

I don't understand that either.:confused:

[Nickdfresh]

Originally posted by LoungeMachine
Quite possibly the most ridiculous supposition I have EVER read in here, with all due respect, BT

You're a bright guy. Well informed. Well read.

Tell me you HONESTLY think this has ANYTHING to do with President Dolt's desire to see this country "save" money:rolleyes:

Bullshit. utter bullshit.

He is playing politics, pure and simple. And he'll lose this one.

The "Crisis" ?????

The crisis is tax cuts during war time, and record deficits.

As a "conservative", how can you possibly shill for this guy?

Absolutely true! This is about ideology and Wallstreet, not saving money. It's driven by 19th century minded 'Darwinian' Capitalists that would stich back together Standard Oil if we'd let 'em.

[Big Train]

I am a bright guy, thank you for noticing. I stand by what I said, whether or not it's politics to you.

90% of this countries citizens are leveraged to the hilt. You know that and I know that. I like the plan (regardless of his intentions, I'll assume SOMEBODY cares about their fellow citizens like I do), even though I'd like to see Social Security abolished outright. This plan is the first step in the right direction I have seen.

The ME generation is going to be screwed in 15-20 years because they have saved nothing. Which means my generation gets screwed even worse trying to hold them up. By TRYING to do something now, it's a serious step in the right direction. If we can all get over our fixation with "Wall St. Cronies", there is a lot of good in the plan. Whether you invest it personally or in a government plan, it STILL is going through wall st. to grow.

Granted, I'm leaning towards abolishment. I'd rather everyone get back what they paid in, in a lump sum that they can go invest themselves. Money now to grow, instead of rot in a government savings account.

[blueturk]

Originally posted by Big Train
Its fuckin pure and simple pal. 90% of Americans have negative net worth and are leveraged to the hilt. Any moron (and I know you think he is any moron) can read a piece a paper and notice that.

OK, I'll bite. Where did you get this figure?

[ELVIS]

None of this rhetoric matters really...

As soon as WWIII starts, ALL social programs will be placed very far on the back burner...

We're on the verge of very different times...

[LoungeMachine]

Originally posted by ELVIS
None of this rhetoric matters really...

As soon as WWIII starts, ALL social programs will be placed very far on the back burner...

We're on the verge of very different times...

Rapture:rolleyes:

[Big Train]

Here is a good article on the subject..

savings rate really as bad as it appears?

Sunday, February 06, 2005
By Pamela Gaynor, Pittsburgh Post-Gazette

Regis Briski goes to the supermarket armed with coupons. When he needs clothes, he shops sales. He buys his cars used, minimizes other spending and tries not to take on any debt.

His frugality has a flip side: It has helped the 54-year old Glenshaw resident, who works in accounting, sock away roughly 10 percent of his paycheck in retirement funds since the early 1980s.

Two decades ago, Briski's thrift was the norm. The most widely watched government barometer -- the personal savings rate -- suggests it no longer is. The rate has steadily dropped from 10.8 percent in 1984 to just a shade above 1 percent last year.

Concern about how much Americans save and whether their savings will be enough for retirement underpins the debate on the Social Security changes President Bush promoted in his State of the Union speech last week.

Some argue that Americans would save more if the Social Security did not entitle them to a guaranteed income in retirement. Others believe Congress should leave Social Security alone and create a compulsory savings program alongside it.

Amid it all, there is a debate over whether the dramatic drop in the personal savings rate reflects a free-spending culture in which U.S. consumers buy big-screen televisions and new sport utility vehicles at the expense of their futures, or whether Americans actually are building nest eggs in ways the government does not accurately measure.

To Susan Sterne, president and chief economist of Economic Analysis Associates in Greenwich, Conn., the personal savings rate "is irrelevant." Sterne says the government's bellwether savings measure is flawed because it tracks what is left of Americans' disposable income each month rather than calculating what people put in bank accounts, brokerages and other places.

Sterne, who keeps an eye on money that flows every month into mutual funds and other investments, says, "It's coming from somewhere."

Instead of measuring that activity, the U.S. Commerce Department computes the personal savings rate -- which is intended only to track current savings, not previously invested assets -- by tallying monthly after-tax income from a variety of sources, mainly wages, dividends, interest, rents and employer contributions to pensions, and then subtracting expenditures.

The tally tends to understate income and overstate expenses, most economists agree. Perhaps the biggest shortcoming is that it does not count capital gains from the sale of stocks or homes as part of disposable income, but it does count capital gains taxes as expenditures. In addition, it counts major outlays, such as the purchase of a car, in a lump sum rather than dividing it into payments, as most people do.

Joseph G. Carson, senior vice president and economist for Alliance Bernstein, a New York-based investment research and management firm, said the steady march of consumer spending does not mean Americans are not saving.

U.S. Treasury Department data shows that Americans have harvested $3.5 trillion in capital gains since 1997 -- more than the combined gains of the preceding 20 years, he said, and total household net worth has doubled, to roughly $48 trillion last year, from $24.2 trillion a decade ago.

Using separate statistics, Carson said the median family's net worth likely will top $100,000 when the latest Federal Reserve survey is released, up 52 percent, in constant dollars, from 1995, when it was $66,000.

As for regular savings, Carson also has tracked monthly net acquisitions of all financial assets (excluding life insurance and pension reserves) from Federal Reserve data and found that they came to an average of 5 percent of disposable income last year and have not varied much during the past 15 years.

"Wealth creation and capital gain income is an increasingly important part of decisions to spend," Carson said. "I keep asking, how much wealth do you need before you can spend some?"

But some other economists say the plunging personal savings rate suggests that many Americans are not saving enough and some are not saving at all.

"I think there is a reason for concern about the lack of savings," said Mark Zandi, chief economist and co-founder of the economics research and consulting firm Economy.com. "Lower and moderate income households are spending more than they are earning. They have a negative savings rate."

Zandi called the personal savings rate "a very good measure of how much we save, or more to the point, how much we don't save," and he suggested that one reason the savings rate has fallen sharply is the surge in borrowing, particularly mortgage borrowing.

Among his firm's 100 employees, Zandi said, there is the lack of a savings habit. He said he has a tough time getting his largely young staff, most with Ivy League educations, to put money into the company's 401(k) retirement-saving plan, even though the company matches contributions up to 3 percent of the employee's pay.

With income growth tracking historical trends, the explanation for the decline in the personal savings rate is that people are spending more, said Richard Moody, an economist with PNC Financial Services Group. That consumer spending did not flag during the 2001 recession is one of the more telling signs, he said.

Kurt Kunze, an economist in the Commerce Department's Bureau of Economic Analysis, which calculates the personal savings rate, points to anecdotal evidence that people are spending more and saving less.

He said he sees expensive new cars in many driveways in his neighborhood and listens to his children talk about new electronic games and other gadgets their friends have gotten.

"I know these people make about as much as I do, and so the question I have to have is where is that money coming from," Kunze asked.

"We've become such a consumer society, everyone has to have the latest gimmick," said Glenshaw's Briski.

As for sharp gains in household and family wealth, those are not reliable indications that Americans generally are saving enough, Zandi said.

"The wealth distribution is very skewed," said Zandi, noting that the vast majority of wealth built up in the past decade accrued to those at the high end of the income scale.

"The folks in the bottom half have very little net worth, probably negative net worth," Zandi said. "They have a little home equity, but they have credit card debt, college loans" and other liabilities.

The result, he said, is that many households are going to face very significant financial problems as they retire.

Briski, the Glenshaw saver, said he has been disciplined so that his will not be among them. In his view, the 70-year old Social Security program that provided livable incomes for many of the baby boom generation's parents will not be sufficient for baby boomers themselves.

"I'm not planning on that to be the basis for my retirement," Briski said. "It's just one of those things that's going to be a big problem in the next 10 to 15 years. A lot of people are not preparing, and they're going to be caught in a big surprise."

He has managed to set aside the money in his retirement plans even though he and his wife have reared two children -- a daughter who has graduated from college and a son still getting his degree -- and peg their household income well below the $50,000 national average.

Shunning the consumer culture, focusing on the family and bargain shopping for essentials has made it possible, Briski said.

"We aren't extravagant. That's not where my focus is," he said.

"Whatever I buy, I buy at the lowest possible price. It's just a whole philosophy."

[Big Train]

Originally posted by blueturk
OK, I'll bite. Where did you get this figure?


A very interesting book I highly recommend called "The Millionaire Mind". The book is bascially a study of a hundred of some millionaires (from 1-20 million roughly) and comparing those interviews and studies with data on the rest of America to illustrate the differences of what these people do to gain their wealth.

[Nickdfresh]

Originally posted by LoungeMachine
Rapture:rolleyes:

Self-fulfilling prophecies? Vote for a moron and say the end of the world was "God's will?" Pul-eeze!:rolleyes:

[Big Train]

I think I'll invest in the "Unlikely" event the Rapture doesn't occur in the immediate future.