One Last Word On Social Security

From comments on previous post The Social Security Debate:

'The system has not been revamped every ten years. As the Lowenstein article I linked to pointed out, it's been revamped . . . once. In 1983. That was to address the very issue you identify, the shrinking ratio of workers to retirees. And it's worked, to a large degree (the Social Security actuaries keep lengthening the time when they won't be able to pay full benefits).
You talk about a 10% return like it's free money. It's not. It comes with risk, and that's a risk that a retiree is going to be destitute at some point, a risk not in the current system. You talk about "personal responsibility", but what about someone who is the victim of, say, a fraud on investors -- which was rampant in the dot-com/ telecommunications bubble (Enron, e.g.)? What about an earnest investor who diligently researches and invests and just has rotten luck?
The point of Social Security is that it's not a money-making scheme -- it's insurance (social insurance) against those types of contingencies, to offer a basic level of dignity of a retired person.
Just as Social Security is insurance against retiring while destitute, it's also insurance against being able to work because of a disability, or of a bread-winner dying.
Even if, assuming for the sake of argument, you want to separate disability and survivor's benefits from the equation to make your point about how African-Americans benefit, there are ways to address that which don't eviscerate the social insurance aspect of Social Security.
One last point: under Bush's plan, the government would borrow money to finance Social Security, and the trust fund would not buy as many Treasury bonds to deal with the surplus, as it would be drained to make room for private accounts. Your surmise that private accounts will make money for the economy fails to take into account that the extra government borrowing and borrowers needed will "crowd out" investment at the same time that people would be investing their private accounts. So the net additional capital for investment in the economy would be zero. Your counter-example of someone borrowing money from a bank is not analagous(sic) for this reason.'

I appreciate your discussion on this topic as it may help some readers make up their own minds on the issues. I must admit, here though, that I only argue for the presidents plan as it is the best of a bad situation. If I must have money taken from me by mother government, through the threat of jail or fine, I would at least like to own that money. Really, I must say that in the end, we have a difference of opinion on more than just the facts and figures involved. Our differences lie deeper. I believe in the ability of humans to strive, succeed, and survive. The left fears the worst for them and in them. You bring up risk? Of course, there are always risks in life, even mother government can not alleviate this truth. There are difficulties at times in all aspects of life, but I do not believe you make law and policy for the least common denominator or the worst possible scenario. These are baby steps toward totalitarianism.
But on to your comments...
You state Social Security has only been reformed once? I beg to differ..
* The Social Security Act of 1935 set the wage threshold at $3,000. Income earned above this amount was not subject to Social Security taxes. This threshold was a fixed amount that was not indexed for inflation.
*Between 1950 and 1971, various Congresses and Presidents passed at least 6 laws to increase the threshold.
* In 1972, the Congress and President Nixon passed a law to automatically index the threshold based upon the national average wage.
* In 1977, the Congress and President Carter passed a law that increased the threshold in 1979, 1980, and 1981 at higher rates than the growth in the national average wage.
* Since 1982, threshold increases have been based upon growth in the national average wage.
* Since 1950, various Congresses and Presidents have passed at least 9 laws to increase Social Security tax rates above the 6% level specified in the original Social Security Act.
Next, if you really believe Social Security is an insurance program then you should let it be just that. A program for those who are destitute and truly need it. Per the 2000 census, the elderly in this country hold the highest household wealth of any age group. That is even with the money that was stolen by the nanny state, put in the trust fund, and misused by our politicians. If we must have an insurance for the elderly why not just the 8% who really need it? Would the elderly, who have gained that wealth not be that mush wealthier with say a 2% Social Security tax for the truly needy, instead of the 12% they had been forced to pay?
Your last point I will give to you as we were arguing two different ideas altogether. I was arguing the point that the investment of beneficiaries, through stocks and bonds, back into the economy does have an impact. Your argument, I believe, deals with the monies needed to implement the president's plan. On this point, I will just say that our children should be the ones to decide if the investment was worth it.