Obama's economic plan - Soak The Rich

[BeAChooser]

Who is paying interest?

A very good question.

 

[gdnp]

The total valuation of the NYSE and NASDAQ companies on January 1, 2001 was $18.3 trillion dollars. It's even larger today. The investment of 4% of people's social security contributions, up to $1100 dollars, wouldn't even cause a blip on that. Yet the democrats are adamantly against it ... likening it to the end of the world. Go figure.

2 trillion dollars growing 8.5% a year for 9 years becomes 4.17 trillion dollars.

Hmm...let's see. S&P 500 market cap as of today is 11.8 trillion. http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_500/2,3,2,2,0,0,0,0,0,1,1,0,0,0,0,0.html

and 2 trillion dollars, growing to 4 trillion dollars wouldn't cause a blip? Or is it just the Democrat-opposed plan that wouldn't cause a blip?

 

[BeAChooser]

Hmm...let's see. S&P 500 market cap as of today is 11.8 trillion ... snip ... and 2 trillion dollars, growing to 4 trillion dollars wouldn't cause a blip?

First, where in my posts did I ever suggest that the S&P 500 was the only stock index plan one could invest in? At least now we know we are looking at 2 trillion going into 30 trillion. In fact, I'd have no objection to investing a portion in some of the plans that invest globally, so I suppose we should include international valuations too.

Second, are you suggesting that growth of companies is a bad thing? Sheesh!

Third, you folks don't even want less than 4% of the yearly contributions to be invested in the markets. That's a measly 20 BILLION dollars. Yet your democrat leaders, like Pelosi, act like that would be the end of the world.

CORRECTION: It's even less than that since anyone making more than 25,000 would have to put less than 4% of their contributions into the market under Bush's plan. Yet the democrats are irate about the mere idea!

 

[SezMe]

If you insist on taking my money (at gunpoint) to give to those people, the least you could do is ban them from buying lottery tickets.

This is rich. A conservative who, presumably advocates for smaller government, less intrusion by the government in individuals freedoms, etc. wants to control who can buy lottery tickets. I can see it now; Joe goes into the local liquor store to buy a lottery ticket and the clerk cards him to see if he's above retirement age. If so, Joe cannot buy a lottery ticket unless he can show he's not using SS money. Riiiiight.

 

[David Wong]

This is rich. A conservative who, presumably advocates for smaller government, less intrusion by the government in individuals freedoms, etc. wants to control who can buy lottery tickets. I can see it now; Joe goes into the local liquor store to buy a lottery ticket and the clerk cards him to see if he's above retirement age. If so, Joe cannot buy a lottery ticket unless he can show he's not using SS money. Riiiiight.

That seems common to most conservatives and libertarians; they only want restricted government as far as it lowers their personal taxes. I heard Neal Boortz talk about ending Medicare in with breath, and with the next saying that parents with obese children are guilty of child abuse and that the government should seize the children and put them in homes with healthy diets.

 

[Meadmaker]

ROTFLOL! Gee ... Do you really think that allowing folks to put a third of the 12% they contribute (or a tenth, at the higher income levels) to a personal account that would be invested in the American companies rather than an entity that produces ABSOLUTELY NOTHING is bad?

Bad doesn't begin to describe it. It is government interference in securities markets on a massive scale. It is very, very, bad.

I have to go to work now, but perhaps I'll hit this later. However, a brief summary is that you are moving goal posts around. Are you allowing folks to do something? I don't think so. I think you are mandating what they do. Also, you call SS a welfare program, which is more or less accurate, but you analyze it as if it were an investment. It isn't an investment, so all this talk about returns on investment is totally irrelevant.

I suggest you go back and look at the original reason for starting SS. It's purpose wasn't to bankrupt America. That's why originally they only took 2% of a few thousand dollars.

They only took 2% because most people had the good sense to die before or shortly after age rendered them unable to work.

 

[Meadmaker]

This is rich. A conservative who, presumably advocates for smaller government, less intrusion by the government in individuals freedoms, etc. wants to control who can buy lottery tickets.

Don't forget he also wants to dictate what stocks they buy.

 

[Pookster]

Would you like me to report you for personal attacks? Keep it up.

No personal attacks. We're all ignorant about many things. This happens to be one of the things you've displayed ignorance about. But feel free to report me at any time.

Yes I do. For the next 9 years, the SSA predicts it will take in more money in contributions each year than it spends. So during that time, that 2 billion dollar could be considered assets that should be invested WISELY. Because if you do that, it will grow.

Sure. At it's current growth and interest earned, the surplus begins shrinking in 2017. You may delay the inevitable by investing the surplus in different ways, but it's still going to happen. First, I doubt your additional revenue from investments is adjusted for inflation. Also, I don't see any accounting for significantly decreasing payroll contributions into the system as the baby boomers retire over the coming decades. With projected economic conditions, the accelerating growth in the number of retirees over the coming decades along with the steadily shrinking number of contributors can't sustain the system as it is today without either reducing benefits or raising significant additional revenue somewhere.

But then, you haven't eliminated or replaced social security with anything by doing what you've suggested, have you?

I just told you, but maybe the math is too difficult.

You've done no such thing. All you've done is offered a suggestion on how to possibly get a little better return on the existing surplus that will begin disappearing in 2017. This doesn't eliminate social security. This doesn't allow young contributors to take the money they now pay into social security and invest it themselves. You've completely dodged the request. You take away contributions going into social security now, the surplus begins disappearing now ... not in 2017.

Try again.

 

[gdnp]

First, where in my posts did I ever suggest that the S&P 500 was the only stock index plan one could invest in? At least now we know we are looking at 2 trillion going into 30 trillion. In fact, I'd have no objection to investing a portion in some of the plans that invest globally, so I suppose we should include international valuations too.

Second, are you suggesting that growth of companies is a bad thing? Sheesh!

Third, you folks don't even want less than 4% of the yearly contributions to be invested in the markets. That's a measly 20 BILLION dollars. Yet your democrat leaders, like Pelosi, act like that would be the end of the world.

CORRECTION: It's even less than that since anyone making more than 25,000 would have to put less than 4% of their contributions into the market under Bush's plan. Yet the democrats are irate about the mere idea!

Extra money flowing into the stock market does nothing to improve company growth. It simply inflates the value of the existing shares. If a company with a market cap of 10 billion dollars has its stock price bid up to 20 billion dollars because and extra 2 trillion enters the market from social security, company X doesn't get the money--the previous owners of company X's stock do. The company has no more money to invest. The actual value of the assets of the company have not changed one bit. The gain is entirely on paper.

Let's ignore what Pelosi wants or doesn't want to do. I doubt that she has stated, as you now have twice, that investing 4% would be "the end of the world". I haven't read the bill that you claim she opposes, if one has even been submitted. She may think it is a bad use of 20 billion a year: not the end of the world, but not a trivial sum of money either.

I have, however, read what you want to do, and I submit that a 2 trillion dollar influx of cash into the stock market would be far more than a blip. Do you disagree?

I have read that the shift in sea level necessary to produce a tsunami is about 2 feet. Think about that: 2 feet in an ocean a mile deep, almost undetectable in the mid ocean, can cause untold devastation when it reaches shore. Shifting social security-sized sums of money into and out of world stock markets has the potential for causing similar effects.

 

[Meadmaker]

Extra money flowing into the stock market does nothing to improve company growth. It simply inflates the value of the existing shares.

I want to reiterate this, but in a different way. The stock market generally works, and generally produces good returns, precisely because it is a free market. As soon as the government mandates that mone be invested in that market, it is no longer a free market, and it will cease to behave as such. The people who advocate privatizing social security are generally champions of the free market, but they don't realize that their plan would destroy the very thing that they are championing.

 

[WildCat]

Ah, so you admit it isn't an investment system ?

No, it's a pyramid scheme.

 

[WildCat]

I want to reiterate this, but in a different way. The stock market generally works, and generally produces good returns, precisely because it is a free market. As soon as the government mandates that mone be invested in that market, it is no longer a free market, and it will cease to behave as such.

And yet people argue with me that the government mandating that mortgage lenders issue risky loans in the name of "helping minorities realize the dream of home ownership" had nothing at all to do with the real estate and mortgage mess.

 

[Kevin_Lowe]

I want to reiterate this, but in a different way. The stock market generally works, and generally produces good returns, precisely because it is a free market. As soon as the government mandates that mone be invested in that market, it is no longer a free market, and it will cease to behave as such. The people who advocate privatizing social security are generally champions of the free market, but they don't realize that their plan would destroy the very thing that they are championing.

The idea that any deviation from completely unfettered capitalism is less efficient is a mere article of dogma, not a position derived from empirical observation or even sound armchair economics.

Mind you, if you were one of the people who believed that nonsense, it would indeed be self-contradictory to suggest that the government invest in the stock market.

 

[Meadmaker]

And yet people argue with me that the government mandating that mortgage lenders issue risky loans in the name of "helping minorities realize the dream of home ownership" had nothing at all to do with the real estate and mortgage mess.

That was only one part of the problem. They also screwed it up a different way. They created agencies to buy mortgages and package them as mortgage backed securities. This would allegedly create a low risk investment vehicle, because the banks would be very, very careful to make sure that these loans were low risk. In steps the government and, through the pseudogovernmental agencies, says, "Banks, we trust you not to make risky loans. We'll buy them from you so we can package them up and sell them." Suddenly, there were an awful lot of radio ads saying, "We don't give a rip if you are bankrupt. Come on in and buy a house you can't afford, and we'll loan you the money, because some sucker will buy it from us and package it into a mortgage backed security! And they'll sell that as a 'low risk' investment! Bwaaahaaahaaaa!" The wording was slightly different than that, but that's basically what was going on.

The government got so excited about free markets that they created an unfree market, but continued acting like it was a free market. What happened? Financial disaster.

 

[gdnp]

No, it's a pyramid scheme.

Here I would have to agree. Social security is closer in design to a pyramid scheme than to any of the other models presented: current contributions are used to pay off the the obligations owed to past contributors.

Why do pyramid schemes fail? Because the people running them skim large portions of the "take" for their own purposes, or because too much is paid out to the current recipients, leaving too little for the latter players when their time comes.

As long as the benefits match the contributions, the system can survive indefinitely.

 

[BeAChooser]

This is rich. A conservative who, presumably advocates for smaller government, less intrusion by the government in individuals freedoms, etc. wants to control who can buy lottery tickets.

Even richer is a liberal concerned about someone else wanting to restrict individual freedoms when everywhere we turn we see liberals demanding just that ... and often with the excuse that the person or group who they want to restrict is using federal dollars. What would be even more amazing would be to find a liberal who shows even a modicum of sense where fiscal AND personal responsibility are concerned. But alas, that's a sight I may live never see.

Here's what I think. People can do whatever they want ... WITH THEIR OWN MONEY. If they ask me for money, then I may give them some but I get some say in what they do with it. Call it an exchange. But then democrats don't believe in asking, do they? They are perfectly ok with the government taking that money and handing it to someone else ... usually something they think will vote democrat in the next election. Which is why they never have bought into the notion of free market economics. They just pay it lip service.

 

[BeAChooser]

That seems common to most conservatives and libertarians; they only want restricted government as far as it lowers their personal taxes. I heard Neal Boortz talk about ending Medicare in with breath, and with the next saying that parents with obese children are guilty of child abuse and that the government should seize the children and put them in homes with healthy diets.

Instead of throwing out red herrings, why don't you attempt to argue against the specific examples I've presented that show how badly SS has abused and is abusing those who are forced to contribute to it.

 

[BeAChooser]

It is government interference in securities markets on a massive scale. It is very, very, bad.

ROTFLOL! I'm continually amazed how liberals can make such silly arguments and keep a straight face. But with so much practice, spouting nonsense like the above is probably a breeze.

Remember, dear readers, that the top, as well as rank and file, democrats are up in arms because Bush proposed a plan that might have put LESS THAN 4 PERCENT of NEW CONTRIBUTIONS into personal investment accounts where they could have been invested in the stock market. As I showed above, that's less than 20 billion dollars a year flowing into a stock market that has a valuation of over 30 TRILLION dollars (and much more if you let them invest globally). Yet, democrats like Pelosi cry that would be the end of the world, leaving our children at the mercy of ... god forbid ... heartless republicans.

Now lest you think that the above has nothing to do with Meadmaker's concern, keep in mind that I proposed earlier just taking 1/4th of the 2 trillion dollar trust fund assets and investing it and I got the same response. So 500 billion into 30+ trillion must also be "massive interference". Later I just said "some" of the 2 trillion, and the response was the same. Where do they draw the line? Well not at lies because remember, the liberals on this forum first dishonestly tried to make you think that the 2 trillion dollars was money flowing out of the fund so rapidly that it couldn't be invested at all. But now you know that it will be there for AT LEAST 9 years (by the SSA's own estimate) and much longer if we get wise about how we invest it now. But, no, democrats can't allow that. No sir. Because what they WANT to do is keep you poor and dependent. Because that group tends to vote democrat. So much for their true motivations.

They only took 2% because most people had the good sense to die before or shortly after age rendered them unable to work.

"the good sense to die"?

Don't forget he also wants to dictate what stocks they buy.

"Risk" is another topic where democrats have NO understanding. Along with "opportunity". Because they are stuck in time and partisan politics. Stuck in whatever position they've previously held. It doesn't matter that the Social Security system clearly isn't working as structured. It can't be change so pony up more $$ and live with it. It doesn't matter that the education system doesn't work and needs reform ... like school vouchers. What's important is that it does to young impressionable minds what democrats want it to do. It doesn't matter if oil is $130 a barrel and we need to exploit our own oil, shale and nuclear resources unless we want the economy damaged. We can't do it. We can't harm the environment AT ALL. It doesn't matter if the war in Iraq appears to be won provided we stay a little longer and follow our generals' advice. We must withdraw now because everyone knows we lost the war years ago. It doesn't matter that under Clinton law after law was violated. We defended him because that was the right thing to do. Now it is Bush that must be impeached.

All the above would be funny if the consequences of Obama winning this election weren't so serious. But they are.

 

[Kestrel]

Here I would have to agree. Social security is closer in design to a pyramid scheme than to any of the other models presented: current contributions are used to pay off the the obligations owed to past contributors.

Why do pyramid schemes fail? Because the people running them skim large portions of the "take" for their own purposes, or because too much is paid out to the current recipients, leaving too little for the latter players when their time comes.

As long as the benefits match the contributions, the system can survive indefinitely.

A classic pyramid scheme requires a geometrically expanding number of contributers in order to pay recipients. The expansion eventually uses up the pool of contributors and collapses. A system like Social security will work with a fixed ratio of contributors to recipients. It doesn't require the continual expansion of a pyramid scheme.

Calling Social Security a pyramid scheme is technically incorrect. It's simply a loaded term used to create fear and distrust.

 

[Tricky]

Here's what I think. People can do whatever they want ... WITH THEIR OWN MONEY. If they ask me for money, then I may give them some but I get some say in what they do with it. Call it an exchange. But then democrats don't believe in asking, do they? They are perfectly ok with the government taking that money and handing it to someone else ... usually something they think will vote democrat in the next election. Which is why they never have bought into the notion of free market economics. They just pay it lip service.

Here's what I think. Since you decide to be a citizen of this country, then you obey the laws as written. This includes things like paying taxes and social security. It's a bit like being in a club where you pay dues to be a member. Now you can vote and write letters and even lobby to see that the country does what you think is best with the dues, but to be a member of the "club" you have to pay your dues. Once you pay your dues IT'S NOT YOUR MONEY.

The "club" has decided that they are going to spend some of it making sure that there aren't starving old people everywhere, even those who have planned badly. You are free to take the money you have left over after you have paid your dues and spend it, invest, even donate it as you like, but that doesn't mean you can take it out of your dues unless there are rules for "dues deductions" for certain types of money use.

Now perhaps you find it unfortunate that you are strong-armed into joining this club, simply because of where you were born and because most of the people you deal with are club members, but it is not absolute. You are free to resign from the club, though it is likely that you will have a lot less of YOUR MONEY coming in, and may indeed have a hard time finding a place to live. This will probably offset any benefits you might gain from having no dues.