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Thursday, April 21, 2005

Needlessly Political Post: Bush's Social Security Plan

I'm reading all sorts of interesting things about the President's windmill attack, er, Social Security reform package. First off, I want to say that I believe it's a bad plan -- it's way too expensive to set up and has effects that will be minimal at best. Allowing people to do what they want with 4% of their social security taxes is not going to help matters. However, you have to give Bush some credit for his stones -- he's attempting to tinker with the Third Rail of American Politics, after all. There's no way Clinton/Gore would have tried this.

I've found websites that say the the President's plan is necessary, which is to laugh. I've found sites that say that Social Security is in great shape and "There is no crisis", which I don't think anyone seriously believes. I'm convinced Liberals are just saying that because they hate Bush and everything he stands for. If he says something, they automatically assume it's: a) wrong, and; b) has some nefarious purpose behind it that benefits "the rich". As you might guess, this can be exhausting to listen to or read. I will now proceed to rip apart one such Liberal site, a wonderful haven of Bush-bashing called, "Think Progress". They have a delightful Q&A called, "How to Talk to a Conservative about Social Security (If You Must)." One would think a Serious Liberal Organization (SLO) would steer clear of referencing skeletal conservative vulture-woman Ann Coulter, but whatever.

It starts out with this introduction:

The White House and their deep-pocketed allies have launched a $35 million public relations effort to spread misinformation about President Bush’s Social Security Privatization scheme. This fact sheet will arm you with all the facts you’ll need to take them on.

"Deep-pocketed allies", eh? It's never too early to play the class warfare card, I suppose.

CLAIM: “By the year 2042, the entire system would be exhausted and bankrupt.” [President Bush, 2/2/05]

FACT: In 2042, enough new money will be coming in to pay between 73-80 percent of promised benefits. Even with this reduction, new retirees will still receive more money, in inflation-adjusted dollars, than today’s beneficiaries. [WP, 2/5/05]

Let's think about this logically. If (even by their unsubstantiatable pro-solvency figures), we'll have to cut Social Security benefits to between 73-80 percent of what we "promised", and we still end up giving out more in inflation-adjusted dollars, what does this mean? The only thing it can mean is that we've "promised" to raise benefits more than 20% over and above the rate of inflation over the next 37 years. We've done this because any time someone wants to reduce the amount SS benefits increase every year, old people start screaming about the SS “cuts” that are killing them. It’s a system totally out of anyone’s control, and we’re stuck with it.

CLAIM: “In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes.” [President Bush, 12/11/04]

FACT: “In 14 of the past 47 years, including 1975 to 1983, Social Security paid out more in benefits than the government collected in payroll.” [MSNBC, 1/14/05]

FACT: Under Bush’s plan, expenditures will begin to exceed revenues even earlier, in 2012. [New York Times, 2/4/05]

First they call Bush a liar (when the reality is he’s probably just using a more favorable set of figures for his argument), and then they shoot themselves in the foot. Bush brings up something he thinks means we’re in a crisis, and “Think Progress” tells us that Bush is a liar for understating that crisis.

CLAIM: “Under the current system, today’s 30-year old worker will face a 27% benefit cut when he or she reaches normal retirement age.” [GOP Guide to Social Security Reform, 1/27/05]

FACT: According to the Congressional Budget Office, younger workers would receive better benefits from Social Security as it exists now, even if nothing changes, than from President Bush’s private accounts plan. [EPI, 2/05]

They don’t even dispute the “claim”, they just tear down the convenient straw man of Bush’s slightly disastrous plan. The only reason we are having this debate is because Bush has proposed something, and his opponents have convinced themselves that he’s the devil incarnate. I like how they just gloss over the fact of the 27% “cut” that will need to happen. I’m sure if Bush tried to cut SS benefits by 27% over the next 37 years, Think Progress would be attacking that, too. But here it’s the hero of the scenario because it doesn’t involve privatization.


CLAIM: “As we fix Social Security, we also have the responsibility to make the system a better deal for younger workers. And the best way to reach that goal is through voluntary personal retirement accounts.” [President Bush, 2/2/05]

FACT: Analysis of the plan so far does not prove the accounts would be a better deal for anyone not working on Wall Street. Workers who opt for the private accounts would recover forfeited benefits through their accounts only “if their investments realized a return equal to or greater than the 3 percent earned by Treasury bonds currently held by the Social Security system.” But CBO factors out stock market risks to assume a 3.3 percent rate of return. With 0.3 percent subtracted for expected administrative costs on the account, “the full amount in a worker’s account would be reduced dollar for dollar from his Social Security checks, for a net gain of zero.” [WP, 2/4/05]\

Oh, and did they mention Bush’s plan was voluntary? Also, I like how they can make assumptions about how the stock market is going to perform in the future. It’s a risk with the potential for greater reward – what part of this don’t you get?

CLAIM: “You’ll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren.” [President Bush, 2/2/05]

FACT: Most lower-income workers will be required to purchase government lifetime annuities, financial instruments that provide a guaranteed monthly payment for life but that expire at death. Money in these annuities cannot be passed on to heirs. [NYT, 2/3/05]

This is actually a fairly good point. I can’t really find anything wrong with it, so Yay, Think Progress. I would ask what “most lower-income workers” means. Anyone who makes less than 10,000 a year? 75, 000 a year? It’s probably important to know where that figure is, but they’re not telling us.

CLAIM: “We must pass reforms that solve the financial problems of Social Security once and for all.” [President Bush, 2/2/05]

FACT: “A Bush aide, briefing reporters on the condition of anonymity [said] that the individual accounts would do nothing to solve the system’s long-term financial problems.” The long-term gap in revenue would “have to be closed through benefit cuts that have yet to be detailed.” [LAT, 2/3/05; WP, 2/5/05]

And when those benefit cuts are proposed, Think Progress will stop thinking about progress entirely and fight them tooth & nail. This, dear readers, will mean much higher tax rates to pay for benefits that go up way faster than the rate of inflation each year. We’ve stumbled on the real issue. This “FACT” is meant to scare you into thinking that what Bush really wants is to pave the way for a dreaded cut in benefits. Of course, if we cut benefits a little now we can save the bloodletting later on. Don’t let that worry you, though. Keep fighting for higher taxes on the rich.

CLAIM: “A personal account would be your account, you would own it, and the government could never take it away.” [President Bush, 2/8/05]

FACT: Bush’s Social Security plan is a far cry from the private ownership he’s touting, however. For example, instead of private plans that let Americans control their own investments, there are tight restrictions on which conservative stocks and bonds the public will be allowed to buy. And, as the New York Times reports, “the more restrictions there are, the harder it would be for people to achieve the outsized returns the administration has generally promoted to sell the public on private accounts.” [NYT, 2/6/05]

This is a good point that demonstrates why the President’s plan is tepid and ineffectual. But do they mean to suggest that more freedom should be given to people w/r/t their SS money? Are they saying that these accounts should be totally free from restrictions, so that people can try to make something out of that paltry 4%? Again, they’re shooting their overall point (that SS must not change) just to hate on President Bush.

CLAIM: “Best of all, the [private] accounts would be replacing the empty promises of government with the real assets of ownership.” [President Bush, 2/8/05]

FACT: Social Security trust funds “hold nothing but U.S. Treasury securities,” recognized as “the safest, most reliable investment worldwide.” [Century Foundation, 1/26/05]

Bush makes a point about how much the government sucks, and Think Progress comes back with wild claims about Treasury Bonds. I don’t think they understand what privatization means, which sheds some light on their overall philosophy, don’t you think, comrade?

CLAIM: “The problem that we now face is not one that we can tax our way out of, for a very simple reason: The costs and the current program are growing faster than the underlying tax base. So if we were to raise taxes today to deal with it, and the costs of the program continued to grow faster than the tax base, then in the future, future generations would simply have to come back and raise taxes again.” [Senior White House Official, Press Conference, 2/3/05]

FACT: An alternative proposal by Peter Diamond and Peter Orszag would resolve Social Security’s funding problems directly and permanently through modest tax increases. The Congressional Budget Office states that, “under Diamond-Orszag, the trust fund balance would always be positive and scheduled benefits would be fully financed.” [CBO, 12/22/04]

I’m sorry about the delay, but I just fainted. Modest tax increase(s)? What does that mean? We’re already way overtaxed! You see, this is what Think Progress ultimately wants – full funding no matter what. I told you so. If we pay enough money to the government, there will be no insolvency problem, they think. Of course, what they don’t tell you is that there will also be no money in the economy. But hey, we’ll have the pleasure of living off our SS payments when we retire from our nonexistent jobs. Woo Hoo!


CLAIM: “Social Security was a great moral success of the 20th century, and we must honor its great purposes in this new century.” [President Bush, 2/2/05]

FACT: Conservatives have been trying to gut Social Security since its inception. Both Barry Goldwater and Ronald Reagan endorsed privatization in 1964. In 1983, the Cato Institute laid out a privatization plan similar to President Bush’s, stating, “We will meet the next financial crisis in Social Security with a private alternative ready in the wings.” [Miami Herald, 2/7/05]

Nothing in that FACT disputes anything Bush said in the CLAIM. This is just here so Think Progress can hate on Republicans, who to their credit seem to be the only ones thinking about doing anything about the SS problem.


CLAIM: “I think it’s important for people to be open about the truth when it comes to Social Security.” [President Bush, 2/4/05]

FACT: The Bush administration has lobbied hard for privatization while being notably closemouthed about the details. [WP, 2/6/05]

The details are pretty much out in the open, you political hacks. His plan sucks, so he doesn’t like to talk about it. That’s perfectly understandable. And what does that have to do with the truth about SS?

FACT: The Wall Street Journal reports the White House is quietly assembling a coalition of deep-pocketed allies “that will privately raise $35 million for an advertising and lobbying effort to push the politically risky measure through Congress.” [WSJ, 2/4/05]

Didn’t they already say this exact thing? Again, what does this have to do with the truth about SS?

CLAIM: “The role of a President is to confront problems – not to pass them on to a future President, future Congress, or a future generation.” [President Bush, 2/4/05]

FACT: Dick Cheney admits trillions of dollars in future borrowing will be necessary to cover the cost of establishing private accounts. This deficit would have to be repaid by today’s younger workers. [NYT, 2/6/05]

Bush has the right idea, but he doesn’t have enough guts or the right plan to pull it off. I do like how Think Progress brings up the old mantra of future deficit repayment, as in, “We’re leaving our kids with our horrible mess.” But is repaying this deficit really any worse than raising taxes? Isn’t that really the same thing? Our taxes are the horrible mess we're passing on to our kids, much like SS was passed on to us. The sad part is that SS reform will now forever be associated with this Bush failure, much like National Health Care is currently associated with Hillary Clinton’s shrewish face. I’m just glad that thanks to our National Fear of Change, neither one of these things has any chance of happening any time soon.



  • At 6:13 AM, Blogger Danny said…

    Hey Mike,
    How's Texas? Sorry, but it's time for my daily comment. Hope ya Don't mind.
    So my question is: whatever happened to the money that we placed into SS? Oh what's that, it's been squandered. I think that you could agree that something's gotta give in respect to a little accountability. I agree with the fact that think progress is thinking about one thing and that is larger gov't. But what about Bush manning up in the accountability department...perhaps he could start saving a little by not asking for an additional $81 billion for the war; not to mention more money to be asked for next year. What the heck? I just don't get it...I've been paying into SS for the past 8 years and I'm only 23. It's not as though I can start up a 401K with the money I'm making now...looks like my kids will have to support me when I'm sportin' depends and screaming about the ole days. Ha. Just kidding. My kids are going to be as lazy as me and we'll all be on food stamps and welfare because we thought progressively back in the day.

    Take care.


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