Sunday, August 15, 2010

Obama’s Old/New Tactic – Republicans Will Hurt Social Security! How long will False Rhetoric Work on the Public?

The old tactic, letting older voters know that their Social Security would be permanently endangered should those crazy Republicans get their hands on it, is a staple in every Democrats campaign rhetoric closet, and has, for decades worked to some extent. In Congressional Races in Massachusetts, a postcard from incumbent Richard Neal in 2006 warned voters that if he were not re-elected, the Republicans would kill Social Security and life as a senior would be put at grave financial risk. (One post-card was all that was necessary as Neal rarely had a credible opponent – which is not the case in this 2010 election.)

Regardless of which Democrat is running for office, Social Security is a “go to” – the charge now: Republicans’ want to privatize social security. Politico reporting on Obama’s weekly address noted the president has promised to fight the GOP from privatizing Social Security!
What exactly does the privatization of Social Security mean? It would take the money away from the Federal governments control and put it into the control of the individuals – it is similar if not exactly the same plan that Federal retiree’s now enjoy. In fact, George Bush was demonized for attempting to privatize “some” of the social security benefits, in order to stabilize the system in his second term and was soundly fought back by the Democrats in control of the Congress and the Senate.

In a nutshell Federal Employees have two separate programs for retirement, one is the The Federal Employee Pension System (outlined here and with benefit eligibility beginning at age 55.

This pension (Social Security substitute) is coupled with an additional plan called “Thrift Savings”. (Those that leave the Federal workforce, often do contribute to Social Security through second jobs, but can only apply for a greatly reduced Social Security benefit, which may end up being completely denied.)

How does Thrift Savings Work?
1. Thrift savings are similar to a 401K – where employees can receive higher benefits upon retirement.
2. Dollars contributed are allocated pre-tax, in savings accounts but are not eligible for matching funds – the age for non-penalty for withdrawal is70-1/2.
3. The employee is in charge of his/her own account – having options as far as how they wish to see their monies invested. The options are government securities, mutual funds, higher risk/yield funds and fixed funds (lower returns but safer and mandatory after an employee hits a certain age). They have, in other words, choices of how to invest for their retirement at higher yield which those paying into the Social Security system do not.

Therefore, retirement benefits for federal employees are semi-self-directed, allowing for a greater return on investment, and higher checks each month than the average retiree on social security.

The problem with this Republican plan to bring the same or similar benefits enjoyed by federal workers to the general public, is that it puts the money into the hands of the “masses” who may, or may not, according to Progressive think” be wise enough to take care of the money themselves – (even though there are safeguards in place).

What does Social Security cover besides Retirement programs for those that don’t work for the Federal Government?

Social Security Disability Benefits are covered under Social Security.

These benefits are taken from the Social Security monies, and provided to individuals when a disability occurs. What is considered a disability? It varies, however, there are law firms (in concert with the Social Security Acministraiton)that will help individuals fight the Social Security system to enable them to receive a monthly check. one popular disability - The inability to speak English. (Inability to communicate in English: As English is the language of America the SSA will consider an inability to speak English to be a factor in evaluating what type of work that person can do.)

Seriously, that might go a ways in explaining, in part, why the system is broke. Add this to the fact that there are more people taking out of the system due to an increase in the number of retirees (baby boomers), than there are people paying in (9.5% and holding unemployment rate) and one sees a pattern developing.

Where else does the Social Security money go?

When in need, the Government borrows from Social Security (and has for decades, regardless of the administration in charge, the Congress spends as it will) as it is not held in Trust, (see article here)

Therefore, one can see why this President might not want those Republicans to put that money into the hands of the people who might just put their money to work for them, instead of letting the “government" maintain total control. The Republican Plan proposed by Bush never intended to take money away from senior citizens, rather to allow them to have the the option (only the option) of having the same benefits as someone like the President or any other civilian working for the government. Besides the cash, the other problem, it would take away one of the biggest campaign slogans that the Democrats currently enjoy and what’s good for the public is not necessarily good for the Party in this case. This explains Social Security and why the Democrats will fight tooth and nail to maintain their ability to access the Social Security Funds.

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