Wednesday, February 02, 2005

Social Security, Democracy and your money

I have to admit to being a little less than enthusiastic about faux-president Bush's ideas on Social Security reform. Basically, the imposter wants to take 4% of what we make - roughly a third of the total SSI contributions as it now stands, and allow us to make investments in stocks, bonds and other so-called "safe" investments.

Excuse me while I flush the rest of my money down the toilet...

Let's say you make 40K a year, 4% of that is $1600. Now, just putting that money in a jar in a closet will net you $48,000 after 30 years. If you inflate that $1600 contribution by 3% annually, it comes up to $76,000 and change. If you invest it, and you make an average of 4% per year (we're talking 30-year Treasury Bills here) you boost it to over 130,000.

You can slice and dice the numbers any way you like. Personally, I'd prefer that the government "allow" me to keep more of my income, even at the risk of a much lower retirement benefit at their predetermined time. I might be able to do much more with that 12.4% they scam from me every paycheck.

What the hell am I talking about. I haven't had a real job in 7 years. When I get to 67 (that's the new retirement age for us late boomers) I'll probably owe them money - according to them. If I ever see a Social Security check made out to me, I'll likely die from shock. Big deal.

Maybe you can see where this is going? Some people might want to get a little more out of their money, as in riskier investments. They don't always go up. Sometimes they even loss most or all of their value. Permanently, as in forever. Flush!

The faux-pres is taking a small step toward the complete bankruptcy and slavery of the US population with this scheme. No doubt, if we allow personal accounts to become part of the Social Security aparatus, the rules and structure will become so complex, not even the government's own accountants will fully understand it, much less the average wage-earner.

I suppose investing for yor retirement, instead of blowing your paycheck on the lottery - the hidden tax, completely voluntary, mind you - probably is an idea worthy of some merit. Doing it with money previously earmarked for the retirment fund of others, older than you, creates a deficit on one side of the equation, precisely, on the payout end, the most important element and the sole purpose of the program. It's not a good set-up.

The worst part of this scenario is the windfall it is for the banks, mutual funds, insurance companies and brokerages who will be handling an additional 4% of the total US payroll. Naturally, that would create a flood of new money and regular infusions of capital, forever. If the investments are limited to certain government choices, it is completely unfair to every other investment vehicle and create imbalances and market distortions, which is, quite possibly, the whole idea, anyway. For instance, will Americans be allowed to invest thse funds in gold futures, or currency swaps, or options trading? If not, why not? Some people are more adept at investing than others and more expert. Some could, if given the opportunity, make excellent investment choices and large profits. Others may not.

The idea of private accounts is a good one, just not within the bounds of the Social Security system. The introduction of private accounts into a system that has, since its inception, been, a model of simplicity, is simply irresponsible and far too risky. The faux-president wants to spend some of that "political capital" he boasted about after his recent win in the mock election. Unfortunately, that real capital is going to be ours and it's headed right for the rich slobs who helped put this bozo in office in the first place - the fat city fat cats of Wall Street.