Good decision by Bush and company

[billvon 3,009]

>In trying to find a way to increase RRB revenues without raising taxes,
> Congress changed investment rules so that up to 65 percent of the
> railroad system's trust funds could be invested in the stock market. The
> changes involved "collective investment" of the funds rather than
> individual investment."

Again, a silly complication. Give railroad workers the right to invest their OWN money in a way of their OWN choosing. Or use it in any other way they choose. If a family has a sick child, they may well choose to not invest in their retirement for a while, choosing instead to spend the money on care for their child. Too bad our government would not allow that. That money's gotta go into the stock market!

The real reasoning behind the forced investment strategy is pretty clear. Most people with a lot of investment in the stock market are republicans; therefore, by forcing every american to invest in the stock market, they can create more republicans. A poor reason to separate people from their money IMO.

[Jimbo 0]

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The real reasoning behind the forced investment strategy is pretty clear. Most people with a lot of investment in the stock market are republicans; therefore, by forcing every american to invest in the stock market, they can create more republicans. A poor reason to separate people from their money IMO.

Oh my God! Bill, are you serious?

-
Jim

"Like" - The modern day comma
Good bye, my friends. You are missed.

[billvon 3,009]

>Oh my God! Bill, are you serious?

It's certainly not the only reason, but is certainly one of the reasons. Any political figure would surely be a fool if he did not have analysts figuring out how any action he took benefited or detracted from his party's position. And a nation of stock market investors would be a boon for republicans.

It's like the "the Iraq war is all about oil!" thing. It's silly to say it was all about oil, but it's even sillier to say that it has absolutely nothing to do with oil.

Republican attitudes can perhaps best be summed up by the late Sen. Moynihan's comments, as reported by Taylor Armerding of the Eagle-Tribune:

----------------
Former Democratic U.S. Sen. Bob Kerrey recalls Moynihan telling him that the reason Democrats are so afraid of Social Security reform is because it might make people wealthy, "and they worry that wealth will turn Democrats into Republicans."
--------------

[Jimbo 0]

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Former Democratic U.S. Sen. Bob Kerrey recalls Moynihan telling him that the reason Democrats are so afraid of Social Security reform is because it might make people wealthy, "and they worry that wealth will turn Democrats into Republicans."

Of course it will! It's worked so well with Soros, and then there's the Hollywood types!

-
Jim

"Like" - The modern day comma
Good bye, my friends. You are missed.

[DrewEckhardt 0]

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You know, that's a good idea. We SHOULD have a way to control where payroll deductions for retirement go! That way we could choose to invest in a high risk fund when we're young, and switch to a lower-risk one when we're old. And it should be tax-free to encourage its usage. And it should be voluntary. Have some very basic government-administered system in case the stock market crashes (so seniors don't starve to death when the market tanks) but otherwise have people rely on their own tax-free retirement accounts!

Oh wait. We have them. They're called 401k's. Looks like Bush and co have realized that, fortunately.

While I'm counting on my 401K and other investments to fund my retirement, I'd be very happy with payroll tax diversion into private accounts especially when we can make dangerous investments like 5-year fixed rate CDs.

Provided that in the next 38 years the government increases benefits at the rate of inflation, doesn't increase the retirement age for full benefits, doesn't increase the wage cap faster than inflation, and doesn't decrease benefits for people that spent less and saved more before retirement (like working couples that give up the luxuries you could buy with $19K a year in favor of putting the $28K legal limit into their 401Ks) I'll need to survive nine years beyond my statistically expected life span to get out what I put in.

With my Social security savings going into a private account I or my heirs will be insulated from government policy changes and will have all the money if aged steaks marbled with fat kill me early or the government decides that frugal living made me too rich to take the full benefit.

With inflation at 3% and my bank paying 4.2% on CDs, I'll come out ahead with 25% more if I can make that dangerous investment with pre-tax dollars.

The stock market as a whole does much better averaging 5-7% after inflation including sore points like the great depression and crash in the 80s. At those rates my money would be doubling every 10-14 years and yield 3-5X what I'd get from Social Security. A month long 40% loss like in the great depression close to retirement would reduce my gains to a mere 180% - 300% of what Social Security would pay me.

Social Security is a horrible retirement plan.

It does provide a useful safety net for the disabled, widowed non-working spouses, working poor who can't save for retirement, and fiscally irresonsible.

This is a separate issue which should exist as a budget item in the expenses column without the regressive tax and creative accounting that goes with the current system.

Depending on how you define working class and wealthy, the current system comes with a regressive tax where working class salaries are hit with a marginal tax rate up to 12.4% higher than wealthy people's salaries. This tax rate is up to 27% higher than the wealthy are paying on other income. Ludicrous.

Under the current system, the budget deficit is reduced on paper by Social Security revenues exceeding its current obligations. We don't have honesty in accounting.

Social Security needs an over-haul where the retirement savings plan is separated from the rest. We need to do away with the regressive payroll tax. We need to close the accounting loophole.

Doing all that at once is not politically viable.

A payroll tax diversion to private accounts is a good first step to reduce the working class burden, increase retirement savings, and protect people from government policy changes.

While I trust Bush 43 less than a used car salesman and question the motives behind his implementation, the basic idea is wonderful.

[JohnRich 4]

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The real reasoning behind the forced investment strategy is pretty clear. Most people with a lot of investment in the stock market are republicans; therefore, by forcing every american to invest in the stock market, they can create more republicans.

So it's better to keep them poor and democrat?

[Ron 10]

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So it's better to keep them poor and democrat?

Yes of course.

http://www.flashbunny.org/content/partyoftherich.html

If people don't need to be supported and get sick of others living off of their dime....The Dems are lost.

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[billvon 3,009]

>So it's better to keep them poor and democrat?

So you admit that part of the reason to push this through is for the GOP's political gain, eh? Interesting.

But why stop there? Why not require everyone to invest in stocks that specifically address pollution and energy problems, like solar power generators, organic farms, alternative fuels etc? That would help the country _and_ allow people to invest. The reason the GOP will never agree to that is that that might create rich democrats - and that would be death to the GOP.

But to answer your original question - I don't think the government's job is to make ANYONE rich OR republican. You want money? Work for it. Don't sit around expecting the government to dole out money or decide what you should be investing in.

[rehmwa 2]

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>Why not require everyone to invest in stocks that specifically address pollution and energy problems, like solar power generators, organic farms, alternative fuels etc? That would help the country _and_ allow people to invest. The reason the GOP will never agree to that is that that might create rich democrats - and that would be death to the GOP.

But to answer your original question - I don't think the government's job is to make ANYONE rich OR republican. You want money? Work for it. Don't sit around expecting the government to dole out money or decide what you should be investing in.

Stop stereotyping, I don't see in your 'preferred list of stocks' how those categories are in the province of a particular political party. If those investments are profitable, then they'd be good for a dem or rep or etc.

If we are stereotyping here, the last statement is very GOP, but you state the above list of forced stocks = democrat (and we all know that list is the Billvon utopia definition - i.e., we are all screwed up until we live the Billvon lifestyle).

If you don't keep yours stereotypes straight, how are we to prejudge you?

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[billvon 3,009]

>I don't see in your 'preferred list of stocks' how those categories are in
>the province of a particular political party. If those investments are
>profitable, then they'd be good for a dem or rep or etc.

Democrats and republicans have specific characteristics that political operatives know and exploit. Listen to all the talk of "Bush is alienating the blacks" or "Kerry is scoring well with 18-35 year old women." A political operative might well decide that owning banking stocks selects for republicans, but owning Whole Food stock selects for democrats. And thus if a democrat is in power, he might well try to force the federal investment bankers to invest in Whole Foods. Or perhaps a republican would decide that bankrupting Whole Foods would be good for the GOP and bad for the liberal BoBos; he might well announce they consider Whole Foods to be a poor performer, and thus drive their stock into their basement with the massive influence of the Federal Goverment's investment banking division.

You really want our government playing the market (and the parties) like that? If you think they would never do something like that, I got a bridge in NY that you would love.

>and we all know that list is the Billvon utopia definition - i.e., we are
>all screwed up until we live the Billvon lifestyle.

Well, of course! How can anyone live in a utopia unless everyone is just like me?

>If you don't keep yours stereotypes straight, how are we to prejudge you?

It's easy. If you're an environmentalist, I'm a right wing money grubbing greedy bastard. If you're a young republican, I'm a tree-hugging, america-hating nut.

[SkydivingNurse 0]

Second!
(let me don my evil costume for a sec...)
What is it about getting old that entitles you to MY money?

[headoverheels 333]

"Even in the narrow context of trust fund accounting, investing in stocks is not a reliable way to increase trust fund balances. Although stocks can be expected to outperform bonds, on average (a difference often referred to as the "equity premium"), the performance of the stock market is never certain. Indeed, even over long periods of time, there is a chance that stocks could perform worse--perhaps much worse--than bonds. According to historical data, investors face about a 25 percent chance of realizing lower returns from holding a portfolio of S&P 500 stocks for 10 years than from holding 10-year government bonds over the same period.(11)

Even during the great postwar boom of the past 50 years, stocks have returned no more than Treasury debt in some long periods. For example, between 1966 and 1981, the real rate of return on stocks was -0.4 percent, lower than the real rate of return on short-term Treasury securities (-0.2 percent).(12) More recently, in the 12 months that ended on September 30, 2002, the S&P 500 portfolio fell by 20.5 percent, while bonds (as measured by Barclay's U.S. Debt Index) provided returns of 8.6 percent.

It is the risk of greater potential losses that causes investors to demand a premium to hold stocks rather than bonds. Stocks must provide higher returns than bonds, on average, because otherwise no one would be willing to invest in them."

quoted from http://www.cbo.gov/showdoc.cfm?index=4023&sequence=0

[JohnRich 4]

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Although stocks can be expected to outperform bonds, on average (a difference often referred to as the "equity premium"), the performance of the stock market is never certain. Indeed, even over long periods of time, there is a chance that stocks could perform worse--perhaps much worse--than bonds. According to historical data, investors face about a 25 percent chance of realizing lower returns from holding a portfolio of S&P 500 stocks for 10 years than from holding 10-year government bonds over the same period.

A 10-year investment period is irrelevant in the context of this retirement fund discussion. For our purposes here, we're talking about an investment that starts when you're about 18 years old, and continues to receive funds until you are 65 or so - a period of 47 years! Pick any 47-year period in the history of the U.S. stock market, even one that spans the Great Depression, and you'll see huge gains in investment value.

[kallend 2,032]

Quote

Quote

Although stocks can be expected to outperform bonds, on average (a difference often referred to as the "equity premium"), the performance of the stock market is never certain. Indeed, even over long periods of time, there is a chance that stocks could perform worse--perhaps much worse--than bonds. According to historical data, investors face about a 25 percent chance of realizing lower returns from holding a portfolio of S&P 500 stocks for 10 years than from holding 10-year government bonds over the same period.

A 10-year investment period is irrelevant in the context of this retirement fund discussion. For our purposes here, we're talking about an investment that starts when you're about 18 years old, and continues to receive funds until you are 65 or so - a period of 47 years! Pick any 47-year period in the history of the U.S. stock market, even one that spans the Great Depression, and you'll see huge gains in investment value.

Well, if you go to grad school followed by professional school that 47 years might turn out to be more like 35.


edited for font adjustment.

...

The only sure way to survive a canopy collision is not to have one.

[JohnRich 4]

Quote

Quote

A 10-year investment period is irrelevant in the context of this retirement fund discussion. For our purposes here, we're talking about an investment that starts when you're about 18 years old, and continues to receive funds until you are 65 or so - a period of 47 years! Pick any 47-year period in the history of the U.S. stock market, even one that spans the Great Depression, and you'll see huge gains in investment value.

Well, if you go to grad school followed by professional school that 47 years might turn out to be more like 35.

Regarding "grad school": that's why I said "about 18 years old", and "until you are 65 or so". Of course, individual circumstances will vary. I was speaking of people generally. And even those who go to grad school, may work part time, contributing to social security.

Even with a 35-year working span, the principal still applies.

[billvon 3,009]

>Pick any 47-year period in the history of the U.S. stock market, even
>one that spans the Great Depression, and you'll see huge gains in
>investment value.

There is no question that you can see huge gains in the stock market, and on average, people make a lot of money. The problem is that in _specific_ cases you can lose almost everything, which people do with great regularity. That's fine for someone voluntarily investing in a 401k. It's not fine for a government-mandated fund that is intended to keep people from starving.

[JohnRich 4]

Quote

The problem is that in _specific_ cases you can lose almost everything, which people do with great regularity. That's fine for someone voluntarily investing in a 401k. It's not fine for a government-mandated fund that is intended to keep people from starving.

Well, if we do nothing, everyone on Social Security will get nothing ("starving"), because the fund is going broke.

So it seems to me that you have got yourself into a Catch-22 here.

I think people should have freedom of choice. If they want to go with a percentage in a private account, give them that choice, and let them live with the consequences, good or bad. If others think that is too risky, they can stick with the old plan. The choice is voluntary, but at least people will have a choice. I don't see why so many Democrats think that is such a horrible thing...

I notice that the Democrats don't want Bush's changes. But they don't propose any alternative plan either. That's a nice strategy! I think the quote I heard (from Boxer?) was: "There will be no proposition, only opposition!"

[wmw999 2,461]

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Well, if we do nothing, everyone on Social Security will get nothing ("starving"), because the fund is going broke.

There are lots of bad things that will happen earlier if we do nothing. For instance, Medicare will be in a world of hurt long before Social Security will even cut benefits, never mind quit paying at all.

Good triage means taking the most emergent problems first, and filling in the ones that are easy and definitive to fix.

The current social security fix is neither particularly emergent, nor is it easy and definitive.

Wendy W.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[billvon 3,009]

>Well, if we do nothing, everyone on Social Security will get nothing
>("starving"), because the fund is going broke.

I agree. So - figure out what the absolute minimum people need to live is. Reduce/increase SS benefits to match that. Then reduce/increase taxes to match that.

Everyone is making a big stink about how we should add stuff to SS. Add a personal investment account with a personal investment banker and a personal customized portfolio; that should only cost a few billion to administer. We don't need to be spending more money right now. You may have noticed we have a bit of a deficit problem.

Republicans seem to be saying that people can afford to risk some of their retirement in a high-risk stock fund. If that's the case, then clearly there is extra money in SS. Reduce SS benefits until it really _is_ just a safety net, then give people back their own money.

>I think people should have freedom of choice. If they want to go with
> a percentage in a private account, give them that choice, and let
> them live with the consequences, good or bad.

Agree 100%. Get the goverment the hell out of the retirement business and let people put their own money in their own retirement accounts. SS should be a safety net if all else fails; nothing more.

>I notice that the Democrats don't want Bush's changes. But they
> don't propose any alternative plan either.

Well, I'm neither one. My alternative is simple - reduce SS to the minimum people need to live on. Take some of the savings and fund SS forever. Take the balance of the savings and give it to people so they can put their own money in their own investment accounts of their own choosing. Stop expecting the government to do your investing for you.