Social Security reform chatter is everywhere, and it's likely that at
some point, you're going to be cornered by the water cooler or in the
cafeteria and asked what you think. Your conversation partner may even
be (gasp) a conservative. So be ready. This guide from Think Progress (a
project of the American Progress Action Fund) includes point-by-point
claims in the Bush administration's words, coupled with the real facts
about Social Security. Make sure you're able to explain to a
conservative why that "personal" account won't really be yours to
control, or why passing on account money to your grandchildren won't be
possible. SEE THE GUIDE

http://thinkprogress.org/index.php?p=206

On Mon, 28 Feb 2005 16:58:09 GMT, "Jim," wrote:

Social Security reform chatter is everywhere, and it's likely that at
some point, you're going to be cornered by the water cooler or in the
cafeteria and asked what you think. Your conversation partner may even
be (gasp) a conservative. So be ready. This guide from Think Progress (a
project of the American Progress Action Fund) includes point-by-point
claims in the Bush administration's words, coupled with the real facts
about Social Security. Make sure you're able to explain to a
conservative why that "personal" account won't really be yours to
control, or why passing on account money to your grandchildren won't be
possible. SEE THE GUIDE

http://thinkprogress.org/index.php?p=206


Here's some good thinking:

FACT: Analysis of the plan so far does not prove the [personal] accounts would
be a better deal for anyone not working on Wall Street. Workers who opt for the
private accounts would recover forfeited benefits through their accounts only
“if their investments realized a return equal to or greater than the 3 percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either. History shows
it would likely be a better deal than the 3% earned by bonds. Is there risk?
Sure.

But, people can always stop putting their money into risky accounts. In fact,
they can stop participation at any time.

I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!

Do we assume people have the responsibility to make baby-killing decisions but
not monthly investment decisions?

John H

On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!

"Divide each difficulty into as many parts as is feasible and necessary to resolve it."
Rene Descartes

John H wrote:
Here's some good thinking:


Oh yeah.

FACT: Analysis of the plan so far does not prove the [personal] accounts would
be a better deal for anyone not working on Wall Street. Workers who opt for the
private accounts would recover forfeited benefits through their accounts only
“if their investments realized a return equal to or greater than the 3 percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either. History shows
it would likely be a better deal than the 3% earned by bonds. Is there risk?
Sure.


And you don't see any problem with introducing RISK into a program
titled "Social Security"? Maybe you'd like to see the Homeland Security
Dept embrace the policy putting your life & your family at risk?


But, people can always stop putting their money into risky accounts. In fact,
they can stop participation at any time.


AFAIK paying into Social Security is not "voluntary."

I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!


Personally, I'm not anti-choice at all. However I am very definitely
against the diversion of Social Security funds to politically favored
Wall St brokerages, so that a portion can be returned as campaign
contributions (an accurate term would be "kickbacks").



Do we assume people have the responsibility to make baby-killing decisions but
not monthly investment decisions?


There is no reason whatever you can't invest your own money as you like.
You are obviously trying to dodge the issue that this is a case of the
gov't taking your money and giving it to private enterprise, on the
gamble that you might get some of it back later.

DSK

John H wrote:

On Mon, 28 Feb 2005 16:58:09 GMT, "Jim," wrote:


Social Security reform chatter is everywhere, and it's likely that at
some point, you're going to be cornered by the water cooler or in the
cafeteria and asked what you think. Your conversation partner may even
be (gasp) a conservative. So be ready. This guide from Think Progress (a
project of the American Progress Action Fund) includes point-by-point
claims in the Bush administration's words, coupled with the real facts
about Social Security. Make sure you're able to explain to a
conservative why that "personal" account won't really be yours to
control, or why passing on account money to your grandchildren won't be
possible. SEE THE GUIDE

http://thinkprogress.org/index.php?p=206



Here's some good thinking:

FACT: Analysis of the plan so far does not prove the [personal] accounts would
be a better deal for anyone not working on Wall Street. Workers who opt for the
private accounts would recover forfeited benefits through their accounts only
“if their investments realized a return equal to or greater than the 3 percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either. History shows
it would likely be a better deal than the 3% earned by bonds. Is there risk?
Sure.

Except the blended return of bonds held by the SS administration is
closer to 5%. The 3% figure is only for the most recent bonds, and
rates are rising again.

Here are todays numbers note the 30 year return is 5.375%
From http://www.bloomberg.com/markets/rates/
(note that unlike you *I* always try to give a source for my data, so
people can check what i say)
U.S. TREASURIES
Bills
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
3-Month N.A. 05/26/2005 2.69/2.74 0.00/.015 11:14
6-Month N.A. 08/25/2005 2.89/2.97 -0.01/.031 10:54
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 3.375 02/28/2007 99-19/3.58 -0-03/.053 12:22
3-Year 3.375 02/15/2008 98-31/3.74 -0-06/.068 12:23
5-Year 3.500 02/15/2010 97-27/3.98 -0-12/.085 12:24
10-Year 4.000 02/15/2015 97-06/4.35 -0-21/.084 12:24
30-Year 5.375 02/15/2031 109-29/4.71 -1-06/.074 12:23




But, people can always stop putting their money into risky accounts. In fact,
they can stop participation at any time.

I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!

Do we assume people have the responsibility to make baby-killing decisions but
not monthly investment decisions?

John H

On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!

"Divide each difficulty into as many parts as is feasible and necessary to resolve it."
Rene Descartes

On Mon, 28 Feb 2005 12:31:21 -0500, DSK wrote:

John H wrote:
Here's some good thinking:


Oh yeah.

FACT: Analysis of the plan so far does not prove the [personal] accounts would
be a better deal for anyone not working on Wall Street. Workers who opt for the
private accounts would recover forfeited benefits through their accounts only
“if their investments realized a return equal to or greater than the 3 percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either. History shows
it would likely be a better deal than the 3% earned by bonds. Is there risk?
Sure.


And you don't see any problem with introducing RISK into a program
titled "Social Security"? Maybe you'd like to see the Homeland Security
Dept embrace the policy putting your life & your family at risk?

No more so than putting RISK into the thrift savings plan, 403b plans, 401K
plans, Traditional IRAs, Roth IRAs! If it's my choice, it's my risk. Your
Homeland Security analogy was somewhat ridiculous, so I won't comment thereon.


But, people can always stop putting their money into risky accounts. In fact,
they can stop participation at any time.


AFAIK paying into Social Security is not "voluntary."

No, but putting any of it into a personal savings account would be.

I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!


Personally, I'm not anti-choice at all. However I am very definitely
against the diversion of Social Security funds to politically favored
Wall St brokerages, so that a portion can be returned as campaign
contributions (an accurate term would be "kickbacks").

Do you think all the Congressmen putting their money into the Thrift Savings
Plan are doing so just to fatten the wallets in Wall Street. You're reiterating
the panic crap espoused by some of the more notable Bush-haters.

Do we assume people have the responsibility to make baby-killing decisions but
not monthly investment decisions?

There is no reason whatever you can't invest your own money as you like.
You are obviously trying to dodge the issue that this is a case of the
gov't taking your money and giving it to private enterprise, on the
gamble that you might get some of it back later.

Do you know *anything* about the Thrift Savings Plan used by government workers,
to include Senators and Representatives?

Lastly, the government wouldn't be *taking* anything. The program would be
voluntary, as has been stated continuously. Again, do we assume people have the
responsibility to make baby-killing decisions but not monthly investment
decisions?

DSK

John H

On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!

"Divide each difficulty into as many parts as is feasible and necessary to resolve it."
Rene Descartes

On Mon, 28 Feb 2005 17:42:46 GMT, "Jim," wrote:

John H wrote:

On Mon, 28 Feb 2005 16:58:09 GMT, "Jim," wrote:


Social Security reform chatter is everywhere, and it's likely that at
some point, you're going to be cornered by the water cooler or in the
cafeteria and asked what you think. Your conversation partner may even
be (gasp) a conservative. So be ready. This guide from Think Progress (a
project of the American Progress Action Fund) includes point-by-point
claims in the Bush administration's words, coupled with the real facts
about Social Security. Make sure you're able to explain to a
conservative why that "personal" account won't really be yours to
control, or why passing on account money to your grandchildren won't be
possible. SEE THE GUIDE

http://thinkprogress.org/index.php?p=206



Here's some good thinking:

FACT: Analysis of the plan so far does not prove the [personal] accounts would
be a better deal for anyone not working on Wall Street. Workers who opt for the
private accounts would recover forfeited benefits through their accounts only
“if their investments realized a return equal to or greater than the 3 percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either. History shows
it would likely be a better deal than the 3% earned by bonds. Is there risk?
Sure.

Except the blended return of bonds held by the SS administration is
closer to 5%. The 3% figure is only for the most recent bonds, and
rates are rising again.

Here are todays numbers note the 30 year return is 5.375%
From http://www.bloomberg.com/markets/rates/
(note that unlike you *I* always try to give a source for my data, so
people can check what i say)
U.S. TREASURIES
Bills
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
3-Month N.A. 05/26/2005 2.69/2.74 0.00/.015 11:14
6-Month N.A. 08/25/2005 2.89/2.97 -0.01/.031 10:54
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 3.375 02/28/2007 99-19/3.58 -0-03/.053 12:22
3-Year 3.375 02/15/2008 98-31/3.74 -0-06/.068 12:23
5-Year 3.500 02/15/2010 97-27/3.98 -0-12/.085 12:24
10-Year 4.000 02/15/2015 97-06/4.35 -0-21/.084 12:24
30-Year 5.375 02/15/2031 109-29/4.71 -1-06/.074 12:23




But, people can always stop putting their money into risky accounts. In fact,
they can stop participation at any time.

I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!

Do we assume people have the responsibility to make baby-killing decisions but
not monthly investment decisions?


The 3% figure came from *your* reference, which apparently I read but you
didn't.

Now go back and check the stock market figures for the last 40 years.

John H

On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!

"Divide each difficulty into as many parts as is feasible and necessary to resolve it."
Rene Descartes

John H wrote:
On Mon, 28 Feb 2005 17:42:46 GMT, "Jim," wrote:


John H wrote:


On Mon, 28 Feb 2005 16:58:09 GMT, "Jim," wrote:



Social Security reform chatter is everywhere, and it's likely that at
some point, you're going to be cornered by the water cooler or in the
cafeteria and asked what you think. Your conversation partner may even
be (gasp) a conservative. So be ready. This guide from Think Progress (a
project of the American Progress Action Fund) includes point-by-point
claims in the Bush administration's words, coupled with the real facts
about Social Security. Make sure you're able to explain to a
conservative why that "personal" account won't really be yours to
control, or why passing on account money to your grandchildren won't be
possible. SEE THE GUIDE

http://thinkprogress.org/index.php?p=206



Here's some good thinking:

FACT: Analysis of the plan so far does not prove the [personal] accounts would
be a better deal for anyone not working on Wall Street. Workers who opt for the
private accounts would recover forfeited benefits through their accounts only
“if their investments realized a return equal to or greater than the 3 percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either. History shows
it would likely be a better deal than the 3% earned by bonds. Is there risk?
Sure.

Except the blended return of bonds held by the SS administration is
closer to 5%. The 3% figure is only for the most recent bonds, and
rates are rising again.

Here are todays numbers note the 30 year return is 5.375%
From http://www.bloomberg.com/markets/rates/
(note that unlike you *I* always try to give a source for my data, so
people can check what i say)
U.S. TREASURIES
Bills
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
3-Month N.A. 05/26/2005 2.69/2.74 0.00/.015 11:14
6-Month N.A. 08/25/2005 2.89/2.97 -0.01/.031 10:54
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 3.375 02/28/2007 99-19/3.58 -0-03/.053 12:22
3-Year 3.375 02/15/2008 98-31/3.74 -0-06/.068 12:23
5-Year 3.500 02/15/2010 97-27/3.98 -0-12/.085 12:24
10-Year 4.000 02/15/2015 97-06/4.35 -0-21/.084 12:24
30-Year 5.375 02/15/2031 109-29/4.71 -1-06/.074 12:23




But, people can always stop putting their money into risky accounts. In fact,
they can stop participation at any time.

I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!

Do we assume people have the responsibility to make baby-killing decisions but
not monthly investment decisions?



The 3% figure came from *your* reference, which apparently I read but you
didn't.

The 3% figure was in the article because that's the number the
administration is tossing around to push their plan. The number is
BOGUS -- see the rate of return on bonds (and remember this is a low point)

Now go back and check the stock market figures for the last 40 years.




from the December 27, 2004 edition -
http://www.csmonitor.com/2004/1227/p01s03-cogn.html

One man's retirement math: Social Security wins
By David R. Francis | Staff writer of The Christian Science Monitor

At the heart of President Bush's plan to sell Social Security private
accounts is a simple notion: You're always better off investing your
retirement money than letting the government do it.

By doing it yourself, you can stow some money in the stock market, and
over the long run will get a better return on that investment than
today's Social Security system offers.

The idea is broadly accepted. That's why the administration's plan to
partially privatize the system sounds appealing to many. But that better
return won't always happen.

Just ask Stanley Logue of San Diego.

For 45 years, the defense-industry analyst paid into the system until
his retirement in 1994. But with all the recent hoopla over reform, Mr.
Logue, a Massachusetts Institute of Technology graduate, decided to go
back and check his own records. Would he have done better investing his
money than the bureaucrats at the Social Security Administration?

He recorded all the payroll taxes he paid into the system (including the
matching amount from his employer), tracked down the return the Social
Security Trust Fund earned for each of the 45 years, and then compared
the result with what he would have gotten had he been able to invest the
same amount of payroll tax money over the same period in the Dow Jones
Industrial Average (including dividends).

To his surprise, the Social Security investment won out: $261,372 versus
$255,499, a difference of $5,873.

It's an astonishing finding. The DJIA represents blue-chip stocks.
Social Security invests in US Treasury bonds. Over long periods of time,
stocks have consistently outperformed bonds. So, you would think that
Logue's theoretical stock investments from 1950 to 1994 would have
surely outpaced the return on government bonds.

The fact that they didn't illustrates one of the hard truths about stock
investing: Timing matters.

Although Logue started pouring money into Social Security in the 1950s
and early 1960s, some of the best years for stocks, he hadn't
accumulated a lot of money.

So the gains of his theoretical stock portfolio would have been limited.

By the time he had substantial sums, the market swooned for long
periods. From 1965 to 1982, for instance, the DJIA made no progress.
Logue retired before the real run-up in stocks in the latter half of the
late 1990s.

So the real lesson from his analysis is that any pension plan based on
stock investments carries extra risks.

Advocates of privatization point out - correctly - that Logue's analysis
compares theoretical stock returns with what the Social Security Trust
Fund earned - not what he himself would get from the system.

From that perspective, the investment approach looks better, they
argue. Over the long run, a typical worker can expect to earn 4.6
percent a year (after administrative costs) on a diversified portfolio
of stocks and bonds and only about 2 percent or less from Social
Security, according to federal estimates reported by Michael Tanner of
the Cato Institute, long a proponent of privatization. Hypothetically,
someone earning $30,000 annually would at the end of a 40-year career
receive nearly twice as much under the investment approach ($344,000)
than with Social Security ($185,000).

Who's right: Logue or Mr. Tanner?

The debate hinges considerably on what people want their retirement
system to be. Social Security has always been an insurance program. It
was never intended as an investment scheme. So everyone - retirees, the
disabled, widows, and orphans - receive guaranteed monthly income. The
"return" on their Social Security contributions depends largely on how
long they live. Those in their 90s have enjoyed superb returns. Those
who don't live as long benefit less.

Private accounts, by contrast, involve far more variability, both sides
agree. Individuals who enter and exit the market at the right times
would undoubtedly do better under privatization.

But under Britain's privatized pension system, so many retirees are
doing so poorly at this moment that a commission warned this fall that
widespread poverty among the elderly may be returning, which could
require massive new government spending.

Presumably, President Bush's plan would offer the choice to meld
insurance and private investment: much less guaranteed income in return
for the opportunity - and risk - of earning more in the markets.

"Because financial asset returns are volatile, benefits under a personal
account system would fluctuate," notes Bill Dudley, an economist at
Goldman, Sachs & Co., a New York investment bank. "On a risk-adjusted
basis, the privatized account ... becomes much less compelling."

There are other problems with private accounts. Administration expenses
of the present Social Security system are minuscule compared with the
size of the benefits provided. The Bush administration so far has
provided no details on its private accounts plan. But if these are
handled by Wall Street, the fees could be sizable, dissipating some of
the return from investing in stocks. Logue takes no account of such
expenses in his analysis.

Further, administrative costs and difficulties for private business
could be large as companies, big and small, try to deduct the right
amount from a payroll and put it into a private account in a timely fashion.

A study by the Congressional Research Service (CRS) notes some
complexities: 650,000 employers go out of business or start new
businesses each year. More than 4 million employers have 10 or fewer
employees, often having record-keeping problems and errors. About 12
million to 15 million individuals are self-employed and presumably would
have to send money directly to a private account.

So the complexities of change are substantial. If the extra return from
privatization is not very advantageous, "why even consider changes that
all agree would be very disruptive?" asks Logue.

John H

On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!

"Divide each difficulty into as many parts as is feasible and necessary to resolve it."
Rene Descartes

John H wrote:
Do you think all the Congressmen putting their money into the Thrift Savings
Plan are doing so just to fatten the wallets in Wall Street.

That's not Bush's plan. It's been mentioned as a possible option, with
the change that it would be a seperate account (handled of course, by
favored Wall St'ers)

... You're reiterating
the panic crap espoused by some of the more notable Bush-haters.


You're reiterating the distortions and outright lies of the Bush-Cheney
spin machine.



There is no reason whatever you can't invest your own money as you like.
You are obviously trying to dodge the issue that this is a case of the
gov't taking your money and giving it to private enterprise, on the
gamble that you might get some of it back later.


Do you know *anything* about the Thrift Savings Plan used by government workers,
to include Senators and Representatives?

More than you, apparently.


Lastly, the government wouldn't be *taking* anything.

Really? Is the gov't not taking your money when it pulls in Social
Security taxes?

... Again, do we assume people have the
responsibility to make baby-killing decisions but not monthly investment
decisions?


This seems to be a buzz-phrase for you. Where does this come from? Are
people not able to make savings & investment decisions now? Preventing
the diversion of Social Security taxes into "private investment
accounts" in no way diminishes people's ability to invest their money as
they choose.

JimH wrote:

"Jim," wrote in message
...

John H wrote:

On Mon, 28 Feb 2005 17:42:46 GMT, "Jim," wrote:



John H wrote:



On Mon, 28 Feb 2005 16:58:09 GMT, "Jim," wrote:




Social Security reform chatter is everywhere, and it's likely that at
some point, you're going to be cornered by the water cooler or in the
cafeteria and asked what you think. Your conversation partner may even
be (gasp) a conservative. So be ready. This guide from Think Progress
(a project of the American Progress Action Fund) includes
point-by-point claims in the Bush administration's words, coupled with
the real facts about Social Security. Make sure you're able to explain
to a conservative why that "personal" account won't really be yours to
control, or why passing on account money to your grandchildren won't be
possible. SEE THE GUIDE

http://thinkprogress.org/index.php?p=206



Here's some good thinking:

FACT: Analysis of the plan so far does not prove the [personal] accounts
would
be a better deal for anyone not working on Wall Street. Workers who opt
for the
private accounts would recover forfeited benefits through their accounts
only
“if their investments realized a return equal to or greater than the 3
percent
earned by Treasury bonds currently held by the Social Security system.”

Of course, analysis doesn't prove it would be a worse deal either.
History shows
it would likely be a better deal than the 3% earned by bonds. Is there
risk?
Sure.

Except the blended return of bonds held by the SS administration is
closer to 5%. The 3% figure is only for the most recent bonds, and rates
are rising again.

Here are todays numbers note the 30 year return is 5.375%

From http://www.bloomberg.com/markets/rates/

(note that unlike you *I* always try to give a source for my data, so
people can check what i say)
U.S. TREASURIES
Bills
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
3-Month N.A. 05/26/2005 2.69/2.74 0.00/.015 11:14
6-Month N.A. 08/25/2005 2.89/2.97 -0.01/.031 10:54
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 3.375 02/28/2007 99-19/3.58 -0-03/.053 12:22
3-Year 3.375 02/15/2008 98-31/3.74 -0-06/.068 12:23
5-Year 3.500 02/15/2010 97-27/3.98 -0-12/.085 12:24
10-Year 4.000 02/15/2015 97-06/4.35 -0-21/.084 12:24
30-Year 5.375 02/15/2031 109-29/4.71 -1-06/.074 12:23





But, people can always stop putting their money into risky accounts. In
fact,
they can stop participation at any time.
I still can't understand how a bunch of 'pro-choice' folks can be so
'anti-choice'!

Do we assume people have the responsibility to make baby-killing
decisions but
not monthly investment decisions?



The 3% figure came from *your* reference, which apparently I read but you
didn't.

The 3% figure was in the article because that's the number the
administration is tossing around to push their plan. The number is
BOGUS -- see the rate of return on bonds (and remember this is a low
point)

Now go back and check the stock market figures for the last 40 years.




from the December 27, 2004 edition -
http://www.csmonitor.com/2004/1227/p01s03-cogn.html

One man's retirement math: Social Security wins
By David R. Francis | Staff writer of The Christian Science Monitor

At the heart of President Bush's plan to sell Social Security private
accounts is a simple notion: You're always better off investing your
retirement money than letting the government do it.

By doing it yourself, you can stow some money in the stock market, and
over the long run will get a better return on that investment than today's
Social Security system offers.

The idea is broadly accepted. That's why the administration's plan to
partially privatize the system sounds appealing to many. But that better
return won't always happen.

Just ask Stanley Logue of San Diego.

For 45 years, the defense-industry analyst paid into the system until his
retirement in 1994. But with all the recent hoopla over reform, Mr. Logue,
a Massachusetts Institute of Technology graduate, decided to go back and
check his own records. Would he have done better investing his money than
the bureaucrats at the Social Security Administration?

He recorded all the payroll taxes he paid into the system (including the
matching amount from his employer), tracked down the return the Social
Security Trust Fund earned for each of the 45 years, and then compared the
result with what he would have gotten had he been able to invest the same
amount of payroll tax money over the same period in the Dow Jones
Industrial Average (including dividends).

To his surprise, the Social Security investment won out: $261,372 versus
$255,499, a difference of $5,873.

It's an astonishing finding. The DJIA represents blue-chip stocks. Social
Security invests in US Treasury bonds. Over long periods of time, stocks
have consistently outperformed bonds. So, you would think that Logue's
theoretical stock investments from 1950 to 1994 would have surely outpaced
the return on government bonds.

The fact that they didn't illustrates one of the hard truths about stock
investing: Timing matters.

Although Logue started pouring money into Social Security in the 1950s and
early 1960s, some of the best years for stocks, he hadn't accumulated a
lot of money.

So the gains of his theoretical stock portfolio would have been limited.

By the time he had substantial sums, the market swooned for long periods.
From 1965 to 1982, for instance, the DJIA made no progress. Logue retired
before the real run-up in stocks in the latter half of the late 1990s.

So the real lesson from his analysis is that any pension plan based on
stock investments carries extra risks.

Advocates of privatization point out - correctly - that Logue's analysis
compares theoretical stock returns with what the Social Security Trust
Fund earned - not what he himself would get from the system.

From that perspective, the investment approach looks better, they argue.
Over the long run, a typical worker can expect to earn 4.6 percent a year
(after administrative costs) on a diversified portfolio of stocks and
bonds and only about 2 percent or less from Social Security, according to
federal estimates reported by Michael Tanner of the Cato Institute, long a
proponent of privatization. Hypothetically, someone earning $30,000
annually would at the end of a 40-year career receive nearly twice as much
under the investment approach ($344,000) than with Social Security
($185,000).

Who's right: Logue or Mr. Tanner?

The debate hinges considerably on what people want their retirement system
to be. Social Security has always been an insurance program. It was never
intended as an investment scheme. So everyone - retirees, the disabled,
widows, and orphans - receive guaranteed monthly income. The "return" on
their Social Security contributions depends largely on how long they live.
Those in their 90s have enjoyed superb returns. Those who don't live as
long benefit less.

Private accounts, by contrast, involve far more variability, both sides
agree. Individuals who enter and exit the market at the right times would
undoubtedly do better under privatization.

But under Britain's privatized pension system, so many retirees are doing
so poorly at this moment that a commission warned this fall that
widespread poverty among the elderly may be returning, which could require
massive new government spending.

Presumably, President Bush's plan would offer the choice to meld insurance
and private investment: much less guaranteed income in return for the
opportunity - and risk - of earning more in the markets.

"Because financial asset returns are volatile, benefits under a personal
account system would fluctuate," notes Bill Dudley, an economist at
Goldman, Sachs & Co., a New York investment bank. "On a risk-adjusted
basis, the privatized account ... becomes much less compelling."

There are other problems with private accounts. Administration expenses of
the present Social Security system are minuscule compared with the size of
the benefits provided. The Bush administration so far has provided no
details on its private accounts plan. But if these are handled by Wall
Street, the fees could be sizable, dissipating some of the return from
investing in stocks. Logue takes no account of such expenses in his
analysis.

Further, administrative costs and difficulties for private business could
be large as companies, big and small, try to deduct the right amount from
a payroll and put it into a private account in a timely fashion.

A study by the Congressional Research Service (CRS) notes some
complexities: 650,000 employers go out of business or start new businesses
each year. More than 4 million employers have 10 or fewer employees, often
having record-keeping problems and errors. About 12 million to 15 million
individuals are self-employed and presumably would have to send money
directly to a private account.

So the complexities of change are substantial. If the extra return from
privatization is not very advantageous, "why even consider changes that
all agree would be very disruptive?" asks Logue.


Jimcomma, do you ever have an opinion of your own?



Sure -- several, particularly about right wingers, but I'm too much a
gentleman to express them here

On Mon, 28 Feb 2005 13:22:42 -0500, DSK wrote:

John H wrote:
Do you think all the Congressmen putting their money into the Thrift Savings
Plan are doing so just to fatten the wallets in Wall Street.

That's not Bush's plan. It's been mentioned as a possible option, with
the change that it would be a seperate account (handled of course, by
favored Wall St'ers)

You have a reference for this, right? The TSP has been used repeatedly as an
example of the type of account the personal account would be.

... You're reiterating
the panic crap espoused by some of the more notable Bush-haters.


You're reiterating the distortions and outright lies of the Bush-Cheney
spin machine.

Show me a lie with respect to the personal savings account.

There is no reason whatever you can't invest your own money as you like.
You are obviously trying to dodge the issue that this is a case of the
gov't taking your money and giving it to private enterprise, on the
gamble that you might get some of it back later.


Do you know *anything* about the Thrift Savings Plan used by government workers,
to include Senators and Representatives?

More than you, apparently.


Lastly, the government wouldn't be *taking* anything.

Really? Is the gov't not taking your money when it pulls in Social
Security taxes?

The taking and putting into a personal savings account is voluntary. The other
option isn't.

... Again, do we assume people have the
responsibility to make baby-killing decisions but not monthly investment
decisions?


This seems to be a buzz-phrase for you. Where does this come from? Are
people not able to make savings & investment decisions now? Preventing
the diversion of Social Security taxes into "private investment
accounts" in no way diminishes people's ability to invest their money as
they choose.

Sure it does. If I had the choice, I'd rather see half my Social Security
withdrawals going into an investment over which I had some control. By denying
me that opportunity, you are, in fact, diminishing my ability to invest my money
as I choose. (Note, the references to me are rhetorical.)

The 'buzz-phrase' is applicable. You pro-choice folks are anti-choice here. Why?

John H

On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!

"Divide each difficulty into as many parts as is feasible and necessary to resolve it."
Rene Descartes