February 8, 2005

RE: Privatization of Social Security

OPEN LETTER to:

President George W. Bush

Senators Olympia Snowe and Susan Colins

Congressman Michael Marchand, Tom Allen

In considering the president’s privatization of Social Security, I’d like to pose a scenario and learn how it would probably be handled.

An individual begins cover employment at age 17; at which time they select the privatized option and make deposits with wise, and properly timed, selections of the available options. By age 50 they can no longer do their work, but are not "legally disabled", and so decide to start their own business using their savings. During the 37 years of employment, the individual worked every hour of overtime and so made maximum payments into their privatized account.

To support the family during this period, their spouse enters the minimum wage work force. Five years later, the business a failure and bankruptcy filed, couple divorces. The individual is, at this point in time, legally disabled.

Due to the five year period of effective unemployment, the individual lacks the requisite credits for SSDI disability payments – assuming such payments still exist under the president’s plan. This is the first question – would it exist; and if so, how would payments be made?

However, as they also have the funds amassed over 37 years of maximum allocation, and as these funds yielded the maximum possible return, the account returned in excess of 8% annually and so doubled every ten years – with a resulting account valued at over $175,000, and continues to grow at the maximum possible rate.

Since the individual is legally disabled, and lacks the credits for SSDI coverage, and the privatized account is legally "untouchable" until they are retirement age – they are now 57 – are they qualified for SSI? And if so, as they have no assets – the divorce and bankruptcy having seen to that – would they receive the maximum funds?

That is, would they receive the same as someone who never entered the work force, never amassed retirement benefits, and did not have a personal account worth in excess of $175,000 in today’s dollars?

If the privatized account does constitute a disqualifying asset, would it then disqualify the individual from all "safety net", circuit-breaker, or other welfare entitlements? Or is the individual to be denied access to both the privatized account and social welfare programs?

If through an exception, they receive access to the account, what happens when it is depleted? If they are not given access, but receive entitlements, why should they – as someone earning in excess of $14,000 a year in interest – be treated like someone who has no assets?

And if the assets are to be reclaimed to repay entitlements, what value does the account have as a retirement plan?

These are simple real life questions – as such, one would expect that Dick Cheney would also like to know the answer; hasn’t he asserted "real life" as a function of the validity of the privatization plan.

I await your answers.

Thank you,

Sincerely,