Article Link: http://online.wsj.com/article/SB122204378523361477.html
The idea for a private (at least semi-private) Social Security system was important in the 2000 Presidential election, and again in 2005, and even between elections the mention if it drew up all sorts of banter from politicians and workers, regardless of the color of their collar. The idea, as explained in this cbs marketwatch opinion article is that part of your %12+ payroll deduction to go into the government-run social security fund would be added to an account that could be controlled and invested in the stock market.
But with the recent downturn in the financial markets, Barack Obama is asking if this plan is still a good idea. Obama points that the entire country (except the savviest of investors) would lose their retirement (if they haven't already lost it) in a major stock slump. The McCain camp sees this as merely scare tactics and sticks by the GOP ideals of self-made riches. The McCain camp even goes on the offensive, saying that if Obama believes that this idea in this market is bad, that the United States runs the risk of up to 8 more years of a bad economy under his leadership.
Both groups make very valid points. What would happen under a system where individuals have their money in their hands. Cnn.com has an article on this as well from the 2000 campaign. Questions still remain such as who would run the accounts? Would a private bank like Bank
Of America or Wachovia control these? Would it be the choice of the individual, using stockbrokers like etrade or Fidelity? Or would it be the responsibility of the Federal Reserve? And if so, would the costs of such account management outweigh the benefits? See the Washington post image to the right and imagine in your mind where the lines would shift if the government had control of the accounts. Would individuals pay more attention to their money since they can control it?
Of America or Wachovia control these? Would it be the choice of the individual, using stockbrokers like etrade or Fidelity? Or would it be the responsibility of the Federal Reserve? And if so, would the costs of such account management outweigh the benefits? See the Washington post image to the right and imagine in your mind where the lines would shift if the government had control of the accounts. Would individuals pay more attention to their money since they can control it?Discussion Questions
Question #1: Would you pay more attention to the stock market if your retirement was in it? If you lost money, would you accept the blame or blame the system?
Question #2: Would this plan be scrapped at the next economic downturn? Would a market collapse scare the president into removing the program?
Question #3: Do you think this is a good idea? For this question I want you to remove party names and just think of it in terms of your pay stub (not your paycheck). Look at the deductions section and eye over how much is taken out for Social Security. Those who work part time (like me), think about how that number could be multiplied by 6 or 8, even 10 times what is being deducted now, as your salary will increase.
Question #4: Do you see this happening in the next 4 years? 8? 20?
Question #5: If Obama wins this election, will this plan be completely scrapped as just "something left over from the Bush administration?"
Image source:Google Images, accessed 9-22-2008.
