Ryan/Sununu Social Security Proposal

[SENDITIN]

Me Likey a lot!!


Personal Savings Guarantee and Prosperity Act
<HR>This bill empowers workers with the freedom to choose a large personal account option for Social Security, with no benefit cuts or tax increases.<?XML:NAMESPACE PREFIX = O /><O> </O>

Summary of the Bill:<O> </O>

• Workers will be able to shift to their personal accounts 10 percentage points of the current 12.4% Social Security payroll tax on the first $10,000 of wages each year, and 5 percentage points on all taxable wages above that. This creates a progressive structure with an average account contribution among all workers of 6.4 percentage points.<O>
  
  
• Workers choose investments by picking a fund managed by a major private investment firm, from a list officially approved for this purpose and regulated for safety and soundness, similar to the operation of the Thrift Saving Plan for federal employees.<O>
  
  
• Benefits payable from the tax-free accounts would substitute for a portion of Social Security benefits based on the degree to which workers exercised the account option over their careers. Workers exercising the personal accounts would receive traditional Social Security retirement benefits based on the past taxes they have already paid into the program. Workers would then also receive in addition the money payable through the personal accounts.<O>
  
  
• The accounts are backed up by a safety net guaranteeing that workers would receive at least as much as Social Security promises under current law.<O>
  
  
• This program is voluntary. Anyone who chooses to stay in Social Security would receive the benefits promised under current law. Survivors and disability benefits would continue as under the current system.<O>
  
  
• Social Security and the reform’s transition financing are placed in their own separate Social Security budget, apart from the rest of the Federal budget.

Financing the Transition:<O> </O>

<TABLE width="100%" border=0><TBODY><TR><TD vAlign=top align=middle width="5%">ü </TD><TD width="95%">The short-term Social Security surpluses now projected until 2018 are devoted to financing the transition – instead of fueling other government spending;<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">ü </TD><TD width="95%">A national spending limitation measure would reduce the rate of growth of federal spending to an average of 3.6% for eight years, rather than the current 4.6% projection. In comparison, spending grew at an average rate of 2.6% during the Clinton Administration. The spending savings for those years are maintained until all short-term debt issued to fund the transition is paid off in full;<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">ü </TD><TD width="95%">The revenue feedback from increased saving and investment in the accounts due to taxation of increased investment returns at the corporate level (concept developed by Harvard economics professor Martin Feldstein), would help fund the transition;<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">ü </TD><TD width="95%">To the extent needed, excess Social Security trust-fund bonds would be redeemed to continue to pay all promised Social Security benefits, with the funds to redeem them obtained by issuing new federal bonds to the public. Under the current system, these bonds will be redeemed for cash from the federal government anyway after 2018. </TD></TR></TBODY></TABLE>

This proposal has been scored by the Chief Actuary of Social Security. <SUP>[1]</SUP> That official score shows:<O> </O>
​

<TABLE width="100%" border=0><TBODY><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">The large personal accounts in the plan are sufficient to completely eliminate Social Security deficits over time, without any benefit cuts or tax increases. That is because so much of Social Security’s benefit obligations are ultimately shifted to the accounts. As the Chief Actuary stated, under the reform plan, “the Social Security program would be expected to be solvent and to meet its benefit obligations throughout the long-range period 2003 through 2077 and beyond.” http://www.house.gov/ryan/Summary_R...avings_Guarantee_and_Prosperity_Act.htm#_ftn2<SUP>[2]</SUP><SUP> </SUP> Indeed, the eventual surpluses from the personal accounts are large enough to eliminate the long-term deficits of the disability insurance program as well, even though the reform plan does not otherwise provide for any changes in that program.<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%"> n</TD><TD width="95%">Not only do the accounts achieve this without benefit cuts or tax increases, but over time the accounts would provide substantially higher benefits, as well as tax cuts. The official score shows that by the end of the 75-year projection period, instead of increasing the payroll tax to over 20% as would be needed to pay promised benefits under the current system, the tax would be reduced to 5.11%, enough to pay for all of the continuing disability and survivors’ benefits. This would be the largest tax cut in U.S. history. The bill includes a payroll tax cut trigger providing for this eventual tax reduction once all transition financing and debt obligations have been paid off.<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">Moreover, at standard, long-term market investment returns, the accounts would produce substantially more in benefits for working people across the board than Social Security now promises, let alone what it can pay. This is the only reform proposal that achieves that result. With personal accounts of this size, at standard long-term market investment returns, an account invested consistently half in corporate bonds and half in stocks would provide workers with roughly two thirds more in benefits than Social Security promises but cannot pay. An account invested two thirds in stocks and one third in bonds would pay workers over twice what Social Security promises today.<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">The reform also achieves the largest reduction in government debt in U.S. history, by eliminating the unfunded liability of Social Security, which is almost three times the current reported national debt.<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">The reform would also greatly increase and broaden the ownership of wealth and capital through the accounts. All workers would participate in our nation’s economy as both capitalists and laborers. Under the Chief Actuary’s score, workers would accumulate $10.7 trillion in today’s dollars in their accounts by 2020. Wealth ownership throughout the nation would become much more equal, and the concentration of wealth would be greatly reduced.

</TD></TR><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">With the above transition financing, Social Security achieves permanent and growing surpluses by 2025 under the Chief Actuary’s score. Before that time an average of about $35.9 billion in new federal bonds are sold each year for 16 years, for a total of $575 billion, all in today’s dollars.

</TD></TR><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">Within 22 years after 2025, the reform produces sufficient surpluses to pay off all the bonds sold to the public during the early years of the reform. So this surplus completely eliminates the Federal debt sold to the public in the earlier years of the reform, leaving the net impact of the reform on debt held by the public at zero. Indeed, as mentioned above, the reform goes on to completely eliminate Social Security’s current unfunded liability of $10.4 trillion, which is 2.5 times the reported national debt.<O>

</TD></TR><TR><TD vAlign=top align=middle width="5%">n</TD><TD width="95%">Finally, the reform plan would greatly increase economic growth, through reduced taxes and increased saving and investment. The result would be more jobs, higher wages, and faster growing incomes and national GDP.<O> </TD></TR></TBODY></TABLE>
This proposal consequently modernizes and expands the Social Security framework to bring in real personal savings and investment. Through the Federal guarantee that workers would receive at least the benefits promised by Social Security under current law, a strong social safety net remains in place for all seniors. The Social Security modernization and expansion provided under the bill produces enormous benefits for working people across the board and for the nation as a whole.



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[JinnRikki]

I don't pretend to be an economist, but if this plan wouldn't put a sparkle in Rube Goldbergs eye nothing would. My head started to hurt and my eyes glazed over half way through it.
When they started talking about limiting spending I was looking for the punchline.

 

[xpanda]

Workers will be able to shift to their personal accounts 10 percentage points of the current 12.4% Social Security payroll tax on the first $10,000 of wages each year

You guys pay 12.4% 7to SS? Holy crap.

 

[JinnRikki]

You guys pay 12.4% 7to SS? Holy crap.

Only on payroll for the working stiffs. And only on the first $90,000. So that's fair, if you're rich.

 

[xpanda]

Only on payroll for the working stiffs. And only on the first $90,000. So that's fair, if you're rich.

Wow. That's insane. Our CPP (Canada Pension Plan) hovers between 1 and 3% depending on your income bracket.

 

[JinnRikki]

How far up the income ladder does that go in Canada?
If all income brackets had to share this burden equitably we may only have to pay 3%. But our concern for the elderly population only goes so far.

 

[WildBill]

I just have to ask. If stock market gains are what supposedly will eventually cover all obligations with no benefit cuts or taxes, why not keep the system as we have it now and then invest the SS funds into the market itself??? That would force the government to keep their hands off our money, that would get these great returns the conservatives are so sure are out there, and that would keep this at heart as a poverty reduction program and not a retirement savings plan as it really shouldn't be. If you want to prosper in retirement, fund your 401k or IRA. It should really be that simple. What might come out of all this wrangling could be another boondoggle the likes of our Medicare prescription plan.

 

[xpanda]

How far up the income ladder does that go in Canada?
If all income brackets had to share this burden equitably we may only have to pay 3%. But our concern for the elderly population only goes so far.

Everyone pays, everyone can collect. I'm pretty sure you pay CPP on the entirety of your income, with no ceilings. The amount you make after retirement is fixed as a percentage of your earnings. That said, I have no idea what that percentage is.

Self-employed people don't pay into it at all, nor do they collect on their self-employment earnings (you might collect if you worked for someone else for a time.) My understanding is that it's supposed to be a sustainable, stand-alone fund.

 

[Phaedrus]

posted by xpanda:

You guys pay 12.4% 7to SS? Holy crap.

posted by JinnRikki:

Only on payroll for the working stiffs. And only on the first $90,000. So that's fair, if you're rich.

Jinn, I assume you are aware that business owners, professionals and other self-empoyed people are the ones who pay the 12.4% rate, and that "payrolled working stiffs" only have half of that directly deducted from their pay, while the business owners, professionals and other self-employed people who put food on the working stiffs' tables pay the other half. While theoretically some or all of that money might otherwise be spent on a pay raise for the employee if the tax was not there, the fact remains that the impetus is on the business owner, not the employee, to file and pay this money.

I assume you know all of that, but just to clarify for our curious northern neighbour.


Phaedrus

 

[JinnRikki]

You're right P, my subconscious working stiff bias kept that salient point out of my post. Your assertion that business owners, professionals and other self-employed people put food on the working stiffs' tables I would amend. The relationship between employee and employer is considerably more symbiotic than you allow. And I don't think employers are so benevolent that if they weren't asked to pony up for SS they would do anything but put the difference in there pockets.
I also think until SSI benefits are means tested the well off are getting a deal.

 

[Phaedrus]

Jinn

I'm willing to retractthat poriton of my post which states that employers "put food on tables" simply because it does seem to imply a lack of appreciation on my part for the role that employees play in the employer-employee relationship. On the contrary, like most other employers, I actually understand and appreciate that relationship far better than most employees.

And I don't think employers are so benevolent that if they weren't asked to pony up for SS they would do anything but put the difference in there pockets.

This is just one of the innumerable "ifs" in life. I'm sure you'll agree that some would, some wouldn't.

I also think until SSI benefits are means tested the well off are getting a deal.

I'm not sure I see a "deal" anywhere there, which seems to imply that the wealthy pay less than they "should." No one, wealthy or otherwise, should pay a red cent into the bloated Ponzi scheme that is Social Security. I will point out for the nth time that virtually every country on earth, including the United States, has laws against doing what the Social Security Administration does.

And as in most cases, I'm far more concerned with those getting the shaft than those getting any sort of breaks, and as in most cases, it's the middle class, since they feel the biggest pinch in terms of contribution, deflated earning power, and benefit cheques that are all but meaningless wrt their post-career lifestyles. The answer to that problem is not to simply also screw over the rich in the name of ameliorating the effects of screwing over the middle class. We keep that sort of thing up and before too long we'll have to change our national anthem ("She swallowed the cat to catch the bird, she swallowed the bird to catch the spider, she swallowed the spider to catch the fly, I don't know why she swallowed the fly ...")


Phaedrus

 

[eek.]

Why have a cap at all?

It should be 12.4% across the board.

So $90k dude will pay $11,160 which is 12.4%
and $900k dude will pay $11,160 which is.........

drumroll

1.24%

 

[PatPatriot]

Why have a cap at all?

It should be 12.4% across the board.

So $90k dude will pay $11,160 which is 12.4%
and $900k dude will pay $11,160 which is.........

drumroll

1.24%
<!-- / message -->

The 900,000 dude also gets taxed at 40% which is

drumroll
360,000 per year...which takes care of about 10 bastard breeder familes per year,and other various layabouts.....who pays no tax and SS but draws both.

 

[Phaedrus]

eek

The caps are there because the point of Social Security was to set up a forced government savings plan that would mitigate the possibility of a destitute old age for Americans. It would have been impossible to sell if FDR had simply said, "well the eldery rich are going to have to pay for the elderly poor." People in high income brackets (in theory) are not going to be needing Social Security's chump change payments, so unless and until the US government has a collective brain aneurysm and suddenly becomes honest, thereby clearing the way for them to point out that Social Security is nothing more than a despicable wealth redistribution scheme that is illegal in nearly every country on earth, the pretence has to be maintained that it's just a system for "just in case," a "no old fart left behind" kind of thing.

Of course, America would be totally fine with this if they would just say so. FDR also promised that Social Security numbers would never, ever, ever, ever be used as identifying numbers. Ever. Americans are fine with increasing amounts of idiocy from the state, since it has been de rigueur since before the oldest living American was born. It's ironic that the rest of the world disdainfully refers to Americans as sheep, when the most sheep-like aspect of American culture is the way we've become so much like our friends abroad, just doing whatever the hell we're told and assuming someone will eventually fix the problems for us if we just keep on building a bigger and more expensive state.


Phaedrus

 

[eek.]

"no old fart left behind"

 

[JinnRikki]

The 900,000 dude also gets taxed at 40% which is

drumroll
360,000 per year...which takes care of about 10 bastard breeder familes per year,and other various layabouts.....who pays no tax and SS but draws both.

And, once again, please find me $900,000 dude actually paying $360,000 per and I will gladly prepare his taxes...for a small fee

 

[xpanda]

just to clarify for our curious northern neighbour.

I hope that when you say 'curious' you mean, 'would like to know.' The other definition is just so nasty!

 

[Phaedrus]

I'll admit I've had visions of you and Jinn getting all left-girlie with one another but I have a feeling that's not the sort of curiosity you mean ...

I did, in fact, mean "curious as in she asked a question."


Phaedrus

 

[JinnRikki]

Well, that would be exciting, I would have to undergo a sex change.....on second thought naaaw.:messed:

P....are you and gamefarce so in need of females on this board you're projecting?
I'm gonna change my handle if this happens again.

[font=Verdana, Arial, Helvetica, sans-serif][size=-1]Definition:[size=-1] Fiery spirits, one of which was Iblis. From the Arabic junna, "angry, possessed." Djinn are often disruptive, but can sometimes be of service to mankind. The word "genie" is a corruption of Djinn.[/size][/size][/font]
JINN I dropped the D to avoid confusion + a bastardization of my name RIKKI = JinnRikki.
An old girlfriend of mine hung this on me 'cause I drank gin at the time.
This probably way more than you wanted to know and more than I wanted to tell.

 

[Woody0]

For 2004 the maximum CPP contribution for employees is $1831.50. I believe the employer makes a similar contribution and that maximum pensionable earnings are slightly less than $40K.

Pension benefits are payable in full at age 65 and the maximum benefit is based on the number of years and amount of contribution. Currently the maximum pension is about $880 per month.