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Senior Advisor

Private ownership of SS

Those of us that support SS know that we may not realize benefits that exceed our contributions. We may not live long enough to retrieve our investment but like any other insurance we are aware if that. You don't always get back what you put in.

 

Some are suggesting we make our SS deposits our own personal savings accoun for the benefit of ourselves and our families. Then who is going to step up and support the elderly and infirm or the widows with underage children?

 

You and I already have a few bucks saved up for our families. Do we volunteer to contribute to someone in need of support? Who would do that in the world of private SS accounts. Government needs the revenues to pay the benefits. And those that don't have claims have to support those that do. JUst like healthy people subsidize those unfortunate souls that are injured or ill.

 

SS is insurance that offers a basic benefit package for those that qualify. There are winners and losers just like in any other insurance product. I don't know how you get from private ownership to provide benefits for those in need. Have you cashed in your IRA to support a family down the street? How would that work?

18 Replies
Veteran Contributor

Re: Private ownership of SS

If all that was being supported by SS was the elderly and  infirmed, and widows with underage children, SS wouldn't be in the shape it's in now.  The problem with SS is that it is supporting too many including the spending habits of our current president and congress.  President Obama said a couple of weeks ago that if the Republicans were successful in privatizing social security, the budget deficit would skyrocket.  Raise the retirement age, quit making disability payments to those who drink or drug themselves into disabled status at an early age.  Two things one could do to help the situation.

Advisor

Re: Private ownership of SS

How generous of you Don, I'm sure you won't mind getting none of what you paid in when it's means tested.

 

And oh, it's not insurance, that is a lie.   It's an entitlement like welfare, FICA is a tax, the government is under no legal obligation to every pay anyone a cent.  The supreme court already ruled on the issue.   Lets review - SS an entitlement, FICA a tax, they done spent your money and they'll give some back if they like.

 

Don't worry Don, SS won't be privatized.   In fact the trend is running the other way.    Private retirement will be siezed and made public.  Check out the new Kerry/Bingaman  Automatic IRA bill.   A little step at a time, the beast needs to be fed.

Senior Advisor

Re: Private ownership of SS

Social Security is just another way for liberals to help people with other people's money. The thought to help the widow with their own treasure never crosses their mind, their thought is let's take it from the lazy rich man and give it to some one we DEEM fit.

Frequent Contributor

Re: Private ownership of SS

The reckless spending of this and the previous administrations to support liberal championed welfare programs is trashing the purchasing value of my IRA thereby effectively cashing it for me.  Keep hearing the word deflation but I certainly haven't seen it in any of my expenditures.  Perhaps housing is the bad boy that is helping generate the inaccurate but low inflation numbers.   Might be a factor if purchasing a previously owned home, but I'm not in the market, and although the residence's value is down 30%, that eventually will be "chump change" compared to the shellacking the IRA's is suffering.   Might be able to buy a few cups of coffee with my IRA when distribution is nigh.  Unfortunately I don't like coffee,

Senior Advisor

Re: Private ownership of SS

And cut out farm payments to anyone that drinks beer.

 

What troubles you so much that SS is investing in government securities?  they have to invest their suplus dollars somewhere. Or do you consider government bonds worthless?

Senior Advisor

Re: Private ownership of SS

Does it bother you that your premium dollars pay for someone else's car accident. Does it bother you that your home owners premium pays for someone else's home fire? Does it bother you that your health insurance premium dollars pay for someone elses surgery? Why do you buy any insurance if not to share risk with others?

 

SSI is indeed insurance aka old age and survivors insurance.  

 

BTW nobody has explained how shared risk would be handled with private SS accounts. 

Advisor

Re: Private ownership of SS

Would you buy insurance if the company told you flat out that they didn't have to pay your claims if they didn't want to.

 

SS is not insurance.  From SS own web site:

 

There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit............. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

Veteran Contributor

Re: Private ownership of SS

Is there such a thing as a Social Security surplus?  Isn't SS money collected now is used to pay today's obligations under the SS program and anything left over is just used in the general budget?  If the government is making investments with that money, I have no problem with investing it in government securities.

Senior Advisor

Re: Private ownership of SS

The government  borrows the excess from the SS trust fund. They are U.S. government obligations just like the borrowed the money from you, me, China or Saudi Arabia.

 

Goverment spends the money like other revenues. When we deposit money in the bank we do not expect the bank to hold the physical funds in the vault.. That would make little sense to hold the trust fund without drawing interest. BTW SS fub=nds can only be invested in U.s. government securities.