Bush/Lockhart 4/24 threat to kill Soc Sec in next Congress

[papau]

Bush spokesperson James B. Lockhart III was sworn in as Deputy Commissioner of Social Security March 13, 2002, and serves as the principal deputy to the Commissioner of Social Security, and as Chief Operating Officer. Mr. Lockhart also serves as the Secretary to the Social Security Board of Trustees and is also a member of the President’s Management Council. He served under Bush 41 as Executive Director of the PBGC.
http://irm.wharton.upenn.edu/WP-Financial%20Problems-Smetters.pdf
http://www.teamncpa.org/files/PDF/news/2004TrusteesReportNCPA.pdf
http://prc.wharton.upenn.edu/prc/prc.html
http://rider.wharton.upenn.edu/~prc/06conf.html

Speaking at the Pension Research Council's 2006 Retirement Symposium, at the University of Pennsylvania in Philadelphia, Lockhart said the Social Security system needs change, or it will "run aground", and called the system "unsustainable".

Discussing the easily fixed problem (via retirement age to 70 from current 67 by 2042 (continuing today's Reagan required (as in the 2006 current addition) of one month to the required full benefit retirement age) and eliminating the wage cap with the rich paying the full payroll tax on all income - albeit also getting much higher benefit checks), Lockhart proceeded to give the worst scenario review of the system that is possible. He noted the negative cash flow that will cause the system to begin to cash in it's Trust Fund assets in 2017 - which which will in turn cause the rich to repay the loan to the rich the system is now making in the form of lower FIT tax rates under Bush. The laughable and academically and actuarially rejected "infinite horizon" shortfall of $11.1 T was trotted out, along with the slightly less unsure, and still quite "conservative" guess of a $4 trillion shortfall over 75 yea. And then the fear factor based on these very soft numbers of increasing withholding taxes 46% at the end of the 75 year period, or having a "dramatic" cut in benefits (around 20% if done in 2040) was noted.

So Lockhart suggested that there were 3 options: increasing taxes, implementing a slow(er) growth in benefits, and increasing the investment rate of return on Social Security funds. Of those three, increasing taxes appears to be the most popular, he said. As for increasing the rate of return, there are multiple ways to accomplish the third solution, he said, because there can be direct investment by the Social Security trust fund in stocks and bonds, or personal accounts created from payroll taxes, or personal accounts created from additional contributions. He did not note that the effect of removing the ability for US Budget deficits to be financed by low interest bonds given the Social Security system will mean higher FIT taxes so as to pay the higher interest - unless we pass that additional deficit on to our grandchildren.

He called the elimination of 90% of the shortfall by a payroll taxes increase of 1% and a retirement age gradual increase to age 70 in 2084, as something that did not make the system "sustainable". The other 90% solution of removing the wage cap so that the rich paid the payroll tax on all their income was undercut in his presentation by his choosing to illustrate raising the maximum taxable wages to $155,000, and noting that this only reduced the shortfall by $1.8 trillion over 75 years.

He suggested that the "only" solution was much lower benefits with a gradual phase in beginning now that is accomplished by using dropping the CPI indexing and replacing that with the so called progressive index, decreasing benefits further by hiding an increase in the retirement age in the new Bush mantra of "indexing to longevity", and then adding a 2.5% move into personal accounts - he did not bother to note that the last item - personal accounts - does not do a damn thing to the effect on the finances of Social Security and the finances of the US Government or on the total tax - FIT and/or payroll - that will be needed in the future.

THEN THE BIG THREAT THAT WAS NOT REPORTED IN THE MEDIA - IF A GOP CONGRESS IS ELECTED IN 2006, THE LACK OF ACTION ON KILLING SOCIAL SECURITY THAT IS EXPECTED THIS YEAR WILL BE REPLACED BY FOLKS THAT KNOW THAT THE "PROBLEM" WILL "NOT GO AWAY" AND THAT HOPEFULLY EVERYONE WILL BECOME REENGAGED NEXT YEAR.

SO - do we need more of a reason to defeat the GOP in 2006?

[OrangeCountyDemocrat]

1. Another Reason They'll NEVER Let The Democrats Take Control nt

[shain from kane]

2. Why don't we use the s/s trust (?) funds to get in the oil business?

Plastics.

[papau]

3. If SS sells the gov bonds the interest rate will rise, but that is a great

idea. Indeed SS investing in anything except gov bonds should be the law, rather than the current law that requires SS to invest in government bonds.