January 06, 2005
White House Social Security Memo
The White House Social Security memo. The knowledge of the Social Security program held by the author is what you would expect:
From: Wehner, Peter H. [mailto:Peter_H._Wehner@who.eop.gov]
Sent: Monday, January 03, 2005 2:57 PM
Subject: Some Thoughts on Social Security
I wanted to provide to you our latest thinking (not for attribution) on Social Security reform.
I don't need to tell you that this will be one of the most important conservative undertakings of modern times. If we succeed in reforming Social Security, it will rank as one of the most significant conservative governing achievements ever. The scope and scale of this endeavor are hard to overestimate.
Let me tell you first what our plans are in terms of sequencing and political strategy. We will focus on Social Security immediately in this new year. Our strategy will probably include speeches early this month to establish an important premise: the current system is heading for an iceberg. The notion that younger workers will receive anything like the benefits they have been promised is fiction, unless significant reforms are undertaken. We need to establish in the public mind a key fiscal fact: right now we are on an unsustainable course. That reality needs to be seared into the public consciousness; it is the pre-condition to authentic reform.
Given that, our aim is to introduce market reforms in Social Security and make the system permanently solvent and sustainable.
We intend to pursue the first goal by using our will and energy toward the creation of Personal Retirement Accounts. As you know, our advocacy for personal accounts is tied to our commitment to an Ownership Society -- one in which more people will own their health care plans and have the confidence of owning a piece of their retirement. Our goal is to provide a path to grater opportunity, more freedom, and more control for individuals over their own lives. That is what the personal account debate is fundamentally about -- and it is clearly the crucial new conservative idea in the history of the Social Security debate.
Second, we're going to take a very close look at changing the way benefits are calculated. As you probably know, under current law benefits are calculated by a "wage index" -- but because wages grow faster than inflation, so do Social Security benefits. If we don't address this aspect of the current system, we'll face serious economic risks.
It's worth noting that wage indexation was not part of the original design of Social Security. The current method of wage indexation was created in 1977, under (you guessed it) the Carter Administration. Wage indexation makes it impossible to "grow our way" out of the Social Security problem. If the economy grows faster and wages rise, this produces more tax revenue. But the faster wage growth also means that we owe more in Social Security benefits. This has produced a never-ending cycle of higher tax burdens, even during periods of robust economic growth. It is the classic case of the dog chasing his tail around the tree; he can run faster and faster, and never make any progress.
You may know that there is a small number of conservatives who prefer to push only for investment accounts and make no effort to adjust benefits -- therefore making no effort to address this fundamental structural problem. In my judgment, that's a bad idea. We simply cannot solve the Social Security problem with Personal Retirement Accounts alone. If the goal is permanent solvency and sustainability -- as we believe it should be --then Personal Retirements Accounts, for all their virtues, are insufficient to that task. And playing "kick the can" is simply not the credo of this President. He wants to do what needs to be done for genuine repair of Social Security.
If we duck our duty, it can have serious short-term economic consequences. Here's why. If we borrow $1-2 trillion to cover transition costs for personal savings accounts and make no changes to wage indexing, we will have borrowed trillions and will still confront more than $10 trillion in unfunded liabilities. This could easily cause an economic chain-reaction: the markets go south, interest rates go up, and the economy stalls out. To ignore the structural fiscal issues -- to wholly ignore the matter of the current system's benefit formula -- would be irresponsible.
Here's a startling fact: under current law, an average retiree in 2050 would be scheduled to receive close to 40 percent more (in real terms) in benefits than an average retiree today -- and yet there are no mechanisms in place to produce the revenue to pay out those benefits. No one on this planet can tell you why a 25-year-old person today is entitled to a 40 percent increase in Social Security benefits (in real terms) compared to what a person retiring today receives.
To meet those benefit levels, one option would be to raise the age at which people receive benefits. If we followed the formula used when Social Security was first created -- make the age at which you receive Social Security benefits above the average age of mortality -- we'd be looking at raising the benefit age to around 80. That ain't gonna happen.
Another way to meet those benefit levels is through the traditional Democrat/liberal way: higher taxation. According to the latest report of the Social Security Trustees, the current system's benefit formula would require some $10 trillion in tax increases over the long term. We'd therefore need to raise the payroll tax almost 20 percent simply to provide wage-indexed benefit levels to those born this year.
This will all sound familiar. In the past, the way Congress usually addressed the built-in funding problem was by raising payroll taxes (from 2 percent in 1937 to 12.4 percent today). In fact, Congress has raised Social Security taxes more than 30 times -- but it has never addressed the underlying problem. Avoiding the core issue by raising taxes is not the modus operandi of this President.
The other key point, as you know, is that personal accounts, through the miracle of compound interest, will provide workers with higher retirement benefits than they are currently receiving from Social Security.
At the end of the day, we want to promote both an ownership society and advance the idea of limited government. It seems to me our plan will do so; the plan of some others won't.
Let me add one other important point: we consider our Social Security reform not simply an economic challenge, but a moral goal and a moral good. We have a responsibility to fulfill the promise of Social Security, not undermine it. And we have a duty to ensure that we do not create an inter-generational conflict -- which is precisely what will happen if the Social Security system is not reformed. We need to retain strong ties between the generations, which is of course a deeply conservative belief.
The debate about Social Security is going to be a monumental clash of ideas -- and it's important for the conservative movement that we win both the battle of ideas and the legislation that will give those ideas life. The Democrat Party leadership, the AARP, and many others will go after Social Security reform hammer and tongs. See today's silly New York Times editorial (its only one for the day) as one example. But Democrats and liberals are in a precarious position; they are attempting to block reform to a system that almost every serious-minded person concedes needs it. They are in a position of arguing against modernizing a system created almost four generations ago. Increasingly the Democrat Party is the party of obstruction and opposition. It is the Party of the Past.
For the first time in six decades, the Social Security battle is one we can win -- and in doing so, we can help transform the political and philosophical landscape of the country. We have it within our grasp to move away from dependency on government and toward giving greater power and responsibility to individuals.
There are of course other important issues dealing with Social Security; for now, though, I've covered quite enough ground. I wanted to let you know where things stand. If you have any questions, or if we can send you anything to clarify our plans and respond to critics, just let me know. The President remains flexible on tactics -- and rock-solid on the principles. But there's nothing new there.
In one of his last public acts of an extraordinary public life, the late Democratic Senator from New York, Daniel Patrick Moynihan, co-chaired the President's Commission to Strengthen Social Security. In the introduction of its report, Senator Moynihan (along with Richard Parsons, his co-chair) wrote, "the time to include personal accounts in such action [reforming Social Security] has, indeed, arrived. The details of such accounts are negotiable, but their need is clear.... Carpe diem!"
And so we shall.
Posted by DeLong at January 6, 2005 07:19 AM
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» Administration E-Mail Urges Cuts in Social Security Benefits from TalkLeft: The Politics of Crime
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» Breaking News: I LIVE ON MARS from A Tiny Revolution
On Monday, a Bush minion named Peter Wehner sent an email to "opinion leaders," outlining the Bush strategy for Social Security. You can see it in its entirety here: Here's a startling fact: under current law, an average retiree in... [Read More]
Tracked on January 7, 2005 08:23 AM
Again, magical thinking: "The miracle of compund interest".
Banks create wealth, we know that. They have magic boxes that you put money into and you can take money out forever without dimonishing the amount you started with.
Posted by: pragmatic_realist at January 6, 2005 07:25 AM
The tragic thing about it all is that they are going to win. The democrats are going to put their heads down and start mumbling, a couple of minor items will be changed to adjust maybe the number of percent alowed to be set aside for the accounts, maybe a cap of $1,000 a year, maybe a sunset provision, then they will vote and the Republicans will win. Because of cowardice, greed, ignorance and laziness.
Posted by: pragmatic_realist at January 6, 2005 07:29 AM
"We intend to pursue the first goal by using our will and energy toward the creation of Personal Retirement Accounts . . . The debate about Social Security is going to be a monumental clash of ideas -- and it's important for the conservative movement that we win both the battle of ideas and the legislation that will give those ideas life."
Whether Iraq or Social Security, it's all about ideas and the Will with these guys. It's never about interests or the material world.
Neoconservative attitudes and moral commitments are all fascistic, no doubt about it.
Posted by: General Glut at January 6, 2005 07:41 AM
As General Glut says, it's The Triumph of the Will. They're crazy. And they're in charge.
Posted by: P O'Neill at January 6, 2005 07:44 AM
Lieberman strongly supports SS on 3/21/02.
FOR IMMEDIATE RELEASE
March 21, 2002
Contact: Casey Aden-Wansbury
Lieberman Statement on Social Security Resolution
We're here today to loudly and legislatively voice our opposition to the misguided proposals put forward by the President's Commission to Strengthen Social Security, which are totally inconsistent with Commission's name, because they would all weaken not strengthen the benefits we provide to retirees. That just doesn't make sense, and we say so with the Sense of the Senate Resolution we will be introducing today.
Social Security is a critical source of support for all retired Americans, present and future, and one of the best expressions of the shared values that truly make us a community. The payments Social Security provides are essential; the piece of mind and stability that go along with the money, no economist can quantify. The resolution we're offering today states that it is the sense of the Senate that we understand Social Security's economic value and appreciate its moral value, and that we won't let it be diluted, dismantled or dissolved.
Sadly, those are essentially the three options that the President's Commission lays out in its three alternatives for reforming the system. Two of the proposals require deep benefit cuts to retirees-one with cuts of more than 45 percent in 2075, according to the Social Security Administration's own chief actuary. Keep in mind that current payments to retirees work out to an $845 average monthly benefit, or a little more than $10,000 a year. Our resolution makes clear that such a substantial reduction would be a substantial threat to the very nature of the system, and to the lives of tens of millions of future senior citizens.
All three of the commission's proposals include some form of privatization, which is a dangerous mistake. All three plans are unworkable-requiring a $1 trillion, up-front infusion of money we don't have, and not a penny of which is set aside in the President's budget. And all three are highly risky-the evaporation of Enron employees' privately invested 401(k)s demonstrated what can happen when nest eggs get scrambled in the market. Simply put, Social Security privatization would take away the safety from the safety net, and turn the idea of a rainy day fund into a sink or swim proposition. If you don't choose wisely, you lose badly. And the government's response to bad luck would be to say, "tough luck."
Last but not least, without transfers of general revenue -- which would take money out of other important programs -- all of the Commission's alternatives will hasten Social Security's insolvency instead of helping to fix it. Last year, with budget surpluses and a stable fiscal future, we had an opportunity to end the Social Security shell game and get the system on firmer fiscal footing. This year, in his budget, the President is asking us to go deep into the Social Security surplus just a year after we made a bipartisan promise to the American people that we'd protect it, to pay for his fiscally irresponsible and unfair tax cut. It seems that the President has written off the lock box as a lost cause.
We need to be in a position of fiscal strength to grapple with the growing crisis of Social Security. But the President's tax cut has put us in a position of weakness. Regrettably, that gives the American people far less than the full, fair and fiscally responsible approach to their budget that they deserve. For now, all we can do is to speak out in support of our common values and common fiscal sense, and that's just what this resolution aims to do.
Posted by: Jonathan R. Davey at January 6, 2005 07:56 AM
My favorite quote from the memo...
"No one on this planet can tell you why a 25-year-old person today is entitled to a 40 percent increase in Social Security benefits (in real terms) compared to what a person retiring today receives. "
actually I can. Today's 25 year old is putting his money at risk by contributing to Social Security when the GOP is running things, and is bent on destroying Social Security. Therefore, he deserves a greater return on his contribution because of the risk that he is facing. Its just like the stock market!
Posted by: paul_lukasiak at January 6, 2005 07:56 AM
Interesting fact learned: i.e., wage indexing in Social Security didn't start until the Carter Adminsitration in 1977 and was never part of the original New Deal concept. The Village Idiot from Plains strikes again.
Question: If changing the annual indexing formula from wages to prices is too extreme, what about changing from full wage indexing to partial wage indexing? How many percentage points less than full wage indexing would be required for 75 year retirement fund solvency?
Partial wage indexing might be the best compromise given that benefits must be reduced, present FICA taxes are not going to rise (much anyway), and personal retirement accounts seem either too chancy or just anathema to big government liberals.
Posted by: Lawrence at January 6, 2005 08:07 AM
"That part of that party that does have a plan, let’s call them the Nords, has posited a model that requires purchase of ticket to ride. Distribution will be in accordance with investment. While their model appears to serve them and theirs well, there’s no mention by the Nords of how those without coin can buy a ticket. So, we can but assume that under the Nords’ scheme many are to be left behind. How many? Three-fourths the work force? Does anyone, even the Nords, believe our democracy will stand for this? Can survive this? Ask then we must, does their model include other changes they are not telling us about?"
Posted by: ken melvin at January 6, 2005 08:22 AM
This cracked me up:
>The current method of wage indexation was created in 1977, under (you guessed it) the Carter Administration.
Between the high-school clique snarkiness of the aside (grow the f up Mr. Wehner, you are writing a WH memo, not a blog entry) Bush must be the prime audience, because he probably would have to *guess* who the President was in 1977!
But as mind-boggling as this memo is to the informed, to the uninformed - and not necessarily stupid - it is very coherent, very internally consistent.
With one amazing, astonishing, laugh-out-loud exception - has anybody noticed it yet?
Posted by: a different chris at January 6, 2005 08:22 AM
The "privatizers" aren't necessarily going to win. They may succeed in changing the terms of the debate, one of their goals.
The expensive Drug Benefit/Medicare plan barely passed even with the AARP's help and it left some Republican congresspeople beaten and roughed-up. The AARP is squarely against this. Geezers of the world unite!
Posted by: Peterk at January 6, 2005 08:23 AM
Amid all the conservative triumphalism and Dear Leader glorification, this is the line that jumped out at me:
"If the goal is permanent solvency and sustainability -- as we believe it should be --then Personal Retirements Accounts, for all their virtues, are insufficient to that task. "
That seems quite a bit off message, at least in terms of how the White House has tried to position this scam so far. It actually goes part of the way (which is a long way for this administration) towards the truth: personal accounts are no solution AT ALL for the long-term solvency "crisis," such as it is. And yet, the key to selling privatization is to treat it as one and the same issue as solvency -- as per Saddam = 9/11, Saddam = WMD, etc.
Once the admission is made that deep benefit cuts will be needed to repay the trillions borrowed for the transition costs AND put the trust fund in long-term balance, the debate shifts to ground much more congenial to the Democrats. Why not put off the privatization costs until the government's fiscal house is in better order, and concentrate on saving Social Security - let's put out the fire in the bedroom before we start talking about building a new garage.
From a political point of view, I think the White House really needs to stick with the free lunch approach, like they did with Iraq (liberators, rose petals, a self-financing reconstruction, etc.)
Posted by: Billmon at January 6, 2005 08:35 AM
Carter wasn't as loony as some here make out, if indeed he should be credited with the switch. Between 1974 and 1980 inclusive, in four of those years prices increased faster than the wage index. A lot faster. In a fifth year, the price index increased only .3 percentage points less than wages. (Table V.B1, Trustees report.)
Posted by: Max at January 6, 2005 08:37 AM
What Max said. Those of us around at the time remember the switch from price indexing to wage indexing during the stagflation era of the 70's was designed to save Social Security money. Back in the days when the Republic party was up in arms over the Carter administration's $20B annual deficits.
Posted by: flory at January 6, 2005 08:45 AM
"we consider our Social Security reform not simply an economic challenge, but a moral goal and a moral good."
The flesh crawls.
Posted by: Dubblblind at January 6, 2005 08:54 AM
Lawrence (and others),
The CSSS Plan 2 does not propose anything resembling a change from wage to price indexing of benefits. It proposes a gradual phaseout of Social Security benefits, at the rate equal to that of real economic growth.
The term "price indexing" is only used to obfuscate what the plan really does.
Posted by: enfant terrible at January 6, 2005 08:56 AM
Has anybody else noticed what the script the Pubs are using is? To let the cat out of the bag, it's Halsted and Lind's The Radical Center. These two worthies - and they are - put together a set of proposals involving private accounts in social security and portable, government mandated health insurance (you heard it here first) some years ago. We use the book as a conversation starter in my multidisciplinary core course on America.
What's disconcerting about this is that, while way short on details, Halsted and Lind are proposing a stronger central government with more regulatory power and fiscal strength. What the Bushistas have done is take their ideas and subverted them by building in a future fiscal train wreck. Too bad; some of their proposals make very good sense. Not, of course, the one on SS; too much saving (pace Brad) is a real bad idea. Especially when it impoverishes future generations.
Posted by: tracy lightcap at January 6, 2005 08:58 AM
As I noted @ Angrybear, he's right that the fiscal course is on an unsustainable path - but that should be in a memo concerning the GENERAL FUND. Ah but W. refuses to listen to that.
Posted by: pgl at January 6, 2005 09:00 AM
Paul Craig Roberts, of all people, gives a reasonably clear explanation of what happened in a paper posted over at Cato:
Apparently, the indexing problem actually was created in 1972 under (you guessed it) the Nixon administration. The original cost of living adjustment reform, which Nixon and the Republicans supported as feverently, if not more so, than the Democrats) apparently contained a formula error that essentially double counted inflation, leading to a rapid rise in wage replacement ratios:
"The 1972 amendments provided for the annual adjustment of the marginal benefit rates for each year’s population of retirees by the amount of inflation over the year. For exaniple, if inflation had been 10 percent and the old benefit rates had averaged 0.40, the new benefit rates would average 0,44. Unfortunately, complete adjustment of the benefit rates for inflation overadjusted benefits. Over time, wages tend to rise with inflation. While wages earned in the distant past were, of course, not adjusted for recent inflation, wages earned in the years immediately preceding retirement would have been largely adjusted for inflation. Consequently, one part of the benefit computation, the average monthly wage, was already partially adjusted for inflation by the marketplace."
The 1977 admendments were an attempt to fix the problem by keeping benefits from continuing to rise FASTER than wages and inflation, which they would have kept on doing as a result of Tricky Dick's handiwork.
So if Mr. Wehner wants to direct snide comments at anyone, it should be at the Nixon-Ford administration and the people who worked in it -- people such as the current vice president, the Secretary of Defense, etc.
Posted by: Billmon at January 6, 2005 09:00 AM
C'mon, Billmon. Fire up the Whiskey Bar. You want to do it. We know you do.
Posted by: praktike at January 6, 2005 09:15 AM
any chance this is a plant with the press?
Posted by: Lin Ma at January 6, 2005 09:22 AM
Since these guys are quoting Daniel Patrick Moynihan so much, perhaps Democrats should turn it right back at them. DPM helped deep-six Clinton's health-care proposal by saying that there was no health-care crisis. Moynihan may have been right then (he wouldn't be, right now), but the "There is no crisis" mantra works even more for Social Security than for health care.
Posted by: Rob A. at January 6, 2005 09:38 AM
I know that it is pointlessly pedantic to argue against changes of meanings, but I can't suppress that nails-on-the-chalkboard feeling when I hear radical, ideologically -- dare one say metaphysically? -- driven proposals described as "conservative". Surely dismantling a 3/4 century old institution in service of abstract (even "magic") formulas cannot be considered conservative in any sense of the word. But now the ostensibly "liberal" Democrats are "the party of the past" -- that is, linked to the past generation's pragmatic reforms, no? (Perhaps this is a.d.Chris's laugh- out-loud exception?) Burke himself penned many a tribute to the "Glorious Revolution" that preserved and advanced the cause of English freedom, writing a scant century later. Much the same thing could be said of SS...true conservatives fear anarchy, not the government.
Posted by: David at January 6, 2005 09:56 AM
I would like to see a discussion of SS contributions from unearned income as well as from payroll. Why are some forms of income excluded from participation in the SS system?
Posted by: Dale at January 6, 2005 09:59 AM
The proposed changes would make the system like the one that the UK is currently being forced to abandon. The Conservatives swapped an earnings link for a prices link and are now proposing to switch back while the Labour party is being dragged kicking and snarking into doing the same.
Is the Republican party entirely full of Norquist style ideologues and PR flacks? Does anyone have a serious and ingenuous defense of these proposals?
Posted by: Jack at January 6, 2005 10:09 AM
I think all of this wage-indexing vs. inflation-indexing calls for a creative Google-Bomb:
(Phrase courtesy of Baker and Weisbrot's Social Security: The Phony Crisi
Posted by: Melissa at January 6, 2005 10:17 AM
To me, the memo looks bogus; meant to deceive. This crew does not leak the tightly held info,
e.g., the Cheney energy group.
Posted by: SEC Overreach at January 6, 2005 10:21 AM
Am I reading this right? "...one in which more people will own their health care plans" sounds like socialism. Does that mean I will own Health Net?
Posted by: Tom Hunt at January 6, 2005 11:00 AM
Love the typo!
"Our goal is to provide a path to grater opportunity"
Line up everybody, we're going to grate you!
Posted by: S0C7 at January 6, 2005 11:31 AM
To 'a different Chris'
I don't know much about SS (I'm still in college), but after reading about the proposals in the media I am worried that Bush is going to sell it off.
What's the laugh out loud exception?
Posted by: Matt at January 6, 2005 11:32 AM
The way I read the comment about indexing to price inflation instead of wage inflation is that we can easily "grow our way out" of our obligation to retirees provided we only promise them yesterday's standard of living instead of anything approaching the standard of living at the time they retire. Gee, if we apply this approach to medical benefits (only allow procedures that existed while retirees were still working) I guess we can tackle Medicare too.
Posted by: Paul Callahan at January 6, 2005 11:42 AM
"No one on this planet can tell you why a 25-year-old person today is entitled to a 40 percent increase in Social Security benefits (in real terms) compared to what a person retiring today receives."
Au contraire, you pompous ass -- there is a very good reason why a 25-year old person should get a bigger pension: She earned it by creating a more productive and prosperous nation! The mind boggles at the depths this administration will go to belittle the contributions of working people toward making this nation strong. It's as if capital and entrepreneurship did all the heavy lifting!! Fine! If they do all the heavy lifting, then they should pay all the freight! Let's raise the capital gains tax back to 35% or 40% and have it fund Social Security as a dedicated revenue source.
Posted by: fred c. dobbs at January 6, 2005 01:04 PM
What age retirement comes is a fair question.
If government didn't intervene so severly in markets a person might say that they should have put away for the time they were older, but if governement policies might fund your competitors in ways private parties would never have actively risked their own hard earned stored efforts on government would have less reponsibilty. If the government is printing money quicker than people and taxing money earned on the allready taxed money and taxing "earnings" necessary to stay neutral in buying power, it seems government needs to provide a bigger saftey net.
The one thing people can prudently do is buy enough stuff to last them into retirment. Pay for their home, and tools, perhaps reroof near the end of their working days...clothing lasts a long time and food for substanance costs verry little for all except the extremley poor.
What people will need in their old age is services. They'll need their car repaired, their house painted. They'll need their hair cut, and healt care. There might be year or two toward the end where they'd need live in help.
They would like to have saved enough to pay for service driven items like dining out and entertainment (or perhaps caretaking of a golf course).
If you don't live for stuff (which you buy at the walmart) but hope to maintain a standard of living similar to your wage earning years (assuming you were only living off half of you income in wage earning years and giving the rest to governmetn and savings) you absolutely need wage protection.
The most valid measure of the purchasing power of money is the purchasing power of similarly skilled labor. That you can by more food is a factor of efficiency and progress of society. If you dollar is only staying equal to goods and falling behind services theres been a lot more monetary debasing than is claimed.
Posted by: Tom Norian at January 6, 2005 01:25 PM
"Line up everybody, we're going to grate you!"
So it looks like its going to be a SOYLENT GREEN world after all.
And what EXCELLENT timing: 2022
Liberal Hollywood got, of course, a bunch of naysaying, bad-mouthing commies to star in this thing, didn't they?
Posted by: ritchie at January 6, 2005 01:27 PM
Soylent Green: http://tinyurl.com/5wc5r
Posted by: ritchie at January 6, 2005 01:31 PM
I'm an entrepeneur. I like the notion of people building for their own futures, owning property, controlling their own destinies.
But if we have government policies which act against people building their own security *, in the name of public policy, it seems only balanced that public policy should replicate the security it takes away.
It seems to me that some of this social security bill is really a closet sort of move against the very notion of "security". Some elements of the cultural wars seem to me more bent on restraining freedoms (to live misguided hedonsist ways ;-) ) more than they have charitable or self-protection motives...almost want to restrict peoples actions out of spite. Similarly, the good words of "ownership society" aknowledged, I can't help but read another motive between the lines. Its almost as if there is a purposefull attempt to disempower citizens from being able to walk their own trail, or act with the knowledge of a safe landing.
I can't help but think that some of the folks pushing the bill themselves have seen the difficulty of maintaining their upper middle (and higher) service needs based on income fromt their investments and hope to force people, especially low wage people, to reamin in the job market indefinitely providing serves to them.
It could be we need to raise the retirment age to keep the balance working (or have an interim period where 65 to 70 year olds income would be free of all taxes and ssi deductions allowing extra income to put some things right before the start taking in benfits at the same time as posponing the cost.
But to force people to keep working because of innadquecy of income rather than delay of benefits seems planned mostly to make peopel feel, that they will never be secur.
(*by taxation not tied to consumption of resources or insuring those resource, by tort systems that suck extra money either through losses or insurance costs, and by governmenet finacial policies that dilute dolars or cause overinvestement that in manic ways over funds different fields from time to time potential wipeing out past investments people prudently built)
Posted by: Tom Norian at January 6, 2005 01:46 PM
>> Simply put, Social Security privatization would take away the safety from the safety net, and turn the idea of a rainy day fund into a sink or swim proposition. <<
I would agree with the authors of this piece. But it is stylistic tact to avoid combining three divergent metaphors in the same logic.
Posted by: Admiral Tirpitz at January 6, 2005 02:32 PM
Now that the Bushies have put the idea of Social Security "reform" on the table, I don't understand why there haven't been any Democratic counterproposals.
Now would be the time to point out that removing the contribution cap (currently ~$90,000) would save the system; or to point out that a PROGRESSIVE witholding tax would save the system (having high-wage-earners contribute more than minimum-wage-earners); or to propose that non-wage income should be subject to SS withholding; or to point out that the Trust Fund could make investments more efficiently than a hundred million wage-earners could...
well you get the idea, and I'm sure that the economists here could suggest a dozen other reforms.
Now that the idea of tinkering with SS is on the table, why aren't we hearing any ideas from the Dems, changes that might HELP workers? (On preview: what happened to my paragraph breaks??)
Posted by: 'As You Know' Bob at January 6, 2005 03:02 PM
The memo avoids mentioning that they've got to reduce benefits in order to force people into private accounts. How many workers are going to stick with the "ownership society" after the next bubble-burst?
I think a major problem for the Democrats is that, after thirty-or-so years of free-market proselytizing by the Right, everybody in the street knows how capitalism works, but they have forgotten the ways in which it doesn't work. This has allowed the greedheads to take over.
If we remain a democracy, of course, in some future time when people with functioning hearts and minds are back in political power, we can overturn all this conservative crap, or invent another system to ameliorate the ravages.
But it is absolutely remarkable how all the people who are opposed to the present greedy jackassses who are running the show, and consider themselves to be thinking people who follow all the issues, are UNABLE to formulate a short, accurate, convincing account of the certain things which capitalism can never achieve--it comes out either as Marxism (and so is instantly discredited by regular people), or as college econo-speak about market failure, externalities, distribution, etc. (and so the regular person's eyes just glaze over.)
It is a sort of very effective rhetorical double-bind, built upon decades of think-tankery.
Meanwhile I guess we are here being monitored, by the same people who have "released" this "memo," for the sorts of language and phraseology which might be used in opposition in this battle over Social Security, in order to formulate rhetorical strategies to short-circuit possible counter-arguments, before they are even well-publicized.
Posted by: Lee A. Arnold at January 6, 2005 05:11 PM
I agree with Lee about the monitoring part, esp. on this blog.
Let us keep our best framing phrases in the e-mails to our electeds.
Posted by: Dano at January 6, 2005 05:50 PM
Q Scott, can I follow up? The memo, the email memo that Jim just referenced is from Peter Wehner -- he's the White House Director of Strategic Initiatives -- and it's making its way around the Hill. First, this is an authentic memo from one of the President's top aids, is it not?
MR. McCLELLAN: Yes.
Posted by: Michael Robinson at January 6, 2005 06:14 PM
In the spirit of "framing", we should start referring to the President's "ownership of society" initiatives.
Posted by: djs at January 6, 2005 07:09 PM
Well, I didn't mean to clam up. Lots more good people read this than bad. And good ideas may come to us, from our stochastic choices and transcendent rearrangements, practiced upon varietal inputs.
Perhaps we should talk in code, and try to mislead the bad people by using words they do not understand, like "honesty" and "intelligence." Make them scurry to the dictionurry.
Posted by: Lee A. Arnold at January 6, 2005 10:36 PM
From Max's other home: the Economic Policy Institute
Examine the table. Extrapolate the numbers. How do you explain a depletion date that has been shoved back thirteen years over an eight year period when the "crisis" has been left unaddressed?
Answer, it is only a crisis if the economy performs down to the numbers presented in the annual report of the Social Security Trustees. It didn't in the eight years since the 1996 Report, it didn't in the nine months since the 2004 Report. And it won't next year. Growth rates would have to crash by more than 50% to make that happen, and exactly nobody is predicting that.
A depletion date that recedes into the future an average of 1.3 years per year is a date that will never come.
Or you can examine this figure. Outcome ( I ) requires no growth rate for any future year higher than 2.2%, and figures in a 2.8% rate for 2004 besides (reality came in at 4.0%)
It just isn't broken. And the sooner people come to grips with that and stop talking about raising caps or taxing non-payroll income the better. Workers have funded every dollar spent to date. We have a wildly successful program paid for out of our own pockets which is totally funded forever. We neither need nor want those who earn their income on returns from capital to put their hands on this program. It's our money and we don't need a handout, we don't need an assist from Wall Street. We do need a payment of interest on the money Capital borrowed, but that is it.
Workers have been taking a beating on Social Security since its inception. Time to change the narrative. Workers paid for everything, trespassers can just get the hell off the lawn.
Posted by: Bruce Webb at January 7, 2005 07:00 AM
Social Security is much more like a premium annuity than a 'nest egg'.
Democrats need to focus on how private accounts look for the typical 85 year old, not the typical retiree. People want to live a long time. They don't want to have to die at 71 to get a good deal.
"Why would trade Social Security that can never run out, for a so called nest egg that won't last 15 years past retirement."
Posted by: wetzel at January 7, 2005 07:36 AM
[another one *sigh* ...]
Posted by: at January 7, 2005 05:22 PM