Clinton's call to invest Soc Sec Trust assets in Equities & have ADDON Acc

THE CLINTON SOTU GOOD IDEA - ADD ON ACCOUNTS WITH A GOVERNMENT MATCH, PLUS INVEST SOME TRUST ASSETS IN EQUITIES RATHER THAN GOVERNMENT BONDS.

The investing in equities BY THE TRUST - not by individuals - takes Trust assets out of "worthless gov IOU's" and kills that right wing discussion point. The GOP sales point of low Trust return on Assets is also killed since the Trust is invested in those high return equities that the GOP love. Finnaly, the proposal was for only 15% of the Trust to be invested in equities.

The SOTU's call for creating New Universal Savings Accounts -- USA Accounts - was for an ADDON ACCOUNT - not the Bush carve out of current payroll taxes and destroy Soc Sec System carve out accounts. The Cost that will be paid by the surplus would be the tax loss due to the tax deduction caused by these new accounts - just like the IRA or 401k deposit costs the government a small amount of tax because of the tax deduction- plus Clinton wanted to do a "401k" match - you put in 6% of youy salary and if the Federal government surplus was large enough for a match or a 3% gift, that year that would be the Federal contribution to the account. This was expected to cost 11 percent of the projected surpluses ("To help Americans save and to strengthen our current pension system, the government will provide an equal dollar contribution for most Americans. In addition, the government will match a portion of each additional dollar an individual puts voluntarily into his/her USA account -- with larger matches going to lower-income workers."

http://www.clintonfoundation.org/legacy/012099-fact-sheet-on-saving-social-security-now.htm

... but for this reason: the system was originally structured as it was to prevent graft, to eliminate the possibility of huge amounts of government funds from being yet another means by which business could gain a foothold in government. Any time one starts talking about "equities," one is talking, inevitably, about Wall Street, and Wall Street wants to influence government to its own ends. Such a plan could conceivably greatly affect the composition of government if that "Trust" could be influenced by campaign contributions.

The system has held up and worked well for over seventy years. It's not in trouble. At the very most, the cap needs to be adjusted for inflation. The plan was never meant to be an investment vehicle, but, rather, as income insurance.

"low return" GOP slogans may force a change to a Trust investment in Equities -

plus the accounting/capital management change that would be forced would be good for America - no more deferring the capital market effect of deficits so as to give tax cuts to the rich.

... because of the way current law is structured is real--no question about that. However, that's a matter of education--the public has to understand that such is deferred debt and it will have to be paid back in order to keep the SS system going. Still, I think, any use of government funds to subsidize Wall Street is a big mistake.

I suggested a few days ago that the urgency about Bush's pronouncements about a SS "crisis" had to do with a crisis of their own that Wall Street is projecting--I kept wondering why the date 2018 kept popping up (it has no relation to troubles in SS) and I think that's the time when Wall Street starts to see big draws out of the markets. By 2013, the first three years' worth of the baby boomers retire and stop contributing to 401(k) plans. By 2018, those first three years' worth of boomers, by law, have to start drawing down their plans. That's a significant amount of money leaving the markets and we all know what that will do to already inflated stock prices.

Any SS plan which proposes to use government funds to buy equities is a prescription for disaster--the market is looking for a bail-out--and that means they know, already, that trouble is coming. What does that say about private investments in general?

Cheers.

are you talking about minimum required distributions that should begin at age 70.5 ? They don't have to start then if the participant is still working - that was a change a couple of years ago.

want to be working at 70? That number is small compared to the actual number of retirees in that age group. The reality is that, for Wall Street, they're going to be seeing a significant loss of 401(k) contributions by 2013, and an equally significant outflow from those funds by 2018.

Cheers.

but HAVING to. For pay and benefits. Anyway, most retirees would (should) roll over their 401k accounts to IRA's and take regular monthly distributions from the IRA's - or directly from the k plan. Taking a lump sum distribution makes it all taxable. I'm just not convinced that there will be a huge outflow of money from k plans.

... because most people know that's a loser in taxes. I'm talking about money leaving the system, due to retirement (no more contributions from the retirees) and monthly withdrawals.

The top ten percent of stockholders have about 80% of the stock in this country. The bottom ninety percent hold about 20%, and virtually all of that is in the form of 401(k)s or IRAs. For quite a while now, stock prices have been inflated, based on price-earnings ratio. When money starts to leave the system, stock prices are going to go down, maybe not precipitously, but they will. What does that do to the net worth of the top ten percent? What does Wall Street do? Look for ways to prevent that from happening, which I think is a prime motive for the proposed SS plan.

Sure, there's the possibility that the economy will be in bad enough shape that lots of people will try to stay in the job market past minimum retirement age, but if it's anything like it is now, they won't be making enough for it to be worth the effort, and I would expect that (especially considering the inflated cost of housing today and huge 30-year mortgages) people will be drawing down those retirement accounts pretty rapidly, even if they do manage to find work.

There's so little savings being made in this country, and so much spending, especially debt spending, that it seems to me inevitable that people will be going through their retirement accounts rather quickly.

Cheers.