Wednesday, February 16, 2005
On Calvin the Nest Egg
If the Republican plan to privatize Social Security is so great, why can't they be honest about it? From the latest GOP Newsline (a publicantion from Minnesota Republicans):
To put pressure on Dayton to do the right thing, the Republican Party of Minnesota is encouraging Minnesotans to sign an online petition here . The launch of the Social Security petition is part of an aggressive statewide campaign to put pressure on Dayton to support efforts to strengthen and preserve Social Security. The petition points out the fact that while the number of workers paying into Social Security is going down, the promised benefits are going up. For instance, a 20-year-old worker today is being promised retirement benefits that are 40 percent higher than a retiree today receives from Social Security after adjusting for inflation, but the system does not have the resources to pay those promised benefits. President Bush's plan will not change Social Security for those at or near retirement, and will not change payroll taxes but will allow younger workers to place some of their own payroll taxes in a voluntary personal retirement account - a nest egg they can call their own, government cannot take away, and they can pass on to their children.
What are the three benefits of the Bush Social Security plan?
- Naming rights! Huzzah! Nest egg, I dub thee "Calvin". Arise, Sir Calvin of Nest Egg.
- The libruls in guvmint can't take away Calvin the Nest Egg. Except, of course, that under the Bush plan, the government -- get this -- actually does take money away. You only get to keep what you earn over and above the standard rate of return -- say, 3%. So if your investments earn 4.5% over your lifetime, the government can and will take back two-thirds of Calvin the Nest Egg. The Social Security plan where the government doesn't take benefits away? That's the one we already have.
- You get to pass Calvin the Nest Egg on to your heirs, but only if you are fortunate enough to die before you retire. Upon retirement, the Bush plan requires workers to turn Calvin the Nest Egg into an annuity. Sorry, no inheritance rights there. If you are fortunate enough to die early with young children (think of all the taxes you'll never have to pay!), your kids will no longer be burdened with a steady monthly benefit until they turn 18. Instead, they'll get a piece of Calvin the Nest Egg. If you have two kids and contributed $1000 a year to Calvin the Nest Egg for 10 years, your kids will come out way ahead -- for about six months.