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So How is Gore's Lockbox Doing Anyway ?

Discussion in 'Political Discussion' started by BelichickFan, Apr 25, 2007.

  1. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    Just wondering how his stupid f*cking lockbox is doing while the "risky stock market" soars upwards to heights never seen before. Thanks for encouraging the country to keep social security money "safe" while scaring Americans out of actually growing the money you nitwit.
  2. Fogbuster

    Fogbuster Rookie

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    Al Gore is a total fruitcake. We will see him committed to "celebrity rehab" one of these days, I'm afraid.



    //
  3. sdaniels7114

    sdaniels7114 Rookie

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    The lock box concept was about spending social security tax revenues on social security expenses as opposed to say spending social security tax revenues on some stupid war half way around the world or to give some billionaire another tax cut. It wasn't implemented, as anyone with 1/2 a brain knows, since the wrong guy won in 2000.
  4. BelichickFan

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    #24 Jersey

    All the liberals can do around here is insult people with comments like 1/2 a brain.

    The lockbox was equivalent to putting money under the mattress instead of investing it. My heart aches at how much money we lose by putting social security under the mattress.
  5. sdaniels7114

    sdaniels7114 Rookie

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    Or saying they suck? I seem to remember someone around here just recently saying someone else sucked. Must have been another evil lefty.

    No it had nothing to do with the shrub's harebrained scheme to hand out giant managing fees to his sleazebag friends in the investor class. It was strictly about NOT putting social security revenues into the general fund.

    You'd have to have a heart for it to ache. Your words here have proven time and again you couldn't give a rat's azz about anyone else.
  6. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    Yeah, you would know what I care about more than I would ? Liberals :rolleyes:
  7. BelichickFan

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    #24 Jersey

    Read this, he's talking about the lockbox (no SS to the stock market) vs. Bush's very small proivatization plan. When he talks about a diversion of 1 out of 6 dollars he's talking about not investing it, not using it for the general fund :

    "Q: What is your Social Security plan?

    GORE: I will keep it in a lockbox. The interest savings, I would put right back into it. That extends the life for 55 years. I am opposed to a plan that diverts 1 out of every 6 dollars away from the Trust Fund. It would go bankrupt within this generation.

    BUSH: We want to allow younger workers to take some of their own money & put it in safe investments so that $1 trillion grows to $3 trillion. The money stays within the system.

    GORE: I give a new incentive for younger workers to invest their own money. My plan is “Social Security Plus.” The governor’s plan is “Social Security Minus.” Your future benefits would be cut by the amount that’s diverted into the stock market. And if you make bad investments, that’s too bad."


    http://www.ontheissues.org/celeb/Al_Gore_Social_Security.htm
  8. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    One last thing, this is a ridiculous comment. Bush's plan was based solely on indexed funds, there's very little management effort or fees in indexed funds. And quit talking about "the investor class", whether it's owning a company (few), having a mutual fund or two (more), having an IRA/Roth IRA (even more) or having a 401K (huge percentage, couldn't find exact number), the vast majority of Americans are in the "investor class" one way or another.
    Last edited: Apr 25, 2007
  9. sdaniels7114

    sdaniels7114 Rookie

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    small fees eh? Just like that small risk associated with de-regulating the banking industry? or the few billion dollars we'd spend in Iraq before they'd take over the costs?

    You can try and smash the two together as much as you like but Gore's lock box idea was strictly about spending the money collected for Social Security on Social Security, which is exactly what we're not doing right now. Every month the treasury takes in MORE money in withholding than it spends out on SS checks. That extra money should be held in reserve in an interest bearing, 100% safe, bank account. It isn't, its all being thrown into a bottomless pit in the middle east.
  10. BelichickFan

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    #24 Jersey

    Well I don't agree with you and think it's laughable that a Liberal, again, turns a thread into a War issue but the question I was asking was :

    So how is the anti partial privatization of SS doing, anyhow ? (we'll just agree to disagree on the lockbox terminology).
  11. chris_in_sunnyvale

    chris_in_sunnyvale Rookie

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    How does this work? Where does this interest come from? Since we're talking social security, the safest source of interest would be T-bills (like you said, 100% safe). T-bills are IOUs by the US Treasury. So in essence you recommend that excess SS money be put in an account that earns interest thanks to IOUs by the federal government. Not going to fly.

    Let's put aside the issue of interest for a second and just talk about putting aside the collected SS revenues in a "lockbox" (or "under a mattress") so the money would be spent solely on SS payouts. When you or I put money under a mattress, we're telling the world we value that money over the material alternatives it could provide. When the federal government does that, what it is really doing is taking that money out of circulation. It might as well light it on fire (since it can reprint it at a later date when the payouts are needed). When money is taken out of circulation, there is less money to go around so people will be less likely to spend it, causing deflation. No politician, democrat or republican, will want to cause deflation due to a policy decision. Gore's lockbox didn't pass the economic sniff test and despite his rhetoric, the concept really didn't have the wings to get off the ground.

    Regards,
    Chris
  12. sdaniels7114

    sdaniels7114 Rookie

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    WTF are you talking about? All banks pay interest, not just Federal banks and T bills. Its a simple matter for the government to establish limits on what the money is invested in to make it risk free. They could also use the money to retire debt. That'll earn us all negative interest so to speak because you don't have to pay interest on loans you've paid off. In the end the interest is unimportant however. Its the dollars themselves. Look at it in smaller terms.

    Lets say you hired me to replace the floors in your house. I might very well collect all the money up front. Don't laugh, that's exactly what Home Depot does. So now I'm rich because I just collected a check from you for maybe $20,000; but I'm only rich on paper. I still have to pay my supplier for quite a bit of flooring and I have to pay my help to do some of the work. I find myself doing less and less labor every year:) I also have to consider taxes, supplies and a host of other stuff. So even though I've got $20,000; I really only have about $5000, and that's only if I manage things well. Its the same thing with Social Security. The 20 something year old that kicks in $25 this week won't come looking for his money back right away, but it will happen.
  13. chris_in_sunnyvale

    chris_in_sunnyvale Rookie

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    :nono: Feel free to call me out if I cuss in return.

    Risk free interest from banks will be T-bill-backed. Every other investment vehicle a bank offers will have some amount of risk, whether it's mortgage-backed securities, muni-backed securities and whatnot. And do we really want our SS's solvency hinging on how the real estate market does (in the case of mortgage-backed securities) or each state's ability to collect tax revenues (in the case of muni-backed securities)?

    This is true in theory. In practice, people (and banks and mutual fund companies and foreign countries) bought the debt expecting to be paid out over the length of the issue. Someone who bought a 30yr T-bill is expecting a payout over 30 years. They are not expecting the government to just refund them the principal halfway through and go, "Hey, we're paying this off early." Prepayment is a risk that people accept when they invest in such things as mortgage-backed securities, not government obligations. The government could offer a premium to the T-bill holders to accept a prepayment, but the premium would be expensive...perhaps worth more in today's dollars than in future dollars despite a lower absolute number today.

    :confused: I got lost when you transitioned to "Its the same thing with Social Security." Can you explain this last paragraph to me like I'm Harry Boy?

    Regards,
    Chris
  14. sdaniels7114

    sdaniels7114 Rookie

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    Every week that goes by right now Social Security takes deductions from just about every worker in the USA. That money won't need to be given back out for many years, but its still money that's not the government's; they're just holding it until the workers who paid it retire. Some of that money goes right back out in the form of current retirees' benefits; but as of today there's always a lot left over. When you hear about the SS crisis to come they're talking about the day when that's no longer the case.

    The money that's left over doesn't need to be spent on SS benefits today; but it will still have to be spent. The whole idea of the lockbox was to keep that extra money out of the general fund and leave it to pay for what it was collected for instead of using it to pay for something else.
  15. chris_in_sunnyvale

    chris_in_sunnyvale Rookie

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    I know exactly what the idea of the lockbox is. It's a great idea that makes sense in terms of how people save and invest. Unfortunately, as I explained in my first post, the federal government can't save and invest like people can. The dynamics of money supply and risk-free interest from the government's own IOUs come into play at that level. The lockbox works great at the personal level. It fails miserably at the federal government level.

    Regards,
    Chris
  16. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    BF, those who invested in the market in 2000 and retired in 2003 would have seen substantial losses. Those who invested in 2000 and retired now would have seen modest gains. Those who invested in 2003 and retired in 2005 would have seen substantial gains. Those who invested in 2000 and are still working would for now have good gains. For those who depend on Social Security, the gains on investment in any case would not have changed their quality of life.
  17. BelichickFan

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    #24 Jersey

    Cry wolf all you like, everyone knows that you can't look at the stock market for a year or two. If you want to pick the worst possible window to scare people off, fine. I bet you can't fine a 10, or even 5, year window in which the broad index like the S&P 500 was down. I hate name calling but only an idiot would pick a window that included 9/11/01 and the dot com crash and use it to generalize about the market.

    If more people will ever become more financially independent they need to start learning to get money in the stock market at an early age and leave it there. Even for someone like me who's right in the middle of middle class, maybe slightly above the middle, it can pay HUGE dividends and I shudder to think what I'd have if the government didn't steal almost 15% for social f*cking insecurity. Quit scaring people and just show them that if they get involved long term they'll win.

    S&P 500 over the past 30 years ? Averages 12% annually.
  18. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Depends when you enter and when you retire, no? And yes, I agree people should invest early, but I also think we need a safety net program since things can go awry in a person's life. People who earn good incomes can afford to play the market and develop other assets as well. People who live on the edge don't have the luxury.
  19. chris_in_sunnyvale

    chris_in_sunnyvale Rookie

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    Well to be fair, if anyone invested *fully* in equities during these time periods and was close to retirement, they were morons...either lucky or unlucky ones. I would hope that if SS was ever privatized, that people would be steered towards target funds...those that adjust their risk downward as retirement age approaches. Albeit still having some risk, these funds should be able to beat SS's "ROI", if you really want to call it that.

    Regards,
    Chris
  20. BelichickFan

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    #24 Jersey

    Nope. The only way you can lose is if you are in the stock market for a short time (5 years or less). Even if you are unlucky enough to get out at a precipitous fall, like 2002's -22%, you're still up over your career just not as much.

    If you put $5K in for 40 years (working from 25 to 65) at a very conservative 7% you have spend $200K and have $1M at the end. If your last 2 years both had 20% drops (VERY unlikely but let's go with it), you have still turned $200K into $600K. I know, inflation, etc, etc, but you still have a nestegg at the end in this ultra conservative example.

    Of course, the S&P 500 averages 12%, I used conservative numbers. For fun, if you did $5K for 40 years at 12% (which is historically reasonable) then had two straight 20% losses just before getting out your $200K investment is now $2.2M even with back to back 20% losses.

    Maybe a happy medium is 10%, a solid 2% below historic averages, your $200K ends up at $1.3M even with a fairly unrealistic back to back -20% at the end.
  21. BelichickFan

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    #24 Jersey

    Depending how much they have, you're definitely right but Patters loves worst case hyperbole, so just play along :)

    Best case you have enough that you can withstand a drop but stay in equities for upside, that's what my parents are doing; they're retired but have enough that they would be OK with a 20% drop.
  22. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    I don't think the issue is as relevant to those who can put away $5k/year, but in general you sound more like a mutual fund brochure than someone who lives in the real world. Most people can't save that kind of money until they're at least well into their 30s, after they've secured good jobs, bought a house, started saving for their kid's education, etc. And, while I certainly agree the stock market is a good investment, for those who have limited disposable income it is risky. In addition, your figures leave out inflation, which over 40 years would eat away a considerable part of the gain.
  23. Real World

    Real World Rookie

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    Yes but wasn't the idea of privitization of SS only going to affect a limited amount of dollars?
  24. chris_in_sunnyvale

    chris_in_sunnyvale Rookie

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    Putting away $5K/yr has nothing to do with this. Your SS benefits are directly related to how much you put in. If you're poor and barely pay into SS, you won't get much out. Even if it's just a little, that SS money put into a risk-adjusted target fund would still do the recipient better than the current method.

    Regards,
    Chris
  25. BelichickFan

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    #24 Jersey

    :bricks:

    $5K was just an example as we'd talked about that amount earlier in the week regarding Roth IRAs. Make it $1K and divide all the numbers by 5, the point still remains.

    Regarding people's ability to :

    - I disagree that "most" can't. "Most" can invest through an IRA and it can be tax deductable (if traditional IRA) making the actual cost "only" about $3.5K. I just don't believe most can't swing that. Some can't. And others may choose not to and buy an HDTV instead.

    - This was supposed to be about privatized social security. I fully realize there may be a little, or a lot, of upfront spending to keep social security solvent as privatization begins befor the non privatized recipients are gone but the concept would be money that is ALREADY going out of people's paychecks could be invested. They wouldn't be coming up with $5K additional.

    Why are you so scared of people having money ?
  26. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    The average income in the US is about $35k, which means the average person is contributing about $2.5k to SS. Now given that that's the average, one presumes many people earn much less, which makes a guaranteed SS all that much more important. While Bush's proposal would have allowed people to invest only a small share, 4%, he never made clear how much their SS would drop if their investments went south. For those who for whatever reason have no other source of retirement income, his proposal is a bad idea. While we are now in a good market economy, that will change once the war is over and we start focus more on deficit reduction than deficit spending.

    I'm not against tax vehicles to promote investing.
  27. BelichickFan

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    #24 Jersey

    That number is disingenuous because

    - it includes part time kids and elderly
    - many families have two incomes

    http://www.infoplease.com/ipa/A0104688.html

    Median household income :

    Age group :

    15-24 - $29K
    25-34 - $47K
    35-44 - $58K
    45-54 - $62K
    55-64 - $52K

    65--- - 26K

    65+ is the second biggest group so that number, mostly retired, brings the number way down.

    Household income is what matters - and median is better than average because it chops off Bill Gates, etc. The 25-65 group I've been talking about has PLENTY of income, with an average median of $55K or so. That's $7.7K a year they're dumping into the pit of social security.

    Get rid of SS, let everyone put $5K into their investment, take the remains to use as a true safety net. Everyone is richer, it just costs us a bit short term until the current generation of retirees is gone. After that everyone wins.
  28. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Wow, that's a lot worse than I thought. I thought median income referred to individuals, but apparently it refers to households. Imagine someone earning $60k, with a spouse and two kids, stocking away money for a home, education, health care, etc. and still finding money to put away for retirement. I think the stock market is an excellent vehicle for retirement, but unfortunately many people invest unwisely, seduced by false promises, and I certainly don't favor controlling how people invest since that would creat a class of favored companies, giving them a substantial competitive advantage. But, the main point is that Social Security is merely a safety net. I would not be against the government investing some of the money into Social Security as part of a sensible economic development plan.
  29. BelichickFan

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    #24 Jersey

    The point I'm trying to make is we would have a lot more money for that stuff if 14% (pretax) wasn't taken out and stolen from us.

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