ASPIRE Act, $500, & Social Security (Another watch the dollar collapse thread)

[WhiskeyGirl]

Coming Soon: $500 for Every Newborn?

Is this were all the savings from Medicare and Social Security will go?  Who is going to pay for this?  Does the government create wealth?  Or, just print money?  Another unfunded 'trust fund' for the future?

Imagine a world where every baby received a trust fund at birth. It might sound like a fairy tale, but being born into money--or at least into a $500 savings account--could soon become reality for all children born in the United States. Lawmakers are considering a bill that would give each newborn just that, with the goal of promoting savings that would later be used for education, a first home, or retirement. Here's what you should know about the ASPIRE ("America Saving for Personal Investment, Retirement, and Education") Act:

It seems like there already exists Social Security and investments like 401k's for retirement.  Who's managing the account?  Politicians?

I seem to recall that there are a number of programs that address financial aid for students.  There are also extremely rich colleges and universities that provide a 'full boat' of aid to the needy and disadvantaged students, and may include pocket money too.  No need to work for an education. 

The ASPIRE Act would give each child born in the United States a $500 savings account. Recipients could then use that money once they were older to pay for education, a first home, or retirement. Low-income children would receive additional funding, and all participants could add to their accounts over time.

Where is the money coming from to pay for all of this?  Who is managing the money?

Why not just give the money to low-income people who really need it?

Entitlement programs that benefit everyone, such as Social Security and Medicare, tend to enjoy more widespread support and therefore last longer. Programs aimed exclusively at lower-income groups, such as welfare programs, often attract more controversy and receive less political support.

Aren't Social Security and Medicare broke?  Don't they pay out way more than folks contribute?  Some contribute nothing?  Why isn't the Obama administration working to make these programs sound?  As an example, in Mexico, I read you get contributions plus interest from their Social Security type program.  In the U.S. many receive far more than they contribute and Social Security has been called a Ponzi Scheme.  Isn't that what Madoff went to jail for?

If you're giving more to low income children, isn't that a welfare program with a little window dressing?  Who's going to pay for this new welfare?  Who's going to manage it?  Politicians?  A future 'trust fund' that is mismanaged and empty?  IOUs?

Has this been tried anywhere before?

Yes--in Great Britain. Since September 2002, children born in the United Kingdom have received a $500 savings account, just as the ASPIRE Act would provide in the United States. Recipients can withdraw the money after the age of 18; unlike in the proposed U.S. version, there are no restrictions on how they can spend the money...Since the program's first enrollees are now only 7 years old, it's too early to say how they will spend the money once they turn 18.

How's that working after five years?

Tories to scrap child trust funds for the wealthy

Shadow Chancellor George Osborne today told the Conservative Party conference that he plans to 'stop new spending on child trust funds for better off families' in a move aimed at saving the Government £300m a year.

...added that 'handing out new baby bonds to the rest of the country is a luxury we can no longer afford.'

'Too much focus on taxpayer-funded handouts'

Jason Hollands, director of CTF provider F&C Investments commented: 'We accept that politicians of all parties are having to face up to some very tough spending decisions given the parlous state of the nation’s finances.

'However, we believe that when it comes to child trust funds, there is a real danger of "throwing the baby out with the bathwater", since limiting or abolishing taxpayer-funded contributions need not mean closing these plans to voluntary contributions. There has been too much focus on the taxpayer-funded handouts when the real focus needs to be on encouraging people to change their own savings habits.'

http://www.which.co.uk/news/2009/10/tories-to-scrap-child-trust-funds-for-the-wealthy-186080.jsp#

Lesson learned is just a few years?  Is there any guarantee that wealthy parents save for their children?

How would this program be paid for?

Over the first decade of its life, the program would cost around $37.5 billion, and would start at around $3.25 billion per year. Cramer argues that because the money would be invested through the savings account, it would help spur economic growth. Lawmakers sponsoring the bill have said they would pay for it by making other cuts, but the bill doesn't specify what those cuts would be.

Hmmm...paying for it by making other 'mystery' cuts.  Sounds like the healthcare bill.  Where are all these cuts coming from? 

Why not make the cuts first?  Prove the ability of lawmakers to stop printing money?  What good is saving $500 U.S. dollars today when it will be worthless tomorrow due to Obama's spending?

The Brits can't afford their program after just over five years...maybe Congress should read the writing on the wall. 

http://news.yahoo.com/s/usnews/20091006/ts_usnews/comingsoon500foreverynewborn

jmho

[WhiskeyGirl]

More real life experience from the UK -

"Dismay at proposal to axe child trust funds"

But Hargreaves Lansdown head of research Mark Dampier says the Conservatives have not gone far enough. He says: "They should scrap CTFs entirely as all Labour did was put the entire nation on benefits. How can they be funded at a time when the country is flat broke?"

"This would not come with a significant tax cost for the government as children already have an income and capital gains tax allowance for savings made outside the Child Trust Fund.  However, the Child Trust Fund wrapper makes saving for children a simple and straightforward process."

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=194617&d=340&h=341&f=342

I remember in the olden days, there were savings bonds (before all the bubbles, they were a good SAFE investment), children brought their dimes and quarter to school...

$500 a year is just a little more than a dollar a day.  Why not get encourage ALL parents to save?  Maybe a matching program for the poor?  Welfare/benefit deductions before the money is spent?   Perhaps there are some poor folks that would make the sacrifice?

Does giving away money really help?  What about those folks that may take advantage of their children when the children are old enough to take out the money?  It reminds me of those children that abuse their elderly parents savings and investments.

What happened to the satisfaction of earning money, saving, and not living off of government handouts?

Why encourage dependency?  Don't people get satisfaction from saving their own money?

Can government really duplicate that satisfaction?  Or, will this just encourage reliance on government?

jmho

[WhiskeyGirl]

Where are the investments made in the U.K.?

"Should parents place their trust in child fund schemes?"

The money cannot be touched until the child is 18, and the idea was to give the poorest children a nest egg with which to start adult life, while offering the middle classes a tax-free savings vehicle.

Investments within the CTF will roll up free of tax, and parents and grandparents can also top up the accounts if they wish – by a maximum of £1,200 per year. Parents can choose to invest in either a cash fund or the stock market. Unfortunately the experience with both has been disappointing so far.

Institutions with cash funds are offering miserly returns (see buy tables), which are lower than comparable rates elsewhere. 

Once banks and building societies have attracted in the cash, they clearly hope everyone forgets about it for the next 18 years, thereby short-changing both the children and the taxpayers.

Those who prefer the stock market, where long-term returns have been historically higher, can chose between a simple low-cost tracker stakeholder fund, where the value of the holding moves up and down in line with stock market indices, such as the FTSE 100.

Who will manage the money in the U.S.?  I think that a REAL important question.  Politicians?  Another trust fund to be looked in the future?  A 'trust fund' with IOUs?

http://business.scotsman.com/personal-finance/Should-parents--place-their.5681780.jp

How long before Obama/Pelosi/Reid start imposing stiff taxes on retirement investments to start paying for all this spending?

[WhiskeyGirl]

"The Child Trust Fund has trebled the savings rate for children by families.

"More than two million parents are using the CTF to make monthly contributions.

"Amongst our customers those contributions have risen by 60% from £15 to £24.

Many of today's young adults are drowning in a sea of debt and are further away than ever before from being able to afford education, to get on the property ladder or advance themselves.

"We predict that if, on average, £0.5 billion is being invested each year in Child Trust Funds this would result in an anticipated £2.4 billion being available to young adults which would make a huge difference to the Nation's level of indebtedness.

"We need to pull future generations from the sea of debt. Removing the most successful savings initiative ever at this juncture will condemn the young people of the future to the same fate as today's generation."

http://www.easier.com/view/Finance/Investments/Child_Trust_Funds/article-275690.html

Does it really matter how much you save if your paper money is worthless?  Politicians spend like drunken idiots, don't read the legislation they vote on, don't comprehend the DEBT they are imposing on future generations?

What good does a $500 savings account do today, if in the future the savings and interest won't buy you a cup of coffee or a Happy Meal?

Why isn't the Obama administration focused on creating  robust economy?  The global community is losing it's faith in the dollar and Obama/Pelosi/Reid keep spending?  Is the goal to destroy the United States?

jmho