Thursday, February 03, 2005

Nonpartisan Views on Bush's Social Security Proposals

One problem I often have with President Bush's proposals is that the reasons he gives publicly often are not his real motives, and the effects of his proposals are quite different from what he claims. Bush tries to sell his Social Security proposals with scare tactics, making people willing to support a new plan by falsely thinking there is a Social Security crisis which will prevent them from ever collecting benefits. To the degree there really are long term financial problems, his proposals fail to address the real problems.

By now, anyone reading a political blog is well aware of the arguments put forth by both parties with regards to Social Security. We might receive further insight from a non-partisan source. There's some interesting information in The Note's coverage the day after the State of the Union address:

The President laid down two numerical markers last night (55 and 4), but his failure to (all together now) SAY CLEARLY THAT THE *POINT* OF THE CHANGES HE PROPOSES IS TO TAKE PRESSURE OFF OF THE TRUST FUND IN THE FUTURE BY LOWERING THE GUARANTEED MINIMUM BENEFIT SOMEHOW is, for some (read: "us"!!!) the story of the night.
When a White House official conceded in a pre-speech background briefing (the truth) that the personal accounts plan would not save the system the President described as being in peril, that got the day off to a fine straight-talk start.
But the President's one-paragraph listing of past stray Democratic flotations of ways to reduce guaranteed benefits did not continue the pattern.
Some day (we are sure of it), the President will give a whole big speech laying out the reason for benefit cuts and the level of guaranteed minimum benefit that he thinks is appropriate.
That day was not last night, and we bet it won't be this week.

Many newspapers also had similar comments. For now I'll limit to what is quoted by The Note, starting with the LA Times:

"A Bush aide, briefing reporters on the condition of anonymity, was more explicit, saying that the individual accounts would do nothing to solve the system's long-term financial problems."
"That candid analysis, although widely shared by economists, distressed some Republicans."
"'Oh, my God,' one GOP political strategist said when he learned of the shift in rhetoric. 'The White House has made a lot of Republicans walk the plank on this. Now it sounds as if they are sawing off the board.'"
"Independent political analyst Stuart Rothenberg said that the administration's admission that there was no connection between private accounts and Social Security's long-term solvency could complicate Bush's planned two-day, five-state campaign swing later this week to tout his proposals."

While details remain uncertain, what was announced also raised questions as to the benefits workers would receive under Bush's plan. The Note quoted this description from the Washington Post:

"If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 ­ or about 80 percent of the account. The remainder, $21,100, would be the worker's."
"With a 4.6 percent average gain over inflation, the government keeps more than 70 percent. With the CBO's 3.3 percent rate, the worker is left with nothing but the guaranteed benefit."

They also quoted this from The New York Times:

"Workers could participate or not, as they chose. Those who did might fare better financially than those who relied on guaranteed benefits. Though Mr. Bush did not acknowledge any risk, they could also do worse. Bush administration officials say the accounts would be heavily regulated, but even so, the unpredictability of the financial markets would be injected into what has always been a straightforward social insurance program."


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