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June 14, 2005

How Does 69 Sound?

By Karl-Thomas Musselman

Because Social Security is such a hot topic these day, not, Republicans offer up their latest idea to save the not-broken system.

Raise the retirement age to 69.

Though with proposals like this, I've always wondered if they hurt the 62-67 year old age cohort who would otherwise be looking forward to retiring. Would they be a blip in opposing the policy based simply out of their own self interest? Probably. But I doubt that this is going anywhere now that SS has been backburnered for a while.

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March 30, 2005

Privatization Hurts Young People

By Byron LaMasters

The College Democrats of America have a petition on Social Security that I hope that you all join me in signing.

Posted at 03:28 PM to Social Security | Permalink | Comments (1) | TrackBack

March 09, 2005

Playing Hardball

By Byron LaMasters

The right-wing front group USA Next, which is supporting President Bush's Social Security privatization plan has been sued for $25 Million by the gay couple used in their advertisements. The couple's integrity and patriotism was questioned by the ad which had an image of a U.S. Soldier with an "X" and a picture of the couple with a "check". The ad implied that supporting the rights of gays and lesbians was incompatible with supporting our military. America Blog has all of the details.

More coverage here.

Posted at 08:14 PM to Social Security | Permalink | Comments (1) | TrackBack

February 27, 2005

What Republicans Want, but are Afraid to Say

By Byron LaMasters

Dick Armey isn't afraid to point out the real agenda though (emphasis mine):

Former U.S. House Majority Leader Dick Armey said Friday that Social Security should be phased out rather than saved.

"I think if you leave people free to choose, it will be phased out by competition," the former Republican congressman from Lewisville told reporters before sharing a President's Day Dinner with the Smith County Republican Club. [...]

"We now have a generation of people that are thoroughly committed to investing their hopes and futures in private IRAs (Individual Retirement Accounts)," Armey said. "People will always do better for themselves when they are free to choose from among competing options than if they are compelled. Most thoughtful people could do better." [...]

He added there will never be a class of destitute Americans who neglected to do their own investing.


Is Dick Armey in La-la-land? Oh, wait, is the Pope Catholic? Besides the obvious idiocy of Armey's remarks, and his utter inability to comprehend poverty and understand the working class in America, Armey's remarks are very telling. The Republican agenda on Social Security is not one of minor tweaking, or of harmless "personal accounts". They want to dismantle the entire program. Not all at once - it'll be a piecemeal process, but have no doubt, that is their aim. Just ask the Pennsylvania young Republicans... "Hey Hey, Ho Ho, Social Security has got to go"!

Meanwhile, Tom DeLay notes that only one-third of GOP congressmen tried to sell the GOP Social Security plan during the congressional recess - typically with little success. The other two-thirds? They didn't even bother trying:


Last week's congressional recess was intended to be a big chance for GOP lawmakers to push the president's plan in their home districts. Instead, it found Brady and his compatriots here and across the country often encountering chilly skepticism to President Bush's ideas on remodeling the strained benefit program for elders. They found that the opposition was often surprisingly organized and hoped-for support did not always materialize.

The tension could be daunting for some lawmakers. House Majority Leader Tom DeLay, R-Sugar Land, said only about a third of House Republicans nationwide conducted meetings on Social Security.

"I am very disappointed about that," said DeLay, who held two town hall meetings on the issue last week.

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February 22, 2005

The Real AARP - DFA Responds

By Karl-Thomas Musselman

There has been a bit of discussion across the blogs about the upcoming attack on AARP by the old Swifties for Truth crew with their otherwise ridiculous ad. On of the main concerns is that that Democratic Party won't tackle it head on (like Kerry let the Swifties go). Well, I'm glad to see that Democracy for America has raised the issue to their membership (meaning that the DNC isn't far behind I would imagine, with Chairman Dean being there now :).

Your petition will be delivered to every TV station that aired the swift boat ads during the 2004 campaign and any station that airs this new garbage in 2005. Stations were duped once by this group making false claims -- we can't let it happen again. If TV stations give USA Next a platform, they will be abetting the same kind of disgraceful slander as the swift boat ads.

So if you want, sign the DFA petition.

Posted at 11:31 PM to Social Security | Permalink | Comments (1) | TrackBack

January 31, 2005

Now you know it's a bad idea

By Nathan Nance

In case you were sitting on the fence about whether privatization was a good thing or not, the news is that Tom DeLay is on board and his speech was the turning point in this weekend's meeting of Congressional Republicans.

According to The Daily DeLay, he actually said that the GOP has a "moral obligation" to promote privatization. I know, I can taste the vomit, too.

Democrats, of course, have a moral obligation to protect the American people from sleazeballs like Tom DeLay and their money-grubbing schemes.

Also from this weekend's meeting, a 104-page playbook on how to sell privatization to the American people.

The congressional Republicans' confidential plan was developed with the advice of pollsters, marketing experts and communication consultants, and was provided to The Washington Post by a Republican official. The blueprint urges lawmakers to promote the "personalization" of Social Security, suggesting ownership and control, rather than "privatization," which "connotes the total corporate takeover of Social Security." Democratic strategists said they intend to continue fighting the Republican plan by branding it privatization, and assert that depiction is already set in people's minds.

Interesting stuff, to say the least. You can go here to download a PDF copy of said playbook.

All this in anticipation of the campaign that starts as soon as the State of the Union is given to convince people that this really bad economic policy is actually a good one. We had better be ready.

Posted at 10:05 PM to Social Security | Permalink | Comments (0) | TrackBack

January 23, 2005

Social Security is $70.40 short

By Jim Dallas

While working as a substitute teacher, my employer (Galveston I.S.D.) diverted money that would have gone to Social Security to an alternative program.

This is, of course, legal and encouraged by the federal government; State and local employees can opt-in, but they're not automatically part of Social Security like most workers. But it isn't at all helping the long-term finances of Social Security.

Changing this is yet another way to improve OASDI finances without cutting benefits, as the President proposes.

P.S. Actually, after checking this, I see my 457 account has accrued $1.49 in earnings since June, when I hung up my hat. Obviously, I am on my way to being a zillionaire; Boca Raton, here I come!

Posted at 04:48 PM to Social Security | Permalink | Comments (1) | TrackBack

Social Security and Young People

By Byron LaMasters

For once, I feel average. Ordinary. On the issue of Social Security, my thoughts probably mimic that of the typical 22 year old in America. Social what? I take pride in the fact that Iím more politically active, more involved, and research the important issues of the day far more than your average 20-something American. However, on the recent Social Security discussion, Iíve only glimpsed at the debate, even on this site.

Why? Because on a personal level, itís not an issue Iíve really thought about. My thoughts are surely influenced by the fact that Iím still enjoying my final semester as an undergraduate, and Iíve yet to join the workforce in a meaningful way. Iím much more concerned about finding a decent job when I graduate Ė the last thing on my mind is retirement. My guess is that the average 20-something year old cares much more about how theyíll pay for school and debts. If youíre lucky enough to be able to save any considerable amount of money in your twenties, that money is much more likely to go towards saving for a new car or buying a house / condo than to savings for retirement.

It boggles my mind that President Bush and Republicans think that young people will rally to the idea of private accounts for Social Security. The people that such accounts would potentially benefit the most are probably the least likely to vote on Social Security. The past three election cycles Iíve spoken to hundreds of young voters face-to-face about important issues of the day, and how Democrats best represent the values of young people. This past election I emphasized three issues almost universally when speaking to young people: Jobs, Iraq and higher education. Those are the issues young people care about Ė Social Security never comes up.

While every poll should be taken with a grain of salt, I finding it very telling that the 18-30 age bracket has the least confidence (by a 27 point margin) of any age group in President Bush on Social Security. At first glance this seems counterintuitive. Young people have the most potentially gain from a partial privatization of Social Security, so why do we oppose the idea by a larger margin than anyone else. My hypothesis is simply that young people generally donít care about Social Security too much, and we certainly donít vote on the issue. Thus, I think that when most young people look at the issue, they trust their initial partisan instincts. The 18-30 age group was the group most likely to vote against this president, so it makes sense that they would also be most likely to distrust this president on an issue that most would probably otherwise feel indifferent towards.

On the other hand, Iím increasingly seeing the path to Democratic victory in 2006 and beyond as claiming the mantle of reform on big issues: Redistricting, campaign finance, fiscal responsibility, recorded votes, etc. Social Security will surely need reform at some point, but right now itís not in crisis, and the problem can be solved by some minor changes like raising the cap for wages taxed to support Social Security.

Of course, Republicans have done their darndest to claim the cause of reform. The first Bush term saw ďtax reformĒ that bankrupted our budget, and ďeducation reformĒ that largely resulted in unfunded mandates. Now, the Bush administration is attempting to claim the side of reform in what is likely to be the most notable and debated domestic issue of the 109th Congress. Having said that, Democrats shouldnít fall for the trap. There is no Social Security crisis. Social Security is arguably the best domestic program ever enacted by congress.

Itís a promise that reminds me of this Hubert Humphrey quote: ďThe moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy, and the handicappedĒ. Social Security has done more to pass that moral test than any other legislation in American history. I believe that any attempt of privatization is a slippery slope that will inevitably lead to failing that test. For that reason, I added a link to the site There is no crisis on the left-sidebar. Itís not an issue that I intend to talk about too much, but I did want to throw in my two cents for what itís worth.

Posted at 03:21 PM to Social Security | Permalink | Comments (5) | TrackBack

January 19, 2005

Google-Bombing for the Blue Team

By Byron LaMasters

Social Security

Update: Well via BOP News we can elaborate further...


Social Security? Wow, that's weird! I was just thinking about Social Security, and how ignorant trolls like to pretend that the forecasts for Social Security in the 90's can somehow be whored out by those who opposed Social Security all along as an excuse to use Social Security as a giant, socialist subsidy for American equities markets, thus ending Social Security as we know it.

Poor Social Security. So many dishonest enemies, so few friends. Who will save Social Security from those who would destroy Social Security to save Social Security?


Just doing my part to help the blue team...

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Netroots activism in gear

By Nathan Nance

Guest post by Nate Nance

BlogPAC has joined the cause to fight against the Social Security "reform" push. There is no crisis is a Web site set up to inform people about fundamental untruths in what the administration is claiming in its rhetoric on Social Security. They go so far as to even call it "fraud."

From what I've seen, it's a good site and its got lots of blogger support from guys at dKos and MyDD. And I like that it is netroots initiative that isn't reliant on AARP or other groups to get our message out for us. Lord knows relying on other people, like the chairman of the DCCC to get a message out against privatization is a losing proposition.

So check it out and support it if you can.

This is a guest post from Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com.

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January 18, 2005

Knocking down the straw man

By Nathan Nance

Guest post from Nate Nance

One of the central arguments for privatization of Social Security is that we will begin drawing more money out of the system than we put in in 2018. It's mostly to do with the baby boomer generation retiring and there are more of them than there are of us. To combat this problem, the bipartisan commission led by Alan Greenspan raised the payroll tax more than was needed to cover expenses so that we would run surpluses in the system and buy government bonds to stash away in the Trust Fund for the rainy days in 2018 and beyond.

But some people claim that because the government bought the government bonds, it means that the Trust Fund is just filled with IOUs from one part of the federal government to another, making it meaningless. So the system will be in deficit starting in 2018. There's no money. We need privatization now!

First of all, privatization doesn't really address the problem of not having enough money in the system. In fact, it means even more money will be out of the system, so how this is a "fix" I've never understood. It's the benefit cuts that they plan to make to the system are what will "solve" the iceberg yada yada. The private accounts and fancy rhetoric about an "ownership society" are really just fancy window dressing for the really big cuts in benefits.

But it doesn't really matter because they are wrong about the trust fund.

The reason that I know this is because of the Constitution. That's right. Section 4 of the 14th Amendment says "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Roughly meaning that debts incurred by the federal government (i.e. to the payment of the bond) shall not be questioned because we are obliged to pay it (in other words we have to pay our debts). Those bonds are promisories from the federal government to be paid back with interest at a later time. The government has to pay it's debts, so the bonds will be paid, even if we have to pull money out of the general fund and put it in the trust fund. The word promisory should be familiar as well, since our currency is a promisory note, for the government to pay you back at a later time.

And the bonds must be good (probably because there is almost no risk of them not being paid, short of a revolution), so good, in fact, that President Bush is heavily invested in them right now.

Once we realize that the trust fund will indeed be paid and actually exists, the 2018 date becomes essentially meaningless in the Social Security discussion. Now, how we get the money into the general fund to pay off the bonds is a seperate issue, and one I'll be happy to discuss with anyone who emails me.

A friend of mine, who supports privatization, had a small argument just yesterday over the next point. She left before I got to give her the coup de grace, but her point was that private accounts were a higher return on investment than the government run pension plan. I pointed out the CBO's projections that traditional Social Security will pay more than private accounts coupled with price-indexing, even assuming a pretty low 1.9% average growth over the next 75 years.

Now, this person is a smart woman I've known for many years. She even has a business degree. But I was shocked as she actually asked "but what if we don't have that high growth?" That's when she left and by the time I was over my shock at being asked such a ridiculous question, I couldn't answer her. If we average less than 2% growth over the next 75 years, we have much bigger problems than Social Security. If there is not enough money going into Social Security, and SS comes from taxes on wages that means... no wages. Good job class. That kind of economic growth would be very bad, and if you remember the last time we had similar growth was the recession in 2001, and the stock market didn't exactly have a high return on investment then did it?

These are just a few of the things that we're going to have to understand as the debate over Social security heats up. I'm trying to do my part to help us all understand what this debate is actually over and what it may mean.

This is a guest post from Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com.

UPDATE: It took me three hours and several dozen phone calls about high school basketball to write this, so if anything is amiss or you don't understand what I meant, feel free to leave a comment or email me and I will try to clarify it. Thanks.

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January 15, 2005

OMG, look. it's Halley's Comet!

By Jim Dallas

While we were getting all hot and bothered about bloggers, more of your tax dollars were diverted to political propaganda.

From the New York Times Via Atrios (who, lo, says the same thing, but it's worth repeating).

Over the objections of many of its own employees, the Social Security Administration is gearing up for a major effort to publicize the financial problems of Social Security and to convince the public that private accounts are needed as part of any solution. The agency's plans are set forth in internal documents, including a "tactical plan" for communications and marketing of the idea that Social Security faces dire financial problems requiring immediate action.

Social Security officials say the agency is carrying out its mission to educate the public, including more than 47 million beneficiaries, and to support President Bush's agenda.

"The system is broken, and promises are being made that Social Security cannot keep," Mr. Bush said in his Saturday radio address. He is expected to address the issue in his Inaugural Address. [Story, Page A20]

But agency employees have complained to Social Security officials that they are being conscripted into a political battle over the future of the program. They question the accuracy of recent statements by the agency, and they say that money from the Social Security trust fund should not be used for such advocacy.

"Trust fund dollars should not be used to promote a political agenda," said Dana C. Duggins, a vice president of the Social Security Council of the American Federation of Government Employees, which represents more than 50,000 of the agency's 64,000 workers and has opposed private accounts.

Deborah C. Fredericksen of Minneapolis, who has worked for the Social Security Administration for 31 years, said, "Many employees believe that the president and this agency are using scare tactics to promote private accounts."

I mean, really, it's pretty useless to debate ethics these days. What we're dealing with are people who will get you debating whether pornography is wrong while they're raping you.

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January 11, 2005

An honest debate

By Nathan Nance

Guest post by Nate Nance

I'm all for an honst debate on the merits of privatization. Andrew and I don't agree one bit, but we're able to have a serious discussion because we're both reasonable and we'll use facts to back up our arguments.

But I'm getting really sick of the crap the Republicans are trying to pull on this. As I was getting ready for work today, I managed to catch Sen. John Sununu on Lou Dobbs talking about the benefits of privatization. Sununu made several assertions, everyone one of them demonstrably false. Things like "The system will go bankrupt in 2042" which it won't. The trust fund will go bankrupt in 2042 (or 2053 if we have better than 2% economic growth over the next 40 years). But since the trust fund was a temporary fix to the fiscal hurdle of the baby boomers retirement after increasing benefits for retirees throughout the 60s and 70s. We all planned on the trust fund ending, which is why we are going to quit paying into it in 2018. Sununu knows this and is trying to mislead people with lies, or if he doesn't and he's just reading talking points, he doesn't deserve to hold an office higher than dog catcher.

I'm pissed about this kind of thing because they keep getting away with it and people like Lou Dobbs don't correct the record on their own damned shows. Dobbs has a responsibility to his audience to let them know the truth about the subject they are debating. If he isn't going to do his job, then I don't see why he has a job. It's unethical to allow people to lie on your show like that. Blatant lies that Dobbs, who I assume knows as much about how the Social Security sytem works as a 22-year-old sports clerk, should have been all over.

Sununu also talked about the lowered interest rates that come from a good ecoomy where people are saving more and investing in the market. He doesn't bother to tell us that has nothing to do with Social Security. We have a three-legged stool of retirement to stand on in this country. One leg is Social Security, which at the moment, is the sturdiest because the other two, private pensions and private investment accounts, are too risky because they rely on the market. That hasn't turned out too well so they want to do it to Social Security. He also doesn't mention that borrowing $2 trillion dollars is going to significantly raise interest rates.

And finally, Sununu peddles the $12 trillion shortfall in the system number. That number was reached because the Trustees were asked to calculate what the shortfall is to infinity. The final tally at the end of infinity (I know, end of infinity?) is $10.2 trillion dollars. I have a lot of problems with this, the least of which is that Dobbs didn't call him on rounding up $1.8 trillion, which is not an insignificant sum. It is literŚlly impossible to calculate the economic situation of the US infinity from now, making the number totally meaningless. We can make reasonable assumptions about the state of our economy 75 years from now, which the actuaries of Social Security and the Congressional Budget Office did. They found that the number is actually $2 trillion to $3.7 trillion, which over 75 years is pretty good. If we raise the cap on payroll taxes to $100,000 and don't make the Bush tax cuts permanent, we've literally covered our shortfall in the system. Problem solved.

Well not really. When the trust fund goes bankrupt there will be an abrupt drop in benefits to about 80% of what they would be. That's still going to be more than what people get in full benefits now, but we can lessen this shock by doing a few things. But privatization does nothing to address any real shortfalls in the system and it doesn't address the lack of savings in the other two legs of the retirement stool. All privatization does is destroy the solvency of Social Security and put dangerous pressure on our economy. It's time to have an honest debate, but we can't do that if the Republicans are going to keep lying.

This is a guest post from Nathan Nance. He is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com.

Posted at 06:54 PM to Social Security | Permalink | Comments (4) | TrackBack

January 05, 2005

Everything in a nutshell

By Nathan Nance

Guest post by Nate Nance

Over at Political Animal Kevin Drum has some nice visual aids that explain why the possible Bush plan for Social Security "reform" doesn't actually improve the system.

Kevin uses the Congressional Budget Office's own projections and comparisons to Plan 2, which is what is widely believed to be the foundation of Bush's partial-privatization scheme. Assuming the CBO's conservative projections of economic growth hold true. Assuming the SS trust fund goes bankrupt in 2053 and benfits are suddenly cut by 20%, you're still going to be better off with traditional Social Security than with Plan 2's draconian cuts due to price indexing and private accounts.

I think the economy is going to grow more than the CBO's projection, I think the revenue base will expand and I think we will eventually start paying down the deficit with surpluses again making traditional Social Security all but immortal. Give it a sword and push it off a cliff, it will still be around.

AARP held a press conference today to discuss their legislative agenda for the year and they put Social Security at the top of the list. Their Web site has some suggestions as to what should be done to "strengthen" Social Security and not dismantle it. They are advocating minor changes phased in over a long period of time to balance out the equation, which fiscally makes sense to me.

Also, hat tip to Greg for pointing out that some of us are happy that the DLC and Third Way are opposed to privatization.

Guest post from Nathan Nance. He can be reached at nate_nance@yahoo.com

Posted at 07:38 PM to Social Security | Permalink | Comments (2) | TrackBack

"Cut"

By Jim Dallas

I've always found Social Security discussions to be a fun parlor game. So please forgive me for continuing on with my half-baked musing on the topic.

The real battle-line right now seems to be forming over the re-indexing of benefits, from wage indexing to price indexing. Because we're told (although I'm somewhat suspicious given recent economic conditions, and because I am an awful pessimist) that wages will grow faster than prices, changing from one to the other will necessarily result in a reduction, over time, of promised benefits.

We're apparently calling this a "cut", although that's sort of like George Bush calling not-making-his-tax-cuts-permanent a "tax increase." At any rate, I'm satisfied in knowing that fixed benefits for someone of my age will probably be less under any Bush plan than under the status quo (with or without an influx of cash). For what it's worth, though, current seniors probably won't see much of a difference if the only reduction in benefits comes from a change in indexing, since the difference takes years - decades - to accrue.

Ironically, for many moons we have heard that Social Security privatization was about "saving the children," but the children will end up bearing most of the cost of "reform." Although "reduced" benefits may very well end up being about the same as today's, I would prefer to think that the world is getting better.

Anyway - I think there's an important nuance that's getting missed though in the current debate over indexing, and it is this -- that not once in the history of Social Security (or any other program that I can think of) has the United States government made a reform that stuck for 60 or 70 years.

From the 1940s until the late 1970s, Congress made an almost-annual ritual out of increasing the genrosity of Social Security benefits, and in fact this may very well of helped keep Democrats afloat for so many years. These expansions were not entirely done in a fiscally responsible manner, and the result was the last Social Security crisis, which was actually a crisis, in 1983.

For twenty years Congress has been amazingly steadfast in not tinkering with Social Security (except around the margins); but of course as Groucho Marx noted, "politics is the art of looking for trouble, finding it, misdiagnosing it and then misapplying the wrong remedies." And that leads us to the current situation in Washington.

How long, exactly, does any reasonable person think that any new "grand consensus" (which, given the high likelihood of near-total Democratic opposition)would survive, before Congress raised benefits or did someother such pandering (for better or worse)?

Talking about the distant future is always going to be a parlor game, because you've got several intervening generations of politicians to muck everything up.

Incidentally, where's my bleepin' flying car? And why haven't robots enslaved humanity (yet)?

I'm sure 70 years from now, we'll all look back (god willing I'm still here) and laugh about how ridiculous the entire 2005 Social Security debate was. Provided of course that we haven't been enslaved by robots (yet).

Please keep this in mind.

At any rate, I think a more compelling argument for rejecting private accounts as a silver bullet is that it relies on incoherent, internally contradictory economic assumptions.

Why debate the detailed merits of a program that casual observation would suggest won't even get off the ground? This is like debating how far a penguin can fly.

Posted at 01:09 PM to Social Security | Permalink | Comments (1) | TrackBack

January 04, 2005

Cognitive dissonance watch

By Jim Dallas

Color me confused, but why is switching from wage-indexing to price-indexing of Social Security benefits such a big deal if wages haven't been going up?

OK, granted, the time frame on these two phenomena are slightly different, but let's just say that the picture isn't quite as bad as liberal economists paint if you assume the same bunch of morons will be running the economy for the next 70 years. Which of course is a fundamental political assumption in any policy proposed by the modern Republican Party (what, them worry?).

For what it's worth, I feel a little bad for even imagining that Model 2 could be worth it. MaxSpeak pretty much disects that one, although I'd like to see where he's getting his numbers from.

(I'd like to see a middle-ground position on benefit indexing, personally. Under a pay-as-you-go system with wage-indexing, each individual retiree effectively lays claim to a certain percentage of the productive output of America. The more retirees (relatively speaking), the bigger the chunk for the entire retiree cohort. With price indexing, the individual and cohort shares of GDP eventually get whittled down. What I'd like to see, perhaps, is a benefit-indexing scheme where each retiree cohort lays claim to a constant share of economic output, because, after all, that's what the revenue-base is tied to - a constant share of wages paid in FICA taxes. I'm not sure, of course, how to define such a system in convenient terms.)

Posted at 04:19 PM to Social Security | Permalink | Comments (3) | TrackBack

January 03, 2005

One more on Social Security tonight

By Nathan Nance

Guest post by Nate Nance

Since I was so pleased by the Times' editorial, I guess I was just asking for a letdown with the Washington Post's story on the proposed plans for price indexing and private accounts.

Essentially, the first step in the partial-privatization plan is to index the benefits payouts to prices instead of wages. Since wages rise faster than prices, it would save tons of money. It also means that anyone who retires halfway through this century will get about 54% of what is currently promised. Even the Trustees say that doing nothing means you get 70% in 2042.

The whole point of this change in indexing is, of course, to make you have no choice other than to invest in a private account. Fifty years from now, you can't possibly retire on 54% of what is promised by Social Security.

I know some of us will say that the return from the private accounts will make up for the shortfall. The article has this little nugget buried in it that sums up why this is all a very bad idea.

"If this was a case of just price indexing and doing nothing else, frankly, some of the [opponents'] charges are pretty valid," John said. "But if you give the personal accounts as well, you're giving people the opportunity to make up the difference. Not everyone will do that, but a substantial number will."

Even they are telling you that not everyone is going to come out ahead on this, and I'm sure plenty of economists will agree that the "substantial number will" claim is dubious at best. I'm all for investing in the market, that's what 401ks are for. That's what pensions are for. It's not what Social Security is for.

Some people may do really well and retire with plenty of money in their golden years with this plan. But a great number of people will not. They will retire with nothing to show for the years of hard work, let alone enough to pass on to grandchildren like the $40 million dollar ad campaign to come promises them. No, fundamentally changing a safety net program so that a few will retire with plenty while others have to pay for it is immoral and it is wrong. We can't let that happen.

This is a guest post from Nathan Nance. He can be reached at nate_nance@yahoo.com.

Posted at 09:55 PM to Social Security | Permalink | Comments (0) | TrackBack

The Times gets down and dirty on Social Security

By Nathan Nance

Guest post by Nate Nance

Today's NY Times had a great editorial on the Social Security "crisis" that Bush has been on about for a month. Basically they just reiterated everything I've said about fixing the small shortfall projected 75 years from now and that Bush is being disingenuous when he talks about "reforming" the system by using private accounts, which the editorial points out is a trememdously bad idea. Everything I've said before, only it's the OpEd page of the Grey Lady and not my blog with all its 5 readers.

It's hard to try and pick out a graf that sums up the whole argument, but this one will give you some idea of the tone the editorial takes:

As it often does with dissenting professional opinion, the administration is ignoring the actuaries. But that doesn't alter the facts or common sense. If the $10 trillion figure is essentially bogus, so is the claim that Social Security is in crisis. The assertion that doing nothing would be costlier than enacting a privatization plan also turns out to be wrong, by the estimates of Congress's own budget agency.

It stays snarky right on until the end, which made it a lot of fun to read. It is full of really usefull information, so read up. There will be a quiz tomorrow.

This is a guest post from Nathan Nance. He can be reached at nate_nance@yahoo.com.

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January 02, 2005

I can't believe I missed this

By Nathan Nance

Guest post by Nate Nance

I must have been revelling a little too much over the past week to have missed that AARP will begin lobbying against Bush's partial-privatization scheme for Social Security. They are planning a $5 million, two week advertizing blitz to coincide with the start of the new Congress.

"This is our signature issue," said Christine M. Donohoo, chief communications officer for AARP, which represents 36 million Americans 50 and older. "We will do what it takes."

The full-page advertisements, to appear next week in more than 50 newspapers around the country, say the accounts would cause "Social Insecurity."

"There are places in your retirement planning for risk," the advertisements say, "but Social Security isn't one of them."

One advertisement shows a couple in their 40's looking at the reader. "If we feel like gambling, we'll play the slots," the message says.

Another advertisement shows traders in the pit of a commodities exchange. "Winners and losers are stock market terms," it says. "Do you really want them to become retirement terms?"

This is great! I couldn't dream of a better lobbying group to fight privatization. In fact, I've said before that we should work with AARP to fight the Republicans to save Social Security. AARP has tons of moeny and activist members, not to mention that the biggest single voting bloc is still seniors. The GOP may have made a strategic mistake in moving ahead on partial-privatization. With AARP on the Democrats side, it could cost Republicans more than they have in the trust fund, so to speak, during the midterm elections.

This gives us a signature issue to oppose them on and we have major backing in large groups like AARP who are willing to spend money to educate seniors and young people that there is no crisis in Social Security. This could be what starts the turnaround for the Democratic party.

This is a guest post by Nathan Nance. He can be reached at nate_nance@yahoo.com.

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December 23, 2004

The Times on Social Security

By Nathan Nance

Guest post by Nate Nance

This is probably going to be my last post about Social Security this year, if I can help it. I don't want you guys thinking that I'm a one-note guy. There are plenty of other things I would like to cover in more depth before the ball drops in Times Square, so I might move my dork-like focus to other policy areas.

Having said all of that, I really want some feedback on this NY Times piece. Jeff Madrick's article is about the most informative thing I've seen in the print media on the pros and cons of private accounts. He covers both sides fairly well, but comes to the same conclusion I did, that privatization was just too risky and leaves too many people in a lurch. The numbers don't lie, as they say, and Madrick goes over both sides of the equation, especially in the benefit cuts for every dollar put into private accounts.

I think this is one of the best pieces to refute the claims made about private accounts being a "reform" of Social Security rather than totally stripping it for parts. But, like I said, I want your feedback after reading it.

This is a guest post by Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com.

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December 22, 2004

Even more on Social Security

By Nathan Nance

Guest post by Nate Nance

According to Reuters, Bush is planning a big campaign to "educate" people about how we need to "reform" Social Security. The Club for Growth and the Cato Institute are going to get involved and they plan to spend an estimated $15 million dollars to get public opinion behind Bush's privatization plan. But here's the thing:

"The initial focus of the campaign is that we have to do reform. But they don't want a lot of details out there," said Mike Tanner of the Cato Institute, a libertarian think tank that is preparing to distribute 25,000 Social Security guides to help community leaders shape public opinion for Bush.

...

By focusing on principles rather than details, analysts said the White House would have an easier time rallying popular support necessary to win a majority of votes in Congress.

It's going to be our job as the loyal opposition to make sure everybody who gets one of those "Social Security Guides" also gets the numbers they don't want out there. The $1-2 trillion dollars it is going to cost to tansition and all the benefit cuts that may be associated with it to keep the cost down. That's what we have to do.

There are those in the party who may support privatization, like Andrew. We need you with us on this. You know that Bush couldn't find his way out of a wet paper bag, let alone overhaul a government entitlement program. Go with us on this and after it's all over, I will buy us a few rounds and we can sit and have a great debate. I'll try to find some way to convince you and you do your best to convince me. But don't let it fall to the Republicans to decide for us.

Over at DailyKos, Kos writes about some of the problems Republicans are having getting their caucus together on this. Possibly as many as half the Republican caucus of the House is shit-scared that voting for privatization will be viewed as "gutting" Social Security in the '06 midterms. We need to give them some substance for that fear. We all need to be talking about how the Republicans want to destroy Social Security. We need to start telling anybody who wil listen that privatization now is fiscally irresponsible, that in order to pay for it we are going to have to borrow a hell of a lot of money and possibly cut benefits for current retirees. We have to tell them about the risk involved in putting all of your retirement savings in the stock market. Has anyone called AARP to see if they want to spend some money and run some adds about how this will affect seniors monthly checks? I mean, they are only the most powerful lobbying group with the biggest voting bloc in the country.

It all starts now. We have got to get the ball rolling on this.

This is a guest post by Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nante_nance@yahoo.com

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December 21, 2004

Private Accounts revisited

By Nathan Nance

Guest post by Nate Nance

There are some interesting findings in the WaPo/ABC News poll that came out today. On the surface, it looks bad, when asked if they support privatization 53% responded yes. But a new question that asks them if the support private accounts if the government has to borrow $2 trillion dollars support drops to 46% with 47% opposed.

The really interesting stats are with those who support privatization, though. When informed of the risks of putting your retirement in the hands of the stock market, 62% said they would not put their money into private accounts. Of the 37% who would put their retirement in the private accounts, only 7% would put it all into the market, while 53% would put some and 23% just a little.

While a large portion of those polled supported private accounts, they supported it for other people. The majority wanted to keep the traditional government entitlement program and allow the choice for others. If we start a PR campaign that educates people about the transition cost (the $2 trillion figure) and that it weakens traditional social security to have private accounts, the Bush position becomes a lot more untenable. He would really have to spend his "political capital" to get privatization through.

This is a guest post by Nathan Nance. He can be reached at nate_nance@yahoo.com

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December 20, 2004

Lies, lies and damned lies

By Nathan Nance

Guest post by Nate Nance

I just found out about Andy Card and Sec John Snow being on Fox News Sunday. And I just found out what they were saying:

"Under no one's plan will younger workers receive benefits they've been promised because the Social Security system doesn't have the financial underpinning, the foundation to support the expectations of social security 75 years from now, 50 years from now."

I'm not an advocate of doing nothing, but Social Security is not in an danger of collapsing anytime in the next hundred years. The idea that Social Security won't be there for us younger folk when we're ready to retire is a carefully cultivated image from pro-privatization groups that is decades long. Under the Social Security Act, everyone is guaranteed to receive benefits. It is an entitlement you receive as an American citizen. It doesn't matter if the federal government is running a surplus or a deficit, you will get your check because it is the law. Under private accounts, if you lose your money, then you just don't get anything to retire on.

I can't stress enough that Social Security is more or less solvent indefinitely. There is a shortfall looming that can be made up with some shared sacrifice of a few dollars more per person in payroll taxes and some cuts in benefits or means testing later. We can also cover it with raising the cap from $87,900 to $200,000, or more money from rich people. But that's my solution to everything.

Hat tip to Josh Marshall for bringing it to my attention since I don't watch Fox News.

This is a guest post from Nathan Nance. Nate is a sports/news clerk for the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com

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Isn't that illegal? UPDATED

By Nathan Nance

Guest post by Nate Nance

In today's press conference, Bush was asked by a reporter about Social Security and some of the hard choices that would need to be made. His response was priceless, if very long and confusing. To sum it all up, he will not "negotiate with myself in public."

I for one am glad, that's the last thing I want to see on the front page of the Washington Post. I can see the headlines now, though, "Sticky Situation. The president negotiates himself into benefit cuts."

Read the entire response and see if it reads as anything other than "fuck yourself for even asking" to you.

UPDATE: You should read this piece in Slate that might explain exactly what the hell he meant by all of that in his very long-winded answer.

This is a guest post by Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com

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December 17, 2004

It's my day off

By Nathan Nance

Thursdays are my days off and I like to spend them with friends. This Thursday was no exception because I spent the night with a friend who just passed his ASVAPB test and is about to embark on a journey to become a nuclear sub computer technician. Needless to say, I don't like the idea of someone who is like a brother to me in a tiny metal coffin floating around the ocean waiting for a reactor to go critical. But to each his own.

No, we celebrated with heart-clogging Swiss melt hamburgers and onion rings followed by a trip to Blockbuster so we could rent Transformers: The Movie (can you tell none of us have girlfriends?). I finally got home at midnight to watch the hours of DVR recorded news shows that I missed.

I was lucky enough to catch something on C-SPAN, though. The Campaign for America's Future held a forum devoted specifically to talking about why privatization of Social Security is bad. A lot of things they covered we've gone over already and some things we might get into in the future. I really want to link this to something in Jim's earlier post about problems with Medicare. Social Security is mostly solvent and will continue to be so well into the next decade and beyond without changing a thing. The real problem right now is the rising cost of health care and how much it is sapping from the fixed incomes of retirees. A huge portion of the monthly Social Security check goes to paying part B of Medicare and other health costs.

Not only will it eat the babies, but the elderly and anyone paying payroll taxes. Once health care is under control and the cost is kept down, that check will go a lot further towards the cost of living.

I cannot stress enough that Social Security and Medicare are important safety nets that people in this country need. Social Security was never meant to leave large sums of money in your pocket when you die, it was for those who probably worked hard their whole life and never saved a dime because they didn't have those kinds of wages. If all else failed, Uncle Sam would make sure you had enough to live on or had enough to pay for medicines you need. It's a right that all Americans share and a right we are all guaranteed. I can't believe anyone would want to turn their back on the kind of rights we are talking about here or about making sure others have those rights.

It just goes to show you that, even on your day off, there is still work to be done.

This is a guest post by Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense (finally updated) a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com

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December 16, 2004

Seeing the Forest

By Jim Dallas

We've had a nice little chit-chat about Social Security. I've maintained that, yes, we need to do something, and I wouldn't be absolutely against creating private accounts if they weren't done in a totally incompetent, ideologically-contrived manner that President Bush's reverse-midas touch would almost certainly bring.

Kevin Drum, on the other hand, points out that we NEED to do something about Medicare before it eats the babies alives. And because doing so would require real courage, Fearless Leader has said nothing about it (except for making excuses for why he's still digging the hole deeper). Probably because it would involve taking health care providers to the mat on cost containment, instead of giving out goodies and privatizing everything (EVERYTHING!).

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December 15, 2004

It's that important

By Nathan Nance

Guest post by Nate Nance

I've been focusing on Social Security the past few days because I think it is vitally important that we all understand what is sure to come up in the very near future. The Republicans have been waiting for a long time to finally go after Social Security and get rid of it, and with all three branches of the government and comfortable leads in both chambers, they finally can do it.

Josh Marshall is also thinking about Social Security and he has some ideas on strategy.

I've said before that there are two wings on this; my wing that is totally opposed to this privatization scheme and a wing that is open to privatization, like Andrew. I think the better of both worlds would be to defeat Bush's plan with a unified Democratic front, then we can talk about whether or not privatization is the way to go. I'll be more than happy to listen to the conservative element of the party when we are discussing the Democratic plan for privatization. One of the many points Andrew and I agree on is that Bush is too incompetent to carry this out in a succesful way. Better to stop him now and argue the merits later.

The question will be how to enforce discipline at the margins. And here Democrats should take a page from the Republican playbook in 1994 (on health care) and 1998 (on impeachment).

I think Democrats should consider pulling together the major funders of the party, the official committees, the major organizations, basically the entire infrastructure of the Democratic party and making clear to individual members that if they sign on to the president's plan to phase out Social Security, those various institutions and individuals won't fund their campaigns. Not in 2006, not ever.

Similar committments can come from voters, activists and volunteers. And free rein to primary challengers. If a couple folks lose their seats because of underfunding or tough primaries, so be it. (In a subsequent post, we'll discuss how this compares to what the House Republicans did in 1998).

It's that important. And there is an importance to unity on this issue that transcends the particular debate over Social Security.

There is lot's more in Josh's post, and you should read all of it. The point is, though, this is a fight we cannot lose and it is going to take all of us to do it.

This is a guest post from Nathan Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com.

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December 14, 2004

You can't lead a dead horse to water and make him drink

By Nathan Nance

Guest post by Nate Nance

I couldn't help but notice Andrew's post on my Social Security posts, so I thought 'why not keep the discussion going?' Somewhere we might find a compromise position between the two of us and therein find a politically viable option for our party to use in campaigning. There are two wings of the party here, those that thinks as Andrew does and find privatization to be workable and then there are those who find everything wrong with privatization. I think that if Andrew and I can work through our differences on this, we will really have accomplished something.

I'd like to start with some things we agree on, since this is what it's all about. I think we agree that there is a problem with Social Security and that something needs to be done. I think we can agree that payroll taxes are regressive and hurt poor people and working people and whatever we can do to limit that damage is a good thing. I think we agree that we can't trust George W. Bush to sit the right way on a toilet, let alone understand how best to help fix a problem without totally screwing it up. I think we can both agree that Bob Shrum totally sucks as a consultant and we can't understand why people keep hiring him.

That's a lot in common. And I'm going to let you in all in on a secret, Andrew's right about the market doing pretty well over time. I think I've adressed it before, why exactly I don't think a good market yield really helps his argument because of the overhead associated with putting you retirement money in the private sector. I think there are probably ways of limiting risk investing through well-managed mutual funds or maybe even have the option of buying government bonds and letting them mature in your private account. I'm willing to concede all of that to Andrew's wing. Privatization could probably work if it was done by people who knew what they were doing.

I'm just going to lay out on the table why it is I think my wing of the party doesn't like privatization, though. Number one has got to be who's proposing it. These people are the Keystone Cops of Wall Street and I definitely don't want my golden years in their hands. Two's got to be just how unfair it is. When Greenspan's group decided on the trust fund in 1983, they raised payroll taxes to way more than they had to buy bonds to put in the trust fund. If we go to privatization, that means poor and working people have been paying extra high regressive taxes for 20 years for no real reason. There will be no corresponding rise in income taxes on the wealthiest to pay for those bonds for the payout to reitirees.

The thing that bothers us most, or at least bothers me the most, is just why it is Republicans are so keen on privatization. I don't mean some greedy Wall Street conspiracy, I mean the simplest flat out reason: Because it was started by a Democrat. Since Reagan's inauguration, the GOP has been doing everything possible to get rid of government-run programs, any trace of Johnson Great Society or FDR's New Deal. They've more or less succeeded. Under the second Bush administration and even the Clinton administration welfare programs have become so mismanaged that people are asking that they be shut down and Bush can happily oblige when it comes time to write the budget. Anyone who has seen Bowling for Columbine knows what I'm talking about with welfare-to-work and other such disasters.

The one thing they haven't been able to touch is Social Security. People like Social Security, and they want to keep it. Twenty years ago, the Republicans (and everybody else for that matter) realized there was a looming crisis in the system so they've been working on a PR campaign every since to radically change the system. The whole point of Social Security is to spread the risk of investing throughout the federal government so that you are guaranteed by law to have enough to live on when you retire. Privatization is not about fixing Social Security, it is about eliminating the last best vestage of liberalism and government being a force of good in people's lives.

I don't know if Andrew and I are any closer to a compromise, but the discussion is still ongoing. As long as we're talking there's hope.

Guest post by Nate Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com

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Social Security Stuff

By Andrew Dobbs

I saw Nate's post on this earlier and I thought I'd throw in my 2 cents.

I know that most Democrats stridently oppose privatization, and I can respect that position even though I'm not totally in agreement with it. Privatization offers a magic bullet kind of scenario in the long run- lower payroll taxes (which are the highest taxes 80% of Americans pay) and higher benefits. In the short run it might not be that great- hence Sweden's situation right now (you can't judge a major public policy after only 3 years of existence)- or it might go gangbusters (see Chile right after their program began, though it is shaky right now still in the short run relatively speaking). But in the long run it will perform very well- over a 20-30 year period the market in the US will always end up gaining. So for people that are in their 20s or 30s the program will be great- giving them 30-40 years to invest their money- but people in their 50s or 60s really won't gain from the system and might in fact lose a lot of money. That is why the switch should probably only be for people 45 or under and the rest should just stay in the system that exists now.

But that entails massive transition costs, and from whence will those come? Bush wants to invest 10% of their income while 2.4% will be used for transition (payroll taxes are 6.2% for employees with their employers matching them with their own 6.2%). That will still leave a $2 trillion shortfall over the next 10 years. Bad bad bad. Our deficit is already $450 billion a year, hiking it to $650 billion would be disastrous. Of course, the increased investment might spur big business growth and higher tax revenues, but I hate that kind of budget writing. But the Cato Institute has suggested putting 6.2% into the current system and 6.2% into investment for young people, with more and more money invested as fewer and fewer people remain in the old system. They say it will have nominal transition costs, and if they are right such a program would be the best of all the worlds- small transition costs, a stable current system and a transition into a private system that will mean eventually lower payroll taxes, higher benefits and stronger business growth. So let's hope Bush pays attention to all of his options (though I wouldn't hold my breath).

But there are reasonable reasons to be against these proposals I'll admit. Worrying about transition costs, the volatility of the market (though it is very stable in the longrun), the impact of brokerage fees and other legitimate worries abound. I think there are ways of ensuring all of these worries can be addressed by a system of private accounts, but it is easier just to stick with what we have.

What is NOT reasonable and should not be acceptable is the position John Kerry had which is easily summed up as "do nothing." We know that Social Security is a train wreck waiting to happen just 20-30 years down the line. Yet when asked would he raise the retirement age, John Kerry said "no." When asked if he would lower benefits he said "no." And I don't think I ever heard him say that he would raise payroll taxes or raise the income rate at which the tax is levied. This position (or lack thereof, to be honest) is borne of overpaid, underwhelming consultants such as Bob Shrum getting $20,000 a month plus 15% of the ad buys to tell him the old "third rail" conventional wisdom.

"John, John, its like I told Kennedy in '80- don't talk about Social Security," Shrum said. "But didn't he lose?" Kerry said. "Yeah," Shrum stammered, "but y'know, how can a Kennedy beat that Carter charisma?"

Bush has obliterated the conventional wisdom. For two straight elections he has talked openly about radically changing Social Security, and he won both times. Democrats shouldn't be so trepidatious, and they need to be more honest. Without privatization we will have to raise the retirement age, lower benefits or raise taxes (either the rate or the base). Most likely a combination of all three will have to happen. So the Republicans want to take something of a risk and save the systm while keeping the retirement age at 65, dramatically increasing benefits and actually lowering the taxes while Democrats want to do nothing at first and then hastily raise the retirement age, lower benefits and raise taxes. Who's got ahold of the third rail now?

Democrats should embrace privatization and should draw up an alternative plan that will keep the GOP honest. If we can create a solid system that will keep us from exploding the deficit, it promises to recreate American society and the American economy for the better. For the first time ever middle and working class Americans will have s serious stake in the workings of corporate America and corporate America's investors will be increasingly common people. Both sides will work for the improvement of the other, creating a more honest business environment and a more prosperous middle and working class. The program is a good one, and we of all people should be behind it.

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December 13, 2004

Would you like to privatize that for only $.35 more?

By Nathan Nance

Guest post by Nate Nance

First, I want to say I'm glad to see Byron back posting at his regular pace. It's just not BOR without Byron.

Second, I want to say this woman, Dana, is about the stupidest person I've heard from this week (my next post will have the stupidest). She's got a post on Hardblogger about the need to revamp Social Security and why 20-somethings (like us) should be thinking about it.

I will give her that she's right in the interest our generation should be taking in this issue. It affects us all because of the way the system is designed with the current generation of workers paying the way for the current generation of retirees. But she just makes some really ludicrous leaps in logic to arrive at 'privatization is good.'

She starts off with by stating that Social Security "although created with hopeful intentions, has been a flawed design since its conception." I would argue that the real problem is the Baby Boomers and the fact that there are so damn many of them. Except for them, the population in every other generation is stable and the system is solvent, paying for itself as it goes along with little risk of losing retirement savings.

Dana only gets more ludicrous:


President Bush's plan includes an option for younger taxpayers to allocate funds from their Social Security payroll taxes in private investment accounts. Party lines aside, some reconfiguring must be made and considering our options a private fund would limit the need for an increase in taxes.

Let me see if I can follow this logic. There are too many people who are about to start drawing from Social Security, so we want to start diverting money away Social Security and start putting it into private accounts for individuals to keep from raising taxes? Less money in the system, more people, without raising taxes? For you folks playing at home, the shortfall in the system if we transition to privatization is $2 trillion over 10 years. That's how much we are going to have to borrow from China to do this. And the Bush administration wants to pretend like the cost doesn't even exist.

This is the piece d' resistance (my horrible French) "And since the United States always tries to portray itself as a cutting edge culture with the latest gadgets and the hippest trends, maybe we should move beyond the same system that has been in place for seventy years and try out something hip and new that is only 20 years old, like 401(k)s and IRAs." I added my own emphasis to show what my major problem is. Her closing point is to trash a 70-year-old government entitlement program to portray ourselves as hip? How about we ask the people in Chile or Sweden who have gone to private accounts and who's retirements have gone in the toilet how they feel about being trendy?

The bottom line here is that Social Security is a special vow that government made with its people in the 1930s. FDR said he would provide a safety net for those who could not save for retirement. He created a New Deal with the American people where he told us that he would promote the general welfare of the citizens of this country. The Republicans want to take that away because they don't like the government giving anyone anything unless it is corporate subsidies or tax cuts for the very wealthy. Well screw that. This is something that we all need to take a stand on because it s our future, too.

This is a guest post from Nate Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com

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December 12, 2004

Social Security Now: Redux

By Nathan Nance

Guest post by Nate Nance

Tonight I'm going to attempt to leap from hack to wonk in a single bound. But first, we need to have a quick discussion of the media.

Byron pointed out a biased line at the end of an AP article on gay marriage being OK'd in the Canadian Supreme Court a few days ago. There was one kind of bias that I don't think any of us really discussed in the comments to that post. It's the most prevalent bias in journalism: laziness.

Who cares what you say on TV, as long as you get that paycheck you'll parrot Roger Ailes like there's no tomorrow. That's an attitude that I think a lot of journalists take, the path of least resistance.

Part of that laziness shows up in how some stories are reported. Remember the missing 380 tons of explosives from the al Qaqaa facility? That was a huge story before the election last month because the media got to write a lot of process stories about how it will affect who we pick as president. As soon as the election was over, everybody dropped it. It's not like we found all those explosives, it just didn't matter because their was no election.

Need another example, how about Abu Ghraib? A huge human rights story that everybody covered during hte summer. When was the last time you saw a story on it? The mainstream media dropped the story in favor of reporting the Swift Vets, a story that had absolutely nothing to do with anything except the election. For the entire month of August that was the top story, people arguing over what happend 30 years ago.

The media finds it easier to report process stories and horserace numbers than anything of actual value. Why ask questions when you can report quotes?

Before I go much further, I should tell you I'm not an economist. I don't have a degree in economics nor did I minor in economics. Luckily I don't have to be. We've had 30 years of blue ribbon commissions and Congressional hearings and real economists telling us exactly how we can fix the gap in Social Security that will be caused by the Baby Boom generation retiring all at once. A small tax increase now in the payroll taxes to buy more Treasury bonds for the trust fund and a small benefits cut later when we are cashing in those bonds with slightly higher income taxes. All of a sudden the equation equals out and Social Security is solvent indefinitely.

In 1983, Alan Greenspan chaired a committee that came up with the stop loss measure known as the trust fund. They decided that increasing the regressive payroll tax more than necessary to cover curent costs would be used to buy those bonds. After the 2018 insolvency date, the government would start cashing in those IOUs and to pay for it would increase the progressive income tax (coincidentally, since the govt. would no longer be buying bonds to put into the trust fund, payroll taxes would go back down). The bonds run out about 2038, but by then the source of the problem (the Baby Boomers) is gone too and the worker to retiree ratio evens out.

Back to the media for a minute. Most of the stories you're going to see about Social Security reform of the next few months will ask questions like "When will President Bush ask Congress to privatize SocialSecurity?" Very few will ask "Do we need to privatize Social Security?" Remember, process stories not actual issue stories.

One of the people asking hard questions is Edmund Andrews at the NY Times. Brad DeLong has a post on Andrews' article covering the first of the many problems of privatization: risk. There is a lot of risk in investing your Social Security account in the stock market. If you're nearing your retirement and a bad day in the market cuts the bottom out of the mutual fund you're invested in, you have no time to recoup your losses. The market may perform really well over a 40-year period, but you don't retire over 40 years, you retire in a single day and God help you if you pick the day after the market hears about a scandal at your fund's manger's office.

The other problem lies in the assumed return. The bonds the government buys to put in the trust fund return at about 3%, privatization proponents say the market will return 6.5%. Assuming that is true, that extra return would cover the shortfall caused the Baby Boomers retiring en masse, which is about $3.5 trillion (That's trillion with a 't'). Let's asume I start saving a personal account right now. In 40 years, I don't lose any significant sums and the market performs really well (as it does. Even when it goes down it goes back up). The privatizers turn out ot be right and I get a 6.5%. But we've forgotten something very important, the fund manager. This is private sector after all, so the fund gets some of that money. You have your investment advisor, he needs to get paid. Pretty soon your percentage of that return, the money you get for taking the gamble that is the market and putting your retirement on the line, is 3%.

And none of that takes into account the fact that, more than likely, the 6.5% is a pipe dream in the first place. There are some real problems with Social Security, but nothing that can't be fixed easily enough. The sooner we raise taxes and cut benefits, the less severe those hikes and cuts have to be. And the sooner we get our financial house in order (i.e. get rid of Republicans) the sooner we can stop sticking our hand in the till to help pay down the debt instead of buying bonds to put in the trust fund.

This is a guest post from Nate Nance. Nate is a sports/news clerk at the Waco Tribune-Herald and writer/editor of Common Sense a Texas-based Democratic Web log. He can be reached at nate_nance@yahoo.com

Posted at 06:24 PM to Social Security | Permalink | Comments (0) | TrackBack
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