Friday, February 04, 2005


From the State of the Union

It is time for an immigration policy that permits temporary guest workers to fill jobs Americans will not take, that rejects amnesty, that tells us who is entering and leaving our country, and that closes the border to drug dealers and terrorists.

We might as well call it it the migrant farm worker bill. It's not that there are jobs that no American will do, it's just that American's won't do them for $3 an hour with no medical insurance.

I don't get it, when we're talking something like health care, the market is all-powerful. When we're talking cleaning bathrooms and picking cabbage, we have to import workers because snotty Americans are too good for those jobs. Why not just let the market decide?

And now the lies about Social Security begin:

And instead of 16 workers paying in for every beneficiary, right now it's only about three workers - and over the next few decades, that number will fall to just two workers per beneficiary. With each passing year, fewer workers are paying ever-higher benefits to an ever-larger number of retirees.

The scary ratio of workers to retirees is often thrown around as a sign SS is in imminent danger of failure. But it's not. Consider that workers in the future are expected to have fewer dependent children, even as they support more elderly. So if these balance out, it doesn't matter. Here is a better summary of this.

If you are a younger worker, I believe you should be able to set aside part of that money in your own retirement account, so you can build a nest egg for your own future.

We have that. It's called an IRA. It allows you to plan for your retirement by putting money away tax-free for the future (in the case of a traditional IRA). You can put it in just about any investment that you want, from stocks to mutual funds to bonds. Social Security is the back up plan in case you're one of the many people that doesn't make good investment choices. By eliminating Social Security and replacing it with an IRA-like scheme -- and make no mistake, that's exactly what we're talking here -- we'd be eliminating that backup, and putting all our eggs in one basket.

Your money will grow, over time, at a greater rate than anything the current system can deliver - and your account will provide money for retirement over and above the check you will receive from Social Security.

Ah, there's the rub. What happens when (not if) it doesn't? Another economic slowdown at some point in the future is inevitable. And since Social Security won't be funded as much as it has been in the past, it won't be able to make up the shortfall.

...raising the yearly limits on contributions over time, eventually permitting all workers to set aside four percentage points of their payroll taxes in their accounts.

Something tells me this is wrong. He probably means four percent of income, not four percent of payroll taxes. For a worker making $50,000, 4% of that 6% would be $120 a year. Hardly enough to support a retirement. So that should probably be 4% of a worker's total income.

But hey, 4% isn't a lot, is it? If you're making less than the SS cap (and pretty much everyone does), then about 6% of your income is taken out as Social Security. So he's talking about diverting 4% of income to the SS privatized accounts. That's 66% of the total SS contribution from the worker. (The employer contributes an additional 6%.)

Here was the big lie from the SotU:

[Social Security] is headed toward bankruptcy.

I don't use the term "lie" loosely. But I can think of no other appropriate term. From the Center for Economic and Policy Research, "Even after 2042 the program would always be able to pay retirees a higher benefit (in today's dollars) than what current retirees receive." Did you get that? That's even if the trust fund runs out! Paul Krugman agrees, "...even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits." That's a problem, yes, but it's hardly a catastrophic crisis.

This isn't a small deal. This is about one political party making radical and drastic changes to a very important program, and justifying it through distortion, half-truths, and spin. They are relying on the American public's poor math skills and general ignorance about Social Security to remake it how they will.

This is important shit. They can't be allowed to get away with it.

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