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marfknox
SFN Die Hard
USA
3739 Posts |
 Posted - 06/22/2011 : 12:08:59
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I was checking out Politifact's article that fact checks claims made by candidates in the last Republican primary debate. They marked Herman Cain is half correct in his claims regarding the superiority of the "Galveston Plan" or Galveston County's alternative to social security that has been in place since 1981.
Here's the Politifact article.
What most concerned me was that the Galveston Plan seems to be just another plan that would disadvantage people with low incomes, and give advantage to people with high incomes, which pretty much defeats the whole purpose of social security since people with high incomes typically don't even need social security. To quote the article: As our colleagues at PolitiFact Texas summarized in an item published in December, 2010, participants who had higher earnings and fewer or no dependents generally fared better under the Galveston plan, particularly over the near term. But workers with lower earnings and more dependents tend to receive more money under Social Security.
This stems from the plans’ divergent designs. The Galveston plan is somewhat analogous to a 401(k) plan -- that is, a plan designed to encourage workers to save for retirement -- rather than a social insurance, or safety-net, program like Social Security.
"Social Security is a social insurance program designed, in part, to provide a basic level of retirement income to help retired workers, disabled workers and their dependents and survivors stay out of poverty," GAO wrote in 1999. As a result, GAO said, Social Security benefits "are tilted to provide relatively higher benefits to low-wage earners" than they would have received based on what they put into the system.
There is no such redistributive mechanism in the Alternate Plan. If you have a higher salary and put more money into the system, you’ll get more out of it -- perhaps even more than Social Security would provide, GAO and SSA concluded. But if you are on the low end of the income scale, Social Security will give you a relatively better payout at retirement, compared with the Alternate Plan. |
In response to this criticism, I found this NCPA article in favor of the Galveston Plan as a way to reform social security, and it argued: | Two government studies of the Galveston Plan - by the Government Accountability Office and the Social Security Administration - claim that low-wage workers do better under Social Security. However, these studies assumed a low 4 percent return, which is the minimum rate of return on annuities guaranteed by the insurance companies. The actual returns have been substantially higher. |
I don't know enough about economics, and I'm not sure how to look for the answer to this question, but how stable is the rate percent of return? What does that depend on?
The article in Politifact also said that the Galveston Plan was high risk because it lacks inflation protection that social security has built in. The NCPA article doesn't say anything about the risks inflation poses.
The more I read and think about the Republican criticisms and solutions for social security, the more disgusted I get. They seem to miss the whole point of social security. The only reason the government should be involved with retirement funds for its citizens is to protect those low-income earners and their dependents who would otherwise sink into poverty when they retire. Why the fuck do high wage earners need any help from the government? High wage earners tend to have fucking IRAs and stock portfolios, savings, and highly valued property. They don't need the government's help. The Galveston plan clearly helps high wage earners get an even bigger retirement than they ever would through social security, and then it also lets them pass on the remainder to their survivors after they die! Oh great, let's use the government to help the relatives of rich people inherit even more money than they were going to before! 'Cause that's the point of the government, right, to help the rich! Seriously, wtf?
It makes way more sense to me to reform social security (in other words, making it sustainable for the future) is to make it more progressive. That is, stop giving social security payouts to people who don't need them. Everyone pays in, and then those who actually need it at the end of their lives get payouts to prevent living their old age in poverty.
Thoughts?
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"Too much certainty and clarity could lead to cruel intolerance" -Karen Armstrong
Check out my art store: http://www.marfknox.etsy.com
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Ebone4rock
SFN Regular
USA
894 Posts |
Posted - 06/22/2011 : 14:52:38 [Permalink]
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Originally posted by marfknox
I don't know enough about economics, and I'm not sure how to look for the answer to this question, but how stable is the rate percent of return? What does that depend on?
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You can find some great information here.
Unfortunately I cant figure out how to copy and past from that pdf file but if you go to the second page under the heading "Investments" it gives good info on the rate of return for both the Galveston Plan and SS. The company that administers the Galveston Plan offers a guarantee of a minimum 4% return.
Shit, I just realized that info is over a decade old. Time for me to find more current info.
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Haole with heart, thats all I'll ever be. I'm not a part of the North Shore society. Stuck on the shoulder, that's where you'll find me. Digging for scraps with the kooks in line. -Offspring |
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marfknox
SFN Die Hard
USA
3739 Posts |
Posted - 06/23/2011 : 06:52:35 [Permalink]
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There is no more current info on Galveston. Everything the politicians and pundits quote is the studies done over a decade ago. New studies need to be done.
But if this plan was applied to the whole country, how could a rate of return that is at least as high as social security be guaranteed? Also, how would the problem of inflation be resolved?
Again, this just seems like a plan that puts low-income at greater risk of getting even less after retirement, and increases the likely payouts to high-income people. |
"Too much certainty and clarity could lead to cruel intolerance" -Karen Armstrong
Check out my art store: http://www.marfknox.etsy.com
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| Edited by - marfknox on 06/23/2011 06:53:21 |
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Ebone4rock
SFN Regular
USA
894 Posts |
Posted - 06/23/2011 : 09:13:49 [Permalink]
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Originally posted by marfknox
There is no more current info on Galveston. Everything the politicians and pundits quote is the studies done over a decade ago. New studies need to be done.
But if this plan was applied to the whole country, how could a rate of return that is at least as high as social security be guaranteed? Also, how would the problem of inflation be resolved?
Again, this just seems like a plan that puts low-income at greater risk of getting even less after retirement, and increases the likely payouts to high-income people.
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Yeah, I'd really like to see what happened post 9:11. It appears even back then that SS outperformed the Galveston Plan.
It's a good idea as far as an individuals option goes but is a terrible idea as a nationwide security blanket.
NEXT!
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Haole with heart, thats all I'll ever be. I'm not a part of the North Shore society. Stuck on the shoulder, that's where you'll find me. Digging for scraps with the kooks in line. -Offspring |
| Edited by - Ebone4rock on 06/23/2011 09:15:03 |
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sailingsoul
SFN Addict
2830 Posts |
Posted - 06/23/2011 : 22:25:41 [Permalink]
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Before you move on [Ebone], here are my thoughts.
Originally posted by marfknox
There is no more current info on Galveston. Everything the politicians and pundits quote is the studies done over a decade ago. New studies need to be done. |
Who can deny a lot has changed in the last ten years. I'm no investment expert but I believe when most stocks go south, a few go north. In a big way. I'm thinking with what changes have occurred, Galveston's yields have not gone up in the last ten years. If they were dramatically up or even up at all, promoters, would be using more current figures to push their wish for support. If yields were better during good times, the 90's than they were during bad, the 2000's, they wouldn't use the old numbers like they are. That is what I would expect. It makes sense to me and I could be wrong but that's my logic. That money is managed (tracked) on computers and can spit out the numbers at will. The fund managers know what it's been doing, minute by minute. If anyone doubts that, I'm sorry your just ignorant about what's going on with money management and day trading. They don't need to do another study, they know. These fund managers are not your great grandmother keeping her savings in nickles, in the pantry behind the peach preserves on the bottom shelf. The fund managers monitor it, like eagles. That's their job and they make investment adjustments as the climate changes. I say the 2000's performed less than in the 90's. Can anyone here believe the fund managers are ten years in the dark? Speak up. That is crazy and no one is calling the pundits on it. I smell a big big big rat. These fuckers FUCKERS tried to get SS privatized during the Bush years and failed (thank God but they're not done trying). This is the same fox with a new sheep skin. They won't be happy until we have as much political power and individual financial wealth as the citizens of North Korea. This shit is starting to piss me off.
Now, if over the last ten years Galveston's money was heavily weighted in companies dealing with oil or defense, like EXXON or Kellogg Brown & Root, the nation's top Iraq war contractor (no recession there) you would be seeing the latest numbers. Without stating what their invested in.
But if this plan was applied to the whole country, how could a rate of return that is at least as high as social security be guaranteed? Also, how would the problem of inflation be resolved? |
First question, that's easy. There can be no guarantees. When applied on a national scale, dealing with the amount of money involved, I would expect it to be pillaged by market manipulators on a scale that can't be imagined but can be done. The thief(s) are out there. What happened in the past when fund managers got caught with their hand in the cookie jar? They made Hundred's of millions, at the expense of "their" investors and only after they got caught did they have to pay a fine of 10's of millions. They didn't even have to admit to doing any thing wrong. They payed the fine (ca'ching!). This has happened over and over again. That's like you get robbed of a thousand dollars, the cops catch the dude. He pays a $100 fine and cries I not guilty he walks out of court. The CROOK keeps your $900, the cops get your $100 and your out a grand. He's happy , the cops are happy and your neighbor is happy because he didn't loose shit or get robbed. With 4 people, 75% of the people got no problem with the results. When it comes to stock scams even small millionaires get fucked because they are just pimples on the super wealthy's ass and are to out'Fox'ed brainwashed to stupid to realize their not part of the club either (like us) and are being conned. 2 million is nothing compared to what will be lost if SS is changed to this shit..
Again, this just seems like a plan that puts low-income at greater risk of getting even less after retirement, and increases the likely payouts to high-income people.
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I agree Marfknox and I would add, "there is no 'seems' about it, it will not put the low-income people at greater risk of less, it will. How can I be so sure? Well, like you I can't be sure. I'm just calling as I see it. SS |
There are only two types of religious people, the deceivers and the deceived. SS |
| Edited by - sailingsoul on 06/23/2011 22:27:13 |
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marfknox
SFN Die Hard
USA
3739 Posts |
Posted - 06/24/2011 : 12:12:56 [Permalink]
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| So is Herman Cain a greedy sonovabitch trying to pull the wool over peoples' eyes by advocating such a plan, or is he just misguided and not smart enough (on these matters - obviously he's a smart enough business man) to realize how this plan would fail as a nationwide security blanket and would most likely further the divide between the rich and the poor? |
"Too much certainty and clarity could lead to cruel intolerance" -Karen Armstrong
Check out my art store: http://www.marfknox.etsy.com
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| Edited by - marfknox on 06/24/2011 12:13:42 |
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The "Galveston Plan" for social security
