Now, Social Security... *sigh*

This is a sticky topic... and not one we have covered here in the Bund (online version), but I think I have made my position clear in the old "thread" version. None the less, we can talk about here, too.

First thing first, though...

I think you made some errors in how you summarized the use of SocSec funds by the Federal Government. I'm not picking a fight, or saying that the jist of your post is wrong... it isn't wrong at all... but let's be clear for clarity's sake, okay?

Money paid into the General Fund for SSI is used to pay out supplemental revenue for that fiscal period... meaning that money coming is pays money due in the same year (as you pointed out). Loans against the General Fund by the Feds are not as clear-cut as you seem to think, though. Currently (and in all years since 1956) the money coming into the Fund from SSI withholding is greater than that going out in benefits, and the surplus is placed into non-marketable Government bonds with an average yield of less than 4%. THAT money is then available to the Feds for use in deficit spending projects (meaning ANY spending that isn't already paid for... not "New Deal" public works projects that might pop into mind). You can see all this for yourself HERE.

It was my understanding that when the GOP suggested alternative investment possibilities for the SSI surplus back in '96, they wanted to distribute some of the funds to market-based accounts, rather than simple Government bonds. As we discussed on numerous occasions at work and your patio (at least that's were I recall them), this was a half-assed solution at best. I always felt the "partial" use of market-based accounts was to ensure at least SOME availability of money to the Feds through the same low-interest bonds that are currently used, while the Republicans called it a "safety net" in the event of major market changes (something on the order of October, 1929).

If the market-based funds could return a conservative 12% annually, but only 20% of General Fund income was going into them, then the average return on the General Fund for a year would go from 4% to 6.2%... and that's not such a great fix, is it?

However, even if the WHOLE amount of the annual withholding income for the Fund went into market-driven accounts, the 12-18% return that could be realized wouldn't fix the problem in the long-term. There are simply too many Baby-Boomers out there facing retirement with no alternative plans outside of SSI. As you stated, the increase would have to be measured in orders of magnitude, not simple percentages.

BUT, I still feel that if the use of market-driven accounts was coupled with the ability of younger Americans to "opt-out" of the system by taking a Government-sponsored opportunity to INCREASE there pre-tax amount available for personal retirement accounts (IRAs and 401k plans) while continuing to pay their CURRENT level of SSI payments to maintain the system as it stands now (meaning those who are depending on the SSI income within the next 10 years... not maintaining the status quo), we'd see the beginnings of a solution to the crisis.

THIS was the Bush alternative to the GOP plan of the mid-90s, and the one I think is still viable. However, Bush failed to counter the Dems campaign to make him look bad in the eyes of older, Baby-Boomer-age Americans who are dependant on the SSI benefits as they understood them to exist. This is NOT the privatization that the Dems pushed so hard to retirees... it is simply smarter investing of General Fund's surplus withholding. I understand that (and I'm a Democrat)... but Bush didn't try very hard to make the public see it that way, did he?

I am perfectly willing to forgo my $1029 (in adjusted dollars) a month at age 67.5 for the ability to invest (tax-free) and additional 5 to 7% of my GROSS income in a personal retirement plan. This ability to personally invest 1/5 of my gross income in a retirement account would ALSO constitute a substantial tax reduction (under the current system) because the IRA/401k is still seen as money in MY pocket... not the Feds. Even a middle-of-the-road mutual fund will return 8 to 14% annually over the life of a fund... with higher-risk funds returning as much as 20 to 27% annually. Who WOULDN'T take that kind of return, if they knew they had 20 to 40 years to build on the account (which I still do, unfortunately).

This is simple math, really... knowing I have 20+ years left to invest, and putting the max (14%) in now, I can still (assuming no previous investments) plan on having between $300,000 and $480,000 by the time I'm 67.5. If my maximum contribution goes to 20%... Liz and I will have more than $1.7 million in available funds that can be distributed at age 67.5... which would mean that Liz and I would be paying TAXES on an annual retirement income of $55,000 EACH for the last 10 years of our statistical lives.

Where is the downside to THAT formula for the Feds?

This isn't an issue of ignorance on the Democratic side of the isle... it is pure partisan politics. Fighting this reform is serving no other purpose than to ensure that the GOP doesn't keep control of the White House past '08. THIS is the result of 1% of the Democratic Party controlling 100% of the Party's position platform.

And THIS is what is going to cripple the Democratic National Party for the next 10 to 15 years.