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December 28, 2004

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Looking at this, I am revising my opinion. Bush is going to get some version personal accounts, but at the end of the day they won't be such a big deal.

Thank you! I was feeling very alone in my it's-all-a-rightwing -conspiracy-to screw-me point of view. I know Sebastian would disagree with me on this, but I really don't see this administration as at all trustworthy. Social Security isn't broken so it doesn't need to be fixed. If the Bush administration wants to "reform" Social Security, it isn't because they want to save the program. Their goals are ideologically driven.
The best indictor of future behavior is past behavior. My expectation, based on past Bush adm. behavior, is that the 'reforming" will be focused on re-arranging, restructuring, possibly dismantling, and it will be done in a way that benefits those who don't need benefits and screws everyone else. The parallel to how we got suckered into Iraq is exactly right. But don't forget about Bush connections to, and policies in regard to, Enron, Medicare, the National Forests, rewriting the Clean Air and Water Acts etc. This is an administration that is consistantly dishonest about its aims and consistantly uses public resources and public policy issues to serve the interests of corporations against the public's interests.
Even if Social Security had real problems, The Bush admini. would not be the folks to entrust with the job of fixing things.

I think what sticks in my craw is that privatization would create even more government bloat that, supposedly, conservatives would not be in favor of. The truly conservative approach would be to reduce benefits so that the payroll tax could be lowered. Instead, it seems like this privatization scheme is the Norquistian "cut it down to the size where we can drown it in the bathtub" approach. Instead of attempting the politically very difficult task of cutting benefits and payroll taxes, they'd rather try to sell the better-sounding privatization scheme. (Wouldn't it be a more principled stand to cut benefits and payroll taxes than to dramatically increase spending in the short term with the hope that solvency will improve in the long term?)

I wish I had time to do the math, but I would bet dollars to donuts that some combination of means-testing, benefit formula revision (using price instead of wage growth), and raising the retirement age would actually allow us to reduce the payroll tax AND make the system more "solvent." I would guess most Americans don't have a problem with returning Social Security more to its roots--a last-resort safety net for the elderly who would otherwise live in poverty, rather than a supplemental pension plan. If we could only get AARP on board!

We've gone rounds on whether or not the real goal is to dismantle Social Security. For the purposes of this thread, let's assume it's not. That a healthy debate on how to ensure SS is there 50 years from now is something we can all do, including dicussion privatization, is actually an exercise that's good for all.

This particular thread is for discussing Bush's method for selling his ideas...the way he won't discuss specifics until it's widely agreed/assumed that there's a problem, not (only) to spur debate but (judging by past experience) also to silence his later critics with claims of flip-flopping. It's sinister.

"It's sinister."

But is it more or less sinister than the person alluded to in the "Big Doings? Here?" post.

BTW, since sinister is derived from the word for left in Latin (among other languages, if the new poster is less sinister, does that mean he/she/it will be further to the right? Inquiring minds want to know.

We've gone rounds on whether or not the real goal is to dismantle Social Security. For the purposes of this thread, let's assume it's not.

I'm outta this one. Ignoring the fact this is the real goal is unrealistic and detrimental.

Part of the reason for this pretense is political; the other reason is ignorance of the role of SS. If you believe SS is a retirement or pension plan--that's wrong; it should be addressed as a separate proposal aside from SS.

I'd love to tell you Dantheman, but von has closed the comments on that topic...sorry...you can always demand an open thread to discuss the totalitarian nature of such closed-comments posts, but even then, there's no guarantee.

I was torn about using "sinister" in that comment, mind you, knowing it would reference von's tease, but it was the best word for what Bush is doing.

I'm outta this one. Ignoring the fact this is the real goal is unrealistic and detrimental.

I disagree. In fact, I think if that is the real goal, there's a real chance to defeat it by opening the debate as wide as it can get. I think by refusing to discuss the alternatives to privatization, you help it come to be.

"This particular thread is for discussing Bush's method for selling his ideas...the way he won't discuss specifics until it's widely agreed/assumed that there's a problem, not (only) to spur debate but (judging by past experience) also to silence his later critics with claims of flip-flopping. It's sinister."

More seriously than my last comment, I doubt this thread will generate much useful. Given the reluctance of the R's on this board to admit there was anything underhanded about how Bush sold the public on the War in Iraq, I can't see how they can possibly agree that there is a pattern. Of course I could be proven wrong (and would like to...).

The truly conservative approach would be to reduce benefits so that the payroll tax could be lowered.

Well, I would argue that what the President is hinting at would do pretty much what you describe, but, for political reasons, cuts cannot realistically be made to the benefits of current or near future retirees. But they can and will be made to the benefits of future reitirees (most people, say, currently under 45), especially if such people can be convinced to accept such cuts voluntarily as the price to pay for the right to divert two points of FICA into a retirement account.

Obivously this failure to cut the benefits of people currently receiving benefits (or about to do so) will push any net savings decades into the future.

Praktike finally gets it and Eddie wants a debate. I'm looking forward to the separation of fact from fiction (Eddie certainly can do it) Don't forget all Bush is trying to do is to provide some options.

I continue to be pro-choice on this subject as well as on education.

I continue to be pro-choice on this subject as well as on education.

Gee Timmy, expand that list to include abortion and gay marriage and I'll vote for you for president.

I'll wait for you to illustrate via the post above where I'm mixing fact and fiction...I'll start "War and Peace" while I'm waiting.

Don't forget all Bush is trying to do is to provide some options.

This is false.

Eddie, see Felix's comment regarding fact and fiction, I wasn't trying to be snarky (shock and horrors) just pointing out all the heavy lifting you will have to do with the normal stable of commentors on this site.

Good Luck Eddie (Von too), you will need it.

On the other two topics you raised, as long as those issues are decided by the legislature (state or federal)you won't hear from me on either topic.

Not allowing for the fact that BushCo is trying to dismantle SS is making the same fundamental mistake that hawks on the left made in the run up to Iraq. What in his history of governence - or in the history of those who advise him, like the Norquistas - would suggest that BushCo has anything in mind except the destruction of SS? And I'm not talking about promises and speeches, I'm talking about actions taken. What steps has he ever taken to insure the wellbeing of the percentage of the citizenry that doesn't include the moneyed elite or the corporate class? What does his bankruptcy bill look like, for example?

It's fine to engage in intellectual back and forths, if you're into that kind of thing, but when you start setting reality aside, you're being irresponsible. A whole bunch of GIs will tell you the same thing.

Until it can be proven that BushCo does not have nefarious motives and that he isn't incapable of handling the implementation of a project of this scale, we should table the debate on the merits of some kind of privatization. There are plenty of first term projects we can insist he digs out of the ditch he drove them into. He can start with the Medicare prescription drug benefit, NCLB and the defecits. And there's always Iraq.

Lily is right. What's going on here is theft. Why is everybody concerned with a program that is over-funded, has been overfunded for years and will continue to be overfunded for years to come? Because they want a piece of the action. All other Federal programs have revenues to cover only 62% of their costs. These are current, today deficits, not projected deficits in forty years. It's dishonest for Sebastian, The Dog and all other Bush enablers to feign concern over a successful program when no other part of the Federal Budget is properly supported. We do not have a Social Security problem, we have a Republican problem. They are no longer concerned with good governance but raw power.

To Almeida:

How is diverting tax dollars into another government bureacracy cutting taxes? Bush isn't promising anything like cutting the payroll tax. I don't know about you, but I think I can do a lot better for myself with the extra money in my own hands than in the government's thrift plan. Isn't that the American way?

Social security currently takes in more money than it spends, and is predicted to continue doing so until 2018. That takes us out pretty close to the retirement of those 45-yr-olds you're talking about. It also gives people further away from retirement a chance to start planning for lower SS benefits during retirement. Why not borrow then to pay the deficit for five or ten years until we transition to lower benefits? Why borrow trillions now to solve a problem that will likely cost even less in the future to fix? Why pay today what we can pay tomorrow? Think net present value.

As for savings being pushed out decades, that's fine. We don't really need the savings for decades (at least two) anyway.

Fabius, if the program is successful and needs no help, I'm just wondering what the previous Admin was so concerned about.

Please note, that it was a Democratic Admin who brought SS on budget and it was a Republican Admin who fixed it in the last go around.

I continue to prefer choice over the current system, as I prefer power in the hands of the people.

Why not borrow then to pay the deficit for five or ten years until we transition to lower benefits? Why borrow trillions now to solve a problem that will likely cost even less in the future to fix? Why pay today what we can pay tomorrow? Think net present value.

hcaulfield: I'm not sure I quite understand all your arguments here. But as to your words above, I want to inquire as to why you're so confident the "likely cost" in the future will be less. Even the most optimistic scenarios have Social Security's take of GDP increasing substantially (by, at least, nearly half) between now and mid-century. What if a considerably grayer America in the year 2050 cannot summon the political will to make desireable spending cuts to Social Security, but instead insists on raising the tax on jobs?

Convincing people now working to voluntarily accept cuts in their guaranteed benefit will improve public finances in a few decades' time; by 2050, after all, even the additional interest costs associated with transition will have been paid.

For the record I think the plan we're likely to see emerge in Congress is lacking in creativity, boldness, and fundamental transformative power. I don't think, in another words, we're likely to see much change. Still, on balance, I probably favor even this mild step away from the status quo. First, there is the aforementioned eventual benefit to public finances (why not step back from the precipice of demographic determinism?). Secondly, I do agree with others that there is likely to be some economic benefit flowing from the incentivization effects associated with private account ownership. Another plus I can imagine (but don't hear mention of) is the increase in savings over and above that resulting from private accounts (if the government-guranteed portion of one's retirement income is reduced by the government, there should be some net, positive impact on one's propensity to build up income-producing assets for retirement). While I do agree with the critics of privatization that increasing the national debt by a couple of trillion dollars is problematic, I suspect the negative consequences of this debt increase to be outweighed (if only slightly) by the aforementioned two developments and the fact that the added borrowing should, in theory, be exactly countered by the increase in capital supplied by the build up of the private accounts. Finally, I believe the added pressures on the budget consistent with the end of the FICA surplus will, in the end, be a net positive in that they're likely to tip the balance in favor of more government spending cuts (there's a chance, in other words, that the $2 trillion price tag of private accounts won't be quite so high).

So, I view the private accounts proposal, such as it's been described, as a very modest, desireable step toward a long-term, cost-curbing approach to this particular entitlement program. Maybe we'll get lucky, and the reform bug will bite Congress, once the genie is out of the bottle, and something more creative or radical will be enacted.

It also gives people further away from retirement a chance to start planning for lower SS benefits during retirement. Why not borrow then to pay the deficit for five or ten years until we transition to lower benefits?

hcaulfied: I re-read your comment, and I grasp now what you're saying. You're arguing for straight benefit cuts enacted now that would affect future retirees, thereby giving them time to prepare by saving their own money (right?).

In short, my answer would be: Social Security as it's currently structured is an increasingly bad deal for people, and an increasing drag on the economy. We ought to seriously think about major changes. What you propose keeps the system intact, but simply makes it an even worse deal for people. Where would the extra money come from in the average person's budget to fund extra savings? If they continue to have to pay 12.5% of their wages as FICA tax (really more like 15% depending on how you look at it), saving more money is daunting, to say the least.

The president's proposal is in some ways a lot more progressive and fair to ordinary folks, in that the money they must pay that flows directly to retirees is reduced, and this reduction pays for deposits into private accounts. In other words, there's no net decrease in ordinary folks' consumption required to fund the change, unlike with your idea, which, for ordinary people at least, would mean they must consume less. (I'm all for increasing the savings rate, mind you, and for this reason (among others) favor fundamental tax code reform; I just think without such reform asking working people to forego additional conumption to underpin SS reform is unrealistic, and quite possibly, cruel).

I realize federal borrowing will increase, but the added interest expense will mostly be paid for by the income tax. And income tax is more progressive than the FICA tax. So, again, what Bush is proposing is fairer, I think, than simply keeping the staus quo but cutting benefits.

And, at any rate, the presiden's proposal has the added (and very necessary) advantage of being politically feasible. Asking people to take future cuts in their Social Security checks is difficult to do. It's a lot more possible if you give them something in return. In this case that "something" is private accounts. Absent private accounts, I doubt much in the way of substantial benefits cuts can be enacted in the short term. And that, in turn, risks big hikes in the FICA tax to fund the benefits of retirees in the future. Again, there is no guarantee a future, grayer America will be able to face down the old people lobby and prevent workers from being much more heavily taxed; so perhaps the greatest benefit of the president's approach is that it mostly "heads off at the pass" potentially destructive, sharp hikes in FICA.

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