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Senate Dems A Privatized

Senate Dems: "A Privatized Account that Earns the CBO-Projected Rate of Return Would Have its Entire Value Eliminated By the Privatization Tax." See the rest.

The White House fact-sheet

The White House fact-sheet on the "participants" in the North Carolina Bamboozlepalooza event <$NoAd$>...

BACKGROUND INFORMATION ON CONVERSATION PARTICIPANTS

Andrew Biggs, Associate Commissioner for Retirement Policy, Social Security Administration (Washington, D.C.)

Andrew was appointed to the Social Security Administration (SSA) in 2003. Before joining SSA, he served as a staff member for the House Committee on Banking and Financial Services, a Social Security analyst at the Cato Institute, and a staff member on the Commission to Strengthen Social Security. He holds a Bachelor’s degree from The Queen’s University of Belfast, Northern Ireland, a Master’s from Cambridge University, and a Ph.D. from the London School of Economics and Political Science.

Dawn Baldwin, Teacher, Lenoir Community College (Merritt, North Carolina)

Dawn teaches English at Lenoir Community College in Kinston, North Carolina. She recently purchased her first home in October 2004 and will move into her new home in the next four to six weeks when construction is complete. Dawn has a 401(k) plan through Lenoir Community College and is looking to open an IRA, but Social Security will play an important role in her retirement. Dawn is concerned about the future of Social Security for herself and her son. She says that personal retirement accounts would make her feel as if she had an important role in her own retirement. She wants Social Security reform to happen sooner rather than later so that her son can rely on Social Security.

Noel Council, Retired Senior (Raleigh, North Carolina)

Noel worked as a senior designer for IBM in Raleigh for over 31 years. His wife, Ruth, is a retired nurse. Noel’s retirement income is comprised of his pension from IBM – a tax-deferred savings plan that he started at IBM and now is managed by Merrill Lynch – and Social Security. He says that Social Security is an important part of his retirement income. Noel would like to see his children and grandchildren receive the benefits of Social Security that he and Ruth have seen. He likes the idea of personal retirement accounts because they give the individual more control and ownership.

Cyndi Godfrey, Corporate Communications Manager, Godfrey Lumber Company, Inc.

(Statesville, North Carolina)

Cyndi’s husband, William, and his three brothers own and operate a third-generation lumber company, Godfrey Lumber Company, Inc., which was started by the brothers’ father. Godfrey Lumber has approximately 80 employees. Cyndi works in Corporate Communications at Godfrey Lumber. Cyndi and William are planning for their retirement through their Roth IRAs and a profit-sharing plan. They would like to do more personal investing in preparation for their retirement because they are uncertain of the future of Social Security. Cyndi likes the idea of personal retirement accounts because she feels that they would put her in the driver’s seat when planning her own retirement. She also believes that personal retirement accounts would be beneficial to her employees because they would be part of a system that is updated for this generation.

Matthew “Skip” Long, President and CEO, National Jobs Partnership (Raleigh, North Carolina)

Skip is the President and CEO of National Jobs Partnership, a company that equips churches and faith-based organizations to provide job training and support enabling individuals to secure meaningful employment. He is a former associate pastor at Raleigh Mennonite Church. He is on the leadership team of Christ Our King Community Church in Raleigh. Skip says that ownership is very important to minority communities, and personal retirement accounts would put the individual in control of his or her own retirement. He says that this empowerment regains hope in people’s lives. He also likes that a personal retirement account could be left for future generations because when both of his parents passed away, the money that had been put into Social Security through all their years of work just disappeared. He says that it is important to him to be able to leave a legacy for his children.


Participant #1 is interesting ...

For those questions to

For those questions to Chairman Greenspan we talked about Wednesday evening, some helpful documentation ...

First the president's view: "The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust."

Second, the Greenspan Commission's view: "The National Commission believes that the investment procedures followed by the trust funds in the past generally have been proper and appropriate. The monies available have generally been invested appropriately in Government obligations at interest rates which are equitable to both the trust funds and the General Fund of the Treasury and have not -- as is sometimes alleged -- been spent for other purposes outside of the Social Security program."

And another interesting passage: "The National Commission believes that changes in the Social Security program should be made only for programmatic reasons, and not for purposes of balancing the budget."

(ed.note: Special thanks to reader DS.)

A quick look at

A quick look at some polling data gives a clear idea of why the Fainthearted Faction keeps shrinking and the Conscience Caucus keeps getting bigger.

Start with the most recent Gallup poll just out on Wednesday and go to the most basic question: Private accounts good idea or bad idea?

55% say bad idea; 40% say good idea. They asked the same question a month ago and the numbers were identical. 17% of the public believes that there is a Social Security 'crisis'. (55% say 'major problems' and 23% 'minor problems'.)

When asked about other steps that might be taken to shore up the system, benefit cuts for people under 55 -- which is part of the Bush plan -- are 29% for, 67% against. Raising, or actually doing away with the cap on payroll taxes, gets 67% for, 30% against, something the White House appears to have ruled out.

(Note: The White House has categorically ruled out 'raising payroll taxes'. But there has been at least a bit of ambiguity about whether they would consider raising the cap 'raising taxes' or if that only applies to rates.)

Down the line the numbers are not good for the president or the supporters of phasing out Social Security. Not terrible, mind you, but in the negative on almost every count.

What makes those numbers more telling is that, as near as I can tell, the Gallup questionnaire did not include the one follow-up question that consistently sends support for privatization plummeting -- namely, transition costs and trillions of dollars of borrowing.

For example, in the Washington Post/ABC poll from December 22nd, the initial query on private accounts yielded a respectable 53% level of support. But when they followed up and asked people whether they would support it if the transition costs might reach as high as $2 trillion, support dropped to about 25%, with 69% against.

To say that the bottom dropped out of support for private accounts would, I think, be a fair characterization of that shift.

This dynamic is underscored by a new article of poll analysis out Thursday from the Post. It's an important article painting a complex picture of public attitudes, with potential avenues of advantage for both sides. But one point that comes through clearly is that supporters of the president's plan tend to drop their support in the face of objections much more readily than the president's opponents are swayed by his arguments.

The key passage from the article reads ...

That [transition] cost estimate proved to be the most effective of four arguments against Bush's proposal tested in the polls. While 56 percent said they support a plan for individual investment accounts, more than half of those said they would be less likely to do so after hearing the estimate. More than four in 10 supporters wavered when they heard that personal accounts would not, by themselves, reduce the financial problems facing Social Security.

Those opposed to Bush's plan were consistently more resistant to changing their view -- about one in four did -- when confronted with four arguments supporting his proposal.


In other words, support drops dramatically when supporters are pressed with even the most elemntary and indisputable problems with the president's approach. I say 'indisputable' because White House itself has conceded that private accounts won't assure the solvency of Social Security. One might have made that question far sharper by noting that private accounts will actually accelerate the onset of the programs financial problems. On the other hand, people who are opposed tend to remain opposed or, in the not altogether flattering wording of the article, show themselves "consistently more resistant to changing their view."

One might say this is a pretty fair characterization of the disunity and wavering today among congressional Republicans and the unity of the Democrats.

Following up on our

Following up on our earlier posts about the president's apparent desire to default on the US Treasury notes held by the Social Security Administration, two points ...

First, most of President Bush's personal wealth appears to be tied up in bonds. Do his get honored? Or is he out of luck too?

Second, what the president said today almost certainly violates his oath of office in which he swears to "preserve, protect, and defend the Constitution of the United States."

That would be the Constitution which reads (Am.XIV, Section 4): "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."

Lets ask Alan. We

Let's ask Alan.

We and many others had predicted that the president's angle here was to default on the Treasury bonds sitting in the Social Security Trust Fund. And now we can be pretty confident that he plans to do just that since today he said that the Trust Fund doesn't even exist.

Now, here's the thing.

Alan Greenspan headed up the 'Greenspan Commission' (aka the National Commission on Social Security Reform). The Greenspan Commission didn't create the Trust Fund -- it dates back to 1939. But it was the reform package devised by the Greenspan Commission and issued in their January 1983 report that led to the intentional building up of a large surplus in the Trust Fund which would provide excess revenue to help pay for the retirement of the babyboomers in the early decades of the 21st century.

Setting aside all the actuarial and financial gobbledegook, the basic idea was that the boomers and others would start paying not only their own taxes but also advance paying to cover the costs of their own retirement. The Social Security Adminsitration used the monies in the Trust Fund to purchase bonds -- debt that otherwise would have had to have been purchased by private individuals, pensions, foreigners, all the parties that buy US Treasury bonds. (The majority of the US government's debt is in the hands of those folks; and you can be sure they're going to get paid back.)

So if you've paid Social Security taxes in any of the years from 1983 until today, you've been advance paying. And now President Bush just said that that money is gone. So, you thought you were advance paying to cover part of the future expenses of your generation's retirement. But it seems you were just a sucker since President Bush is now saying the money ain't gonna be paid back. You're just fresh outta luck, you could say.

So here's our question: Does Alan Greenspan think there's a Trust Fund? Does he believe those bonds are backed up by the full faith and credit of the United States government? Does he think they will and should be paid back? If he doesn't, he's got a hell of a lot of explaining to do since it was under his guidance that we came up with this whole idea.

Or how about Sen. Bob Dole? He was on the Commission too. What does he think? Does he agree? Or the recently-retired House Ways and Means Chairman Bill Archer (R). He was on it too.

Let's ask all of them ...

President Bush lays the

President Bush lays the groundwork for defaulting on almost two trillion dollars worth of <$NoAd$> US Treasury bonds, from today at the Commerce Department ...

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. We're on the ultimate pay-as-you-go system -- what goes in comes out. And so, starting in 2018, what's going in -- what's coming out is greater than what's going in. It says we've got a problem. And we'd better start dealing with it now. The longer we wait, the harder it is to fix the problem.


It's what they're after. Just watch.

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