Bush's "Piratization" of Social Security
rraider
reconsidering Bush's tax cuts?
Why declare a Social Security "crisis" when one does not exist - and
without dealing with a health care crisis that really does?
Is there any point, beyond ideological predilections, for changing
Social Security from an insurance program that has worked well to an
untested investment program?
------------------
It's a giant scam to benefit Wall Street.
Deaf Power
wrote:
All Dubya cares about are his wealthy constituents, not the middle
class and poor, i.e., Halliburton (WMD), Wall Street (SS)
CJT
market as a result.
--
The e-mail address in our reply-to line is reversed in an attempt to
minimize spam. Our true address is of the form che...@prodigy.net.
Williams
wall street in banker/broker/dealer/paperpusher FEES - managenent fees,
consultation fees, research fees, hourly fees, trading fees,
commissions, transaction costs, mailing costs, hidden costs, shipping &
handling, etc etc !!!!!
Deaf Power
http://www.revolutionmag.com/newrev6/chile.html
Two-thirds of Chile's hard-pressed workers will get a poverty-level
pension, or less.
When President George W. Bush decided to push a partial replacement of
Social Security with individual investment accounts, a Chilean
economist named Jose Pinera had his ear.
Now on the payroll of the Cato Institute, a right-wing think tank in
Washington, Pinera filled Bush's head with stories of the
"indisputable success" of the private, individual savings account
system he put in place in his country under a military dictatorship in
1980.
Instead of buying what Pinera was selling, Bush should have listened
to Chilean surgical nurse Maria Adriana.
"I know I'd be much better off under Social Security," she said.
"Because salaries are so low, you're not building up a very good
retirement fund on your own."
Recent study shows that Adriana has good reason to be worried, despite
what dozens of corporate-funded reports and Wall Street Journal
editorials claim about Chile.
The United Nations Program for Development 2000 report on Chile shows
that at least half of the six million workers in Chile will get no
benefits for retirement - except possibly $35 per month in welfare.
Another 25 percent, low-earners who contribute regularly to their
individual accounts, will have to rely on the minimum pension
guaranteed by the government ($130 per month for anyone contributing
to their individual accounts for 20 years). This minimum pension is
but 75 percent of the poverty level minimum wage.
As bad as the private pension system itself is, nurses like Adriana
know that the situation for retirees is much worse because of the
privatization of national health care, the other central part of what
was Chilean Social Security.
She's run into numerous older people like Luis and Margarita Vargas.
Retired under the old Social Security system, they saw their benefits
frozen and cut under the dictatorship. Margarita's cancer operation,
which would have been fully covered under Social Security, left them
deeply in debt.
"We've been shafted," Luis said.
The shafting began after a 1973 military coup, backed by President
Richard Nixon and National Security Advisor Henry Kissinger, overthrew
the democratically elected government of Salvador Allende and
unleashed a reign of repression with many thousands of union activists
murdered, "disappeared," imprisoned and tortured.
Before the coup, more than 75 percent of Chileans were covered by
Social Security, with about two-thirds of the cost paid by employers.
"Between 1952, when our national health care system was introduced as
part of Social Security, and 1973, our system was studied around the
world as a model for health care," explained health care organizer
Lalo Recabarren of the nonprofit group EPES (Popular Education for
Health).
With opposition silenced, the military government first drastically
cut funding for all parts of Social Security, and then moved to
privatize it.
Under the private system, employers pay nothing towards employee
retirement or health care. Each worker is required to pay 20 percent
of salary to cover health care, insurance and retirement contributions
to an account with an AFP (private investment company). Health care
for most comes from enlisting in a particularly cutthroat version of
our HMOs called isapres. Funding for the means-tested national health
system has improved since electoral democracy was restored in the
1990s, but it remains terribly inadequate.
Proponents of privatization like Pinera, who served as Minister of
Labor under the murderous regime, claim that private pension accounts
have delivered "double digit returns" since they were started.
But both the UN report and a study done by a Chilean brokerage firm,
CB Capitales, showed that fees ($4.5 billion 1982-98) ate up a big
chunk of the savings.
Thus, the real rate of return in the individual accounts has averaged
but 5.1 percent since 1982, according to the investment firm. Workers
would have done better just putting their money in 90-day certificates
of deposit (CDs), which have returned 7.2 percent annually.
A young worker starting out in 1994 would have lost 6.6 percent per
year through 1998. With the money in CDs, their savings would have
gone up 42 percent.
The private pension companies have raked in $808 million in profits,
with 20 percent profit rates even in years when the account holders
lost money.
Not surprisingly, investment and insurance companies are among the
heavy contributors to the campaign to privatize Social Security in the
United States. Under the Bush proposal, companies would reap $240
billion in commissions in just the first dozen years, according to the
AFL-CIO.
In Chile, the effects are especially pronounced because of the
national health care tradition and because seniors face their
uncertain future with no guaranteed Social Security benefits or
Medicare and no system of company pensions.
"I have a healthy family without serious medical problems, but I still
spend 20 percent of my income on health care," explained Ximena
Larrain, a nurse and union leader at a prestigious private hospital in
Chile's capital.
"Older people spend more on health care, as I see with my own mother,
but decent pensions will not be there for my generation."
As the UN study shows, the burden on the Chilean government will be
huge as large numbers of people begin retiring under the private
system. Already the welfare caseload among seniors jumped 400 percent.
And unlike under Social Security, benefits cannot be raised. The
burden will be especially hard on women because they are less likely
to accumulate the required 20 years of pension contributions because
of child rearing, earn less and live longer than men. (Under the old
system, only 10 years of contributions were required to qualify.)
It will be very difficult for current President Ricardo Lagos to do
much to put the necessary money and services back in the hands of
retirees.
"Once a country implements the kind of market-driven changes the
dictatorship did in Chile, it is extremely difficult and costly - both
economically and politically - to reverse course," says Chilean
economist Fernando Leiva, an assistant professor at the State
University of New York at Albany.
Perhaps Chile's former military rulers knew what was coming: While
forcing the private system on the Chilean people, they kept both
Social Security retirement and national health care benefits for the
armed forces and police.
U.S. Scenario Not Pretty
President Bush's proposal to divert 2 percentage points of Social
Security payroll taxes into individual retirement accounts would have
an impact its backers would rather not publicize.
The Congressional Budget Office has concluded that this partial
privatization will require sharp cuts in benefits and a raising of the
retirement age to offset the trillion dollars that would not flow into
the Social Security System in the next decade. The Congressional
Research Service also warned that Bush's plan would only make worse
any financial problems Social Security has.
Even if the stock market performs fairly well, the Bush plan could
mean almost 20 percent less in benefits, a study by the pro-Social
Security group, Campaign for America's Future shows. The group gives
as an example a young worker who earned $31,685 last year and would
retire in 2037. Under the current system, the person would get $15,877
per year from Social Security. Under the Bush plan they'd get $8,296
from Social Security and $5,300 (using optimistic figures) for a total
of $12,882 or 19 percent less.
Deaf Power
http://www.larouchepub.com/other/2004/site_packages/ss_privatization/3149chile_model.html
Bush's Chile Model:
Take Their Pensions and Run!
by Cynthia R. Rush
Almost 25 years ago, in 1981, the free-market ideologues directing the
economic policy of Gen. Augusto Pinochet's military junta in
Chile—most of them trained at the University of Chicago in the fascist
quackery preached by Milton Friedman and Friedrich von
Hayek—privatized that country's Social Security system. Today, Chile
is George W. Bush's model for Social Security privatization. Chile
took $22 billion deposited in the government-run social security fund
and handed it over to 18 private investment funds, known as AFPs
(Pension Fund Administrators).
The chief architect of Chile's privatization scheme was
Harvard-trained economist José Piñera, a longtime member of the Cato
Institute's Project for Social Security Privatization, who is cited
frequently by President Bush. Piñera has travelled the world to
convince, especially, developing sector and Eastern European nations
of the benevolence of Chile's pension and free-trade model.
Through a splashy multimillion-dollar propaganda campaign, Piñera and
Gen. Pinochet's "Chicago Boys" told Chilean workers the same thing
that Bush is telling Americans today. The large number of funds (run
by banks, insurance companies, and other financial vultures) would
offer workers an array of "choices" on how and where to invest their
money, without government looking over their shoulders. They promised
workers a high rate of return and a secure future.
Those who agreed to leave the old U.S.-style "pay as you go" Social
Security system and join the new privatized one would experience
nothing short of earthly paradise, the privateers vowed. All they
would have to do is allow a mandatory 12.5% of their monthly paycheck
to be deducted and deposited into the AFP of their choice, from which
it would be "wisely" invested. Unlike the old system, employers would
make no contribution at all.
One million Chilean workers did switch to the new system in 1981. They
were offered incentives and rewards, including an initial wage
increase.
It Doesn't Work
Earthly paradise? In a Dec. 9 conversation with EIR, Manuel Riesco, a
board member of the private Center for Alternative National Economic
Studies (CENDA), put it this way: This has been a quarter-century
experiment and the results are uncontestable. "The system doesn't
work!"
Reiterating what CENDA stated in its January 2004 report, "Chile:
Basis for a Reform of the Pension System," Riesco said there is a
consensus today among "everyone"—the government, AFP administrators,
trade union leaders, think-tanks, and even the World Bank (which
recently published a report on the subject)—that the system is a
complete failure. More than half of the people belonging to the system
today will not qualify for even the minimum pension of $110, which the
state guarantees. That's 3.3 million people out of a labor force of 6
million. One government study concluded that the number not qualifying
for the minimum pension is as high as two-thirds of all affiliates.
This has been the case even in years when the rate of return on the
AFP investments was 10%, a rate no fund is likely to see again anytime
soon.
As CENDA documents, this is because contributors have not been able to
make the required 240 monthly payments into a private fund over a
20-year period. Many low-wage earners registered with the private
system evade the mandatory monthly payments by underreporting their
income, assuming that the minimum pension will yield more than
whatever their retirement accounts offer. A majority of participants
only make an average of two to three monthly payments a year.
In 1973, 77.7% of the labor force was covered by the government's
Social Security system. Today, the old system and the privatized
system combined cover only 60% of the labor force; 40% have no
coverage at all. Only a tiny fraction of those who contribute to the
private system will get pensions that allow them to live decently.
Those who don't qualify for the minimum pension may withdraw whatever
meager funds have accumulated in their individual accounts, and must
apply for the state's special welfare pension, about $50 a month. But
not all of the country's poorest citizens can be assured even of those
small grants, as only 300,000 are available. Chile's unemployment is
10%; and the 26% of the labor force employed in the "informal
economy"—off the books—can hardly make voluntary contributions to any
pension fund.
Stealing by Any Other Name...
The truth is that Chile's private pension system is a gigantic
Enron-style swindle. The financial sharks who set it up never intended
it to be anything other than a mechanism to loot the work force and
the economy, while they and their allied financial predators reaped
huge profits. This is true in every country where the Chile pension
model has been imposed—Argentina, Peru, and Bolivia, to name a few.
The same foreign banks that have bought up 42% of Ibero-America's
banking sector—chief among them Spain's Banco Santander, Banco Bilbao
Vizcaya Argentaria (BBVA), and the U.S. Citibank—control a whopping
59% of its pension funds today.
Piñera is explicit in stating that his pension model has nothing to do
with the principle of the general welfare, embedded in the U.S. Social
Security system founded by Franklin Roosevelt. In an article in the
Dec. 1 New York Times, Piñera insisted that the crucial issue is the
link between "personal effort and reward": Who wants "risky government
promises" when they can have "property rights?" What better for
workers than cheering "stock market surges, rather than resenting
them?"
Property rights? It was the AFPs that "took almost all the money and
left the state to pay almost all the pensions, which resulted in a
gigantic expenditure," CENDA states in its January 2004 report. Today,
the Chilean state is left with the responsibility of covering the
private system's unfunded liabilities, to the tune of 7% of Gross
Domestic Product—$5.5 billion—more than it spends on health and
education combined. In 2000, the government spent 41.5% of all of its
social expenditures to cover the private pension system's deficit.
The government must also cover the cost of the old system, to which
the Armed Forces and the police still belong, together with half of
public-sector employees. Workers who switched to the new system were
granted interest-bearing "recognition bonds" corresponding to what
they had accrued in the old system. When those workers retire, they
are entitled to cash in those bonds, on which the government is also
obligated to pay.
But the AFPs are feeling no pain. They charge gigantic commissions for
their services, making the system unbelievably costly. A May 2002
report by the United Nations Development Fund (UNDP) in conjunction
with Chilean experts, found that the AFPs charge commissions on the
order of $500 million annually. Between 1981 and December 2000,
commissions totalled $6.2 billion. The Superintendent of Pension Fund
Administrators (SAFP) estimated that as of March 2002, some 25-32% of
each mandatory deduction went to payment of commissions!
According to the same report, AFPs had an average profit rate of 33.8%
in 2001; and in 2002, under conditions of economic recession, that
rate reached 50.1%—with one of the largest funds attaining a profit of
209.8%! Chilean law professor Juan Gumucio aptly remarked that AFP
managers "make more money than drug traffickers selling white powder."
CENDA concludes that the country's privatized pension system is the
"most protected industry in Chile's history, created by those who
criticized our earlier protection of industry." The Chicago Boys
weren't averse to protectionism if they were the beneficiaries.
Predators, Inc.
In "An Obituary for London's Chilean Economic Model," published in its
July 21, 1995 edition, EIR demonstrated that the much-vaunted Chilean
"economic miracle" was based on a barbaric gutting of the physical
economy and a six-fold growth of a speculative debt bubble over a
20-year period. The radical free-marketeers who took over the
direction of economic policy in 1976, carried out a stunning
dismantling of anything in the country remotely connected to sovereign
state control of economic processes or real production, at the same
time imposing draconian austerity.
The looting intensified after the 1982 financial crisis and banking
blowout, with an accelerated deregulation of the economy—privatization
of state-sector companies, firings of public sector workers, and 70%
wage cuts for those who remained. Funds for health and education were
dramatically cut. Tariffs were lowered to encourage "competition,"
depriving industry of any protection. As a prelude to the pension
privatization, the reforms which Piñera imposed as Labor Minister from
1978-81, including abolishing the minimum wage, smashed Chile's
once-strong organized labor movement.
It was this brutal austerity, enforced by a military dictatorship,
which produced the "high savings rate" which supposedly proves the
success of the Chilean "miracle." The $22 billion appropriated by the
financial buzzards in 1981, became a general slush fund to keep the
debt bubble afloat, or prop up any other part of the "miracle" that
needed backup.
Where did the money go? By 1994, according to The Century Foundation,
more than half of the AFPs were incurring losses. In 1995, about
two-thirds of what was then a $25 billion pension fund was invested in
highly speculative paper linked to the international derivatives
bubble. In September 1995, the funds lost $1.5 billion of their total
value, and had negative real returns of 2.5% for that year. A study by
a Chilean brokerage firm, CB Capitales, found that the real rate of
return in the individual accounts has averaged only 5.1% since 1982.
Today, 33% of AFP funds, which total $36 billion, are invested in
government debt which, under current conditions of a dollar collapse
and global financial upheaval, can hardly be called stable. At least
12% of the funds may be invested overseas, likely to end up in shaky
derivatives markets. The rest goes into unstable mortgage securities,
bank deposits, or corporate debt.
The Enron-style thievery and corruption embedded in the Chilean
pension model is reflected in the fact that at least two dozen former
members of Pinochet's cabinet have at one time or another ended up as
directors of AFPs. Instead of 18 AFPs, today there are only 7,
constituting a virtual cartel that wields enormous financial and
political power.
The above-cited UNDP report points out, for example, that the AFPs
exercise significant political control over the companies whose stock
they purchase. Exemplary are the state-owned energy companies which
the Chicago crowd privatized. Having purchased those companies' stock,
the AFPs were often able to select their directors, who then went on
"to create a true empire in the [energy] sector, which extended to
Argentina, Brazil, and Colombia, allowing them to control a
significant portion of electricity generation and distribution in
Latin America."
Deaf Power
http://www.globalaging.org/resources/incomesupport/solowey.htm
Fred J. Solowey
Labor Journalist, Member of National Writers Union (AUW Local 1981)
Social Insurance and Economic Security: Is Privatization the Answer?
The system in Chile has become an incredible model all over the world.
If you read business publications in the United States, or magazines
like Time or Reader’s Digest, you’ve heard these wonderful tales in
which the Chilean private social security system is credited with
everything short of the second coming of Christ. It supposedly turned
Chile into an Asian tiger type savings rate country. It's supposedly
eradicating senior poverty; and, all in all, just making for a
wonderful land. The World Bank pushes it at every opportunity. Those
in the United States who are seeking to privatize, including the
50-member caucus in Congress, and Wall Street, which smells the smell
of money, are referring constantly to Chile. One of the very familiar
faces in the United States now is Jose Piñera the former Minister of
Labor under the Penochet dictatorship, who privatized social security.
He runs around speaking to audiences on a monthly basis, pushing the
system in the United States, as he does all over the world.
There were no questions that the Chilean social security system was in
need of some reforms. It had uneven benefits; and, some of this has
been mentioned, how the upper public employees were able to get too
generous pensions. It was sometimes easy to get a second pension. But,
as critics have looked at it, all of the problems within the system
could have been solved internally, none were intrinsic to the model.
Those who instituted the new Chilean system promised pensions that
were going to be 40 to 50 percent higher, etc. We're going to take a
look at these in a few minutes, at what actually happened. The Chilean
system went back to the twenties. There was a system of these various
benefit houses, casas de provision, which grew up sector by sector;
and, most of the older social security systems built up that way, not
like in the United States where it all mostly happened at once. Before
the military coup in 1973, about 75 percent of Chilean workers were
covered by the system, an extremely high rate of coverage. It also
included health care, national health care as part of social security,
that covered an even larger percentage. In addition, for employers,
social security payments varied, depending on whether you were a
public employee or an industrial worker or whatever. Generally,
employers paid two thirds of the freight.
Come the military dictatorship and the coup in the early 1970's, you
began, first of all, bleeding social security. And, later when
privatizers began to talk about the "pitiful pensions", it was a
little like those people who killed their parents and used the fact
that they were orphans as a defense. They had begun freezing wages,
freezing social security benefits, etc. By the time they actually
privatized, in 1981, there were tremendous problems in the system;
though, at the time, they had made some reforms that were necessary,
which was to sort of make some more even standards throughout the
country. That was before the change.
It's already been mentioned the wonderful system the military police
kept themselves out of, which says a lot about it right there.
Basically, under the new system, each new worker, starting after 1981,
had to open an individual retirement account in the company of their
choice. From thirteen percent of their salary, ten percent would go
toward a contribution, and three percent would go toward various
insurance costs, for disability and survivors, and for the fees for
the company, and another seven percent to go for health care.
Employers no longer had to contribute anything. It was all to be paid
by the employee.
As the World Bank recommended, this reform in Chile was done with a
whole bunch of others; and, it was one of the first done. This fellow,
Piñera I mentioned, called it "the Mother of all the Privatizations"
in Chile; and it was. At the same time, a stock market was launched.
There was a tremendous bargain basement sale of government assets and
companies to corporations. A new labor code was put in place to insure
that Chile's once strong unions, and those people who had survived the
murder and repression, could no longer be strong. "Flexible labor
markets" was the key term; and, that means, to put it in plain
English, part-time, downsizing, contract labor, etc., etc., etc.
It's not surprising in a system like this that one of the real ironies
here is that the people who called for this whole set of economic
reforms that gives all power to the market are then surprised when
their private systems get such low coverage. But, if you do not have a
good paying job, you don't wind up being qualified for enough years.
Only a little over half of the people who even have these private
pension accounts contribute regularly. At least 43 percent, at any one
time, are not contributing out of their pay check to this private
pension fund, which is collected by the employer and supposedly passed
on; although, there are over 300,000 complaints lodged with the
government investigative agency about employer non-compliance.
At the time, people who were already working under social security
were given the option to change or stay in social security; and, over
90 percent switched. There are a lot of reasons for this. First of
all, workers were given a net increase in take-home pay. They were
barraged by propaganda which promised them all these wonderful
pensions. Often they were given free gifts. If a worker chose to stay
in social security, they were going to have to pay it all themselves;
and, it was going to cost them a lot more (although, 300,000 people
did choose to stay in the old system).
In many cases, particularly in the public sector, employers simply
ordered their employees to change over. One lawyer, who worked for the
government, who at the time sought to put out a basic flyer saying
here are the pros and cons, was not allowed to do it. Workers faced
captive meetings. So, all over Chile, despite what a US Congressman
told me who chairs the Privatization Caucus, who said 90 percent
switched; and, the other 10 percent are sorry they didn't, I saw a
tremendous regret in Chile in the opposite direction. The people said
that, if we had known then what we know now, we never would have
switched.
Right now in Chile, everything is privatized in the system. Health
care was turned over to private esoperes, which are like HMO's; and,
except the poorest of the poor, everybody pays. The 7 percent
deduction from your pay really entitles you to pay more. I found many,
many cases of senior hardship now--people burdened by medical debts
they never would have had under the old system. Disability insurance,
an integral part of social security, was turned over to for-profit
insurance companies. Now a staggering three quarters of the people,
who would have qualified for total disability under the old system,
don't qualify anymore-only 25 percent do qualify.
There was undoubtably some abuse in the old system; but, even as the
chief lawyer in the agency overseeing the system says, what we have
now is not a humane system. It also takes 20 years of putting
contributions into your individual accounts to qualify for any kind of
pension; whereas, it only took 10 years of contributions before that.
The cost of transition here has been mentioned; but, it's worth being
talked about more, because Chile did build up a budget surplus, as was
mentioned, in order to fund this model. Where did it come from? It
came out of the hides of workers, very simply. The people had to pay
for it. What you saw was that, in the early 1970's, social security
pensions took up a little over 20 percent of the social spending
budget of the government, now it takes up a majority. And, at the same
time, spending on health care and education were drastically slashed.
The average worker in Chile today, sending his or her children to the
public schools, has to pay even for public school education. With this
transition, the costs are only going to get worse; and, some of this
has been mentioned, because these recognition bonds that were just
mentioned, are going to have to be paid off. These gave people credit
for their years of contributions to social security. When people start
retiring in large numbers, you're going to have an even greater burden
on the state; and, the other burdens are going to be even worse,
because we're going to talk about what is going to happen to the
quality of pensions.
This system does have a guarantee in it of a minimum state-funded
pension of three quarters of the poverty rate, if you've had your 20
years of contributions; but, then you still don't meet enough of the
criteria because you still have earned too little. So, all these
burdens of the minimum pensions are also going to fall on the
taxpayers in the state. This burden is only going to grow greater,
because ILO studies have shown, perhaps 60 percent or more of people
will not even qualify for these minimum pensions; thus, the welfare
budget will also grow enormous. Chile has something called a "welfare
pension". It's very, very low. In the early 70's, about 75,000 people
were getting them. They've maxed out on the 300,000 maximum that they
have in the system, with 10's of thousands more waiting in line for
them. This is largely the elderly.
What you have here is a kind of individual capitalization system now,
and people have crunched the numbers, it needs a growth rate that
cannot be sustained in Chile in the long run. It is also based on
demographics that assume you're not going to live very long. They've
crunched their numbers based on life expectancy at birth, rather than
life expectancy at retirement. The ILO has pretty much destroyed the
facts. This system will only contribute good pensions to perhaps 20
percent of the population; so, the system's going to get worse.
One of the reasons that anti-government ideologues want to do that in
the United States (we know why Wall Street wants to privatize) is
because they make big money; but, why do people like the CATO
Institute want to do it? Because, you can just look at Chile this way.
This has become so costly that it has crippled a slightly better
intentioned democratic government now. It doesn't really have any
money now to fund anything. It's just like Reaganomics, that military
buildup, that huge tax cut for the rich. There's no politicians
talking about governments doing anything anymore, right? And, that's
exactly what social security privatization would do here as it did in
Chile. It takes up so much of the costs of transition, you really
can't do anything else.
It should be very important to note here that the greatest burdens
here are falling on women, because women earn less, and they live
longer. The possibilities of accumulation in your private pension fund
doesn't work. You just can't make it. Some of the other things that
have happened is that social security also included low cost, no down
payment housing loans. Most workers in Chile bought their houses
through pension fund loans. That's gone. Right now, to own a house,
you have to pay a mortgage that keeps going up in costs; and, you have
to have a down payment. Also, by law, employers have to give a
month-per-year of severance pay when someone retires. That's gone,
except for those people who are grandfathered in. So, they have a
growing standard of living problem for seniors of a tremendous,
tremendous consequence.
Social security in Chile costs a whole lot more than in the US. It was
about 6 percent of overall costs. Depending how you figure in the
costs of these private pension funds, it now costs 18, 20, up to 30
percent.
Last year, the value of accounts, individual pension accounts, went
down for the first time. They've had a real stock market boom; but,
for the first time, people lost two and a half percent. People
retiring last year, who were trying to buy an annuity on that, really
got screwed badly, first of all; but, the pension companies didn't.
Their profits were still over 20 percent, while the people who owned
the accounts in them lost money. What you've had is a total artificial
boom in Chile. You created a stock market. You sold these companies
off. People who owned stock got a great boom, as all of a sudden all
of this money, that was going into social security, got invested in
the stock market; and so, you had this tremendous artificial boom,
which has kept the stock market booming, interest rates relatively
low, and a very high return. It's not going to last; and, even the
person regulating the system now says that the days of double digit
returns are over. What they're hoping to do now is invest elsewhere in
Latin America where they are starting to privatize, so that they can
still get good deals and continue to get the high rates; but, it's not
going to work in the long run.
As we have already mentioned, three companies, one of these US owned,
Aetna, the largest health care company in the United States, owns the
third largest private pension company in Chile, as well as one of the
private health organizations and several insurance companies. They are
making out like bandits. Banker's Trust and the American International
Group from the United States are also there.
On this whole idea that the savings rate in Chile has been increased
by this, Merrill Lynch even thinks otherwise. They say basically that
there was a huge transfer from the public to the private sector--that
doesn't increase savings. But, what has increased savings is increased
corporate savings. That means increased corporate profits. We've
already told you where that has come from, because unions have been
less strong. You have a total contingent labor market. You can fire
people for any reason. You can have 25 different unions in any one
company, etc., etc. They have really kept the market going. What
happens when they start to have to pay pensions off of this system,
and people start selling stock instead of buying it? You're going to
see a tremendous devaluation of that market.
As also has been mentioned, we have a tremendous, dangerous growth of
economic power and concentration of economic power that's only been
made worse. The percentage of income going to wages keeps going down
in Chile. The percentages of profits keep going up. It's no wonder
that 50 percent of Chileans now think that, despite all the talk of
the miracles, despite the talk that every Chilean will now be a
capitalist with this new system, and that the class struggle will be
over because workers would have a stake in the system, it's no wonder
that 50 percent of the Chilean people think that their future will be
worse for their children than what they have now. They think that 70
percent of the people totally distrust both the private health care
system and these private pension companies. None of this mentions the
1 million or 2 million workers, perhaps, who are totally in the
informal market and not touched by this market at all anymore. I have
people try to tell me with a straight face that most of the people who
had accounts, but weren't contributing to them, were housewives, who
had worked one Christmas, rather than the maids and the domestics and
the people who find a temporary job for a while that contribute and
then can't. You have an economic mess for half the country, in the
midst of a tremendous boom in a tremendous land of plenty.
The majority of the Chilean population, living pay check to pay check,
are more likely not to be able to retire at all. Many young workers
told me things like that. They doubt it, and they see their parents
have to work now instead of retire, having to do jobs, having to do
whatever they can. They see people going into wide debt because of the
health care system. They see credit card debt taking enormous
proportions in the country, based on this system.
I came across a quote that I want to close with from the current
President of Costa Rica, who talked about what the world economic
system is today. I couldn't tell if he was being tongue-in-cheek or
not; but, he said "Everyone carries their own weight, and we don't
give anyone a break. Isn't that what a global economy is?" That's
certainly what the Chilean private pension system is. It's been a
failure on all of its own things (i.e., what it claimed to try to do
about eradicating poverty, about costs, and every other measure). It's
created more inequality. It's created a greater burden on government;
and, in short, it's a failure. Those who are trying to sell it to us
in the United States, or to you anywhere else, ought to be looked at
with a very jaundice eye.
Global Action on Aging
PO Box 20022
New York, NY 10025
(212) 557-3163
globa...@globalaging.org
Deaf Power
http://www.socsec.org/publications.asp?pubid=332
Chile's Experience with Social Security Privatization
A Model for the United States
The Century Foundation, 3/10/1999
In 1981, Chile’s military dictatorship sought to reduce government
spending and labor costs by privatizing the oldest social insurance
program in the Americas. The Chilean pension system was, by all
accounts, in need of reform. The system’s deficit had risen to 25% of
Chile’s gross domestic product, yet 93% of retirees received only the
minimum pension benefit. Today, some people argue that American Social
Security is also in need of reform. They urge America to follow
Chile’s example by allowing workers to redirect all of their Social
Security contributions to personal pension accounts. A closer look at
the Chilean system’s performance over the past seventeen years,
however, should be cause for caution.
How Chile Privatized Pensions
General Augusto Pinochet’s regime created a system of private
funds--called Administradores de Fondos de Pensiones, or AFPs--to
manage and administer workers’ individual retirement accounts and
survivors’ and disability benefits. Every worker participating in this
defined-contribution system designates an AFP to receive a mandatory
payroll deduction of 10% of salary (up to $22,000), plus an additional
2.5% to 3.7% for death and disability insurance and administrative
fees. (Employees may voluntarily contribute up to an additional $2,000
a month to their retirement accounts, although only the mandatory
contribution is tax-deductible.) When workers who have contributed to
an AFP for twenty years retire (at age sixty-five for men, sixty for
women), they can use the accumulated funds to buy an annuity or draw
down their account according to an actuarially determined schedule, as
with an individual retirement account (IRA) in the United States.
Retirement plans in the United States and many other countries have
traditionally depended on contributions from both employers and
workers. But the Chilean system puts the burden on employees alone. In
order to offset the absence of employer contributions to AFP accounts
(as well as to health care and other social insurance programs), the
dictatorship ordered a salary hike of 18%, so that workers took home
more in wages even after contributing to the new system. Qualified
workers were also issued interest-bearing "recognition bonds,"
yielding a 4% real return, corresponding to the accrued value of their
contributions to the old social security system. There is a backup
provision for retired workers with twenty years of previous
contributions to AFPs. If their personal accounts become exhausted or
cannot provide a specified minimum benefit, the government guarantees
a minimum pension that is periodically adjusted for inflation; this
minimum pension amounted to $119 a month in September 1997. The
government also requires AFPs to pay an average annual return equal to
at least 50% of the average return of all AFP accounts or two
percentage points below it, whichever figure is higher.
Within thirteen months of imposition of the new plan, more than a
million employees, 36% of the Chilean workforce, had signed up with an
AFP. By late 1995, the AFPs’ assets totaled $25 billion, equal to 40%
of Chile’s GDP, and by the year 2010, they are projected to grow to
110% of GDP. Today, almost 99% of the workforce has, at one time or
another, affiliated with an AFP. But, by several measures, Chile’s
workers may not be getting their money’s worth.
What Went Wrong
1. Volatility. For more than a decade, the returns on AFP accounts
seemed spectacular. The selling off of state enterprises and, from
1985 to 1991, high interest rates contributed to an average annual
real return over fifteen years of 16.6%, peaking at 35% from 1989 to
1991. Almost half of the investments were in government bonds that
were indexed to inflation, which was high during that period. But
subsequently Chile’s economy cooled, and so have returns on personal
pension accounts. In 1994, more than half of the AFPs incurred losses.
In 1995, average returns fell to -2.5%, and over the past three years
they have averaged only 1.8%. Since 1995, the average dollar amount of
pensions paid has also dropped.
2. High Expenses and Fees. Total AFP expenses range from 15% to 20% of
annual contributions--an average of $62 per enrollee in 1995. (U.S.
Social Security expenses, by way of contrast, amount to less than 2%
of contributions.) Approximately one third of these expenses represent
sales costs, which from 1988 to 1995 more than doubled as a percentage
of total expenses as AFPs competed for enrollees, not by reducing
charges but by mounting ever more extravagant marketing campaigns.
Swayed by free toaster ovens and other prizes or the promise of bigger
returns, 25% of enrollees switch AFPs each year. These expenses
consume a higher percentage of low earners’ contributions than high
earners’ contributions, and they reduce the rate of return for every
Chilean. In 1995, fees and commissions amounted to 23.6 percent of
contributions, or 2.4 percent of average wages. According to World
Bank economist Hemant Shah, commissions reduced individuals' average
rates of return between 1982 and 1995 from 12.7% to 7.4%, and between
1991 and 1995 from 12.9% to a mere 2.1%. One actuary has calculated
that for a new enrollee the 3.5% gross yield in 1996 actually amounted
to a return of -6.8%. That same year the profit margins for AFPs--five
of which controlled 80% of the market, constituting an implicit
cartel--averaged more than 22%.
3. Evasion and underreporting. According to Chilean economist Jaime
Ruiz-Tagle, workers contributing to AFPs earned an average of $1,000
in February 1995 but declared an average taxable income of only $460.
Only 58% of workers contributed anything at all. Evasion through
underreporting is particularly widespread among low earners, who
figure that the guaranteed minimum pension will exceed what their
retirement funds can yield. Employers, too, often underreport payroll
in order to evade other taxes and charges. In February 1996, there
were 150,000 unresolved suits against employers for insufficient or
nonexistent deposits of worker contributions.
4. Inadequate coverage. A United Nations Development Program report
estimates that 40% of AFP contributors will require additional
assistance. The less one earns and the longer one lives, the more
likely it is that an AFP account will not suffice. Since women in
Chile, as in the United States, earn less on the average, leave the
workforce more frequently to bear and raise children, and outlive men,
they are particularly at risk. U.S. women, in contrast, benefit from
the redistributive nature of Social Security, which provides more
generous benefits, as a proportion of income, to low earners. The only
safety net for the poor is a minimal pension that provides barely
enough to pay for a loaf of bread and a cup of coffee each day. And
even that austere program is limited to 300,000 Chileans, excluding
thousands of the most destitute citizens. Moreover, most of the
self-employed, who constitute more than 28% of the Chilean workforce,
are especially vulnerable because participation in an AFP plan is not
mandatory for self-employed workers; as of 1996, only 10% of them had
voluntarily enrolled.
5. High transition and supplementary costs. Add up the pensions under
the new system and those still being paid under the old one, the
"recognition bonds," the minimum pension, and other guarantees, and
the private pension system is at least three times as costly to run as
the system it replaced. Government spending on pensions currently
amounts to 6% of Chilean GDP.
A FOOTNOTE:
The junta protected one class of Chileans from privatization. The
military continues to this day to receive pensions under the old
governmental system.
Islander
in soc.retirement who might filter crossposting. There have been some
who claim that the Chile system should be a model for what we implement
to replace Social Security. This article presents the other side of
that argument.
Deaf Power
http://www.larouchepub.com/other/2004/site_packages/ss_privatization/3149bush_lies_ss.html
PRIVATIZE AND POVERTIZE
Bush's Lies on Social Security
Could Cost Americans Trillions
by Paul Gallagher
Starting with a Dec. 6 meeting with Congressmen, President George W.
Bush began a drive to privatize and loot some or all of the $125
trillion which American workers are scheduled to contribute to Social
Security over the next 75 years, proving himself a liar in his
repeated campaign promises that he would "not touch the benefits of
America's retirees." Reports from the meeting show that the
unfortunate President insists on pushing all or most of those payroll
contributions into private individual retirement accounts, destined to
fill up Wall Street sinkholes, just like the recent years'
disappearing 401k private retirement pensions which Americans now
ruefully call their "201ks."
Cheney and Bush plan to make the announced Dec. 15-16 "White House
economic summit" into a stealing summit, by ignoring the dollar's
collapse, and focussing instead on Social Security privatization and
new tax cuts for corporations and the wealthy.
Compounding his campaign lies that he would not loot Social Security
benefits, Bush now peddles an even bigger falsehood: that Social
Security is bankrupt. Press spokesman Scott McClellan, at the Dec. 6
White House briefing, repeatedly told the press a completely
irresponsible whopper, that the Social Security fund will be $10
trillion in deficit at some indefinite future epoch "if we do
nothing." There is not the most remote basis for this "straw man"
claim—an asteroid will hit the Earth first—except that if it's
believed, anything Bush does to wreck Social Security looks good by
comparison.
McClellan did not bat an eye when reporters referred to Bush's plan as
"privatization," the same term Dick Cheney and Commerce Secretary Don
Evans heatedly denied on Oct. 19 after John Kerry nailed the President
on it. And McClellan announced at the briefing, that while diverting
the Social Security payroll contributions of "younger workers" into
private Wall Street-managed accounts, the Bush Administration intends
to have the Treasury borrow the money to pay current and near-future
retirees—on Wall Street!
That borrowing bubble could run to $4.7 trillion over the next 20
years or so—according to one estimate by the White House Council of
Economic Advisors (CEA)—adding $150-200 billion a year to Federal
borrowing, and running up the U.S. debt/GDP ratio by 23 percentage
points. But in fact, the scheme, if enacted, could collapse and
"povertize" the Social Security system entirely, as in Bush's great
model, Chile, where half of all retirees now get only welfare-level
payments.
Compare this radical Wall Street gambling scheme with Bush's standard,
much-repeated claims during the campaign; for example, on Oct. 19, in
Florida: "In a new term, we'll take the next step toward building an
ownership society by strengthening Social Security. Now, let me remind
you of something that took place in the 2000 campaign. They said in
those political ads that if George W. gets elected, our seniors will
not get their Social Security checks. You might remember those ads. I
want you to remind your friends and neighbors they got their checks.
Nobody is going to take away the checks of those who are now on Social
Security. And Baby Boomers like me, we're in pretty good shape when it
comes to Social Security."
Bush's lies and his policy on Social Security—as on economic matters
more broadly—are an incompetent disaster.
Ideologues Against FDR's Success
President Franklin Roosevelt's Social Security program is often
called—even by some of those who want to do away with it—the most
successful government program in human history. Guided by the General
Welfare principle of the United States Constitution, FDR created a
universal retirement insurance policy—not a speculative investment
plan—at very modest cost, one which will soon have worked with great
success for a century, despite illegal looting of the Trust Fund for
decades to pay for general Federal budget deficits—more than $500
billion looted this way on George W. Bush's watch.
Now, an alliance of neo-conservative forces who hate everything FDR
stood for and did, is claiming the mission of "strengthening" his
Social Security program! "They came to bury Social Security, not to
save it," as New York Times columnist Paul Krugman observed on Dec. 7,
after the White House meeting. Wall Street simply wants that money,
the flow of workers' contributions totalling half a trillion dollars a
year, to burn up in speculation.
The center of the Wall Street conspiracy Bush is now lying for, is the
Project on Social Security Privatization and "Social Security Choice"
task force of the Cato Institute, a radical-right government-hating
"think-tank" pushing elimination-by-privatization of Social Security
since 1995. Cato's wreck-Social-Security team includes José Piñera,
architect of the Chile privatization; Mont Pelerin Society
no-government ideologue and Nobel Prize winner Gary Becker; and
Michael Tanner, who wrote Cato's "6.2% Solution," which means
diverting the entire 6.2% worker's Social Security payroll tax into a
personal stock-and-bond account. Cato's scheme, after a few trial
years of such "choice," then would make the private accounts
mandatory, in place of Social Security, for workers born after 1954.
And who else should show up in Cato's down-with-Social-Security task
force? J. Kenneth Blackwell, Ohio's now-notorious Secretary of State,
Bush campaign chairman, and elections chief, who oversaw large-scale
vote suppression in Ohio's minority districts in particular, to assist
Bush's thus-tainted victory in that state. Blackwell's "angle" is to
lure Black elected officials on the idea that Black Americans, with a
five-years-shorter life expectancy, get less out of Social Security
than whites, and need a private account instead to leave to their
children. The idea is discredited by the decline or loss of Americans'
401ks and IRAs in the Enron, etc. and NASDAQ debacles; but Bush
invited several Democrats of the Congressional Black Caucus to his
Dec. 6 meeting with Congressmen.
Reports from that meeting were that the White House was pushing a
payroll-tax diversion of at least 4%. Bush and CEA head Gregory Mankiw
insisted on borrowing—as opposed to any increase of tax rates or
taxable income—to meet the trillions in payments to early 21st-Century
retirees that would go missing right away in such a scheme—what are
euphemistically called "the transition costs."
This debt-balloon strategy showed the "taxation is against my
religion" lunacy of the President. McClellan hammered away at this at
the Dec. 6 briefing, after announcing the mega-borrowing scheme: "I
think you should go back and look at the President's principles. The
President's principles are very clear.... There are some that have
different ideas from us. We want to talk to them about those ideas,
but the President's principles are very clear and he remains firmly
committed to those principles, and one of those principles is not
increasing taxes.... The President's principles have been spelled out
publicly. Members know what those principles are."
The multi-trillion Federal borrowing strategy reportedly made many of
the Congressmen—Republicans included—somewhat seasick. After all, they
are supposed to be practicing "strict fiscal responsibility" since
Election Day. The Los Angeles Times reported that House enforcer Tom
DeLay would rather not try "strengthening" Social Security right away
on these terms, especially since Republicans know they have no
credibility at all on the matter.
Kerry Nailed Bush
In the third Presidential debate, in Arizona on Oct. 13, Sen. John
Kerry responded to Bush's denial that he would loot Social Security,
by citing some of the crucial evidence that Bush was for a disastrous
privatization of the system, as is now clear. Moderator Robert
Schieffer of CBS-TV asked Bush, "The critics are saying [private
accounts are] going to mean finding $1 trillion over the next ten
years to continue paying benefits as those accounts are being set up.
So where do you get the money?"
Bush: First, let me make sure that every senior listening today
understands that when we're talking about reforming Social Security,
that they'll still get their checks.... There is a problem for our
youngsters, a real problem. And if we don't act today, the problem
will be valued in the trillions. And so I think we need to think
differently. We'll honor our commitment to our seniors. But for our
children and our grandchildren, we need to have a different
strategy....
I believe that younger workers ought to be allowed to take some of
their own money and put it in a personal savings account, because I
understand that they need to get better rates of return than the rates
of return being given in the current Social Security trust. And the
compounding rate of interest effect will make it more likely that the
Social Security system is solvent for our children and our
grandchildren....
And we're of course going to have to consider the costs. But I want to
warn my fellow citizens: The cost of doing nothing, the cost of saying
the current system is OK, far exceeds the costs of trying to make sure
we save the system for our children.
Schieffer: Senator Kerry?
Kerry: You just heard the President say that young people ought to be
able to take money out of Social Security and put it in their own
accounts. Now, my fellow Americans, that's an invitation to disaster.
The CBO said very clearly that if you were to adopt the President's
plan, there would be a $2 trillion hole in Social Security, because
today's workers pay in to the system for today's retirees. And the CBO
said—that's the Congressional Budget Office; it's bipartisan—they said
that there would have to be a cut in benefits of 25-40%.
Now, the President has never explained to America, ever—hasn't done it
tonight—where does the transitional money, that $2 trillion, come
from?
A few days later, when a New York Times Magazine article by Ron
Suskind revealed that President Bush had told top Republican
fundraisers he'd "move quickly" to privatize Social Security after the
election, Kerry pressed the issue. An Oct. 18 CNN online article
reported, "Democratic presidential nominee John Kerry seized on a
report Sunday that President Bush would seek to quickly privatize
Social Security in a second term. Kerry insisted such a move would be
'a disaster for America's middle class.'
"Bush 'has never used the word privatization,' a Republican campaign
official said, accusing Kerry of trying to 'scare seniors.'...
Commerce Secretary Don Evans argued the Kerry campaign was
misrepresenting the facts.... Asked [if] Bush's plan could cost $2
trillion, Evans replied, 'They don't know that. I mean, that's just a
number, you know, they're drawing out of the air.' "
Speaking on CNN's Late Edition on Oct. 17, Republican National
Committee chair Ed Gillespie also insisted that Bush "never said that"
he would privatize Social Security.
LaRouche: Is This the Idiocy You Voted For?
Immediately after the election, Bush has proved that Kerry's charges
and Suskind's revelation were true; Bush was lying, and wants to fully
privatize Social Security, with disastrous consequences. At this
point, the President's small obsessions about a domestic-policy
legacy—"the ownership society"—directly intersect and worsen the
collapse of the U.S. dollar which he so serenely ignores. The Dec. 15
"economic summit" will be a turning-point in that downward plunge.
Former Democratic Presidential candidate Lyndon LaRouche said on Dec.
5, that if the flow of Social Security contributions from current
young workers is diverted, as Bush plans to do—on a compulsory
basis—then the government does not have the money to meet the Social
Security needs currently. What Bush is proposing to do, is to take the
money that is supposed to go to the Social Security Trust Fund, and
divert it to private investment sharks. That means that some Social
Security contributions immediately won't be there, and Social Security
checks won't be paid, Bush's claims to the contrary. Didn't Americans
learn anything, LaRouche asked, from the massive 401k losses when the
IT bubble wiped out "private retirement funds"? (One-third of older
Americans with 401k retirement accounts told a recent survey that they
did not know when they could retire, due to the losses of their
pension funds.)
LaRouche called Bush's Wall Street diversion stealing; and making it
compulsory, as the Bush plan would do, will cause a catastrophe for
those counting on Social Security, and for the whole economy.
Measuring the magnitude of this pension theft against Bush's
statements—not once, but dozens of times—denying that he would ever do
precisely what he is now doing to loot the Social Security of the
nation, people are going to say, "I didn't vote for that; I didn't
vote for such a thing!" LaRouche concluded. And the Republicans are
very worried about that kind of reaction.
billb
--
billb
It comes down to how much you trust the "system" to maintain
hypocrisy?
dealer
directly call their senators and representatives. If you want to save
Social Security, make that call, before it is too late.
Take action today. Call your legislators at 1-800-307-8525 and urge
them to oppose private accounts that take money out of Social
Security, jeopardizing the future of all Americans.
It's 1-800-307-8525. It is TOLL-FREE.
Liberals HATE America!-!
"Deaf Power" <de...@power.com> wrote in message news:tZSEd.26182
>>It's a giant scam to benefit Wall Street.
>
> All Dubya cares about are his wealthy constituents, not the middle
> class and poor, i.e., Halliburton (WMD), Wall Street (SS)
Yaaawwwn. This tired old neo-communist class warfare just doesn't work
anymore. It's 60 years old, get something new. Bush won. You left-wing,
America-hating liberals lost. FOUR MORE YEARS!
LAUGHING IN YOUR FACE!!!! Bwaaaaaaaaahahaha!
Deaf Power
You really trust Dubya?
Say it here! HEIL DUBYA! and Dubya will gladly give you a bone!
Williams
Jan. 12, 2005 (ABC) - The invasion of Iraq, which has cost the lives of
some 1,300 U.S. military personnel and billions of dollars, was
"absolutely" worth it, despite the absence of any weapons of mass
destruction in Iraq, President Bush told ABC News' Barbara Walters in
an exclusive interview that will air this Friday...
The Bush administration does not hold out hopes that any weapons will
ever be found...
When asked if the war was worth it even if there were no weapons of
mass destruction in Iraq, Bush responded, "Oh, absolutely."
-------------------------------------------
in a few years we'll see this headline:
Bush: Destroying Social Security "Absolutely" Worth It Despite No Trace
of Crisis
dog4...@yahoo.com
our legislators to give them thoughts about Social Security. After all,
Congress represents the people. Letters and e-mails can also be
affective, however, messages are recieved in "real time" when given
over the phone. And I think SS is a verey timely issue- there are
alternative to the administrations plan. Sharing ideas with legislators
is one of the best avenues toward getting voices heard on Social
Security.
Poppy - San Francisco Bay Area
of Bush. Bush has not even given us a plan as yet so we will have to
see what it entails. I suspect it will be an attempt to compromise and
we will continue to have a mishmash program. Why should Congress
change it when they have a cushy plan that the rest of us don't have.
The things that need changing from our present Social Security program:
1. Does not cover all Americans equally
2. Permits legislators and other crooks to steal from it
3. Does not keep Individual accounts
4. Does not recognize of housewives with an account in their names
5. Has too many other programs dumped on it such as widows and orphans
James A. Chamblee
> From: "Poppy - San Francisco Bay Area" <GoldenSt...@comcast.net>
> Why should Congress
> change it when they have a cushy plan that the rest of us don't have.
What "cushy" plan are you talking about? They have the same plan as civil
servants since 1984. That plan is a combination of Social Security,
Employer matched ( up to 5 % of salary) contributions to a Thrift Savings
Plan, and private savings.
Jerry Okamura
"rraider" <rra...@gottech.org> wrote in message
news:8kr7u092fgk4bmtsk...@4ax.com...
> Why should the country add huge amounts of new debt without
> reconsidering Bush's tax cuts?
Because the "debt" will be a much bigger problem if you wait?
>
> Why declare a Social Security "crisis" when one does not exist - and
> without dealing with a health care crisis that really does?
The health care crisis, as you call it is exactly because we have moved to a
third party payment system. It does not take a genius to figure out that
you cannot control price inflation effectively, when the user of the service
does not have to pay the bill.
>
> Is there any point, beyond ideological predilections, for changing
> Social Security from an insurance program that has worked well to an
> untested investment program?
Okay, I will bite. A person who retires today, regardless of how much they
put into the system, will get about $1100 a month from Social Security. In
many parts of the country today, that won't even pay the rent. Could you
survive on $1100 per month?
Jerry Okamura
"CJT" <abuj...@prodigy.net> wrote in message
news:41E3FEDF...@prodigy.net...
> rraider wrote:
>> Why should the country add huge amounts of new debt without
>> reconsidering Bush's tax cuts? Why declare a Social Security "crisis"
>> when one does not exist - and
>> without dealing with a health care crisis that really does? Is there any
>> point, beyond ideological predilections, for changing
>> Social Security from an insurance program that has worked well to an
>> untested investment program? ------------------
>>
>> It's a giant scam to benefit Wall Street.
>>
> ... which will backfire as the stock market goes into a 30 year bear
> market as a result.
>
bonds, and other financial instruments, means the demand will be bigger than
supply.
Jerry Okamura
>
> http://www.revolutionmag.com/newrev6/chile.html
>
> Two-thirds of Chile's hard-pressed workers will get a poverty-level
> pension, or less.
And what do you call the $1100 a month we get from social security, if not a
"proverty-level" pension?
Rumpelstiltskin
I don't understand this stuff at all. I retired 5 years ago, and
my statement at the time said that when I hit 62, I'd get $875
per month. The dollar figure has been drifting upward since,
and my latest statement says I'll be getting $1,198 per month,
though I haven't worked at all since I retired, and the tables
included show that SS does know that. That's nearly a 30%
increase, but the official inflation rate has been much less
than 6% per year. I suspect something is screwed up, but I
guess I won't know what my benefit will be until I actually start
collecting. Especially since heaven only knows what's going
to happen to it in the next two years.
Glenn
If I recall correctly (I could look it up, but someone will
correct me if I'm wrong) before age 62 the rate is adjusted
according to the average wage increase and after 62 the benefits
are adjusted according to the CPI. The CPI is a pale shadow of
inflation; I believe Art mention when the CPI was at 2.7, real
inflation was about twice that.
Glenn
Rumpelstiltskin
Thanks for the suggestion, even if you're not sure. I didn't
think wages had been rising at that rate, but I don't know
how they calculate the number they use.
Jerry Okamura
"Rumpelstiltskin" <PleaseDoNot...@nowhere.net> wrote in message
news:b2n0v0pkhm594mt3b...@4ax.com...
Which still comes back to my question, could you survive on that $1,198
a month, if that was your only source of income?
Jerry Okamura
"Glenn" <min...@yahoo.com> wrote in message
news:a3r0v0t2ofogrho48...@4ax.com...
already past 65, and he kept telling me how much more he would get
from social security, since he was still contributing to it....but
unfortunately
I do not remember how much more.
Jerry Okamura
"Mamamia" <repl...@thenewsgroup.dumbo> wrote in message
news:1106300661.61aa2bc1135602d30d3c459d28643db6@teranews...
>> > Two-thirds of Chile's hard-pressed workers will get a poverty-level
>> > pension, or less.
>>
> "Jerry Okamura" <okamu...@hawaii.rr.com> wrote:
>> And what do you call the $1100 a month we get from social security, if
>> not a
>> "proverty-level" pension?
>
> My father was a WWII vet born in 1919 and when he was in his 50's,
> Nixon's congress deemed him a notch baby. Nice way they treated the Vets
> and their spouses. Four years of his life and he gets kicked in the
> teeth when he's old. He died 2 weeks before he would have drawn his
> first SS check.
Which of course is another problem with social security. It is like going
to Vegas, if you live to
a ripe old age you get the benefits, but if you die before (or shortly after
you reach retirement age) you l
lose out on the lottery and someone else gets the benefits of all those
years you contributed to the system.
Whereas, any assets your father may have had, was transferred to his wife
when he died.
> Dad died about 20 years ago, and as a result, my mother draws about $600
> a month on his SS. Every time they raise her SS, they raise Medicare's
> fee too. She takes the extra $.99 that's left and buys herself a pack of
> gum with her raise.
Well, that is another problem with the current system. Those who retired a
long time ago, get a lot
less then those who retire today, and those who are retired today, will get
a lot less than those
who retire ten or twenty years from now.
Rumpelstiltskin
<okamu...@hawaii.rr.com> wrote:
Actually, I think I could if I had to. I'm lucky to have low rent
(rent control), and I get $1300 a month from retirement. I live
within about 20% that without thinking about it much, since I
live like a monk, and am such a skinflint that stock dividends
cover the shortfall many times over. I don't know what I'll do
when SS kicks in, in two years: maybe just make my heirs
happier when I croak. I'm surprised they don't buy me
cigarettes for Christmas already.
I'd need more money to live on if I had a family, though, to
be sure.
I hadn't actually been responding to your question, though I
realize that was the topic of this thread. I was just seeking
some input, which I got from Glenn, as to why my projected SS
had gone up so much.
Jerry Okamura
Rent control is another subsidy by the government. Is the $1300 from Social
Security?
And if you have stock dividends, and you are using that to "help" you live a
little more
comfortably, that to me tells me that you would not live quite as well if
you had only Social
Security to live on...which is the point I have been trying to make.
>
> I'd need more money to live on if I had a family, though, to
> be sure.
Well, actually that depends on if your family consisted of children who you
were still supporting
or if you had a wife, who received only a bare minimum in social security
benefits. I find it kind of
nice that my wife and I both receive that monthy social security check.
Rumpelstiltskin
<okamu...@hawaii.rr.com> wrote:
Rent Control isn't a government subsidy, since it doesn't cost
the government anything. I agree it's a "subsidy" of sorts, but
it's a city law and the city doesn't get or pay much, if anything,
as a result of it. Maybe there's a taxation difference based on
the rental income, but I haven't heard of such. We have a
similar subsidy in California for people who have owned their
own homes for a long time, and that one does reduce the
state's tax income.
I could rent something comparable elsewhere for less
without the rent control than it costs here with the rent control.
That would of course in a duller location, maybe even out of
state, maybe even in Jesusland which is not a viable solution.
This flat without rent control would go for about $2,000 a
month, triple what I pay. I've lived in it since 1974.
The $1300 is my retirement from work (along with nearly free
medicine from Kaiser). I have two years to go before I'm 62.
>And if you have stock dividends, and you are using that to "help" you live a
>little more
>comfortably, that to me tells me that you would not live quite as well if
>you had only Social
>Security to live on...which is the point I have been trying to make.
Yeah, but it would only be a couple of hundred dollars less a
month. I expect I could manage that. Not if I had to pay for
medical insurance, though.
Jerry Okamura
Of course it is. Part of the value of rental property is the rent it can
obtain. Back in the days
when I use to be interested in such things, the standard way to judge the
value of
an apartment complex, was to use an 8 to 1 ratio, i.e. the value of the
property is worth no
more than eight times the rental income of that property.
>
> I could rent something comparable elsewhere for less
> without the rent control than it costs here with the rent control.
> That would of course in a duller location, maybe even out of
> state, maybe even in Jesusland which is not a viable solution.
> This flat without rent control would go for about $2,000 a
> month, triple what I pay. I've lived in it since 1974.
Obviously, you could move to say Modesto, or some small California
town in the Central Valley, and your rent would be considerably cheaper.
But that
is not where most people live.
Rumpelstiltskin
<okamu...@hawaii.rr.com> wrote:
OK. I wasn't aware of that.
>Back in the days
>when I use to be interested in such things, the standard way to judge the
>value of
>an apartment complex, was to use an 8 to 1 ratio, i.e. the value of the
>property is worth no
>more than eight times the rental income of that property.
>>
>> I could rent something comparable elsewhere for less
>> without the rent control than it costs here with the rent control.
>> That would of course in a duller location, maybe even out of
>> state, maybe even in Jesusland which is not a viable solution.
>> This flat without rent control would go for about $2,000 a
>> month, triple what I pay. I've lived in it since 1974.
>
>Obviously, you could move to say Modesto, or some small California
>town in the Central Valley, and your rent would be considerably cheaper.
>But that
>is not where most people live.
And it certainly isn't where I want to live! I'm a city boy now,
though born and bred in the sticks. And by "city", I don't mean
Modesto: I mean London! San Francisco is small by my
standards, but such a lovely and varied place to live that that
makes up for the smallness.