Social Secuity..and African American's

The Point Is Ownership!

Many African American's do not evenk
now what privitization means!
While living in Harlem,
I asked people about the issues and found not many people knew!
Acualy most Americans do not know, black or white!


Here are some quick answers, for low income, minorty familie's


Would personal accounts cut benefits?

Under any reasonable projections, personal accounts would actually provide higher benefits than Social Security can pay. It is important to remember that Social Security cannot pay all the benefits that it has promised. Unless there are huge tax increases in the future, Social Security will have to cut benefits by 23 percent.


If we move to personal accounts, will it hurt people on Social Security today?

No one age 55 or older will have his or her Social Security benefits changed in any way. Despite scare tactics by opponents of personal accounts, no one who is currently receiving Social Security benefits under the old system is going to have them taken away or reduced. This proposal is about making a better system for their children and grandchildren




Would personal accounts "Enronize" Social Security?

In fact, personal accounts are nothing like Enron. Under the Cato plan, workers could invest only in diversified, approved mutual funds, not in single stocks or highly volatile stocks.

The current Social Security system is actually more like Enron:



Like Enron, Social Security uses ambiguous "trust fund" type accounting that exaggerates its assets and hides its liabilities.
Like Enron, Social Security gives workers little control over their savings.
Like Enron, Social Security doesn't allow workers to diversify. Low-wage workers have nothing but Social Security.
Like Enron, Social Security is going broke. Not as fast-but that won't matter to workers who are affected.
In the end, the Enron scandal revealed that people need more choice and more control over their retirement savings, including the option to invest part of their payroll taxes in individual retirement accounts.



Do Democrats support personal accounts?


Daniel Patrick Moynihan

In today's bitter partisan atmosphere, attitudes toward Social Security reform often get caught up in politics. But Social Security is far too important to rely on politics as usual. This issue concerns future of our children and grandchildren, not whether or not you like President Bush.

Over the years, many prominent Democrats have supported personal accounts as part of Social Security reform. They include the late senator Daniel Patrick Moynihan, as well as former senators Robert Kerry and Chuck Robb and former congressmen Tim Penny and Charlie Stenholm. Even former president Clinton had this to say about Social Security reform:

If you don't like privatizing Social Security, and I don't like it very much, but you want to do something to try to increase the rate of return, what are your options?

Well one thing you could do is to give people one or two percent of the payroll tax, with the same options that Federal employees have with their retirement accounts; where you have three mutual funds that almost always perform as well or better than the market and a fourth option to buy government bonds, so you get the guaranteed social security return and a hundred percent safety just like you have with Social Security.
This should be an issue that unites all Americans regardless of party affiliation




Are there other ways to fix Social Security besides personal accounts?

Former president Bill Clinton laid out the very limited options for fixing the problem: raise taxes, cut benefits, or privately invest. Certainly, it is possible to raise taxes or cut benefits enough to prop up the existing system for a little while longer. But the Social Security payroll tax is already the biggest tax that the average American family pays. Do we really want our legacy to our children and grandchildren to be the largest tax increase in American history? Cutting benefits would be no better. Already, younger workers can expect a low, below-market return on their Social Security taxes. Benefit cuts would only make a bad deal worse.

Besides, raising taxes or cutting benefits would not do anything about Social Security's biggest problem: workers have no ownership of or control over their money. Only a system of personal accounts would give that ownership and control to workers.

Aren't personal accounts too risky?



Of course we all know that stocks can go down as well as up. But over the long term, investing is remarkably safe. Over the last 80 years, private investment in the United States has earned an average annual return of nearly 8 percent. That period included not only the market decline of the last few years but the Great Depression, World War II, several smaller wars, numerous recessions, the "stagflation" of the 1970s, and the bursting of the dot.com bubble as well. We need to remember that, with compound interest and stocks held over the working life of a typical U.S. worker, the money grows, even if the returns on that investment are lower in some years than in others.

Some people ask, "What if I had had a personal retirement account and had retired in 2002 when the tech bubble burst and the stock market lost so much money?" Good question. If you retired in 2002, most likely you would have been contributing to your personal retirement account for at least 25 years and probably longer. If you started investing in 1978, the Dow Jones Industrial Average was 742. At the low point of 2002, it was 7,286. Despite the crash, you would have received a far higher return than you would have seen from Social Security. The numbers are even more amazing for 40 years of investing. Retirement investments are long-term investments, and historically long-term investing in the American stock market is the best deal going.

In contrast, Social Security is becoming an increasingly bad deal for workers. We know that young workers can expect a return on their Social Security taxes of 1.5 percent or less. Furthermore, workers and retirees must keep in mind that Congress can change their benefits at any time. Thus workers and retirees must always consider the political risk of paying into the Social Security system when they have no legal right to benefits.

Beware of those who refer to Social Security as providing "guaranteed" benefits. Retirees have no legal right to benefits, and nothing prevents Congress from changing the benefit levels at any time. Thus the risk of being in the stock market must be weighed against the political risk of a program that provides no legal rights to participants.

Moreover, there will still be a safety net. Every personal retirement account proposal includes a safety net such that no one will fall below a certain level of retirement benefits. The Cato plan proposes a safety net so that no one will fall below the poverty line. That is a higher level than the current minimum benefit under Social Security.

And finally, keep in mind that personal retirement accounts are voluntary. If you are uncomfortable with the stock and bond market with all of its risks and you are more comfortable with the current Social Security system with all of its risks you can always choose to stay in the current Social Security system.