The first fact that all Americans should know is that our conservative politicians want to steal your Benefits that you paid for all your working life. They spent the last eight years screaming about bankruptcy and not being able to pay our debts to foreign nations causing disaster.
This is the break down as of May 2016
Of the $12.9 trillion chunk of debt owned by Americans, $5.3 trillion is held by government trust funds such as Social Security, $5.1 trillion is held by individuals, pension funds and state and local governments and the remaining $2.5 trillion is held by the Federal Reserve.
Outside the U.S., China is the largest foreign holder of the debt, with $1.25 trillion. It is followed closely by Japan, which holds $1.13 trillion.
According to the Social Security Agency $2,813,000,000 was in the fund at the beginning of 2016. This increased approx.$920,000,000 and paid out approx. $891,000,000 and 6,000,000 in administrative costs. leaving a net gain of approx. 23,000,000 for 2016.
Michael Korbey, who is on Trump transition team’s Social Security effort, has been vocal about his desire to privatize social security. House Speaker Paul Ryan has stated he wants to privatize Medicare. In the past he has suggested doing it to SSI.
If the Government goes ahead with this type of plan:
1 Of the 45 million Americans who collect payments from the Social Security program, over one-third (almost 17 million) are not retired workers. Among those currently receiving Social Security payments are 5 million spouses and children of retired and disabled workers, 7 million spouses and dependent children of deceased workers, and 5 million disabled workers. Every dollar shifted from Social Security programs to personal accounts is a dollar less to provide guaranteed income to the 37 percent of beneficiaries who are not retired workers.
2 Creating private accounts would make Social Security’s financing problem worse, not better. Social Security is funded by a flat tax of 12.4 percent of each worker’s wage income, up to in $127,200 in 2017, split evenly between employers and employees. About four out of five of those tax dollars go immediately to current beneficiaries, and the remaining dollar is used to purchase U.S. Treasury securities held in the system’s trust funds. Beginning in 2018, well after the huge generation of baby boomers born between 1946 and 1964 begins to retire, a portion of general income tax revenues will be needed to pay interest and eventually principal on those bonds to fully finance benefits.A “crisis” is not forecast to arise until the program becomes entirely “pay as you go” again (as it was throughout its history before 1983) in either 2042 according to the trustees’ forecast or 2052 according to the Congressional Budget Office. (By way of perspective, in 2052 the oldest surviving baby boomers will be 106 years old and the youngest will be 88.) As you can see what they say is going broke is only that the Government will have to start paying back the loan.
3 Creating private accounts could dampen economic growth, which would further weaken Social Security’s future finances. Privatizing Social Security will escalate federal deficits and debt significantly while increasing the likelihood that national savings will decline-all of which could reduce long-term economic growth and the size of the economic pie available to pay for the retirement of the baby boom generation. Creating private accounts with increased federal borrowing at first blush would seem unlikely to affect national savings, because additional savings in the new accounts would offset exactly any new government borrowing to pay for those accounts. Economists believe that increased national savings, especially in a country with savings levels as low as they are in the United States, can increase growth by keeping interest rates low and financing investments in productive activities.
4 Privatization has been a disappointment elsewhere. Advocates of privatization often cite other countries such as Chile and the United Kingdom, where the governments pushed workers into personal investment accounts to reduce the long-term obligations of their Social Security systems, as models for the United States to emulate. But the sobering experiences in those countries actually provide strong arguments against privatization. Voracious commissions and other administrative costs have swallowed up large shares of those accounts. The brokerage firm CB Capitales calculated that when commission charges are taken into consideration in Chile, the total average return on worker contributions between 1982 and 1999 was 5.1 percent-not 11 percent as calculated by the superintendent of pension funds. That report found that the average worker would have done better simply by placing their pension fund contributions in a passbook savings account.
5 The odds are against individuals investing successfully. A number of surveys show that most people lack the knowledge to make even basic decisions about investing. For example, a Securities and Exchange Commission report synthesizing surveys of investors found that only 14 percent knew the difference between a growth stock and an income stock, and just 38 percent understood that when interest rates rise, bond prices go down. Almost half of all investors believed incorrectly that diversification guarantees that their portfolio won’t suffer if the market drops and 40 percent thought that a mutual fund’s operating costs have no impact on the returns they receive. Even excluding the cost of commissions and administrative expenses. Indeed, research by Princeton University economist Burton Malkiel found that even professional money managers over time significantly underperformed indexes of the entire market.
6 What you get will depend on whether you retire when the market is up or down. Gary Burtless of the Brookings Institution demonstrated how much timing matters under privatization by examining what would have happened to workers with forty-year careers who retired in each year from 1911 until 2002. Following Burtless’s method, the figure below assumes that each worker put 7 percent of his or her earnings in the stock market every year (reinvesting dividends) and earned the actual historical return, year by year. It shows the wide variation in the retirement income workers would have received. Clearly, some workers would do much better than others based simply on when they happened to retire-that would be a major change from today’s system. Or 2008
7 Wall Street would reap windfalls from your taxes. Brokerage houses, banks, and mutual funds have been very active in the campaign to privatize Social Security. Small wonder, since they stand to gain enormous fees if billions of dollars are shifted each year from Social Security payments into accounts under Wall Street management. Of course, those fees must come from somewhere, namely from the balances in individual accounts. Among the one hundred best stock mutual funds, management fees range from 0.2 percent per year to 1.4 percent of the asset value of an account. The average is near the high end of that range, however, and many mutual funds charge substantially more.
8 Private accounts would require a new government bureaucracy.
9 Young people would be worse off. Social Security privatization is often sold to young adults as a much better deal for them than the current system. But two recent studies show that if Social Security is converted to a system of private accounts, younger generations will be the ones who bear the costs of transforming the program. The added costs arise from the huge increases in federal borrowing needed to finance the new accounts while continuing to direct payroll taxes toward existing benefits for current retirees.
10 Women stand to lose the most. The Social Security system is gender-blind. None of its provisions treat women differently from men. But that does not mean that the results are gender-neutral. Various cultural and biological differences add up to the fact that Social Security is much more essential, and a much better deal, for women than for men. Of all groups, none has more to lose from the privatization of Social Security than women. Compared to the average man, the average woman works fewer years outside the home earns less per year, and lives longer after retiring.
11 African Americans and Latin Americans also would become more vulnerable under privatization. Privatization advocates often claim that converting Social Security to a system of private accounts would disproportionately help African Americans and Latin Americans because those groups are purportedly shortchanged by the current system. But in fact there is almost no difference in Social Security’s payback by race. And because both of those groups on average earn lower lifetime earnings than whites, those minorities would be at greater risk of facing poverty in their retirement under privatization.
12: Retirees will not be protected against inflation. Social Security privatization plans, including all three recommended by the President’s Commission to Strengthen Social Security, require retirees to convert the lump sums in their personal accounts into annuities that provide them with monthly payments until their death. The reason for that is that otherwise retirees could outlive their nest eggs, or even squander them, requiring taxpayers to bail them out.
Current Social Security insurance protections have served the country well for decades. Diluting those protections in exchange for new accounts poses all kinds of new risks while making the relatively manageable long-term challenges confronting Social Security far more immediate and severe.