Wanna Know the Truth About Social Security Reform?

Herman Cain posts there, and I give it my seal of approval.

And don't bring God Hates Fags into a discussion about conservative economics please. That's totally unfair and completely irrelevant to the subject matter at hand. There's nothing at all "pernicious" or "spiteful" about this blog, that's a smear, and all you readers out there can see that for yourself, simply by reading it.

Go read it and see.

"Blatant propaganda"? Or yet another perspective on social security reform? Lynn's not winning any debating points here by labeling with pejorative terms; in fact I think she's entering the negative zone, by time-honored scoring methods.

Take the blog challenge, Lynn, and fisk 'em! On the merits or demerits of their arguments, rather than on smear-by-association. Let's go for content. I'm sure the readers here are open-minded enough to tolerate more than one perspective on this issue. Right? I mean, taking a conservative, or liberal, or libertarian point of view on matters of economics and government spending does not necessarily make one pernicious or spiteful. Am I right?

I'd love to see you paste whole blocks of quotes here and give your take after each point.

And you can do it here if you want.

Or, you can do it there, or anywhere. I still won't eat Green Eggs and Ham.

"Investment bankers are experts in investments. Social Security is an insurance program."

"and for government for the corporations"

I'm still trying to figure out what is so doggone eeeeevilll about corporations. You say it like you spit after pronouncing the word.

"Katherine Harris is from Florida. Florida = old people"

It doesn't chill you just a little bit to be a team player with Harris on this? Just kiddin'.

"If this is really why we're in Iraq, why aren't we in the Sudan, where conditions are much worse than they were before we invaded Iraq, and where non-Muslims, including Christians, are regularly being murdered in large numbers?'

That's exactly what conservatives (like me) concerned about the Sudan have been pushing for. The U.N. certainly isn't going anywhere with it. Sound familiar?

Wish I could rebut #4, and maybe I can in a separate thread in greater detail. Suffice it to say, Bush has been talking about democracy from the beginning; furthermore, he wasn't the only one in this country or around the world who thought what we all did about WMDs. I'll post evidence in another thread. Saddam certainly wasn't living up to his end of the bargain to show us one way or the other, and that's precisely what the grounds for war were. Not only that, but we now know the extent of his terrorist ties, which were even more dangerous than we had expected. We are far, far safer with Hussein out of the picture (not to mention the fact that the Iraqis themselves are far safer). It was way past time that we deposed Saddam; don't forget, we had an agreement with this country from the previous war (started by Saddam) that he repeatedly violated. Remember the No Fly Zone and the booting of inspectors? The U.N., as in the case of Rwanda and the Sudan, were unwilling to lift a finger. Now we understand why (google oil-for-food).

Finally for the rationale behind personal accounts, see below, lifted from this blog (go read it).

Democrats on Personal Accounts
Adam Doverspike

Back in an era where Senators and Representatives listened to proposals before opposing them, these Democrats endorsed the idea of personal accounts. Here are their own words.

Senators:
Sen. Harry Reid (D-NV): “[M]ost Of Us Have No Problem With Taking A Small Amount Of The Social Security Proceeds And Putting It Into The Private Sector.” (Fox’s “Fox News Sunday,” 2/14/99)

Sen. Dick Durbin (D-IL) Press Release: “Durbin Said Due To The Increasing Number Of ‘Baby Boomers’ Reaching Retirement Age, Social Security Will Be Unable To Pay Out Full Benefits … But The Sooner Congress Acts To Avert This Crisis The Easier And Less Painful It Will Be.” (Sen. Dick Durbin, “Reforming Social Security,” Press Release, 9/15/98)

Sen. Byron Dorgan (D-ND): “Fixing Social Security Is An Urgent Priority. It Ought To Be At The Top Of Both Parties’ Agendas.” (Sen. Byron Dorgan, “Fixing Social Security Must Top Both Parties’ Agendas,” Roll Call, 12/6/99)

Sen. Byron Dorgan (D-ND): “The Potential [Social Security] Crisis Should Be Viewed As An Enormous Success, Because It Means That We Are Living Longer And Healthier Lives.” (Betty Mills, Op-Ed, “What Would You Do About Social Security?” Bismarck Tribune, 8/5/98)

Sen. Kent Conrad (D-ND): “I Was At The Social Security Summit At The White House, Along With 40 Of My Colleagues, Republicans And Democrats. And There Was Virtual Unanimity Of Opinion That We Simply Have To Get A Higher Return From The Social Security Investments.” (Fox News’ “Special Report,” 1/20/99)

House Members:
Rep. Sander Levin (D-MI): “People Can See, I Think, A [Social Security] Crisis Where There Immediate Family Is Affected Even If Not Immediately … This Is Something That Affects Almost Everybody’s Immediate Family.” (Richard A. Ryan, “Social Security Reform Stalls,” The Detroit News, 2/2/02)

Rep. Charles Rangel (D-NY): “I Am One Democrat That Truly Believes That Democrats Will Not Benefit By Doing Nothing On Social Security.” (Rep. Charles Rangel, Press Conference, 1/21/99)

Rep. Edward J. Markey (D-MA): “I Am An Advocate For Investing A Portion Of The Surplus In The Private Sector …” (Rep. Edward J. Markey, Committee On Commerce, U.S. House Of Representatives, Testimony, 2/25/99)

Rep. Jerrold Nadler (D-NY): “[I]t’s A Way Of Getting More Money – A Higher Return On The Trust Fund, And Is A Prudent And Good Thing To Do.” (Rep. Jerrold Nadler, Press Conference, 1/21/99)

Former Rep. Dick Gephardt (D-MO): “Why Should Social Security Recipients Be Disadvantaged By Not Getting To Be Able To Have Higher Returns Out Of The Stock Market?” (Rep. Dick Gephardt, Press Conference, 1/21/99)

Clinton:
President Clinton: “[Investing] Will Earn A Higher Return And Keep Social Security Sound For 55 Years.” (President Bill
Clinton, State Of The Union, 1/19/99)

President Clinton: “[W]hat I Believe We Should Do Is To Invest A Modest Amount Of This In The Private Sector, The Way Every Other Retirement Plan Does. The Arizona State Retirement Plan Does; Every Municipal Retirement Plan Does; Every Private Plan Does.” (President Bill Clinton, Remarks To The Citizens Of Tucson On Medicare And Social Security, Tucson, AZ, 2/25/99)

President Clinton: “[E]ven After You Take Account Of The Stock Market Going Down And Maybe Staying Down For A Few Years, Shouldn’t We Consider Investing Some Of This Money, Because, Otherwise, We’ll Have To Either Cut Benefits Or Raise Taxes To Cover Them, If We Can’t Raise The Rate Of Return.” (President Bill Clinton, Remarks Via Satellite To The Regional Congressional Social Security Forums, Albuquerque, NM, 7/27/98)

(Hat tip: A Guide To Social Security Reform created at the GOP retreat on Social Security)

*****

Judging from the quotes here, the idea of private accounts has little or nothing to do with "dismantling" Social Security.

But that only accounts for one corporation. She’s using inclusive language. I mean, imputing the bad behavior of those executives to all executives seems a bit extreme, doesn’t it? I’m trying to think of an analogy that will hit home. It’s like saying that because a couple of Democrats have fornicated with their interns, all Democrats should be suspected of the same behavior.

The latest story about CNN to hit the blogosphere is all about Eason Jordan's comments re: our military. You're telling me this guy is right-wing? Okay, and the moon is made of green cheese.

Anhata, your information is exactly backwards and all I can figure is that you've gotten it from people who are flat-out lying. It simply isn't true that journalists are more conservative than the American public. The precise opposite is true! Every survey ever done of American journalists has borne that out. But I don't have time to rebut every last piece of misinformation in your post. The media bias issue is for another thread. And I'll be glad to join you there if you start it but I don't have time this week.

Nobody is talking about dismantling SS, so you guys are way off base on that. As for crisis, vs. problem, I think you ought to go read this blog, Anhata, since your sources are all very biased and this blog addresses that very issue. You could use an antidote.

I'll try to cut and paste the media bias portion of your post into a new thread sometime soon and we can discuss it there. Suffice it to say that, as I indicated earlier in this thread with a specific example, I get my examples of media bias directly from listening to NPR and reading newspaper articles (I get a couple of news digests via e-mail). After a while, I get kinda fatigued and need a break, so I go read people who declare their bias right upfront. Bias isn't really a problem as long as you are biased toward the truth. The surveys I referenced are well-known (they have to do with how journalists vote) so I'm surprised that they wouldn't be referenced on the Media Matters site.

I'd like to address the "hooey" part. Could you provide a couple of specific examples of "hooey" for me and explain why they are "hooey"? Is something wrong with the figures they are using? Their sources of information? Maybe you could cut and paste something you took issue with and show us why it isn't true. It might actually help the discussion if we could sort fact from fiction. For example:

Anhata wrote: "But taking that money from what would go into Social Security and giving it to the government to invest for you...how is that a good thing? As people in Britian if their attempt at this worked."

See below:

The Usual Suspects
Adam Doverspike

A well-educated, 24 year old friend of mine just found out I was blogging here and jumped right into the usual questions about PRAs. As you will see, he is skeptical of this reform. Since these questions come up often, here are my responses:

1. Do you REALLY think that personal accounts are going to make more money than they cost to manage? Just ask the British. And with the most productive portion of our society retiring, who’s going to be buying all the stock to make the prices go up? Even if it did make more money, some people are going to make a bunch and some people are going to lose in the market. Is this worth taking away the safety net for some people, even if they “opt” out of it by investing in riskier stocks? Get ready for more homeless elderly, not less.

First, although details have not been released I will make the following assumptions about the reform. The proposal will have an option for people to put 2% of their 12.4% contribution into a PRA for those under 45 or 50 years of age. It will be set up similar to the Thrift Savings Plan with 5 to 7 options of different investment bundles. (Recent Return Rates). If these details are significantly different from the original plan, some of my analysis may be off.

Thus, *******we are not modeling on the British system.******[Emphasis added by Susannah] The cost of the Thrift Savings Plan is incredibly low. The administrative expense ratio is $.10 for every $100 which is well below the private ratio of $.63 per $100.

The next concern is about the volatility of the stock market and a possible weakening the safety net. First, only 2% (or so) is likely to be allowed in a PRA whereas the other 10.4% of your income is going to be in the old system regardless. Even for those who choose a PRA will still have a safety net, it will just be 70-80% the size of the current one. The added return of the PRA should more than make up for the reduction in the vast majority of cases. Second, one could always put their money in Government Bonds which is a safe, less profitable option in the Thrift Plan. Third, over the long term, the stock market and most investments outperform the return on Social Security. This should not be a surprise since *****Social Security was originally an insurance plan, not a retirement plan. Now that it is a part of most people’s retirement plans in the country, it should be reformed to succeed as such.****** [Emphasis added by Susannah] PRAs along the lines of the Thrift plan are such a reform that will help create more stable retirement packages while plugging the funding gap of $10.5 trillion that exists.

2. Don’t we already have the equivalent in 401k and IRAs? Seems to me like people who don’t like the whole system of SS are trying to weaken it, and its going to hurt the people who have the least secure retirement options.

We do have private retirement plans outside of Social Security. *****This is why an “add-on” plan would be undesirable as it would just add a government forced savings plan on top of Social Security.***** [Susannah here: We will find out more about the details when legislation is proposed] However, something must be done to fix Social Security, otherwise we will continue to wrench up the contribution level to make up for the declining worker to retiree ratio, which historically has been the solution to these periodic shortfalls. I am sure some people wish to dispose of Social Security in its entirety; however, that is not what the administration is proposing. His goal that I support is to move from a “pay as you go” system to a hybrid that has a proponent of pre-funding. This pre-funding will stabilize the system by making it less dependent on future economic growth, birth rates, immigration, and life expectancy.

3. And a crisis? How do you describe the current budget deficit then? I thought debt didn’t matter? Why, when baby boomers retire and there is a temporary stress on the system in 2042, can’t SS go into debt temporarily too? Just like 9-11 put a temporary damper on our economic engine.

I’ll leave the deficit for later, but suffice it to say *****I truly wish spending was under control.****** [Susannah here: As do most conservatives.] Social Security begins running a deficit in 2018 and runs out of the Trust Fund in 2042 (under current intermediate predictions). In 2042, it runs out of money totally. [Me again: What do you propose to do about this, Anhata?] According to the Social Security Administration,

…the reduction would need to be 27 percent starting with the exhaustion of the Trust Fund in 2042 and would rise to 32 percent for 2078. Alternatively, if additional revenue were provided beginning in 2042, revenue equivalent to a payroll tax rate increase of about 3.1 percentage points (from 12.4 percent under current law to about 15.5 percent) would be needed for the year.

The problem is that Social Security would not be “in debt temporarily.” ******There is an underlying structural deficit that is about to hit.****** The Trust Fund IOUs can cover it through 2042 and then something else must give. ******But instituting PRAs now, we can cover the difference in the structural deficit without making the 27% benefit cut or the 25% tax increase.******* [Emphasis added by Susannah]

I hope these answers help clear up some of the misunderstandings surrounding the decision at hand. Please visit the Social Security Administration FAQ for more basic questions about Social Security and its current finances. And I will be sure to ask my skeptic friend whether he would take the option of putting money into a PRA given the choice. Most young workers would.

*******

What portion of this response to your objections would you describe as "hooey," and why?