Social security privatization

[Websman]

I been hearing about Bush's plan to privatize Social Security. Here's part of an article I just saw on Yahoo...

"Bush envisions a framework that would partially privatize Social Security with personal investment accounts, similar to 401(k) plans, that would be voluntary for younger workers.


A starting point is a plan proposed by a presidential commission in 2001 to divert 2 percent of workers' payroll taxes into private accounts. The remaining 4.2 percent — and the payroll taxes employers pay — would go into the system, helping fund benefits for current retirees. That leaves an estimated shortfall of about $2 trillion to continue funding benefits for current retirees."

Kudlow and Cramer talked about it the other day and said that, if this happened, the stock market would see some huge gains. With the risk of getting into politics, I would have to agree. Can you imagine the markets reaction to all this new money flooding in at once? Who knows, maybe we could see another 90's bull run...

What do you guys think?

[Karel]

Nice for the market, nice for me and everyone already in, nice for those who arrive first, and horror for those who have to buy into the bubble. I did, unexperienced, some years ago, and lost half of my (invested) money. I am still busy to recoup those losses.

[Websman]

Looks like 7 -1 , so far in favor of privatization.

[billyjoe]

Webs, Sorry to be 2 1/2 months late in commenting on the Pres' Social Security plan. I do think it would be favorable for most of Mr. Market's forum
contributers and it would force many to become more serious about their investments, however, in my opinion, the average Joe would lose money doing his/her own investing. One contributer to the IBD forums admitted to losing money over the 20 or so years he's invested although he considered himself very knowledgeable and experienced. This is probably true of more investors than not, if they were to admit it.
The real question is does the government have the duty to protect the average citizen knowing they will fail in all likelihood if given the ability to make their own decisions in the stock market? Then again, we don't remain children forever and have to learn to fend for ourselves eventually.
billyjoe

[New-born baby]

Big Brother is a klutz

BillyJoe,

In Canada, the gov't has the Cans I mention on my thread. They offer the companies tax-exemption if the company pays out 50% or more of its income (not profits) to the shareholders. Thus PMT is paying 15%+ to all those who invest with it; AY 16%+, NVG 17.785%+, etc. In short, you don't have to be a genius to make the market pay. And then also the investor could simply place the money in a mutual fund and let professionals handle it for him.

My problem with SS and all the big brother programs is that it is going to bankrupt the USA--fairly soon. The history of the world is that republics (we are a representative republic) has generally lasted 200 years, and they have all died the same kind of death: the treasury goes bankrupt. The public learns that they can vote themselves money from the treasury, and bankrupcy follows, the gov't dies. A dictator follows.

Here we have out of control govt and consumer spending, a falling dollar, out-sourcing of jobs, and more and more welfare programs, even to corporations. It cannot go on forever. It will collapse in our lifetimes--no question about it.

We need privitization. But it is really inconsequential whether or not we get it, because it is too late so save this country from financial collapse. Short-sighted and selfish politicians have killed it.

[df21084]

BillyJoe,

We need privitization. But it is really inconsequential whether or not we get it, because it is too late so save this country from financial collapse. Short-sighted and selfish politicians have killed it.

New-born,

I hope you're wrong about the fate of the good old USA, but I have to agree with you about the politicians.

[Websman]

I agree that the average person will lose it all when they attempt to invest their own money, but for those of us that are already in the markets it will be very profitable. Basically we will be the ones taking their money. At least I'm on the winning side!

[mimo_100]

I voted against, even though at first glance it sounds like a good idea.

I think we need to wait to see what the final details are before making a solid opinion on this.

On the investment side, all a person would have to do is buy Series I bonds with the privatized money - you would not have to be a genius. As a matter of fact, if the social security monies over the years had been invested in US treasuries, the fund would be huge today with no problems at all. I saw a study on this years ago and will attempt to dig it back up and post a link here.

Tim

[Gatorman]

One of the problems with this debate is that it is waged at the extremes. Most arguments against privitization picture a person being turned loose with a fistful of money to throw at the market and them buying wildly and blindly. This is, of course, a recipe for disaster.
A more controlled process where choices are limited to areas such as T-Bills, tax exempt bonds, QQQQ's, SPDRS, blended mutual funds or the like can be successful. The problem we have today is that nobody wants to discuss alternatives in a rational manner. The rhetoric has taken over the discourse.
The one thing for sure is that if we do nothing, the present system will fail.
Therefore, I am for a system that, with safeguards, can replace our present low-yield system so all will benefit.

[New-born baby]

What's wrong with Freedom?

Gatorman, Webs, et al,

What's wrong with giving the individual his own money to do with it as he wishes? I believe in freedom, don't you? Are the overwhelming majority of people too incompetent to handle their own affairs? And if they are incompetent, then is big brother qualified to handle even his own affairs, let alone the affairs of all the people of the nation? For instance, can the Federal gov't handle its own money? Another budget proposed for 2006 with a $427 Billion or trillion, I don't remember, deficet--and that doesn't count the war in Iraq. Or emergencies. I don't think Congress can be trusted with a dime, so I don't think they are qualified to tell anybody how to handle their money.

I believe this: let freedom ring. Let people have the freedom to do what they think is best for themselves. If they fail, then let them bear the responsibility for their own failures. Don't bail them out with myriads of socialistic programs that the govt has stolen (they call it "taxation") from the producers to give to the non-producers. Socialism has never worked--ask the National Socialists of Hitler's Germany (called "NAZI party"), and ask the United Soviet Socialist Republic ("USSR"), and ask the Rome Empire that collapsed into the dust in 476 a.d.--if it was a successful economic policy. It destroys the moral fiber in its people.

[Gatorman]

New-Born:
There is absolutely nothing wrong with personal freedom coupled with personal responsibility. The problem is that we must introduce a modicum of reality.
If history has shown us anything, it is that the problem lies with accepting that responsibility. If those that "invest" fail, there would be a public outcry of epic proportions to save them from themselves.
Therefore, we must, with cooperation from both sides, formulate a plan that will limit risk but still result in substantial gain. A plan that starts with good intentions but ends up with a new entitlement program is no plan at all. This will be a very difficult task indeed and one that I hope can be accomplished.
The resultant problems created if nothing is done will be harder to solve.

[bec1nj]

Social security privatization

I am all for it (privatization) as after all it is YOUR money to begin with, not the government's!
Bruce