Opinions, Context & Ideas from the TPM Editors TPM Editor's Blog

Perhaps these numbers have

Perhaps these numbers have already been run (I suspect they have somewhere), in which case I'd appreciate if someone could point me in the right direction. Otherwise, can some economist or reliable number-cruncher crunch forth and figure out what percentage of the population would be required to use more than 80% of their private account 'nest-egg' to purchase an annuity.

Come to think of it, that approach only makes sense if the president were proposing 100% phase-out rather than 30%. And that probably won't be sprung on the public for several more years. So given the fact that the benefit-cut-clawback that goes along with your private account would probably bring monthly payments for many below the poverty line, can someone put together some reasonably concrete numbers on what percentage of private account holders will never really get their hands on the thing because they'll be forced to spend the whole thing, or the lion's share of it, on an annuity?

Later we can get into what a bad deal most annuities are supposed to be.

Detroit Free Press A

Detroit Free Press: "A survey of Michigan's congressional delegation shows that at least four of nine Republicans in the U.S. House are withholding endorsement of Bush's proposed personal accounts that would allow taxpayers to invest up to 4 percent of their payroll taxes that now go toward social security."

And apparently one of those four, Rep. Thaddeus McCotter is in the Caucus and Loud and Proud. Says the Free Press: "Opposes Bush's plan of diverting payroll taxes into personal accounts. That plan takes money from the payroll tax, which normally goes to the Social Security trust fund and diverts it to personal accounts for investment. The Social Security pot would shrink, McCotter says."

Late Update: The other three Republicans in the Michigan House delegations are Rep. Candice Miller, Rep. Mike Rogers and Rep. Joe Schwarz. Schwarz is already in the Caucus. But from the descriptions given here in the Free Press run-down it's not yet clear that Miller and Rogers are fully Caucus-worthy. Like we said, the standards for admission are getting tighter! Otherwise we'd end up with most of the House Republicans in there. If you've seen statements by Miller and Rogers which make them true Caucus material, let us know.

Now we know from

Now we know from the White House that there is no Social Security crisis and that private accounts won't guarantee the program's solvency only cost trillions of dollars and require massive benefit cuts.

On the other hand, there is still that Ownership Society Holy Grail, resplendent in all its glory, the ability to pass your private account on to your heirs.

Only, apparently not.

It's been mentioned here and there. But it turns out that you can't do that after all. In fact, probably only if you're an upper-income earner will you ever be able to get your hands on any substantial part of it, let alone pass it on to the kids, the alma mater or your favorite pet.

Under the Bush plan, when you retire you are mandated by law to use your private account funds to purchase an annuity substantial enough to keep you above the poverty line for the rest of your life. (I guess that whole letting people decide what to do with their own money bit only goes so far.) You'd have to figure that for most retirees that would run through pretty much the whole stash or at least the lion's share of it. And when you die, that's it. By definition, you can't pass on this kind of annuity.

So under the Ownership Society the wealthy can pass on their savings, but for middle income folks and the working poor, no such luck. Which, come to think of it, sounds a lot like the rentership society, or whatever benighted age it is we're supposed to be living in now.

So you may not get to pass on your wealth. But at least you have a guarantee that you won't outlive it. Which, come to think of it, sounds a lot like the Social Security, only now with the added benefit of no guarantees and financial services firms to skim off their own cut by managing your account and selling you your annuity.

In December we brought

In December we brought you early word of a controversial new article by Korea expert Selig Harrison in Foreign Affairs.

Harrison argued that the evidence for a North Korean uranium enrichment program (in violation of the 1994 'Agreed Framework') was far more tenuous than the administration had led us to believe.

In the wake of the collosal intelligence failure over Iraq (a mix of political gamesmanship and genuine intelligence failure) such a root-and-branch questioning of consensus opinion gets a far more open-minded reading.

In their next issue to be released tomorrow, Foreign Affairs has a roundtable on the article -- two critiques and a response from Harrison. What makes the exchange so notable is that one of the critiques is co-authored by Mitch Reiss, who was until quite recently the director of policy planning at State, and the former head of KEDO and Robert Galluci, who played a key role in Korea policy and negotiations under the Clinton administration.

The title of their counterpoint -- Dead To Rights -- tells the tale. Their counter-argument is thorough and rejects virtually every point Harrison makes, taking him particularly to task over his explanation of various technical questions which bear directly on how and what we can and cannot know about the North Korean nuclear program.

You'll want to read this.

Rep. Ginny Brown-Waite R

Rep. Ginny Brown-Waite (R) of Florida feeling the heat back in the 5th District?

This new article in the St. Petersburg Times covers Brown-Waite's town meetings today at which she began by telling constituents about her one-on-one with the president in the limo ride to the Bamboozlepalooza event in Tampa.

"He wasn't happy with me," Brown-Waite told the crowd. This was, she said, after telling the commander in-chief she wanted to "proceed cautiously."

Apparently, at the meetings in Citrus county, she even talked up AARP's plan to ditch phase-out and solve the program's future difficulties by raising the payroll tax cap.

Can the Arch-Privatizer, Pat Toomey, be far behind?

As we told you

As we told you just after 5 PM this afternoon, we've found the Loudest and Proudest member of the Conscience Caucus. It ain't even close.

She is Rep. Jo Ann Emerson (R) of Cape Girardeau, Missouri.

As you may remember, Emerson was one of the first or first two members of the Conscience Caucus. And in the constituent letter she's now sending out on Social Security she leaves little doubt where she stands.

Emerson begins by telling constituents she "oppose[s] any cut in Social Security benefits for Americans who have, in good faith, paid into the system."

"Not only is Social Security nowhere near exhaustion," she continues, "the projections of bankruptcy do not reflect the many ways in which we can strengthen the system for the future without using aggressive and risky reforms. If Congress would seriously address Medicare reform, balance the budget, and make pension reform a real priority, then the solvency of Social Security would be assured indefinitely."

Later she writes, "I cannot support any plan to allow workers to place any portion of their Social Security taxes in risky investments, especially those that depend upon the stock market to appreciate in value."

And finally, "It remains my opinion that Social Security reform is not necessary at all if Congress would seriously address Medicare reform, balance the budget, erase the trade deficit, and make pension reform a real priority."

You can see Representative Emerson's letter yourself in the TPM Document Collection.

Late Update: We can now report that Rep. Emerson has been chosen as the Dean of the House Conscience Caucus.

Clear the decksWe have

Clear the decks!

We have found out who is without a doubt the Loudest and the Proudest member of the Conscience Caucus.

More details to come within the hour ...

A new statement from

A new statement from the office of Senator Lieberman (D) of Connecticut ...

"The President has not yet provided enough specifics about his Social Security reform plan to know what he's really proposing. However, based on what he’s heard so far, Senator Lieberman does have serious concerns about the President's plans. The senator does not support a privatization carve-out plan that would jeopardize retirement security or add to the debt. He would consider reforms that strengthen Social Security and enhance personal savings."

The RNC brings in

The RNC brings in the legal eagles to defend the Social Security Speech Code.

As you'll see in this article from the South Bend Tribune, the RNC is sending threatening letters to local television stations requesting they stop running anti-Social Security phase-out ads from Moveon.org.

The ad, as it turns out, is demonstrably accurate.

According to the Tribune, the RNC letter reads:

"The advertisement in question falsely and maliciously makes reference to 'George Bush's planned Social Security benefit cuts of up to 46 percent to pay for private accounts ...' "

In his State of the Union address, the president said that "Social Security will not change in any way" for Americans 55 and older."

The RNC letter said that "what MoveOn.org calls 'Bush's planned Social Security benefit cuts' is actually a plan that would hold starting Social Security benefits steady in purchasing power, rather than allowing them to nearly double over the next 75 years as they are projected to do under the current benefit formula."

(Note that the phrase "falsely and maliciously" has a <$Ad$> clear legal import in this case and sends a clear message.)

The reference to benefit cuts of up to 46 percent is a reference to the president's widely-reported intention of shifting from wage-indexing to inflation-indexing for future benefits. This is true.

Indeed, their response concedes the truth of Moveon's ad, as long as you know how to decode their rhetorical flimflam.

As you see, they seek to refute Moveon's claim by noting the president's claim that people over 55 will not be affected. Setting aside the highly-debatable point about whether even that is true, the RNC no doubt realizes that there are people under 55 -- in fact, quite a few of them.

The next 'refutation' is even more clear. They say that the president's plan "is actually a plan that would hold starting Social Security benefits steady in purchasing power, rather than allowing them to nearly double over the next 75 years as they are projected to do under the current benefit formula."

I mean, how friggin' obvious does this have to be?

Once again this is a reference to inflation rather than wage indexing of benefits. The RNC's argument seems to amount to the proposition that benefit cuts for which they believe there is an argument are simply not cuts.

All those fencing-sitting Republicans say that we need to have a full debate about Social Security. So why is the RNC trying to use the courts to muzzle any honest discussion of the president's plan?

Late Update: The secret RNC-FactCheck.org axis? Or is someone just an easy mark? We've been sitting for a while on a post about the atrociously bad fact-checking on Social Security being done by FactCheck.org, especially one they did on the Moveon ad. Notwithstanding the fact that the RNC says that President Bush has a "plan that would hold starting Social Security benefits steady in purchasing power, rather than allowing them to nearly double over the next 75 years as they are projected to do under the current benefit formula," I think we've argued pretty persuasively above that this point is bogus. The RNC can use this tortured verbiage if they like. But they can hardly claim that Moveon is lying when they call this a cut since the Social Security Administration itself calls it a cut. And look at how Factcheck.org described the president's plan back on the 1st of the month. They called it a "plan that would hold starting Social Security benefits steady in purchasing power, rather than allowing them to nearly double over the next 75 years as they are projected to do under the current benefit formula." Who's cribbing who here?