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Bush's Social Security Plan
February 08th 01:54:15 PM
From Newsweek
If you read enough numbers, you never know what you'll find. Take President Bush and private Social Security accounts.
Last year, even though Bush talked endlessly about the supposed joys of private accounts, he never proposed a specific plan to Congress and never put privatization costs in the budget. But this year, with no fanfare whatsoever, Bush stuck a big Social Security privatization plan
in the federal budget proposal, which he sent to Congress on Monday.
His plan would let people set up private accounts starting in 2010 and would divert more than $700 billion of Social Security tax revenues to pay for them over the first seven years.
If you read enough numbers, you never know what you'll
find. Take President Bush and private Social Security accounts.
Last year, even though Bush talked endlessly about the supposed joys of
private accounts, he never proposed a specific plan to Congress and
never put privatization costs in the budget. But this year, with no
fanfare whatsoever, Bush stuck a big Social Security privatization plan
in the federal budget proposal, which he sent to Congress on Monday.
His plan would let people set up private accounts starting in 2010 and
would divert more than $700 billion of Social Security tax revenues to
pay for them over the first seven years.
If this comes as a surprise to you, have no fear. You're not alone. Bush
didn't pitch private Social Security accounts in his State of the Union
Message last week.
First, he drew a mocking standing ovation from Democrats by saying that
"Congress did not act last year on my proposal to save Social Security,"
even though, as I said, he'd never submitted specific legislation.
Then he seemed to be kicking the Social Security problem a few years
down the road in typical Washington fashion when he asked Congress "to
join me in creating a commission to examine the full impact of baby-boom
retirements on Social Security, Medicare and Medicaid," adding that the
commission would be bipartisan "and offer bipartisan solutions."
But anyone who thought that Bush would wait for bipartisanship to deal
with Social Security was wrong. Instead, he stuck his own privatization
proposals into his proposed budget.
"The Democrats were laughing all the way to the funeral of Social
Security modernization," White House spokesman Trent Duffy told me in an
interview Tuesday, but "the president still cares deeply about this."
Duffy asserted that Bush would have been remiss not to include in the
budget the cost of something that he feels so strongly about, and he
seemed surprised at my surprise that Social Security privatization had
been written into the budget without any advance fanfare.
Duffy said privatization costs were included in the midyear budget update that the Office of Management and Budget released last July 30,
so it was logical for them to be in the 2007 budget proposals. But I
sure didn't see this coming-and I wonder how many people outside of the
White House did.
Nevertheless, it's here. Unlike Bush's generalized privatization talk of
last year, we're now talking detailed numbers. On page 321 of the budget
proposal, you see the privatization costs: $24.182 billion in fiscal
2010, $57.429 billion in fiscal 2011 and another $630.533 billion for
the five years after that, for a seven-year total of $712.144 billion.
In the first year of private accounts, people would be allowed to divert
up to 4 percent of their wages covered by Social Security into what Bush
called "voluntary private accounts." The maximum contribution to such
accounts would start at $1,100 annually and rise by $100 a year through
2016.
It's not clear how big a reduction in the basic benefit Social Security
recipients would have to take in return for being able to set up these
accounts, or precisely how the accounts would work.
Bush also wants to change the way Social Security benefits are
calculated for most people by adopting so-called progressive indexing.
Lower-income people would continue to have their Social Security
benefits tied to wages, but the benefits paid to higher-paid people
would be tied to inflation.
Wages have typically risen 1.1 percent a year more than inflation, so
over time, that disparity would give lower-paid and higher-paid people
essentially the same benefit. However, higher-paid workers would be
paying substantially more into the system than lower-paid people would.
This means that although progressive indexing is an attractive idea from
a social-justice point of view, it would reduce Social Security's
political support by making it seem more like welfare than an earned
benefit.
Bush is right, of course, when he says in his budget proposal that
Social Security in its current form is unsustainable. But there are
plenty of ways to fix it besides offering private accounts as a
substitute for part of the basic benefit.
Bush's 2001 Social Security commission had members of both parties, but
they had to agree in advance to support private accounts. Their report,
which had some interesting ideas, went essentially nowhere.
What remains to be seen is whether this time around Bush follows through
on forming a bipartisan commission and whether he can get credible
Democrats to join it. Dropping numbers onto your opponents is a great
way to stick your finger in their eye. But will it get the Social
Security job done? That, my friends, is a whole other story.
Posted by Chris Schrimpf
Comments
This is a ballsy idea. I love it!!!
Posted by Cahnman on February 08th 02:33:22 PM
We finally have a real plan to secure SS for future generations. It is time for college students to take some action and advocate SS reform. Sure, there are plenty of ways to fix Social Security besides offering private accounts, like reducing taxpayer benefits, rasing taxes, or eliminating taxpayers from Social Security that have well-paid jobs. Private Accounts Baby!
Posted by Jonathan Moore on February 08th 03:39:24 PM
Links and Minifeatures 02 09 Thursday
Carnival of the Vanities is up.
**********
Posted by Searchlight Crusade on February 09th 05:04:17 PM
I completely disagree with the move to privatize Medicare and Medicaid.
There are many poor people in this country and to move in this direction will squeeze them out and there are many children who will suffer because of this. There are many seniors in this country that will suffer and they are now with the current changes being made. This move to create savings accounts will benefit only the wealthy in this country, you need to consider the people that these programs were created to serve and think of other alternatives to save SSA and Title 18 & 19, along with education in public schools, its great for the rich, but the poor are being left behind. Have a heart and reach into the depths of your soul to and find the compassion for your fellow man within. There are many people that are going to continue to fight this privatization nonsense. Use your brains and help to come up with another solution to benefit all.
Posted by Mary Hasvold on February 19th 09:33:11 AM
Mary,
Thanks for your comments. I just have a couple of responses:
First, we don't have anything to do with Medicare and Medicaid, and we don't have a position on any plan out there to deal with these.
Second, you say that people will suffer because of personal accounts, but you fail to give any specific examples. I happen to believe that personal accounts are good for everyone, not just the wealthy. For example, personal accounts would give poor people ownership over their own retirement for the first time. It would also allow them to pass on their benefits to their children if they were to die prematurely.
This builds inter-generational wealth for our poorest citizens and gives future generations a head start.
I understand where you're coming from, but please don't thing we're a bunch of people out to help the rich or that we're motivated by some selfish reason.
The truth is, most of us are making a lot less at S4 than we could elsewhere. If we were really selfish, we'd be out there making much more money and investing it ourselves. I'm sure we'd come out on top.
We care about our fellow man, and that's why we're working so hard to save Social Security in a sustainable and beneficial way for everyone.
Posted by jeremy on February 19th 12:21:05 PM
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