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They Said It...
September 12th 11:22:13 AM
In 1995 Senators Bob Kerrey and Alan Simpson published an Op-Ed in the New York Times entitled "How to Save Social Security". In the piece the two introduced legislation that would have transformed what is currently a consumption-based system into a system that encourages
savings and investment.
They wrote: "Our bill would allow workers to divert nearly
One-Third of the employee's share of the Social Security Payroll Tax into a private I.R.A. -type account or an investment fund modeled after The Thrift Savings Plan offered to government employees."
Posted by Chris Schrimpf
Comments
I hope ya'll are recognizing that this is a horrible thing. Just as I've been saying, they're gonna control the equity markets through "our" SS funds.
How can you be encouraging this?
Posted by Noid on September 12th 02:36:55 PM
Noid,
You seem to have become a regular around here, and I have read all of your comments.
In short, I just don't buy your argument. The government would not directly control such investment. Brokerage firms would assemble mutual funds that would then be offered as an option in these personal accounts.
So to answer your question: what we are advocating is, in my opinion, the best option given the circumstances. It's certainly not a perfect option, but it is better than the status quo.
Posted by Jeremy Tunnell on September 12th 02:47:17 PM
Noid, as a classical liberal I wholeheartedly share your worry about government control of financial markets. But we face a hard choice: do nothing and payroll rates rise to nearly 20% or push for personal accounts which would avert this tax burden but introduce the risk of government manipulation of financial markets. I fully understand the risk involved. However, I believe this risk can be mitigated by structuring the accounts similar to the Thrift Savings Plan which offers broad indexes and mutual funds so the government is not tempted to regulate individual equities.
Ending Social Security, as you advocate, is simply a political impossibility. If you want to dream about it, that's fine. But if you want to do something productive, push for personal accounts. It moves the money back into individuals' hands which is a step in the right direction.
Posted by Fransisco d'Anconia on September 12th 05:36:57 PM
Noid,
Under current policy proposals the government has no plans for directly controlling equity markets, as you say. The proposals that I have seen do regulate the split between stocks and bonds a person can own (there by controlling how much risk a person can assume) and some also demand that your mix of stocks meet a certain diversification index (for the same reason); however, this is by no means the government creating a mutual fund that it will shove down our throats.
Not to mention that there can be serious equity market distortions by not doing anything too. When the system goes into deficit and Trust Fund bonds need to be issued to cover it, the crowding-out effects on private sector economic activity could have potentially severe distortionary effects on the US economy, especially through upward pressure on interest rates, which could reduce available credit.
Noid, it seems that you are succumbing to the Nirvana fallacy like so many other paleo-libertarians of the Lew Rockwell variety. I hope you realize that we don�t think we are advocating a panacea that will solve all our woes, but instead a pro-market reform that is politically feasible.
Posted by Marco on September 12th 05:44:10 PM
noid, dude, i think i have a crush on you - but, seriously - you've got to chill. we HAVE to start SOMEWHERE.
Posted by ponzi on September 12th 05:57:46 PM
QUOTE:
In short, I just don't buy your argument. The government would not directly control such investment. Brokerage firms would assemble mutual funds that would then be offered as an option in these personal accounts.
/QUOTE:
Let me try to explain this yet again. Take FERS (Federal Employees Retirement System) for example, which is likely to be the model for Republicrat 'privatization'. Its C class fund (U.S. Equity Fund) is run by 'Barclays Global Investors' which exercises the voting rights at least as of 2000*.
Now the brokerage used gets selected by the bureaucrats in FERSA (FERS Administration). If they don't like the way Barclay's exercises it's voting rights, they can just pick a new brokerage. Now, the american people definitely don't have enough time to keep the new SocSecAdmin honest about choosing brokerage firms on the merits
of its efficiency and exercising its voting rights
in our interests so therefore said brokerage will be subject to the same political pressures and lobbying that any federal bureaucracy is except that it'll be responsible for exercising incredible control of U.S. corporate directorships and thus corporate policy. As if the goddamn feds don't have enough control of that already.
*(See http://banking.senate.gov/97_04hrg/043097/witness/mehle.htm for details)
QUOTE:
So to answer your question: what we are advocating is, in my opinion, the best option given the circumstances. It's certainly not a perfect option, but it is better than the status quo.
/QUOTE:
No, the best options are to either
1) Keep the status quo but make sure that payroll taxes aren't raised so that government is forced to either cut spending or borrow money on-budget so it can't lie about its insolvency through some B.S. 'trust fund' nonsense.
2) Divert payroll taxes to *FDIC insured* accounts
at the bank of *each individual's* choice where the younger you are, the more you can divert.
Posted by Noid on September 13th 01:14:20 AM
QUOTE:
Noid, as a classical liberal I wholeheartedly share your worry about government control of financial markets. But we face a hard choice: do nothing and payroll rates rise to nearly 20% or push for personal accounts which would avert this tax burden but introduce the risk of government manipulation of financial markets. I fully understand the risk involved. However, I believe this risk can be mitigated by structuring the accounts similar to the Thrift Savings Plan which offers broad indexes and mutual funds so the government is not tempted to regulate individual equities.
/QUOTE:
Look at the details of the Thrift Savings Plan or FERS. *They* choose the brokerage (I.E. FERSA or the SSA), not you and that will undoubtedly be the plan for new 'private' accounts.
QUOTE:
Ending Social Security, as you advocate, is simply a political impossibility. If you want to dream about it, that's fine. But if you want to do something productive, push for personal accounts. It moves the money back into individuals' hands which is a step in the right direction.
/QUOTE:
I've consistently proposed 2 alternatives, the second of which seems to me to be more politically possible than equity privatization due to its lower investment risk.
And doing nothing and letting the govt hemmorage debt also seems possible and would be preferable to either payroll tax increases or bush style 'privatization'
Posted by Noid on September 13th 01:34:28 AM
QUOTE:
Noid,
Under current policy proposals the government has no plans for directly controlling equity markets, as you say. The proposals that I have seen do regulate the split between stocks and bonds a person can own (there by controlling how much risk a person can assume) and some also demand that your mix of stocks meet a certain diversification index (for the same reason); however, this is by no means the government creating a mutual fund that it will shove down our throats.
/QUOTE:
SARCASM:
Boy, all that seems really pleasant and nothing at all like increased government control .
/SARCASM:
As I've already demonstrated, our current example of govt 'private' retirement accounts, FERS, allows federal bureaucrats to control member voting rights and I see no reason to believe that current proposals by Bush or other Republicrats will be any better.
QUOTE:
Not to mention that there can be serious equity market distortions by not doing anything too. When the system goes into deficit and Trust Fund bonds need to be issued to cover it, the crowding-out effects on private sector economic activity could have potentially severe distortionary effects on the US economy, especially through upward pressure on interest rates, which could reduce available credit.
/QUOTE:
Well, your understanding of the Trust Fund is skewed (the trust fund is just a bunch of 'special' unmarketable bonds issued to the SSA by the U.S treasury, i.e. money the government has lent itself or more specifically the SSA has lent to congress so that congress can piss it away) but yes, when the *treasury* has to issue tons of bonds to pay the SSA back soon, it will have to offer them at higher rates since they're gonna have to borrow more than the market will probably lend at today's rates. But so what? Anything the government does with social slavery will have big effects on the economy. And that includes creating an easily corrupted govt administration of equity funds.
The measure of whether a reform is good is whether it makes govt smaller and less powerful especially in the long run (which would both be good things.)
I believe my proposals would be the best ways to make govt smaller and not extend govt power further.
QUOTE:
Noid, it seems that you are succumbing to the Nirvana fallacy like so many other paleo-libertarians of the Lew Rockwell variety. I hope you realize that we don�t think we are advocating a panacea that will solve all our woes, but instead a pro-market reform that is politically feasible.
/QUOTE:
Bush-style 'privatization' is just not pro market.
Posted by Noid on September 13th 02:04:49 AM
QUOTE:
noid, dude, i think i have a crush on you - but, seriously - you've got to chill. we HAVE to start SOMEWHERE.
/QUOTE:
Doing something bad is worse than doing nothing.
Posted by Noid on September 13th 02:06:03 AM
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