Why would it not be a ponzi scheme? It still depends on new generations caring for the previous ones. Why cant we take responsibility for the aged and infirm in our society?

Actually you can have legal ponzi schemes like social security. For example, I can take care of my parents when they’re too old to work.

Is that a ponzi scheme?

But the average insurance costumer doesn’t see the return on that investment. They see themselves insured.

If the real value of the obligations changes, then its a cut any way you slice it. One doesn’t need that much economic literacy to know that 100 bucks today is different than 100 bucks 40 years ago or 40 years from now.

Its not quite that I distrust them. Its that I trust that the goal is eradication of programs that are social and secure, as the memo leaked to the WSJ shows.

‘The transition cost is not an additional cost.’

It certainly is. For one the future obligations are uncertain — future policymakers could decide to change them. With the transition, that is not the case. Legislatively defined obligations are replaced with economically mandated ones (debt).

Secondly, it doesn’t move the costs to the present, as they’re going to be paid with debt that will be paid off into the future.

‘And … it’s about as secure as you can get with the proposal including federal insurance that nobodies investment gets wiped out.’

This is new, I didn’t know that the investments would be secured. Which is in fact an additional cost. If the government faces the downside risk, then there will be no incentive to have low-risk investment. In effect then the plan subsidizes risky behavior. We have a moral hazard problem. The insurance literature will get you started on understanding that, and I can guess that the liberal media are discussing it incorrectly.

CD’s and bonds do outperform social security. But they also serve a different function — they’re investments. SS is an insurance.

As I said, CD’s and Bonds outperform Social Security.

Every indexed fund (includes whole ranges of stocks so you won’t get wiped out because of diversifying) outperforms CD’s and Bonds.

So now I should’ve wiped out your security concern.

If nobody’s check is cut then it isn’t misinformation. It’s just your fear because you distrust conservatives and Bush.

Actus wrote, “They have a transition cost”.

The transition cost is not an additional cost. The transitional cost moves future costs to the present and saves money in the future. This is key to your misunderstanding probably as well as most liberals. Don’t get me wrong here, because most conservatives don’t realize it’s not an additional cost either.

What? Changing the indexing formula changes what real wealth is transferred. I can’t believe this. not ‘actual dollars’. Nominal dollars are the non-actual one.

I wouldn’t surprise me if benefits have been altered in the past. All that I’m saying here is that its misinformation to say that the bush plan honors all obligations. At least part of the bush plan is to change obligations — the indexing. At least another part is to make it no obligation at all — the private accounts.

Overall, the problem with private accounts is:

1. they’re neither social nor secure, and therefore are not social security. They replace, not fix it.
2. They have a transition cost, which thus locks future generations into the policy decisions that we have made today, rather than allowing future generations to figure out how they will handle taking care of their retired and aged. We used to provide them a cushion for doing that — the trust fund, now we’re providing the opposite — a debt repayment.

Are you Actus making the claim that you know that Bush wants to or is trying to cut dollars to individual recipients per month?

You get caught up on non-nominal proposals of benefit cuts which aren’t cuts in actual dollars to any recipients. Over the last 30 years Democrats have (so-called) cut benefits in exactly the same ways and more by:
1)raising eligibility age
2)raising the amount of the tax rate (so that it’s now 15% total – that I pay as a self employed person)
3)raising the amount from 50% – 80% (ala Clinton in 1993) that is counted as income that taxes have to be paid on…

That 3rd one affects a recipient greatly. Imagine 30% more of your SAME income being taxed all of a sudden. Taxed to the general fund even.

The government doesn’t have money to invest. It is in debt.

It is OUR money that we want to GROW faster than the rate of return on Social Security which is less than 1% at this date.

I think you are looking at it backwards. It is our money. We want the government to put OUR money in a nest egg that we can call our own and PASS ON to beneficiaries (which black men can’t do and lose all of their contributions because they die earlier)

And being that it is OUR money we want a better rate of return than 1%.

CD’s and Bonds outperform that rate Actus. Over any 10,20,30 year period every indexed mutual fund has outperformed CD’s and Bonds.

Your objection is what then Actus?