The ObamaNation: Saving You From Yourself

Another interesting point is that, without actually saying it in his speeches, part of Obama's plan actually recognizes that the Social Security system is overburdened and will be in bad shape in the near future. Like the Republicans he disagrees with in public about the condition of Social Security, his plan is to lighten the burden of Social Security by increasing the number of people who have private retirement plans. The problem is in how he plans to stimulate this increased savings. What his followers are ignoring is that Social Security cannot continue to support retiring Americans because it was never built to handle this many aging people in the system.

At least, he's "hoping" that people will have more private retirement savings while still paying into Social Security. His plan calls for raising the amount of money that Social Security will take in by raising the amount of income that will be taxed. Income that will be taxed without any return for those who are paying into it because it has a benefit cap that doesn't match those taxes. He does not mention a raise in the limit on social security benefits a beneficiary could receive. He's only guaranteeing a solvent Social Security plan until 2050. Good for some people, not so good for others or our children. But, he has a plan for them, too.

The current Social Security plan currently taxes earners on the first $97,500 (2007) of their yearly income. The plan assumes, with some accuracy, that people making over 97k (and even less) have more income to invest in stocks and bonds, will own their own homes and other property and are more likely to have private retirement plans to support them in their retirement. It also assumes that, for all the money they pay into Social Security, they will not take the same amount out in payments since such payments are restricted to $2185/mo regardless of how much is put into the system. In some cases, people do not even opt to take their Social Security benefits when they have that kind of personal retirement income. In short, these people who actually represent the upper middle class, not the wealthy, already pay more than their "fair share" and get little back.

Another part of Obama's economic program states that "wages are stagnant", but his Social Security plan actually disabuses that notion and recognizes that the middle class has, indeed, had an increase in income and he plans to take some of that back. What's disingenuous is that the 2008 Social Security plan already calls for a raise in taxable income to $102,000. What is he planning to raise the taxable income to? Without raising the benefit limit? For those folks, even in his "tax breaks" he claims are all about the "middle class" he's planning to give very little expressing a belief that they already get plenty of breaks. The question is, exactly how many people are going to have their disposable and investment income decreased taking money right out of the economy? The question is, will Obama's retirement plan for those with less incomes, investing in private IRAs that invest in company stocks, actually replace the missing investments from those who have had more disposable income and our more likely to invest?

One of his many ways of stimulating the American economy: take money out of it and put it in the hands of government.

His plan calls for automatically enrolling employees in an IRA plan:

Currently, 75 million working Americans – roughly half the workforce – lack employer-based retirement plans. Even when workers are given the option of joining employer-based plans, many do not take up the option because it requires considerable work to research plans and investment portfolios, and enroll in the plan. Barack Obama’s retirement security plan will automatically enroll workers in a workplace pension plan. Under his plan, employers who do not currently offer a retirement plan, will be required to enroll their employees in a direct-deposit IRA account that is compatible to existing direct-deposit payroll systems.

He's not really saying that Americans don't have many options right now to set up IRAs or other retirement plans outside of work. He can't say that because many IRAs offer to open a private account with as little as $100. That's if they choose to do it. That is the main problem. Many individuals making less than $30,000 and families making less than $50,000 simply do not choose to put money into a retirement plan even when it's offered by their employers.

Contrary to Obama's assertions, it's not because they are not smart enough to figure out how to invest their money. A straight up IRA account, the same that Obama proposes for these automatic payroll deductions, are very simple. They have simple investment programs. Interest is nearly guaranteed. And, deductions can be automatically deducted from the paycheck before taxes or taken out through automatic transfers after taxes that would decrease the amount of taxes paid out at time of retirement distribution.

These groups of people don't invest in retirement programs as a matter of financial expediency. They make a financial decision that they cannot afford to pay both social security taxes and invest in a retirement plan.

If anyone reads Obama's plan, no where does he suggest that these taxes be reduced or eliminated at the same time that the forced retirement plan payments are being deducted. These folks are going to get a double whammy out of their pockets that they already believe they can't afford and many probably can't. That's why they aren't investing in their own retirement plans now. As one commenter at Hot Air asked, "Can I opt out of social security"?

Here's some reality. If people invested the amount that was being taken through Social Security taxes into private investment plans, it is more than likely they would have collected interest, expect a larger return and have an even better income at retirement than offered through the government.

Though, it would be equally important to mention that many young people who work at lower paying jobs, just starting out, aren't thinking about retirement and don't plan for it even in the face of so many conversations, political debates and commercial advertisements. At least, not until or if they get further in their careers and/or make more money.

Obama's plan does not mention the amount or percent that will be taken out of each paycheck to be automatically invested in these IRAs. It's an important question. For those whom he proposes to assist, something as little as $10 a paycheck would be less than meaningless in creating a real retirement fund. As much as $30 might mean the difference between one more tank of gas to go to work to make the money necessary to pay their other bills like rent, electricity and food. Still, he doesn't say. Add on his proposed National Health Program that will also "automatically deduct" either taxes or other premiums and the "lower fifth" of America is going to find their pockets markedly more empty.

He also doesn't mention who will be managing these programs or directing their investment. While the IRAs might be distributed among established commercial plans, he doesn't actually specify. One has to wonder if anyone really wants the government to be the director of these programs' investments considering their current record on Social Security and other programs. Further, it is likely that a portion of the investments in these IRAs, under government guidance, will be expected to invest in US bonds and the like. Just another way to get poor and middle class American citizens' money without raising their taxes directly. The back door. Of course, without the details, that's speculation, but based on the Social Security program, it's almost guaranteed.

Obama's plan states that their will be an automatic increase in people saving retirement from 15% to 80%. The Obama plan expects to take advantage of the very thing that he accuses people of being right now, all be it with a smile and cheery pronouncements of "change". He doesn't actually expect Americans to change, since they haven't done so significantly to date. He expects they will remain complacent and too incompetent to actually think about the advantages or disadvantages of the program offered. He expects them to take the easy way out. The same way they elect not to invest in existing private retirement plans and the same way they choose their health care coverage.

How's that for the "Yes, we can" campaign? He's actually saying, "No, you can't, so the government will do it for you."

And, you better like it because, once the government has established such a program by law, its unlikely they will ever rescind it and very likely they will seek to expand it.

Obama's campaign says that he wants to tell people the truth about Social Security, but the truth is, he can't. If he did, people would be demanding that Social Security come to an end or, as the Hot Air commenter noted, they would be demanding the option to "opt out" of Social Security and the taxes that go with it. He knows, if that happens, there will be millions of senior citizens and people about to retire right now who will be left with a dwindling, if not non-existent, benefit to retire on after having invested tens of thousands of dollars in Social Security.

According to Just the Facts in 2000:

The Social Security program has an independent budget that is separate from the rest of the federal government. [60] [61]

* Since 1982, the Social Security program has had surpluses ranging between 89 million and 153 billion dollars per year. [62]

* By law, Social Security surpluses must be loaned to the federal government. The federal government is required by law to pay this money back to the Social Security program with interest. [63] [64]

* According to projections, in 2015, the Social Security program will begin to spend more money than it collects in taxes. At that point, the Social Security program will begin to collect on the money that it has loaned to the federal government. [65]

* According to projections, between 2015 and 2037, the annual shortfalls of the Social Security program will be covered by the money that federal government will pay back to the Social Security program. [66]

- Note: The above fact does not mean that the federal government will have enough money to pay back the Social Security program. Information concerning the ability of the federal government to pay this money back to the Social Security program is contained in the section: Impact on National Debt

* In 2037, it is projected that the money and interest that the federal government owes to the Social Security program will be paid in full. [67]

* Between 2037 and 2075, the Social Security program is projected to run annual deficits totaling 30 trillion dollars. [68]

* This shortfall comes to $154,000 (in year 2001 dollars) for every person projected to be paying Social Security taxes in the year 2075. [69]

* To keep the Social Security program solvent, the tax rate would need to be raised by about 50%, or the benefits would need to be cut by about 33%.

In 1950, there were 16.5 workers paying into Social Security for every 1 beneficiary compared to 2000 when there was 2.1 workers paying into Social Security for every 1 beneficiary. That means one worker is not paying for their own retirement, but somebody else's. Current population is estimated at 50% over 55 and growing substantially with the aging of the so called "baby boomers".

Between 2010 and 2030, it is projected that the number of people eligible for old age benefits will increase by about 80%. During the same time period, the number of people paying Social Security taxes will increase by about 2%

According to "Just the Facts", if socials security taxes had not been increased, Social Security would have been insolvent by 1980.

That's a truth that no candidate wants to state. Every candidate talks about "fixing" social security, but the only true fixes available are to increase taxes and decrease benefits and/or grow the working population yearly by the same number of people retiring and receiving social security or, the most drastic, enact a law that ends Social Security by a specific date and allow the American people to take the 6% taxes they pay and place them into private accounts to pay for their own retirement. Employers could use their 6% taxes to match pensions, 401k and IRA investments or to continue to fund those remaining on social security and those that require disability support.

No candidate will talk about the reality or the necessity because they know they could not get elected since the average age of voters is 45: those who are starting to look forward to their retirement. The year 2015 is only 7 years away. By 2037, these voters would be in the middle of their retirement and many other voters would be on the verge. Obama is planning for this future and hoping to direct people towards private investments without telling them exactly why they need to or how they are paying into Social Security and will not receive any benefits from it.

No president could actually end Social Security because they would never be re-elected as president. Instead, they are in favor of pushing people, through the government, to save and pushing the problem to future generations and presidents. Contrary to all current claims of the candidates. In particular, Mr. Obama, who's campaign is all about "change" and "hope" for the future.

Mr. Obama is telling people, "You want the truth? You can't handle the truth!"

The truth is, the only people who can save themselves is the American people not the government. Certainly not Mr. Obama. And that truth, as Mr. Obama does rightly note, is going to require some sacrifice now. He's just not going to ask for that sacrifice.

He'd rather tell you about "hope".