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Don’t Throw The Baby Out With The Bath Water
The President claims we have a major crisis in Social Security. The system will fail, be bankrupt by 2042 or 2056 depending on which government agency you believe. You may have heard the President or his aides say there will be a $10 trillion dollar shortfall that will threaten the retirement system and the economy (strange he does not mention the ballooning deficit and the adverse effects it will have on the economy and retirees). Talk about using scare tactics to try and frighten the youth of today and the retirees of tomorrow to gain support for “private accounts.” The sky is falling, if we don’t change the system, it won’t be there for future generations. Yeah, sure buy that logic and I have some WMDs in Iraq I want to sell you! (Sorry for the sarcasm, God bless our troops in harm’s way. They deserve the gratitude and respect of this great nation, and they have it!)
The Congressional Budget Office and the Social Security Trustees projected, over a 75-year time frame the shortfall will be $2-$3.7 trillion. If the shortfall is on the low side Social Security will be in the black until 2052, when it will pay out .80 cents on a dollar of promised benefits; if it’s on the high end the system can pay full benefits until 2042 and the .70 cents on the dollar. That is if we do nothing for the next 50 or so years.
The President claims that Private Accounts will strengthen Social Security and provide a higher return on your money. The transition costs are astronomical and you can believe they will be much higher than the Administration tells you, adding to a deficit that is out of control as it is. If you don’t believe me just look at what the President said the prescription drug plan would cost; $400 billion dollars, the cost as of today is $700 billion dollars. Who do you trust? If those transition costs are not fully funded the system will not be able to meet its obligations, undermining the entire Social Security system. Who do you trust?
The individual who invests in a private account will have their benefit reduced at the time they retire by the amount they invested in the private account plus interest it would have accrued if it was in the Social Security Trust, around 3% currently. So a 3% return o your investment means you break even, a 6% return means you are ahead 3%. Some deal, especially when you consider the difficulty in getting a 6 or 7% return in a safe, conservative investment. Also, when you retire you have to take the money in the Private Investment account and buy a long-term government annuity. So if you retire today, invest in the annuity, and die the next day your heirs could get next to nothing. The government will require you invest enough money into the annuity to stay above the poverty line. So you may have a small pittance to leave someone, but not the dollars you are led to believe. What happens if you die before you retire? The President’s plan is unclear on that point. Existing Social Security Survivor benefits serve the public just as well, if not better. Remember, Social Security is a “Safety Net” not a guarantee of wealth.
We actually have the equivalent of Private Accounts today. They are called IRA/401k. They offer everyone the ability to invest in their retirement with tax advantages and earn the returns the market will yield with risk. There is risk! Many who planned on retiring continue to work because of losses posted in their IRA/401k during the last five years or so. So if you are looking for a chance at wealth, an inheritance to leave your family, more return on your money, and are willing to assume some risk take advantage of these existing retirement funds.
I do agree that we should take some action now to strengthen Social Security for the future generations, to do nothing is shortsighted and foolish. The President’s plan will only dismantle Social Security in the long term.
I believe we should consider doing the following:
1. Lift the cap above the $90,000.00 level. Don’t increase the percentage of tax but levy that same tax on people with incomes over $90,000.00. Just raising it to $140,000 is projected to lower the shortfall by half. I say go to $500,000 if necessary, whatever it takes to protect the system that helps so many; 40+ million people.
2. Institute “Lock Box” legislation. No way can the politicians use Social Security trust money for any other cause. Social Security money for Social Security benefits. Hands off!
3. The government should immediately pay back all the money it has borrowed from Social Security, with interest into the trust fund.
4. Since the Administration is so high on market investment, the legislature needs to look into investing the trust money, or maybe a portion of it in fixed income investments that will return maybe 5-6% instead of the current 3-4% the fund currently gets. I believe it is something that bears looking into.
5. This is a great country and we should be proud we help so many, but I was always taught “charity begins at home.” It seems to me we are always willing to run deficits to help other nations, fight other wars, etc. We need to make sure we have “food” on the table for all the people who live in this country, pay taxes, and fight to defend the freedoms we have. Let’s take care of family first! There can be no better investment.
These suggestions do require sacrifice and may not be the perfect solution, but they do support my proposition that we should strengthen Social Security not tear it apart while we say we want to make it secure.
As one old timer put it when they first started taking out Social Security tax and came home and told his wife, “Well honey we will never need to worry about not having anything, we will always have something.” Let’s keep it that way and improve it for future generations. We can fix Social Security without tearing it apart, “throwing out the baby with the bath water” is not a solution. Please let your representatives know how you feel. Agee or disagree, don’t be silent on this issue.
When Will The Snow Stop
I just finished "plowing" through the letter to the Editor from the three Susquehanna County Commissioners. It reminded me that they are already initiating their next election campaign.
It would have been nice if the commissioners mentioned tax increases two years in a row, the last being 23%. There is also the little item of agreeing to fully fund, for four years, health care for each county employee to the tune of nearly $1,100.00 each month per employee. Is this an example of cost saving during union negotiations, or is the 3.5% pay raise? Then there is the PENNDOT grant that was available for streetscape improvement. I wondered why the county was involved when municipalities know better what is best for themselves. While Susquehanna County couldn't agree on who should submit the grant, Factoryville and others received grants. Factoryville received $547,000 in hometown aid. Imagine what this money would do for Montrose or other municipal governments? The commissioners mention the leaking County Office Building roof. After leaking for many, many years a requested quote was received from one vendor. This $80,000 quote was rejected last year, and the leaks continued during our monsoon year.
It seems like the commissioners just don't get it. Many Susquehanna County residents are retired or employed at the lower end of the wage scale. They pay all or part of their health care costs and receive little or no yearly pay increases. They want to know what the county is doing to improve their lot and not how changes are taking place to make the commissioners’ job easier. While industry and business reduce head count, we add high salary positions to make decisions for the commissioners. I remember that during the last campaign, you could not believe the many skills and high qualifications that each commissioner had! Now we are told that the first two years are spent becoming efficient. This approach in industry would end up with the employee getting walking papers at least 23 1/2 months ago. We need to implement cost reductions to get our taxes down to a reasonable level instead of comparing us to other counties. I believe that conservative spending is still the best enticement for job creation.
Silver Lake Township
TO THE EDITOR POLICY
Thank you, Susquehanna County Transcript
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