Democrats continue to lie about Social Security

[A18]

http://reid.senate.gov/ss/calc.html

http://factcheck.org/article.aspx?docID=319

Very amusing.

[opebo]

The Democrat calculator is more conservative in the sense of making reasonable, cautious assumptions.  Stocks are inherently very risky.  Besides, I'm all for our side lying in order to win.  Certainly your side does it all the time.

[A18]

So cautios, you'd think the stock market is a great way to lose money.

[opebo]

So cautios, you'd think the stock market is a great way to lose money.

No, their calculator assumes a 3% return above inflation, which sounds more than optimistic enough to me.

[A18]

As opposed to the 6.8 percent it should be.

[opebo]

As opposed to the 6.8 percent it should be.

Well, that is what that right-wing site claims is the amount.. but they are claiming that is over a whole century.  Over the typical working life - say 30-40 years, it could actually be a negative return!

[David S]

By 2041 Social Security will have exhausted the so-called trust fund and will be dead ass flat broke. If you can save 1 penny by then you will have done a better job than social security did.

Many people are concerned that with private accounts, if they don't save enough money for retirement they will go broke and become a burden on their children. But their social security benefits will be entirely funded by their children, so that will undoubtedly be a burden to their children.

[Inverted Things]

I pay 6.2 percent of my paycheck to old people, and all they do for me is tell me to get a haircut. Jerks!

Now, it looks like I'll never get that 6.2% back, because the democrats won't try anything to fix SS. Jerks!

[opebo]

By 2041 Social Security will have exhausted the so-called trust fund and will be dead ass flat broke. If you can save 1 penny by then you will have done a better job than social security did.

Many people are concerned that with private accounts, if they don't save enough money for retirement they will go broke and become a burden on their children. But their social security benefits will be entirely funded by their children, so that will undoubtedly be a burden to their children.

Just eliminate the income limit on the payroll tax.  Oh and also I would apply Social Security taxes to all income, including capital gains and other 'unearned' or non-wage income.  What the hell is that distinction for?

[opebo]

I pay 6.2 percent of my paycheck to old people, and all they do for me is tell me to get a haircut. Jerks!

Old people are horrible jerks, there is no doubt about that. 

[Wakie]

Phil, do you really believe that the stock market is so drastically undervalued that a sudden influx of social security cash into it would not cause a bubble?

[David S]

The stock market is overvalued right now. P/E ratios are at very high levels by historic standards. It would be  a good time to stay diversified. Interest rates are rising again and it may be possible to get a decent return on CD's in the near future.

[The Duke]

Phil, do you really believe that the stock market is so drastically undervalued that a sudden influx of social security cash into it would not cause a bubble?

A bubble is when an influx of capital enters amrket, but is then suddenly withdrawan.  The surplus of sellers and dearth of buyers is what causes asset prices to depress.  Under social security privatization, there is a constant supply of new buyers, since each year tax dollars are redirected into the equity markets.  There will be no bubble, because theree will always be new buyers entering the market through social security.

Philip's return estimates are based on the average return since 1930.  6.8% is the 75 year average for rate of return on equities.

[dazzleman]

Phil, do you really believe that the stock market is so drastically undervalued that a sudden influx of social security cash into it would not cause a bubble?

I think you have a good point, Wakie.

Over the longer term, though, there's a lot of concern about what will happen to asset values as baby boomers retire, and start to withdraw funds from investments rather than add to them.

Demographically, the baby boomers have altered the values of everything as they have moved up the chain.  It started with housing prices in the 1970s, as demand created by boomers, and their demographically different behavior from their parents, pushed up housing prices.

I think the investment rate of baby boomers has also played a role in the stock market boom.  But what happens when the baby boomer contributions become net withdrawals, and the smaller generation behind them is unable to offset it?

Part of the answer is in the so-called baby boom echo.  But part of it may be in private investment of a greater amount of retirement funds, out of government hands.

It's kind of scary to me that our economy is effectively a pyramid scheme that is anchored on the assumtion of continuously increasing population.  If we ever were to achieve zero population growth, which is desirable for environmental reasons, it would probably lead to severe economic pain.  Nobody has attempted to address this problem.

[Moooooo]

Both sides are lying.  The Democrats are just doing a better job.

[dazzleman]

Both sides are lying.  The Democrats are just doing a better job.

That's about right.  It's a sad state of affairs.

[TheresNoMoney]

The Dow, S&P 500, and NASDAQ are all down since Bush took office in January of 2001.

[○∙◄☻¥tπ[╪AV┼cVê└]

The Dow, S&P 500, and NASDAQ are all down since Bush took office in January of 2001.

Yep, and adjust for inflation and population growth and it's much worse.

When Bush took office:
Dow: 10,587.59
NASDAQ: 2,770.42
S&P 500: 1,342.55

http://news.com.com/2100-1017-251229.html?legacy=cnet

Now:
Dow: 10,192.51 (down 3.7%)
NASDAQ: 1,921.65 (down 30.6%)
S&P 500: 1,156.85 (down 13.8%)

http://money.cnn.com/

[○∙◄☻¥tπ[╪AV┼cVê└]

As for the expected rates of return, price/earnings ratio of stocks are already well above their historical value. The Republicans claim that the GDP won't grow enough for SS to be in good shape, but stocks will go up enough to get high returns beyond inflation. This would lead to asburd price/earnings ratios. The Democratic estimates probably rely on price/earning ratios being close to the historical values.

[Blue Rectangle]

The Republicans claim that the GDP won't grow enough for SS to be in good shape...

?
SS is in bad shape not because GDP isn't growing fast enough, but because the work force isn't growing fast enough.  The only reason SS lasted this long is because of the baby boom, not because of GDP growth.  The Republican plan would effectively take SS from being reliant on high work force growth (unsustainable) and base it instead on GDP growth (steady in the long run).

As long as you're talking about falling stock prices, you might as well tell the whole story:
NASDAQ Mar-2000 (all-time high): 5,132.52
NASDAQ Jan-2001 (Clinton leaves office): 2,770.42

NASDAQ lost half its value during Clinton's last 9 months in office.