5. Bush's privatization plan will endanger S.S. further (5/22/05)
(1) “In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes,” Bush said.
So in 2018, it will be a break even year.
If the S.S. payroll tax is $100 in 2008, the actual benefits paid to old people are $75, then there will be $25 surplus fund go to save in current account of S.S. This trend will go on until 2018.
But when Bush's plan is carried out, about one third of S.S.tax will go to the privatization account instead of S.S.current account. The calculation is: 35/42 x 1/3 = 0.27. Here I suppose the working years of people are 42 years.(also the period they pay tax. If their work start from 20 years old to 62 when they retired.) the rate of people who enjoy privatization are 35. years. (20 years old to 55 years old which Bush said enjoying privatization)
So $27 would go to privatization instead of S.S.current account. There is only $73 left to pay retired people while they were promised $75. The $2 shortage will have to take from the S.S. saving portfolio. The break even year will be in 2008 instead of 2018.(I don't know the exact figure. It can be worse then what I said.)
Bush should say, "In the year 2008 when my privatization plan goes, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes,”
Bush's plan accelerates the collapse of Social Security and directly endanger the old people who depends on S.S. benefit.
(2) Administration fee. Estimated 2 trillion in ten years period. It will either come from S.S. tax or from an additional tax from all tax payers. One thing for sure is it won't come from the pocket of Bush and his group. Another thing for sure is it will go to the pocket of financial group.
Quote, "Economists opposed to Bush's plan say the 10-year, potential $2 trillion cost of shifting to individual investment accounts is reckless and would require such a huge increase in government borrowing that it could destabilize the nation's economy. " ("Social Security change pitched" Mercury News 12/17/04)
Quote, "Social Security spends 1 percent of its money on administration. But administrative costs for private insurance range between 12 and 14 percent, according to the American Council of Life Insurance. In Chile, which instituted a system of mandatory private savings accounts in the early 1980s, administrative costs exceed 20 percent. This is your money, going straight into the pockets of Wall Street. "
http://www.thepetitionsite.com/takea...720?z00m=20239
Before you gamble in Casino, you lose first with a fee about 15% to 20%.