The Article
Well, I finally got the damned thing done, after sweating it for a couple of days and recieving emails about how they need articles, I sent in the rough draft. Turns out it was good enough for the final product, almost. Has to go through final editing, I believe but we shall see.
So anyways, here is the article that I sent and if it goes, it will be the first piece of literature that I have ever had published..
Explaining the Unexplainable.
By Jason Campbell
As I sit and ponder on my future, as I’m sure, many of you all do, I came to realize that my future was quite foggy as I had limited understanding on what lay before me. I had heard the term Social Security and how it’s supposed to give me money for the future, but I really didn’t understand it. With President Bush’s plan on how to change it made me even more confused, so I decided, with the help of the ever present internet, to find out what I could.
To start this, I figured I would need to learn how the current Social Security works. I had a fairly good idea of what was happening, but I wanted to be sure. One thing that I found, that I didn’t know, is Social Security is broken down into three different categories, Retirement, Survivors and Disability programs.
Obviously most of us all have heard of the retirement program to where an fixed, monthly income is provide to those that have reached retirement age, of 65. However, that will be changing soon, to the age of 67. How much that income is depends on how much they put into the system. Generally a person has to have worked at least 10 years to receive these benefits. I’m sure you all have heard of the early retirement, where you can retire at 62, but you will receive fewer benefits until the age of 65 and six months. Then you will receive your full benefits.
The Survivor program ensures that the spouse of a deceased worker will receive a pension for the rest of their life, once they reach retirement age. How much they will receive depends on how much both partners were making, while they were making. This program also pays out benefits to the deceased children under the age of 18 and the spouse that is caring for the children. Unless the child is disabled, the benefits will end when they are 18 or when graduated from school, whichever comes last.
The Disabled program pays out to workers who are disabled, a monthly income. However, in some cases the spouses or children, under the age of 18, receive these pensions. As like all the other programs, the benefits all depend on the working history of the disabled worker.
Another question that I had, while driving home from work one day, was how the Social Security is being funded. I know that its coming out of my paycheck every pay period but how exactly it being paid. Well, again, the internet provided me with some useful information. According to some research done by The Heritage Foundation, in 2005 both employees and employers will pay approximately 15.3 percent of the first $90,000 of the income and 2.9 percent of the income above that. The $90,000 is the dividing line, or “wage cap”.
Now, I have been hearing, a lot, on the news about Bush’s proposal to “fix” the Social Security. I personally didn’t know it was broken. I have heard two different stories. One being that the Social Security isn’t going to have enough money to pay out the beneficiaries too much longer, and another report stating that the Social Security is fine and has enough money, actually too much money, and would be able to sustain itself, without any more money, till 2045, while others say by 2018 Social Security will be bankrupt.
According to President George W. Bush, in 2008 there will only be 2 workers to support each beneficiary, whereas right now there are 3.3 workers, a dramatic drop from the 1950s where there were 16 workers supporting one beneficiary. Today, a worker around my age, 32, will face a 27% decrease in benefits with the current Social Security system.
From the White House website, it states that by 2018, the government will be paying out more money than it will be taking in, in taxes, and will continue to fall short of its goal. By 2042, an average worker now, who is in their 20’s, will no longer have a Social Security system to receive their benefits.
Bush has been working with Congress to find the best solution to fix Social Security and is open to any suggestion that doesn’t raise the payroll taxes. Some of the suggestions that have been made over the years are, limiting the benefits to the wealthy retirees, indexing benefits to prices, instead of wages, increase the retirement age; or to change the benefits formula to create less interest in early retirement.
The plan that seems to have the most publicity is Bush’s plan to essentially move all the taxes paid for Social Security into a personal account. The way its set up now, is as Bush said in his speech on March 21, 2005 at the Tucson Convention Center, “It’s a pay as you go system. You pay, we go ahead and spend it”, which received a resounding laughter. However, the way I look at it, it’s my money, so why can’t I get it. And this is how Bush is looking at it.
Under Bush’s plan to fix Social Security, the plan is to allow the worker to put part of their payroll taxes into a personal account. Then, the money would be put into a conservative mix of stocks and bonds. This is supposed to give the worker a higher return on their retirement fund than under the current system. For example a worker who makes an average of $35,000 a year, through out their working career, would have approximately a quarter of a million dollars in their account.
However, this would not be all the money that the average worker would receive. There will still be a monthly check mailed, but the amount would be significantly less than the $900 a month that is sent out in our current system.
It sounds nice and all but there are many skeptics that don’t feel Bush is being realistic in his plan. Many opponents view the current stock market and feel that Bush is wishing instead of looking in reality. Some even feel that the Social Security system is not going bankrupt like President Bush says it is.
According to Marilyn Watkins, Ph. D from the Economic Opportunity Institute, the Social Security funds are not in jeopardy. She feels that this crisis is “produced by Wall Street interests hoping for huge profits from new private accounts, fed by politicians eager for a few more votes, and promulgated by a media obsessed with sound bites and scandal” according to an article she wrote at the Economic Opportunity Institute website www.econop.org.
She feels that the forcast of Social Security bankrupting by 2042 is based on assumptions that the economy will grow slower than it did in the Great Depressions of the 30’s. In the past 50 years, the economic growth has averaged a 3.5 percent growth, annually, and that Social Security will be able to pay out the benefits until 2075 with no reforms.
There are five major problems with this plan Marilyn sees with President Bush’s plan. One is a stock market fantasy, which makes a lot of sense. The plan is based on a strong stock market, to a weaker economy. However, if the economy is weak, then there stock market will be weak.
There will be a large cut of Social Security benefits. Right now, benefits are scheduled to raise due to inflation, and drop when inflation drops. However, under President Bush’s plan the benefits would have to be slashed between 25% to 54%, according to most economists.
If the 2% of the workers pay, that currently goes into the Social Security account, goes into a private account, the rest of the benefits paid, by the government, needs to come from somewhere. Estimates say that workers would have to pay out, over the next ten years, approximately 1 trillion dollars to cover this cost.
To keep track of everyones personal account, there will be higher broker fees and higher investment fees that would go straight into Wall Streets pocket. In other words, according to Marilyn, “the rich will get richer and the poor will get poorer”.
After pondering on this for a moment, I am having a hard time seeing where the problems are coming from, that President Bush claims they are. In one side, I see that in some ways, President Bush is trying to teach us to fish, instead of just giving us a fish. However, I also see it as a very risky proposition. As unstable as the stock market is, since 9/11, I wouldn’t feel too confident that the money that is going into the stock market would be safe.
However, on the other side, I also see the pitfalls in where there is a major cut to what is presented to Social Security today. If there is another “stock market crash” then everyone has lost their money. The country goes further in debt to try to pay out money for people who are trying to survive.
In all honesty, my confidence in the stock market is not enough to say that President Bush’s plan is a feasible one. In my humble opinion, I just pray that this does not go through, as I think there are many holes in it. I support President Bush on most of what he is doing, but this is one plan that I can not get on board and support.
So anyways, here is the article that I sent and if it goes, it will be the first piece of literature that I have ever had published..
Explaining the Unexplainable.
By Jason Campbell
As I sit and ponder on my future, as I’m sure, many of you all do, I came to realize that my future was quite foggy as I had limited understanding on what lay before me. I had heard the term Social Security and how it’s supposed to give me money for the future, but I really didn’t understand it. With President Bush’s plan on how to change it made me even more confused, so I decided, with the help of the ever present internet, to find out what I could.
To start this, I figured I would need to learn how the current Social Security works. I had a fairly good idea of what was happening, but I wanted to be sure. One thing that I found, that I didn’t know, is Social Security is broken down into three different categories, Retirement, Survivors and Disability programs.
Obviously most of us all have heard of the retirement program to where an fixed, monthly income is provide to those that have reached retirement age, of 65. However, that will be changing soon, to the age of 67. How much that income is depends on how much they put into the system. Generally a person has to have worked at least 10 years to receive these benefits. I’m sure you all have heard of the early retirement, where you can retire at 62, but you will receive fewer benefits until the age of 65 and six months. Then you will receive your full benefits.
The Survivor program ensures that the spouse of a deceased worker will receive a pension for the rest of their life, once they reach retirement age. How much they will receive depends on how much both partners were making, while they were making. This program also pays out benefits to the deceased children under the age of 18 and the spouse that is caring for the children. Unless the child is disabled, the benefits will end when they are 18 or when graduated from school, whichever comes last.
The Disabled program pays out to workers who are disabled, a monthly income. However, in some cases the spouses or children, under the age of 18, receive these pensions. As like all the other programs, the benefits all depend on the working history of the disabled worker.
Another question that I had, while driving home from work one day, was how the Social Security is being funded. I know that its coming out of my paycheck every pay period but how exactly it being paid. Well, again, the internet provided me with some useful information. According to some research done by The Heritage Foundation, in 2005 both employees and employers will pay approximately 15.3 percent of the first $90,000 of the income and 2.9 percent of the income above that. The $90,000 is the dividing line, or “wage cap”.
Now, I have been hearing, a lot, on the news about Bush’s proposal to “fix” the Social Security. I personally didn’t know it was broken. I have heard two different stories. One being that the Social Security isn’t going to have enough money to pay out the beneficiaries too much longer, and another report stating that the Social Security is fine and has enough money, actually too much money, and would be able to sustain itself, without any more money, till 2045, while others say by 2018 Social Security will be bankrupt.
According to President George W. Bush, in 2008 there will only be 2 workers to support each beneficiary, whereas right now there are 3.3 workers, a dramatic drop from the 1950s where there were 16 workers supporting one beneficiary. Today, a worker around my age, 32, will face a 27% decrease in benefits with the current Social Security system.
From the White House website, it states that by 2018, the government will be paying out more money than it will be taking in, in taxes, and will continue to fall short of its goal. By 2042, an average worker now, who is in their 20’s, will no longer have a Social Security system to receive their benefits.
Bush has been working with Congress to find the best solution to fix Social Security and is open to any suggestion that doesn’t raise the payroll taxes. Some of the suggestions that have been made over the years are, limiting the benefits to the wealthy retirees, indexing benefits to prices, instead of wages, increase the retirement age; or to change the benefits formula to create less interest in early retirement.
The plan that seems to have the most publicity is Bush’s plan to essentially move all the taxes paid for Social Security into a personal account. The way its set up now, is as Bush said in his speech on March 21, 2005 at the Tucson Convention Center, “It’s a pay as you go system. You pay, we go ahead and spend it”, which received a resounding laughter. However, the way I look at it, it’s my money, so why can’t I get it. And this is how Bush is looking at it.
Under Bush’s plan to fix Social Security, the plan is to allow the worker to put part of their payroll taxes into a personal account. Then, the money would be put into a conservative mix of stocks and bonds. This is supposed to give the worker a higher return on their retirement fund than under the current system. For example a worker who makes an average of $35,000 a year, through out their working career, would have approximately a quarter of a million dollars in their account.
However, this would not be all the money that the average worker would receive. There will still be a monthly check mailed, but the amount would be significantly less than the $900 a month that is sent out in our current system.
It sounds nice and all but there are many skeptics that don’t feel Bush is being realistic in his plan. Many opponents view the current stock market and feel that Bush is wishing instead of looking in reality. Some even feel that the Social Security system is not going bankrupt like President Bush says it is.
According to Marilyn Watkins, Ph. D from the Economic Opportunity Institute, the Social Security funds are not in jeopardy. She feels that this crisis is “produced by Wall Street interests hoping for huge profits from new private accounts, fed by politicians eager for a few more votes, and promulgated by a media obsessed with sound bites and scandal” according to an article she wrote at the Economic Opportunity Institute website www.econop.org.
She feels that the forcast of Social Security bankrupting by 2042 is based on assumptions that the economy will grow slower than it did in the Great Depressions of the 30’s. In the past 50 years, the economic growth has averaged a 3.5 percent growth, annually, and that Social Security will be able to pay out the benefits until 2075 with no reforms.
There are five major problems with this plan Marilyn sees with President Bush’s plan. One is a stock market fantasy, which makes a lot of sense. The plan is based on a strong stock market, to a weaker economy. However, if the economy is weak, then there stock market will be weak.
There will be a large cut of Social Security benefits. Right now, benefits are scheduled to raise due to inflation, and drop when inflation drops. However, under President Bush’s plan the benefits would have to be slashed between 25% to 54%, according to most economists.
If the 2% of the workers pay, that currently goes into the Social Security account, goes into a private account, the rest of the benefits paid, by the government, needs to come from somewhere. Estimates say that workers would have to pay out, over the next ten years, approximately 1 trillion dollars to cover this cost.
To keep track of everyones personal account, there will be higher broker fees and higher investment fees that would go straight into Wall Streets pocket. In other words, according to Marilyn, “the rich will get richer and the poor will get poorer”.
After pondering on this for a moment, I am having a hard time seeing where the problems are coming from, that President Bush claims they are. In one side, I see that in some ways, President Bush is trying to teach us to fish, instead of just giving us a fish. However, I also see it as a very risky proposition. As unstable as the stock market is, since 9/11, I wouldn’t feel too confident that the money that is going into the stock market would be safe.
However, on the other side, I also see the pitfalls in where there is a major cut to what is presented to Social Security today. If there is another “stock market crash” then everyone has lost their money. The country goes further in debt to try to pay out money for people who are trying to survive.
In all honesty, my confidence in the stock market is not enough to say that President Bush’s plan is a feasible one. In my humble opinion, I just pray that this does not go through, as I think there are many holes in it. I support President Bush on most of what he is doing, but this is one plan that I can not get on board and support.
posted by The Dog at 2:13 PM
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