Debate Digest: Teacher-student friendships on Facebook, Law school, Balanced budget amendment, US debt ceiling deal.
Debate: Privatizing social security
From Debatepedia
(Difference between revisions)
Revision as of 06:23, 30 November 2010 (edit) Brooks Lindsay (Talk | contribs) (→No) ← Previous diff |
Current revision (12:24, 5 December 2010) (edit) Lenkahabetinova (Talk | contribs) (ToC) |
||
Line 10: | Line 10: | ||
===Background and context=== | ===Background and context=== | ||
- | Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" (OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax. During 2008, total benefits of $625 billion were paid out versus income (taxes and interest) of $805 billion, a $180 billion annual surplus. An estimated 162 million people paid into the program and 51 million received benefits, roughly 3.2 workers per beneficiary. Due to projected difficulties with social security programs, many have argued, including former president Bush, that social security should be privatized (at least partly). This is a situation in which individuals are given subsidized personal accounts ("individual accounts" or "private accounts") through partial privatization of the system. President Barrack Obama "strongly opposes" privatization. The pro and con arguments and quotations (from editorials, op-eds, and political statements) are outlined below. | + | In the US, Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" (OASDI), in reference to its three components.[[Image:Roosevelt signs social security.jpg|left|200px]][[Image:Social Security Administration.jpg|right|150px]] It is primarily funded through a dedicated payroll tax. During 2008, total benefits of $625 billion were paid out versus income (taxes and interest) of $805 billion, a $180 billion annual surplus. An estimated 162 million people paid into the program and 51 million received benefits, roughly 3.2 workers per beneficiary. Due to projected difficulties with social security programs, many have argued, including former president Bush, that social security should be privatized (at least partly). This is a situation in which individuals are given subsidized personal accounts ("individual accounts" or "private accounts") through partial privatization of the system. President Barrack Obama "strongly opposes" privatization. The pro and con arguments and quotations (from editorials, op-eds, and political statements) are outlined below. |
+ | |} | ||
+ | |||
+ | {| style="width:100%; height:100px" border="0" align="center" | ||
+ | |__TOC__ | ||
|} | |} | ||
Line 76: | Line 80: | ||
*'''[[Argument: Privatized social security accounts vulnerable to downturns| Privatized social security accounts vulnerable to downturns]]''' Most stock market experts will point out that the long-term return on stocks has always been positive, despite temporary setbacks now and then. In other words, the market may go up 150 percent one decade, then down 50 percent the next, then up 60 percent the next, then down 25 percent the next. Overall, the return may be positive, but what happens to the retirees that hit age 65 during one of the downturns? Hopefully they were wise enough to gradually put most of their money in safer investments, but there's no guarantee they did the right thing. | *'''[[Argument: Privatized social security accounts vulnerable to downturns| Privatized social security accounts vulnerable to downturns]]''' Most stock market experts will point out that the long-term return on stocks has always been positive, despite temporary setbacks now and then. In other words, the market may go up 150 percent one decade, then down 50 percent the next, then up 60 percent the next, then down 25 percent the next. Overall, the return may be positive, but what happens to the retirees that hit age 65 during one of the downturns? Hopefully they were wise enough to gradually put most of their money in safer investments, but there's no guarantee they did the right thing. | ||
+ | |||
+ | *'''Advocates of privatization overestimate performance of accounts.''' [http://www.slate.com/id/2210414/ Eliot Spitzer. "Can we finally kill this terrible idea?" Slate. February 4th, 2009]: "Furthermore, as Paul Krugman has pointed out, the would-be privatizers make incredible—even impossible—assumptions about the likely performance of the market to justify their claim that private accounts would outdo the current system. According to Krugman, their worldview would require the price-earnings ratio in the market to be around 70 to 1 by midcentury. That would make the market at the height of the last bubble look grossly undervalued. Their performance numbers simply do not work." | ||
*'''Privatized social security will cut tax revenues and social services.''' We all know that the social security system is severely underfunded; it's headed for bankruptcy sometime in the 2040s. Implementing private accounts will take 4 percent of the 12.4 percent taxes from every worker out of the trust fund. Thus, almost a 3rd of the revenue generated by social security taxes will be removed. Drastic benefit cuts or increased taxes will have to occur even sooner, which is a recipe for disaster. | *'''Privatized social security will cut tax revenues and social services.''' We all know that the social security system is severely underfunded; it's headed for bankruptcy sometime in the 2040s. Implementing private accounts will take 4 percent of the 12.4 percent taxes from every worker out of the trust fund. Thus, almost a 3rd of the revenue generated by social security taxes will be removed. Drastic benefit cuts or increased taxes will have to occur even sooner, which is a recipe for disaster. | ||
- | |||
- | *'''[[Argument: Privatizing Social Security negatively impacts women| Privatizing Social Security negatively impacts women]]''' | ||
- | |||
- | *'''[[Argument: Privatization threatens disabled worker/family protections| Privatization threatens disabled worker/family protections]]''' | ||
*'''Privatized social security cannot be assured to beat inflation.''' Social Security payouts are indexed to wages, which historically have exceeded inflation. As such, Social Security payments are protected from inflation, while private accounts might not be. | *'''Privatized social security cannot be assured to beat inflation.''' Social Security payouts are indexed to wages, which historically have exceeded inflation. As such, Social Security payments are protected from inflation, while private accounts might not be. | ||
*'''[[Argument: Fees on Soc Sec accounts diminish value of privatization| Fees on Soc Sec accounts diminish value of privatization]]''' | *'''[[Argument: Fees on Soc Sec accounts diminish value of privatization| Fees on Soc Sec accounts diminish value of privatization]]''' | ||
+ | |||
+ | *'''[[Argument: Privatizing Social Security negatively impacts women| Privatizing Social Security negatively impacts women]]''' | ||
+ | |||
+ | *'''[[Argument: Privatization threatens disabled worker/family protections| Privatization threatens disabled worker/family protections]]''' | ||
|- | |- | ||
Line 105: | Line 111: | ||
====Con==== | ====Con==== | ||
- | *'''Conservatives wants to destroy social security because it works.''' [http://www.nytimes.com/2004/12/07/opinion/07krugman.html?_r=1&scp=539&sq=&st=nyt Nobel Laureate economist Paul Krugman. "Inventing a crisis." New York Times. December 7th, 2004]: "For Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it." | + | *'''Conservatives want to destroy social security because it works.''' [http://www.nytimes.com/2004/12/07/opinion/07krugman.html?_r=1&scp=539&sq=&st=nyt Nobel Laureate economist Paul Krugman. "Inventing a crisis." New York Times. December 7th, 2004]: "For Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it." |
- | *'''[[Argument: Private accounts would require costly new govt bureaucracy| Private accounts would require costly new govt bureaucracy]]''' | + | *'''[[Argument: Private accounts would require costly new govt bureaucracy| Private accounts would require costly new govt bureaucracy]]''' [http://tcf.org/media-center/pdfs/pr46/12badideas.pdf Greg Anrig and Bernard Wasow. "Twelve reasons why privatizing social security is a bad idea." The Century Foundation.]: "REASON #8: PRIVATE ACCOUNTS WOULD REQUIRE A NEW GOVERNMENT BUREAUCRACY. From the standpoint of the system as a whole, privatization would add enormous administrative burdens. The government would need to establish and track many small accounts, perhaps as many accounts as there are taxpaying workers—147 million in 1997. Many workers’ accounts would be so small that they would be of no interest to profit-making firms. [...] the government would need to hire ten thousand highly trained workers just to oversee the accounts and answer questions from workers. In contrast, today’s Social Security has minimal administrative costs amounting to less than 1 percent of annual revenues." |
*'''Social Security allows retirees to draw on own investments.''' [http://www.huffingtonpost.com/james-roosevelt/social-security-at-75-cri_b_677058.html James Roosevelt, President & CEO Tufts Health Plan. "Social Security at 75: Crisis Is More Myth Than Fact." Huffington Post. August 11, 2010]: "And those "baby boomers" who are going to bust Social Security when the retire? They have been paying into the system for more than 40 years, generating the large surplus the program has accumulated. Much of the money that baby boomers are and will be drawing on from Social Security, is, and will be, their own. That fact is conveniently forgotten by the critics." | *'''Social Security allows retirees to draw on own investments.''' [http://www.huffingtonpost.com/james-roosevelt/social-security-at-75-cri_b_677058.html James Roosevelt, President & CEO Tufts Health Plan. "Social Security at 75: Crisis Is More Myth Than Fact." Huffington Post. August 11, 2010]: "And those "baby boomers" who are going to bust Social Security when the retire? They have been paying into the system for more than 40 years, generating the large surplus the program has accumulated. Much of the money that baby boomers are and will be drawing on from Social Security, is, and will be, their own. That fact is conveniently forgotten by the critics." | ||
Line 137: | Line 143: | ||
*'''Budget shortfall has more to do with misguided tax cuts, spending.''' [http://www.nytimes.com/2004/12/07/opinion/07krugman.html?_r=1&scp=539&sq=&st=nyt Nobel Laureate economist Paul Krugman. "Inventing a crisis." New York Times. December 7th, 2004]: "It's true that the federal government as a whole faces a very large financial shortfall. That shortfall, however, has much more to do with tax cuts - cuts that Mr. Bush nonetheless insists on making permanent - than it does with Social Security. But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one." | *'''Budget shortfall has more to do with misguided tax cuts, spending.''' [http://www.nytimes.com/2004/12/07/opinion/07krugman.html?_r=1&scp=539&sq=&st=nyt Nobel Laureate economist Paul Krugman. "Inventing a crisis." New York Times. December 7th, 2004]: "It's true that the federal government as a whole faces a very large financial shortfall. That shortfall, however, has much more to do with tax cuts - cuts that Mr. Bush nonetheless insists on making permanent - than it does with Social Security. But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one." | ||
- | *'''Opponents use twisted logic on social security surplus/deficit.''' [http://www.nytimes.com/2004/12/07/opinion/07krugman.html?_r=1&scp=539&sq=&st=nyt Nobel Laureate economist Paul Krugman. "Inventing a crisis." New York Times. December 7th, 2004]: "My favorite example of their three-card-monte logic goes like this: first, they insist that the Social Security system's current surplus and the trust fund it has been accumulating with that surplus are meaningless. Social Security, they say, isn't really an independent entity - it's just part of the federal government. If the trust fund is meaningless, by the way, that Greenspan-sponsored tax increase in the 1980's was nothing but an exercise in class warfare: taxes on working-class Americans went up, taxes on the affluent went down, and the workers have nothing to show for their sacrifice. But never mind: the same people who claim that Social Security isn't an independent entity when it runs surpluses also insist that late next decade, when the benefit payments start to exceed the payroll tax receipts, this will represent a crisis - you see, Social Security has its own dedicated financing, and therefore must stand on its own. There's no honest way anyone can hold both these positions, but very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success." | + | *'''[[Argument: Opponents use twisted logic on Soc Sec surplus/deficit| Opponents use twisted logic on Soc Sec surplus/deficit]]''' |
*'''[[Argument: Plenty of ways to reform social security w/o privatization| Plenty of ways to reform social security w/o privatization]]''' Robert L. Clark, an economist at North Carolina State University who specializes in aging issues, formerly served as a chairman of a national panel on Social Security's financial status; he has said that future options for Social Security are clear: "You either raise taxes or you cut benefits. There are lots of ways to do both."[http://www.newsobserver.com/news/story/1278598.html] | *'''[[Argument: Plenty of ways to reform social security w/o privatization| Plenty of ways to reform social security w/o privatization]]''' Robert L. Clark, an economist at North Carolina State University who specializes in aging issues, formerly served as a chairman of a national panel on Social Security's financial status; he has said that future options for Social Security are clear: "You either raise taxes or you cut benefits. There are lots of ways to do both."[http://www.newsobserver.com/news/story/1278598.html] | ||
Line 176: | Line 182: | ||
|- | |- | ||
|colspan="2" width="45%" bgcolor="#F2F2F2" style="border:1px solid #BAC5FD;padding:.4em;padding-top:0.5em;"| | |colspan="2" width="45%" bgcolor="#F2F2F2" style="border:1px solid #BAC5FD;padding:.4em;padding-top:0.5em;"| | ||
- | ===Public support: === | + | ===Public support: Where is public support on Soc Security privatization? === |
|- | |- |
Current revision
[Edit] Should social security be privatized? |
[Edit] Background and contextIn the US, Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" (OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax. During 2008, total benefits of $625 billion were paid out versus income (taxes and interest) of $805 billion, a $180 billion annual surplus. An estimated 162 million people paid into the program and 51 million received benefits, roughly 3.2 workers per beneficiary. Due to projected difficulties with social security programs, many have argued, including former president Bush, that social security should be privatized (at least partly). This is a situation in which individuals are given subsidized personal accounts ("individual accounts" or "private accounts") through partial privatization of the system. President Barrack Obama "strongly opposes" privatization. The pro and con arguments and quotations (from editorials, op-eds, and political statements) are outlined below. |
[Edit] [ ![]() Economic growth: Does privatization improve economic growth? | |
[Edit] Yes
|
[Edit] No
|
[Edit] [ ![]() Personal wealth: Will privatization improve private wealth? | |
[Edit] Yes
|
[Edit] No
|
[Edit] [ ![]() Liberty/ownership: Does privatization improve individual liberty? | |
[Edit] Pro
|
[Edit] Con
|
[Edit] [ ![]() Crisis? Is there a crisis requiring a response like privatization? | |
[Edit] Pro
|
[Edit] Con
|
[Edit] [ ![]() Voluntary: Will private accounts be voluntary? A good idea? | |
[Edit] Pro
|
[Edit] Con |
[Edit] [ ![]() Case studies: Has privatization worked elsewhere? | |
[Edit] Pro |
[Edit] Con
|
[Edit] [ ![]() Public support: Where is public support on Soc Security privatization? | |
[Edit] Pro
|
[Edit] Con
|
[Edit] [ ![]() Pro/con sources | |
[Edit] Pro
|
[Edit] Con
|
[Edit] See also[Edit] External links and resources
|