Monday, February 07, 2005

An Open Letter to President Bush

This was sent to President George Bush at on February 7, 2005.
You are welcome to copy this letter, and modify
it to express your opinions or ideas and send
it along to the President and/or to any member of
the Legislature. You'll find links at the bottom.

Dear President Bush,

I must say that I really admire your bold and strong
push to fix the Social Security problem. No president
has really taken that on as a major campaign, that I
can remember.

But, may I respectfully object to the direction you
want to take this - using privatized accounts.
And then may I provide an alternative solution?

Why is this not a good idea? Here are 5 reasons:

1) The amount of money going into the accounts will
generate negligible earnings for the average worker.
Even for someone earning $50,000 per year, the
personal portion will not add more than about $50
per month to their SS check, after 20 years of investment.

2) The money that goes into the private accounts
simply reduces the eventual benefit taxpayers will
receive from the SSA.

3) The people who will benefit the most from this are
the people who won't be living on Social Security. They
are the people who are sophisticated enough to work
the market - and their own investments and savings
are doing well. SS income will play a small part in their
retirement budget.

4) The people who will primarily be living on Social
Security checks don't have the time or expertise to
manage those accounts effectively. Most don't even
have investment accounts presently. And the ones that
do - well, most have lost much of their capital during the
boom, then bust years. Some are finally recouping
and getting even with their IRA contributions after 5 years.

5) The small amounts that go into these accounts each
year are too small for the investment banking industry to
really administer cost-effectively. Even now, IRAs and KEOGHs,
etc. with under $1,000 are not permitted to be invested in
mutual funds or stocks by the banking houses. The sums
are too little - the relative costs, too high.

An alternative to private accounts - that will cut the out
flow from the Social Security fund:

Consider looking at all the things that the Social Security
trust fund is used to support. Do a solid analysis of the various
expenses that drain that fund.

For instance, a big drain is money going to children. Did you realize
that when someone dies, their children are able to collect from
Social Security until they are age 18, or even up to 24, as long
as they are students.?

This is a wonderful boon for many college-bound youths. It's like
getting an instant scholarship. In fact, my brother used this
source of support to get through UCLA after my father died.
So, I know how just how valuable this can be.

But, seriously, friends, why are we paying children out of
Social Security?

Shouldn't that money come from some other source?

If we continue to pay children, can you imagine how much we
could cut the drain on Social Security if we just changed ONE thing -
limit the support payments to age 18, or whenever they complete
high school.

Perhaps the support could continue for another two years after
high school - not for college per se, but to cover some vocational
training that would give the child a marketable skill so they could
earn enough, working part-time, to get themselves through college.

You made an excellent point about education and training
in your State of the Union message.

And if you ever watch the West Wing, you see the writers promoting
a candidate, Jimmy Smits, who is promoting a much longer school year.
Granted, I think 249 days is quite excessive. But I also see that children
don't spend nearly enough hours per day in public schools.

They have far too much time off, to be latchkey kids or to be pushed
into joining gangs. That time, an extra hour or two in school can be
used for vocational training or working internships - that could result
in either corporate scholarships, or a means to earn their way through

And keep them occupied long enough to stay out of trouble.

If you've ever looked at the private school and religious school
systems, all those children stay in school until 4:00 or 5:00 p.m.
without too much suffering. And you do see the lower rates of
criminality among these kids who get home around the time
their parents get home from work.

While this might cost more to the school systems, it would save
millions in welfare and other social service and prison costs.

Someone needs to look at the overall savings - not just the increase
to one entity's budget.

Please, do take my suggestions into account when you work to
improve our financial welfare. You're in a position to do a lot of
good. And it does appear that you're making a good faith effort
to do exactly that.

This would be such a powerful legacy that, historically, it would
overshadow any controversy you've generated due to America's
military activities.


Eva Rosenberg, Enrolled Agent

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