Center on Budget and Policy Priorities: Analyses of Social Security Reform Proposals
1/5/2005 9:02:00 AM
Contact: Michelle Bazie of the Center on Budget and Policy Priorities, 202-408-1080 or bazie@cbpp.org
WASHINGTON, Jan. 5 /U.S. Newswire/ -- In the coming weeks and months, the Center on Budget and Policy Priorities will provide analysis of competing claims about Social Security, its fiscal health, and various plans to change the system. In late December, CBPP posted an analysis http://www.cbpp.org/12-17-04socsec.htm examining in detail the effects of shifting the formula for setting benefits from "wage indexing" to "price indexing", an issue very much in the news recently.
Posted to CBPP's website are several other reports examining various aspects of proposals to reform Social Security, including two new papers addressing dubious claims by the President about the "crisis" and by a prominent Senator about the economic effects of a plan offered by two leading retirement experts.
The first paper ( http://www.cbpp.org/1-4-05socsec.htm ) notes that in a December 20 news conference, "the President suggested or implied that Social Security presents a greater budgetary problem than Medicare or his tax cuts, and that the Medicare prescription drug bill will help to reduce the overall cost of Medicare by averting unnecessary hospitalizations. The reality is that the Social Security shortfall, while sizeable, is not gargantuan...Both rising health care costs, which drive much of the projected growth in Medicare costs, and the long-term cost of the President's tax cuts pose much larger budgetary problems."
Specifically, the paper finds that the tax cuts (if made permanent) and the prescription drug bill -- the President's two principal domestic priorities during his first term -- will together cost at least five times as much over the next 75 years as the Social Security shortfall. The cost of the tax cuts just for the top one percent of households, if made permanent, will be about the same size as the Social Security shortfall.
The second paper ( http://www.cbpp.org/1-4-05socsec2.htm ) addresses comments by Senator Larry Craig about a Congressional Budget Office analysis, released Dec. 22, of a Social Security plan designed by M.I.T economist Peter Diamond, one of the world's foremost experts on retirement issues, and Peter Orszag, an economist at the Brookings Institution.
This Center paper explains that "...the CBO report demonstrated the soundness and fiscal responsibility of this plan...CBO found the plan would restore Social Security solvency both over 75 years and into perpetuity, would do so without borrowing money or transferring funds from the rest of the budget, and would provide substantially higher benefits than the principal plan that the President's Social Security Commission proposed, even when the income from the private accounts under the Commission's plan are taken into account.
"Nevertheless, within hours of the CBO report's release, Senator Craig, outgoing Chairman of the Senate Special Committee on Aging, used the report to launch an attack on the Diamond-Orszag plan that generated some media coverage portraying the plan in an unfavorable light. Senator Craig claimed the report showed the Diamond-Orszag plan would injure the American economy. Craig also stated that an earlier CBO report showed the plan the President's Commission designed would expand the economy...
"The Senator's remarks suggest that any plan to restore Social Security solvency that includes revenue measures, no matter how modest, and does not include individual accounts is likely to be denounced in coming months as causing damage to the U.S. economy."
In fact, the Center's paper shows, Senator Craig's statements distorted the CBO findings. CBO projected that both the Diamond-Orszag plan and the principal plan that the President's Commission designed would have tiny effects on the economy. Where CBO found large differences between the two plans was in the level of benefits that seniors would receive, with the benefits being much smaller under the Commission plan than under the Diamond-Orszag plan. Benefits would be cut substantially under the Commission plan, even when income from the plan's private accounts was factored in.
The paper explains that the large difference in benefit levels between the two plans is itself the main reason that CBO projected some very small differences in the long-term economic effects that the plans would have. "CBO projected that because retirement benefits would be reduced so much under the Commission plan, workers would feel compelled to consume less and reduce their standard-of-living during their working years in order to save a bit more. This modest addition to saving would produce a tiny long-term economic gain.
"The most striking finding from the CBO analyses is not the marginal...difference in economic growth rates between the plans, but the dramatic differences in benefit levels." CBO projected that future retirees would receive several thousand dollars less in benefits each year under the Commission plan than under the Diamond-Orszag proposal.
Please contact the Center's media office at 202-408-1080, if you wish to speak with an expert about this issue.
http://www.usnewswire.com/
Full Version: Social Security Reform News & Analyses
Common Ground Common Sense > National & International News > Daily National and International News > National News Archive
Bush Budget May Omit Social Security, Underscoring Challenges
Jan. 6 (Bloomberg) -- President George W. Bush isn't expected to include the costs of his plan to overhaul Social Security in next year's budget, an omission that underscores the political and economic difficulties in achieving his chief domestic goal.
Bush announced he would press Congress this year for legislation to allow younger workers to divert a portion of their Social Security payroll tax into private investment accounts. The probable absence of a budget number was confirmed by Kevin Bishop, an aide to Senator Lindsey Graham, the South Carolina Republican who is sponsoring a bill to create the accounts, and by two administration officials who spoke on condition they would not be named.
Even supporters of private accounts said the likely decision will complicate Bush's efforts to pass a plan. ``It's better to put it in your budget and make it transparent than try to look like you're trying to pull a fast one,'' said Robert Bixby, executive director of the Concord Coalition, a budget research group.
Bush hasn't settled on the final details of his plan. The transition to the accounts could add $1 trillion to $2 trillion to the deficit over the first ten years, based on Congressional Budget Office figures. The president's 2001 Social Security commission presented a plan that would cost $346.2 billion over five years.
Including the plan's costs in the 2006 budget, which must be delivered to Congress by Feb. 7, would make it difficult for the president to honor his pledge to reduce the nation's deficit, make $1.7 trillion in tax cuts permanent and fund the war in Iraq, according to budget experts.
`Can't Do'
``You can do Social Security, fund the war and make the tax cuts permanent, but you can't do those things and cut the deficit in half at the same time,'' said Stanley Collender, an author on budget issues and senior vice president at Financial Dynamics Inc., a Washington consulting firm.
Failing to include costs in the budget may hamper the administration's ability to win Democratic support, which many Republicans say will be necessary to present the restructuring of the retirement system as a consensual undertaking.
``If you're serious about reforming Social Security, then the budget plans should reflect that so we won't have to deal with that later,'' said Representative Allen Boyd, a Florida Democrat who is co-sponsoring a private-account bill in the House with Jim Kolbe, a Republican from Arizona.
Representative Ben Cardin of Maryland, a senior Democrat on the Ways and Means Committee who is being courted by Republicans to support the accounts, said he would find it difficult to support the plan if its impact on the deficit, which reached a record $412 billion last year, isn't reflected in the budget.
Not Credible
``If he doesn't show how he's going to pay for it, then it's not a credible proposal from the point of view of, I think, most Democrats,'' Cardin said.
Chad Kolton, a spokesman for the Office of Management and Budget, declined to comment on whether Bush would include costs for the accounts in the budget.
``Going through the process of evaluating the proposals that are out there is what needs to take place before we can legitimately consider what the specific impact on the budget might be,'' he said. ``I don't think it's going to have an impact at all'' on support in Congress.
Not spelling out the costs would give a skewed and false picture of the government's finances, said Collender. ``Any deficit estimate, any borrowing estimate, that doesn't include something for Social Security is going to be wildly wrong,'' he said.
A recent White House memo said Congress will also have to cut Social Security benefits in order to shore up the program.
Reid's Role
Democrats in Congress have signaled that they will demand an accounting. Senate Minority Leader Harry Reid of Nevada, House Minority Leader Nancy Pelosi of California and other prominent Democratics sent a letter to Bush on Nov. 22 asking that an estimate of the cost of the Social Security plan be included in the budget proposal.
Only with such an estimate, the letter said, would ``Congress and the American people be able to weigh the difficult trade-offs between large-scale borrowing, Social Security benefit cuts, tax increases, and other spending reductions that may be required.''
Social Security will begin paying out more in benefits than it takes in through taxes in 2018, according to the system's trustees. The retirement of the generation born in the years after World War II will bankrupt the system, and the best way to ensure future retirees receive benefits is through private accounts, Bush said Dec. 9 after meeting with the trustees at the White House.
'The Time Is Now'
``The time is now, the time is ready to solve this problem,'' Bush said. Private accounts would provide a better return on tax dollars while allowing the government to scale back its debt to future retirees, their supporters say.
The commission Bush named in 2001 created three plans that would allow workers to invest from 2 to 4 percentage points of the 12.4 percent payroll tax in private accounts.
Democrats who oppose the plan say Bush is exaggerating Social Security's financing shortfall, which the trustees estimate will be $3.7 trillion over 75 years. Social Security is not a ``pressing crisis,'' said Senator Jon Corzine, a New Jersey Democrat.
``It is nowhere near the kind of crises that we have with Medicare, Medicaid and prescription drug'' coverage, Corzine said in a Jan. 4 interview.
Tax Dollars
If Bush's plan is enacted, the government would need to find a way to pay benefits to current retirees who depend on the same tax dollars that would be invested in stocks and bonds.
Private-account advocates say including any of the plan's costs in the budget would ignore savings it would create over time. ``If you put it in the budget, you're spelling out the pain without any of the benefits,'' said Michael Tanner, a Social Security expert at the Cato Institute, a research group that supports limited government and private accounts. ``You're just giving people a target to shoot at,'' said Tanner.
Bishop, Senator Graham's aide, said Bush doesn't have to budget for Social Security changes for next year, even though the president wants to pass it into law before then.
``The president's not settled on a particular plan, so it's probably not going to be in the budget,'' he said. ``Senator Graham understands that reality.''
Not Convincing
Democrats may not find this argument convincing, said Ed Lorenzen, a former aide to Texas Representative Charlie Stenholm, a Democrat who co-sponsored a private-account bill in the House.
``A lot of the Democrats they could potentially get to support them tend to be more fiscally conservative,'' said Lorenzen, now executive director of Centrist.org, a group that advises Democrats on fiscal issues. ``The budget is going to be one key sign towards whether the administration's goal is seriously addressing the fiscal issues, and how much of it is just an ideological agenda.''
The approach stands in contrast to the administration's strategy on passing Medicare legislation. In its fiscal 2004 budget, the president included $400 billion over ten years in costs to restructure Medicare. The bill passed Congress and became law in December of 2003, 10 months later.
`Impossible'
Collender, the budget analyst, said ``it's impossible'' for Bush to square his Social Security plan with his promise to cut the deficit in half by 2009, given all the administration's other budget commitments. Those include the $50 billion to $100 billion being spent this year in Iraq; $350 million to help victims of the Asian tsunami; and a prescription drug plan that will cost $1 trillion over ten years starting in 2011.
Leanne Abdnor, a Republican member of Bush's 2001 commission, said Bush has no good options on Social Security and the budget.
``If they don't do it, they're signaling to people they're not as serious about this as they said,'' said Abdnor, now president of For Our Grandchildren, an Alexandria, Virginia-based advocacy group that supports private accounts. ``If they do do it, they're slamming into the deficit.''
http://quote.bloomberg.com/apps/news?pid=1...efer=news_index
Jan. 6 (Bloomberg) -- President George W. Bush isn't expected to include the costs of his plan to overhaul Social Security in next year's budget, an omission that underscores the political and economic difficulties in achieving his chief domestic goal.
Bush announced he would press Congress this year for legislation to allow younger workers to divert a portion of their Social Security payroll tax into private investment accounts. The probable absence of a budget number was confirmed by Kevin Bishop, an aide to Senator Lindsey Graham, the South Carolina Republican who is sponsoring a bill to create the accounts, and by two administration officials who spoke on condition they would not be named.
Even supporters of private accounts said the likely decision will complicate Bush's efforts to pass a plan. ``It's better to put it in your budget and make it transparent than try to look like you're trying to pull a fast one,'' said Robert Bixby, executive director of the Concord Coalition, a budget research group.
Bush hasn't settled on the final details of his plan. The transition to the accounts could add $1 trillion to $2 trillion to the deficit over the first ten years, based on Congressional Budget Office figures. The president's 2001 Social Security commission presented a plan that would cost $346.2 billion over five years.
Including the plan's costs in the 2006 budget, which must be delivered to Congress by Feb. 7, would make it difficult for the president to honor his pledge to reduce the nation's deficit, make $1.7 trillion in tax cuts permanent and fund the war in Iraq, according to budget experts.
`Can't Do'
``You can do Social Security, fund the war and make the tax cuts permanent, but you can't do those things and cut the deficit in half at the same time,'' said Stanley Collender, an author on budget issues and senior vice president at Financial Dynamics Inc., a Washington consulting firm.
Failing to include costs in the budget may hamper the administration's ability to win Democratic support, which many Republicans say will be necessary to present the restructuring of the retirement system as a consensual undertaking.
``If you're serious about reforming Social Security, then the budget plans should reflect that so we won't have to deal with that later,'' said Representative Allen Boyd, a Florida Democrat who is co-sponsoring a private-account bill in the House with Jim Kolbe, a Republican from Arizona.
Representative Ben Cardin of Maryland, a senior Democrat on the Ways and Means Committee who is being courted by Republicans to support the accounts, said he would find it difficult to support the plan if its impact on the deficit, which reached a record $412 billion last year, isn't reflected in the budget.
Not Credible
``If he doesn't show how he's going to pay for it, then it's not a credible proposal from the point of view of, I think, most Democrats,'' Cardin said.
Chad Kolton, a spokesman for the Office of Management and Budget, declined to comment on whether Bush would include costs for the accounts in the budget.
``Going through the process of evaluating the proposals that are out there is what needs to take place before we can legitimately consider what the specific impact on the budget might be,'' he said. ``I don't think it's going to have an impact at all'' on support in Congress.
Not spelling out the costs would give a skewed and false picture of the government's finances, said Collender. ``Any deficit estimate, any borrowing estimate, that doesn't include something for Social Security is going to be wildly wrong,'' he said.
A recent White House memo said Congress will also have to cut Social Security benefits in order to shore up the program.
Reid's Role
Democrats in Congress have signaled that they will demand an accounting. Senate Minority Leader Harry Reid of Nevada, House Minority Leader Nancy Pelosi of California and other prominent Democratics sent a letter to Bush on Nov. 22 asking that an estimate of the cost of the Social Security plan be included in the budget proposal.
Only with such an estimate, the letter said, would ``Congress and the American people be able to weigh the difficult trade-offs between large-scale borrowing, Social Security benefit cuts, tax increases, and other spending reductions that may be required.''
Social Security will begin paying out more in benefits than it takes in through taxes in 2018, according to the system's trustees. The retirement of the generation born in the years after World War II will bankrupt the system, and the best way to ensure future retirees receive benefits is through private accounts, Bush said Dec. 9 after meeting with the trustees at the White House.
'The Time Is Now'
``The time is now, the time is ready to solve this problem,'' Bush said. Private accounts would provide a better return on tax dollars while allowing the government to scale back its debt to future retirees, their supporters say.
The commission Bush named in 2001 created three plans that would allow workers to invest from 2 to 4 percentage points of the 12.4 percent payroll tax in private accounts.
Democrats who oppose the plan say Bush is exaggerating Social Security's financing shortfall, which the trustees estimate will be $3.7 trillion over 75 years. Social Security is not a ``pressing crisis,'' said Senator Jon Corzine, a New Jersey Democrat.
``It is nowhere near the kind of crises that we have with Medicare, Medicaid and prescription drug'' coverage, Corzine said in a Jan. 4 interview.
Tax Dollars
If Bush's plan is enacted, the government would need to find a way to pay benefits to current retirees who depend on the same tax dollars that would be invested in stocks and bonds.
Private-account advocates say including any of the plan's costs in the budget would ignore savings it would create over time. ``If you put it in the budget, you're spelling out the pain without any of the benefits,'' said Michael Tanner, a Social Security expert at the Cato Institute, a research group that supports limited government and private accounts. ``You're just giving people a target to shoot at,'' said Tanner.
Bishop, Senator Graham's aide, said Bush doesn't have to budget for Social Security changes for next year, even though the president wants to pass it into law before then.
``The president's not settled on a particular plan, so it's probably not going to be in the budget,'' he said. ``Senator Graham understands that reality.''
Not Convincing
Democrats may not find this argument convincing, said Ed Lorenzen, a former aide to Texas Representative Charlie Stenholm, a Democrat who co-sponsored a private-account bill in the House.
``A lot of the Democrats they could potentially get to support them tend to be more fiscally conservative,'' said Lorenzen, now executive director of Centrist.org, a group that advises Democrats on fiscal issues. ``The budget is going to be one key sign towards whether the administration's goal is seriously addressing the fiscal issues, and how much of it is just an ideological agenda.''
The approach stands in contrast to the administration's strategy on passing Medicare legislation. In its fiscal 2004 budget, the president included $400 billion over ten years in costs to restructure Medicare. The bill passed Congress and became law in December of 2003, 10 months later.
`Impossible'
Collender, the budget analyst, said ``it's impossible'' for Bush to square his Social Security plan with his promise to cut the deficit in half by 2009, given all the administration's other budget commitments. Those include the $50 billion to $100 billion being spent this year in Iraq; $350 million to help victims of the Asian tsunami; and a prescription drug plan that will cost $1 trillion over ten years starting in 2011.
Leanne Abdnor, a Republican member of Bush's 2001 commission, said Bush has no good options on Social Security and the budget.
``If they don't do it, they're signaling to people they're not as serious about this as they said,'' said Abdnor, now president of For Our Grandchildren, an Alexandria, Virginia-based advocacy group that supports private accounts. ``If they do do it, they're slamming into the deficit.''
http://quote.bloomberg.com/apps/news?pid=1...efer=news_index
http://www.cato.org/pubs/ssps/ssp-30es.html
Social Security Choice
Large Account Size within a Fiscally Responsible Social Security Reform Framework
Andrew Biggs
Social Security Choice
Large Account Size within a Fiscally Responsible Social Security Reform Framework
Andrew Biggs
http://www.nytimes.com/2005/01/06/politics...artner=homepage
GOP Divided As Bush Views Social security
Richard Stevenson
GOP Divided As Bush Views Social security
Richard Stevenson
As White House Begins Social Security Push, Critics Claim
Exaggeration
By EDMUND L. ANDREWS
Opponents of the Bush administration's approach insist that
Social Security's problems can be easily fixed by tweaks to
payroll taxes and benefit formulas.
http://www.nytimes.com/2005/01/10/politics/10social.html?th
Exaggeration
By EDMUND L. ANDREWS
Opponents of the Bush administration's approach insist that
Social Security's problems can be easily fixed by tweaks to
payroll taxes and benefit formulas.
http://www.nytimes.com/2005/01/10/politics/10social.html?th
For the Record on Social Security
It appears that the president and his aides are trying to
sow ignorance to gain support for their flawed plan to
privatize Social Security.
http://www.nytimes.com/2005/01/10/opinion/10mon1.html?th
It appears that the president and his aides are trying to
sow ignorance to gain support for their flawed plan to
privatize Social Security.
http://www.nytimes.com/2005/01/10/opinion/10mon1.html?th
IMO, the most important basic premise to demolishing the SS program is that the stock market will provide the profits on investments which will in turn support people's retirement needs.
This is like drawing to an inside straight in a 7-hand poker game.
No one can predict corporate growth and performances next quarter, much less for the next 30 years. What about corporations who solicit investments for SS funding and then offshore themselves, denying profits to anyone in the US?
No one can predict what outside forces may force a recession or outright depression on this country. What if China and Japan cash in some or all of their US Treasury bonds? What if oil goes euro-based? What if a mutated SARS virus hits the world and millions are killed? What if we have another five or ten Enrons in 20 years that wipe out 10 million retirement funds?
Before this fiasco gets promoted any further, I wish some IT geniuses would do some modeling on the ramifications of any or all of the above.
This is like drawing to an inside straight in a 7-hand poker game.
No one can predict corporate growth and performances next quarter, much less for the next 30 years. What about corporations who solicit investments for SS funding and then offshore themselves, denying profits to anyone in the US?
No one can predict what outside forces may force a recession or outright depression on this country. What if China and Japan cash in some or all of their US Treasury bonds? What if oil goes euro-based? What if a mutated SARS virus hits the world and millions are killed? What if we have another five or ten Enrons in 20 years that wipe out 10 million retirement funds?
Before this fiasco gets promoted any further, I wish some IT geniuses would do some modeling on the ramifications of any or all of the above.
The biggest problem that we have is to convince the current senators and representatives that this is a bad plan. They do not have Social Security - they don't have to worry about this the same as the Average Joe does.
I say we make every one who votes for this put their own retirement plan on the line.
I say we make every one who votes for this put their own retirement plan on the line.
I'm starting to get the feeling that this issue will spell bad news for the GOP.... Perhap even cost them the majority in both houses...
http://story.news.yahoo.com/news?tmpl=stor...ush_report_dc_5
Bush Vows Ambitious Social Security Overhaul
Bush Vows Ambitious Social Security Overhaul
http://online.wsj.com/public/article/0,,SB...Ffree%5Ffeature
Bush Will 'Lead' Drive for Changes to Social Security
Bush Will 'Lead' Drive for Changes to Social Security
President's plan to overhaul Social Security reflects bigger fight of free market vs. safety net.
WASHINGTON – The coming Washington struggle over President Bush's plan to partially privatize Social Security promises to be particularly intense, because it revolves around a core issue of politics: the values the federal government should espouse.
Read more:
http://www.csmonitor.com/2005/0112/p01s03-uspo.html
WASHINGTON – The coming Washington struggle over President Bush's plan to partially privatize Social Security promises to be particularly intense, because it revolves around a core issue of politics: the values the federal government should espouse.
Read more:
http://www.csmonitor.com/2005/0112/p01s03-uspo.html
In GOP, Resistance On Social Security
By Jim VandeHei and Mike Allen
Many Republicans are expressing reservations about the political wisdom of President Bush's vision for restructuring Social Security, as the White House today intensifies its campaign to restructure the entitlement program for the retired and disabled.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
By Jim VandeHei and Mike Allen
Many Republicans are expressing reservations about the political wisdom of President Bush's vision for restructuring Social Security, as the White House today intensifies its campaign to restructure the entitlement program for the retired and disabled.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
Social Security Debate Gets Personal
--------------------
In talk-show-style chats and phone interviews, Bush and Democratic foes seek to win public support in the battle over a restructuring.
By Warren Vieth and Joel Havemann
Times Staff Writers
January 12 2005
WASHINGTON — Far from his dairy farm in central Utah, 27-year-old Josh Wright stepped onto a stage with President Bush on Tuesday and related the warning his father had given the other day in the barn.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...0,7815231.story
--------------------
In talk-show-style chats and phone interviews, Bush and Democratic foes seek to win public support in the battle over a restructuring.
By Warren Vieth and Joel Havemann
Times Staff Writers
January 12 2005
WASHINGTON — Far from his dairy farm in central Utah, 27-year-old Josh Wright stepped onto a stage with President Bush on Tuesday and related the warning his father had given the other day in the barn.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...0,7815231.story
Pelosi: Social Security Benefit Cuts and Private Accounts Make It Harder for Americans to Achieve Financial Security
1/13/2005 5:49:00 PM
Contact: Brendan Daly or Jennifer Crider, 202-226-7616, both of the Office of House Democratic Leader Nancy Pelosi
WASHINGTON, Jan. 13 /U.S. Newswire/ -- House Democratic Leader Nancy Pelosi released the following statement today in response to Vice President Cheney's remarks this afternoon on Social Security.
"This afternoon, Vice President Cheney tried to persuade American workers that the Republican proposal to drastically slash Social Security benefits and put their retirement benefits at the mercy of the stock market would somehow make it easier for them to save for retirement. Nothing could be further from the truth.
"Nonpartisan experts have determined that even under the most optimistic assumptions, private accounts will never provide retirement benefits that are equal to what Social Security provides workers today. The false promise of private accounts combined with the Bush Administration's proposal to cut Social Security benefits by more than 40 percent is a lose-lose proposition for American workers.
"Vice President Cheney spoke today about continuing the great American tradition of upward mobility. But so far, all the Republicans have offered is a massive cut in the only guaranteed source of retirement income that workers have. They are making Social Security weaker, not stronger. And they are making it harder for American families to achieve financial security.
"Democrats believe that Americans have paid into Social Security and deserve to receive the full benefits they were promised. Republicans are on the wrong track."
http://www.usnewswire.com/
1/13/2005 5:49:00 PM
Contact: Brendan Daly or Jennifer Crider, 202-226-7616, both of the Office of House Democratic Leader Nancy Pelosi
WASHINGTON, Jan. 13 /U.S. Newswire/ -- House Democratic Leader Nancy Pelosi released the following statement today in response to Vice President Cheney's remarks this afternoon on Social Security.
"This afternoon, Vice President Cheney tried to persuade American workers that the Republican proposal to drastically slash Social Security benefits and put their retirement benefits at the mercy of the stock market would somehow make it easier for them to save for retirement. Nothing could be further from the truth.
"Nonpartisan experts have determined that even under the most optimistic assumptions, private accounts will never provide retirement benefits that are equal to what Social Security provides workers today. The false promise of private accounts combined with the Bush Administration's proposal to cut Social Security benefits by more than 40 percent is a lose-lose proposition for American workers.
"Vice President Cheney spoke today about continuing the great American tradition of upward mobility. But so far, all the Republicans have offered is a massive cut in the only guaranteed source of retirement income that workers have. They are making Social Security weaker, not stronger. And they are making it harder for American families to achieve financial security.
"Democrats believe that Americans have paid into Social Security and deserve to receive the full benefits they were promised. Republicans are on the wrong track."
http://www.usnewswire.com/
Former Congresswoman to Lead Panel of Social Security Experts, Advocates in Discussion of Risks and Pitfalls of Privatization
1/13/2005 11:03:00 AM
Contact: Pamela Causey of the National Committee to Preserve Social Security and Medicare, 202-216-8378
News Advisory:
The nation's second largest seniors' advocacy organization, headed by former Congresswoman Barbara B. Kennelly, will bring together a panel of economic and policy experts to give details on why Social Security is not facing a crisis and how privatization poses significant risks for women, minorities, youth and seniors. The conference will begin at 9 a.m. Friday, Jan. 14 at the National Press Club in Washington.
WHO:
-- Kenneth Apfel, University of Texas and former Social Security Commissioner
-- Henry Aaron, Brookings Institution
-- Joan Entmacher, National Women's Law Center
-- Robert Greenstein, Center on Budget and Policy Priorities
-- Maya Rockeymoore, Congressional Black Caucus Foundation
WHAT: Press briefing to provide details of the risks and pitfalls of Social Security privatization
WHEN: Friday, Jan. 14, 9 a.m. (ET) Registration and Breakfast, panel begins at 9:20 a.m.
WHERE: National Press Club (Holeman Lounge), 529 14th Street, NW, Washington D.C.
---
EDITOR'S NOTE: Members of the press who are unable to attend the briefing can listen in by calling 1-800-779-0636 between 9:20 and 11 a.m.
------
The National Committee, a nonprofit, nonpartisan organization acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the Board of Directors and professional staff. The work of the National Committee is directed toward developing better-informed citizens and voters.
http://www.usnewswire.com/
1/13/2005 11:03:00 AM
Contact: Pamela Causey of the National Committee to Preserve Social Security and Medicare, 202-216-8378
News Advisory:
The nation's second largest seniors' advocacy organization, headed by former Congresswoman Barbara B. Kennelly, will bring together a panel of economic and policy experts to give details on why Social Security is not facing a crisis and how privatization poses significant risks for women, minorities, youth and seniors. The conference will begin at 9 a.m. Friday, Jan. 14 at the National Press Club in Washington.
WHO:
-- Kenneth Apfel, University of Texas and former Social Security Commissioner
-- Henry Aaron, Brookings Institution
-- Joan Entmacher, National Women's Law Center
-- Robert Greenstein, Center on Budget and Policy Priorities
-- Maya Rockeymoore, Congressional Black Caucus Foundation
WHAT: Press briefing to provide details of the risks and pitfalls of Social Security privatization
WHEN: Friday, Jan. 14, 9 a.m. (ET) Registration and Breakfast, panel begins at 9:20 a.m.
WHERE: National Press Club (Holeman Lounge), 529 14th Street, NW, Washington D.C.
---
EDITOR'S NOTE: Members of the press who are unable to attend the briefing can listen in by calling 1-800-779-0636 between 9:20 and 11 a.m.
------
The National Committee, a nonprofit, nonpartisan organization acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the Board of Directors and professional staff. The work of the National Committee is directed toward developing better-informed citizens and voters.
http://www.usnewswire.com/
QUOTE(Snuffysmith @ Jan 13 2005, 09:44 PM)
Pelosi: Social Security Benefit Cuts and Private Accounts Make It Harder for Americans to Achieve Financial Security
1/13/2005 5:49:00 PM
Contact: Brendan Daly or Jennifer Crider, 202-226-7616, both of the Office of House Democratic Leader Nancy Pelosi
WASHINGTON, Jan. 13 /U.S. Newswire/ -- House Democratic Leader Nancy Pelosi released the following statement today in response to Vice President Cheney's remarks this afternoon on Social Security.
"This afternoon, Vice President Cheney tried to persuade American workers that the Republican proposal to drastically slash Social Security benefits and put their retirement benefits at the mercy of the stock market would somehow make it easier for them to save for retirement. Nothing could be further from the truth.
"Nonpartisan experts have determined that even under the most optimistic assumptions, private accounts will never provide retirement benefits that are equal to what Social Security provides workers today. The false promise of private accounts combined with the Bush Administration's proposal to cut Social Security benefits by more than 40 percent is a lose-lose proposition for American workers.
"Vice President Cheney spoke today about continuing the great American tradition of upward mobility. But so far, all the Republicans have offered is a massive cut in the only guaranteed source of retirement income that workers have. They are making Social Security weaker, not stronger. And they are making it harder for American families to achieve financial security.
"Democrats believe that Americans have paid into Social Security and deserve to receive the full benefits they were promised. Republicans are on the wrong track."
http://www.usnewswire.com/
1/13/2005 5:49:00 PM
Contact: Brendan Daly or Jennifer Crider, 202-226-7616, both of the Office of House Democratic Leader Nancy Pelosi
WASHINGTON, Jan. 13 /U.S. Newswire/ -- House Democratic Leader Nancy Pelosi released the following statement today in response to Vice President Cheney's remarks this afternoon on Social Security.
"This afternoon, Vice President Cheney tried to persuade American workers that the Republican proposal to drastically slash Social Security benefits and put their retirement benefits at the mercy of the stock market would somehow make it easier for them to save for retirement. Nothing could be further from the truth.
"Nonpartisan experts have determined that even under the most optimistic assumptions, private accounts will never provide retirement benefits that are equal to what Social Security provides workers today. The false promise of private accounts combined with the Bush Administration's proposal to cut Social Security benefits by more than 40 percent is a lose-lose proposition for American workers.
"Vice President Cheney spoke today about continuing the great American tradition of upward mobility. But so far, all the Republicans have offered is a massive cut in the only guaranteed source of retirement income that workers have. They are making Social Security weaker, not stronger. And they are making it harder for American families to achieve financial security.
"Democrats believe that Americans have paid into Social Security and deserve to receive the full benefits they were promised. Republicans are on the wrong track."
http://www.usnewswire.com/
NUMBERS PLEASE! Stocks average about 10% return on your cash long term whereas SS is around a 4% return. Am I wrong? I am missing something here or Nancy is being too vague.
Also, is there a safety net in case people who don't know how to invest stocks end up losing everything gambling this way?
I hope that this is not THE OFFICAL rebuttal to opposing privatizing SS from the Democrats. It sounds pretty weak to me.
BTW, I did not know we had a seperate thread for just SS news! Thanks for providing this.
Cheney: Social Security Changes Will Pull Many Americans Out of Poverty
Vice President Dick Cheney took on critics of the Bush administration's Social Security overhaul plans Thursday, arguing that channeling part of workers' salaries into the stock market would yield bigger retirement nest eggs and help pull many Americans out of poverty.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
Makes you want to gag.
Vice President Dick Cheney took on critics of the Bush administration's Social Security overhaul plans Thursday, arguing that channeling part of workers' salaries into the stock market would yield bigger retirement nest eggs and help pull many Americans out of poverty.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
Makes you want to gag.
http://story.news.yahoo.com/news?tmpl=stor...ty&e=3&ncid=703
Budget Chief: Payroll Taxes May See Rise
Budget Chief: Payroll Taxes May See Rise
--------------------
Bush Plan Sharpens Retirement Investing Debate
--------------------
Tom Petruno
January 23 2005
Even if Americans never get the option — or burden — of investing some of their Social Security tax money, the idea still may have served a useful purpose: It could focus many people on the broader issue of where retirement savings belong.
The complete article can be viewed at:
http://www.latimes.com/business/la-fi-petr...dlines-business
Bush Plan Sharpens Retirement Investing Debate
--------------------
Tom Petruno
January 23 2005
Even if Americans never get the option — or burden — of investing some of their Social Security tax money, the idea still may have served a useful purpose: It could focus many people on the broader issue of where retirement savings belong.
The complete article can be viewed at:
http://www.latimes.com/business/la-fi-petr...dlines-business
Semantics Shape Social Security Debate
By Mike Allen
President Bush is trying to keep the word "private" from going public.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
By Mike Allen
President Bush is trying to keep the word "private" from going public.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
A New Act for Social Security?
Confused about the future of Social Security? Small wonder. One day President Bush is saying the retirement program is going broke and needs radical surgery; another day economists are writing that its finances can be fixed with the economic equivalent of a Band-Aid.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
Confused about the future of Social Security? Small wonder. One day President Bush is saying the retirement program is going broke and needs radical surgery; another day economists are writing that its finances can be fixed with the economic equivalent of a Band-Aid.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
Republican Lawmakers Set for Debut of Agenda Starring
Social Security and Tax Code
By CARL HULSE
Senate Republicans will unveil an ambitious agenda topped
by changes in Social Security and the tax code on Monday.
http://www.nytimes.com/2005/01/24/politics...ongress.html?th
Social Security and Tax Code
By CARL HULSE
Senate Republicans will unveil an ambitious agenda topped
by changes in Social Security and the tax code on Monday.
http://www.nytimes.com/2005/01/24/politics...ongress.html?th
TODAY'S EDITORIALS
A Bridge to Sell
Though President Bush promises a worry-free future for
retirees, his plan to privatize Social Security offers more
risks than benefits to older Americans.
http://www.nytimes.com/2005/01/24/opinion/24mon1.html?th
A Bridge to Sell
Though President Bush promises a worry-free future for
retirees, his plan to privatize Social Security offers more
risks than benefits to older Americans.
http://www.nytimes.com/2005/01/24/opinion/24mon1.html?th
White House Looking for Ways to Ease Opposition to Social
Security Overhaul
By EDMUND L. ANDREWS and RICHARD W. STEVENSON
The Bush administration is looking at new ideas for cutting
benefits that would hit wealthy retirees harder than those
in the middle or bottom ranks of wage-earners.
http://www.nytimes.com/2005/01/25/politics/25social.html?th
Security Overhaul
By EDMUND L. ANDREWS and RICHARD W. STEVENSON
The Bush administration is looking at new ideas for cutting
benefits that would hit wealthy retirees harder than those
in the middle or bottom ranks of wage-earners.
http://www.nytimes.com/2005/01/25/politics/25social.html?th
William Novelli
The chief executive officer of AARP dicusses social security policy
with the Monitor. By David T. Cook
http://www.csmonitor.com/2005/0125/p20s04-usmb.html?s=hns
The chief executive officer of AARP dicusses social security policy
with the Monitor. By David T. Cook
http://www.csmonitor.com/2005/0125/p20s04-usmb.html?s=hns
AARP, GOP Battle Over Private Accounts
--------------------
From Associated Press
January 25 2005
WASHINGTON — In a sign of the intensifying political battle over Social Security, the AARP released a nationwide poll Monday indicating deep public skepticism about President Bush's plan for personal accounts.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
--------------------
From Associated Press
January 25 2005
WASHINGTON — In a sign of the intensifying political battle over Social Security, the AARP released a nationwide poll Monday indicating deep public skepticism about President Bush's plan for personal accounts.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Social Security Reporting Review
January 24, 2005
The Social Security Reporting Review, by CEPR staff is a weekly review evaluates the reporting on Social Security in major media (print, radio, and television). You can sign up to receive SSRR and other CEPR e-newsletters at the CEPR Listserve Signup Page.
Outstanding Stories of the Week
Social Security Enlisted To Push Its Own Revision
Robert Pear
New York Times, January 16, 2005, Page A1
This article reports on the administration’s efforts to use the resources of the Social Security Administration to help convey the idea that the program is facing a crisis and need to be changed.
Critics See Social Security Warnings as Scare Tactics
Warren Vieth
Los Angeles Times, January 16, 2005
This article reports on the administrations efforts to use the resources of the Social Security Administration to help convey the idea that the program is facing a crisis and need to be changed.
Bush Proposal May Reduce Benefits for Disabled
Leigh Strope
Miami Herald, January 19, 2005, Section A; Page 6
This article reports on the likelihood that disability benefits will be subject to large benefit cuts under the President’s proposal to change Social Security. Disability payments support about 16 percent of current Social Security recipients, and disability payments are determined by the same formula as retirement benefits.
Social Security, Solvency, and Political Spin: How Credible are President Bush’s Dire Predictions?
Martin Wolk
MSNBC.com, January 14, 2005
Is There Really a Crisis?
Karen Tumulty, Eric Roston, Massimo Calabresi, Matthew Cooper, and Daren Fonda
Time Magazine, January 24, 2005, Page 22
These articles report on the political environment surrounding Social Security as well as the factual questions regarding the financial condition of the program. They both point to factual errors the President has been making while arguing for the creation of private accounts.
The Time Magazine article points out to readers that the program does not face bankruptcy and that, even if it did, private accounts would do “nothing to slow that process.”
Both articles rightly point out that, as Time put it, the “projected shortfall is not a new situation, or even the worst that Social Security has faced.” In the early 1980s, the problem was much more urgent and was fixed by Congress, which at the same time began the build up of the trust fund to prepare for the retirement of the baby boomers.
Social Security Discussion
Jack Cafferty, Andy Serwer
CNN In the Money, January 15, 2005
This segment presents the views of a proponent of President Bush’s Social Security privatization proposal. At one point host Jack Cafferty asserts that there is currently no real surplus in the Social Security trust fund. He stated that the trust fund is “an unfunded IOU from the federal government. …There is no box of money sitting anyplace.”
The "IOU"s Cafferty refers to are U.S. Treasury obligations, which have never had a default in the history of the United States. The money taxed by Social Security has been set aside and will be repaid, with interest, to the Social Security Trust Fund.
Bush: Program's Heading 'to Bankruptcy'
David Willman
Los Angeles Times, January 16, 2005, NEWS; National Desk; Part A; Pg. 32
Some House Republicans Urge the White House to Consider Tax Increases for Social Security
Edmund L. Andrews
New York Times, January 20, 2005, Section A; Column 1; National Desk; Pg. 19
These articles detail the debate among policymakers on Social Security and proposed reforms to the system by the Bush administration. Both reports mention that there will be a $3.7 trillion gap in Social Security financing over the next 75 years.
It would be useful to put this number in context. The Social Security trustees estimate that the Social Security deficit is equal to 0.7 percent of GDP over the 75 year planning period.
A Question of Numbers
Roger Lowenstein
New York Times, January 16, 2005, Magazine, Page 40
This article examines the history and prospects of the Social Security system. At one point it notes that the trustees report is “based on the actuaries’ analysis.” While this is true, it is important to note that the trustees report consists of projections made by the trustees, not the actuaries. Four of the six trustees are political appointees of the president (the secretaries of Labor, Health and Human Services, Treasury, and the Social Security Commissioner). The trustees receive recommendations from the actuaries at the Social Security Administration, but there is no way of knowing the extent to which they follow these recommendations, since they are not made public.
The article also asserts that the government has run larger deficits because it has been able to borrow the Social Security surplus. This is not clear. The nation’s largest peace-time deficit was 6.0 percent of GDP, a year in which Social Security was not running a surplus. There is no clear relationship between the size of the deficit on the general budget and the size of the Social Security surplus. In other words, it is not clear that the government has borrowed more than would have been the case if it did not have access to the Social Security trust fund.
The article also attributes part of Social Security’s financial problems in the late seventies to inflation. Actually, inflation improves the solvency of the program, since it lowers to some extent the real value of benefits. (Benefits are adjusted to inflation, but only at the end of the year.) According to the trustees' sensitivity analysis, if the annual inflation rate is 1.0 percentage point higher than projected (and wages and interest rates adjust accordingly), then the projected shortfall will fall by 0.22 percentage points of payroll (table VI.D5).
In noting the pessimism of the trustees' projections, the article points out that the trustees assume a much lower rate of immigration in 2020, when the retirement of the baby boomers is creating a labor shortage, than in the nineties. It is worth noting that the rate of immigration is a policy variable. If the public believes that the economy is suffering from a lack of labor, it will be able to have virtually an unlimited supply of immigrants by reducing barriers to immigration.
The article notes that the 1.1 percent projected average wage growth is approximately equal to the average wage growth of the last 40 years. For a seventy-five year projection, it would be reasonable to include the whole post-war period where we have reliable data. Since wages grew by more than 2.0 percent annually from 1945 to 1965, average growth over this longer period would be approximately 1.5 percent.
It is also important to note that the employer side of the payroll tax was increased by approximately 6.0 percentage points over the last forty years. These tax increases lowered average wage growth by 0.16 percentage points. Since the trustees' baseline projections are supposed to assume no changes in future tax rates, a pure extrapolation from the past forty years should show wage growth that is 0.16 percentage points higher than the actual wage growth over the prior forty years, since the projection should assume no increase in future tax rates.
The article includes a discussion of investing Social Security funds in the stock market. It refers to projections that the stock market will provide annual returns of 7.0 percentage points above the rate of inflation, the same rate of return the market has averaged over the past 70 years. Actually, this rate of return is impossible given current price to earnings ratios and the profit growth projections of the trustees. If the trustees are correct in their relatively pessimistic projections of economic growth, then the rate of return on stocks will average approximately 4.5 percentage points above the rate of inflation (see the see the "No Economist/Policy Analyst Left Behind Test").
Bush to Return to ‘Ownership Society’ Theme in Push for Social Security Changes
David E. Rosenbaum
New York Times, January 16, 2005, Page A17
This article discusses the themes that President Bush is expected to emphasize in his inaugural address. It repeatedly attributes his drive for Social Security privatization and other goals, such as reducing taxes on investment income and the promotion of health savings accounts, as a philosophical belief in promoting individual efforts rather than encouraging people to rely on the government.
It is important to note that President Bush is a politician, not a political philosopher. Politicians get elected by courting powerful interest groups. All of the proposals cited in this article provide substantial economic benefits to the constituencies that backed President Bush in his campaigns.
For example, the financial industry is likely to earn tens of billions in fees and commissions if it can gain access to the private accounts created by President Bush’s Social Security plan. Higher-income taxpayers will save themselves several thousand dollars a year, if more of the tax burden is shifted away from investment income and onto wage income. And the health insurance industry may gain a bonanza by offering the high-deductible insurance policies encouraged by Bush’s medical savings accounts. (These accounts would also allow wealthier and healthier people to get into a more favorable risk pool, thereby saving themselves money on insurance.)
While it is possible that President Bush is partially motivated by ideology in his proposals, it is not clear that his ideology really makes much difference in determining these policies. Politicians will almost always claim that they are motivated by their beliefs, rather than a desire to serve powerful political backers, but that does not mean that their claims are true, as this article appears to assume.
At one point the article asserts that investing $1000 annually in an individual account will lead to an accumulation of $140,000 after a 44 year working career. Actually, using stock return projections derived from the Social Security trustees' profit growth projections, the account would grow to just over $100,000 after 44 years.
Political Divisions Persist After Election
Richard Morin and Dan Balz
Washington Post, January 18, 2005, Page A1
This article reports on the results of a Washington Post-ABC News poll examining political attitudes in the country following the election. At one point the article comments that “Democratic leaders may be out of step with their rank and file on the severity of the problems facing Social Security.” It then reports “two-thirds of all Democrats worry that there is not enough money to keep Social Security funded until they retire.”
This is not a case of leadership being out of step with rank and file – this is evidence that the public is poorly informed about the financial state of Social Security. The trustees' projections show that the fund can pay all scheduled benefits through the year 2042, while the Congressional Budget Office projects that the program can pay all scheduled benefits through 2052. Both years are long past the retirement date of the vast majority of current voters. Even after these dates, both sets of projections show the program can always pay a higher benefit than the price-indexed one that President Bush has suggested, and that the poll claims most voters find acceptable.
The projected depletion date of Social Security is a factual matter, like the shape of the earth. If voters believe that the program will not be able to pay benefits at any earlier date than the standard projections, then it must be due to the fact that they have been misinformed. It does not reflect a differing political view.
Is the Social Security really in crisis?
David Gregory
NBC Nightly News, January 18, 2005
This segment explores the terms of the debate on Social Security. At one point correspondent David Gregory notes that the system’s “financial gap runs into trillions of dollars” over the next 75 years. It would have been helpful to pinpoint the exact number of the shortfall; 3.7 trillion. The Social Security trustees estimate that this Social Security deficit is equal to 0.7 percent of GDP over the 75 year planning period.
Report on Social Security Debate
Major Garrett
Fox Special Report with Brit Hume, January 18, 2005, 6 pm
This television segment reports that President Bush appears to be backing away from his earlier assertion that Social Security currently faces a “crisis.” At one point, the segment tells viewers, “Democrats continue to argue that Social Security benefits won’t decline for decades, and then when they do, only slightly.”
While Democrats do point this out, it is misleading to attribute the assertion only to President Bush’s critics. In fact, the Social Security trustees, the majority of whom are appointed by President Bush, are the ones who project that the program will first not be able to pay full scheduled benefits in 2042. Even at that point, benefits are not actually projected to decline from current levels. Because the projected benefit for 2042 is nearly 47 percent higher than current benefits (adjusted for inflation), the payable benefit projected for 2042 is still more than 7 percent higher (adjusted for inflation) than the average benefit today. The trustees project that the payable benefit will continue to rise by about 1 percent annually, in the years after 2042, although it is not projected to keep pace with the scheduled benefit for these years.
The nonpartisan Congressional Budget Office (CBO) is even more optimistic, projecting that the program will make full scheduled benefits until the year 2052. At that point, the payable benefit will be approximately 50 percent higher (adjusted for inflation) than the average benefit received by current retirees.
It is also worth noting that, under either the trustees projections or the CBO projections, the payable benefit under the current system would always be larger than the benefit that would be provided by Plan 2 from President Bush’s Social Security commission. The CBO projections imply that the average payable benefit in 2080 would be approximately twice as large (adjusted for inflation) as the benefit provided by Plan 2 from President Bush’s commission. In other words, the fact that the program may not be able to pay full scheduled benefits without changes would not appear to be an argument for adopting President Bush’s reform proposals.
Chile Offers Preview of Privatization
Kevin G. Hall
Miami Herald, January 20, 2005, Section A; Page 1
This article examines the record of Chile’s privatized Social Security system, put in place under the dictatorship of Augusto Pinochet. It claims at one point that “privatized pension funds can bring retirees higher returns than they would get from the government.”
One important lesson from Chile’s system, which should have been noted in this article, is that the administrative costs have been very high. Between 15 and 20 percent of the money flowing into the system was siphoned away by the financial industry in fees and commissions. By comparison, the administrative cost of the Social Security system is less than 0.5 percent of the annual flow of revenue into the system. The high administrative costs of the Chilean system was one of the major criticisms raised in the World Bank’s recent review of Social Security privatization in Latin America (Keeping the Promise of Social Security in Latin America, 2004, lead author Indermit Gill).
In assessing rates of return, the relevant measure is not past performance of stocks and bonds, but future performance. (Chile’ system originally offered a high rate of return, because its primary asset, Chilean government bonds were viewed as very risky and therefore paid high interest rates.) The article does not specify the rate of return that is assumed for the stock and bond markets. However, there is no rate of return, consistent with the Social Security trustees’ projections and current stock valuations, that would compensate for President Bush’s proposed benefit cuts, even if all Social Security taxes were invested in a private account (see the "No Economist/Policy Analyst Left Behind Test").
Additionally, at one point, the article states that Social Security’s shortfalls are “at least 13 years away.” This is inconsistent with the projections of the Social Security trustees, who project that the shortfalls are 37 years away. In 13 years, Social Security will begin benefiting from the interest on the trust fund that has been building since the 1980s. Those reserves will be enough to prevent shortfalls, according to the trustees, until 2042.
--------------------------------------------------------------------------------
Center for Economic and Policy Research, 1621 Connecticut Ave, NW, Suite 500, Washington, DC 20009
Phone: (202) 293-5380, Fax: (202) 588-1356, Home: www.cepr.net
January 24, 2005
The Social Security Reporting Review, by CEPR staff is a weekly review evaluates the reporting on Social Security in major media (print, radio, and television). You can sign up to receive SSRR and other CEPR e-newsletters at the CEPR Listserve Signup Page.
Outstanding Stories of the Week
Social Security Enlisted To Push Its Own Revision
Robert Pear
New York Times, January 16, 2005, Page A1
This article reports on the administration’s efforts to use the resources of the Social Security Administration to help convey the idea that the program is facing a crisis and need to be changed.
Critics See Social Security Warnings as Scare Tactics
Warren Vieth
Los Angeles Times, January 16, 2005
This article reports on the administrations efforts to use the resources of the Social Security Administration to help convey the idea that the program is facing a crisis and need to be changed.
Bush Proposal May Reduce Benefits for Disabled
Leigh Strope
Miami Herald, January 19, 2005, Section A; Page 6
This article reports on the likelihood that disability benefits will be subject to large benefit cuts under the President’s proposal to change Social Security. Disability payments support about 16 percent of current Social Security recipients, and disability payments are determined by the same formula as retirement benefits.
Social Security, Solvency, and Political Spin: How Credible are President Bush’s Dire Predictions?
Martin Wolk
MSNBC.com, January 14, 2005
Is There Really a Crisis?
Karen Tumulty, Eric Roston, Massimo Calabresi, Matthew Cooper, and Daren Fonda
Time Magazine, January 24, 2005, Page 22
These articles report on the political environment surrounding Social Security as well as the factual questions regarding the financial condition of the program. They both point to factual errors the President has been making while arguing for the creation of private accounts.
The Time Magazine article points out to readers that the program does not face bankruptcy and that, even if it did, private accounts would do “nothing to slow that process.”
Both articles rightly point out that, as Time put it, the “projected shortfall is not a new situation, or even the worst that Social Security has faced.” In the early 1980s, the problem was much more urgent and was fixed by Congress, which at the same time began the build up of the trust fund to prepare for the retirement of the baby boomers.
Social Security Discussion
Jack Cafferty, Andy Serwer
CNN In the Money, January 15, 2005
This segment presents the views of a proponent of President Bush’s Social Security privatization proposal. At one point host Jack Cafferty asserts that there is currently no real surplus in the Social Security trust fund. He stated that the trust fund is “an unfunded IOU from the federal government. …There is no box of money sitting anyplace.”
The "IOU"s Cafferty refers to are U.S. Treasury obligations, which have never had a default in the history of the United States. The money taxed by Social Security has been set aside and will be repaid, with interest, to the Social Security Trust Fund.
Bush: Program's Heading 'to Bankruptcy'
David Willman
Los Angeles Times, January 16, 2005, NEWS; National Desk; Part A; Pg. 32
Some House Republicans Urge the White House to Consider Tax Increases for Social Security
Edmund L. Andrews
New York Times, January 20, 2005, Section A; Column 1; National Desk; Pg. 19
These articles detail the debate among policymakers on Social Security and proposed reforms to the system by the Bush administration. Both reports mention that there will be a $3.7 trillion gap in Social Security financing over the next 75 years.
It would be useful to put this number in context. The Social Security trustees estimate that the Social Security deficit is equal to 0.7 percent of GDP over the 75 year planning period.
A Question of Numbers
Roger Lowenstein
New York Times, January 16, 2005, Magazine, Page 40
This article examines the history and prospects of the Social Security system. At one point it notes that the trustees report is “based on the actuaries’ analysis.” While this is true, it is important to note that the trustees report consists of projections made by the trustees, not the actuaries. Four of the six trustees are political appointees of the president (the secretaries of Labor, Health and Human Services, Treasury, and the Social Security Commissioner). The trustees receive recommendations from the actuaries at the Social Security Administration, but there is no way of knowing the extent to which they follow these recommendations, since they are not made public.
The article also asserts that the government has run larger deficits because it has been able to borrow the Social Security surplus. This is not clear. The nation’s largest peace-time deficit was 6.0 percent of GDP, a year in which Social Security was not running a surplus. There is no clear relationship between the size of the deficit on the general budget and the size of the Social Security surplus. In other words, it is not clear that the government has borrowed more than would have been the case if it did not have access to the Social Security trust fund.
The article also attributes part of Social Security’s financial problems in the late seventies to inflation. Actually, inflation improves the solvency of the program, since it lowers to some extent the real value of benefits. (Benefits are adjusted to inflation, but only at the end of the year.) According to the trustees' sensitivity analysis, if the annual inflation rate is 1.0 percentage point higher than projected (and wages and interest rates adjust accordingly), then the projected shortfall will fall by 0.22 percentage points of payroll (table VI.D5).
In noting the pessimism of the trustees' projections, the article points out that the trustees assume a much lower rate of immigration in 2020, when the retirement of the baby boomers is creating a labor shortage, than in the nineties. It is worth noting that the rate of immigration is a policy variable. If the public believes that the economy is suffering from a lack of labor, it will be able to have virtually an unlimited supply of immigrants by reducing barriers to immigration.
The article notes that the 1.1 percent projected average wage growth is approximately equal to the average wage growth of the last 40 years. For a seventy-five year projection, it would be reasonable to include the whole post-war period where we have reliable data. Since wages grew by more than 2.0 percent annually from 1945 to 1965, average growth over this longer period would be approximately 1.5 percent.
It is also important to note that the employer side of the payroll tax was increased by approximately 6.0 percentage points over the last forty years. These tax increases lowered average wage growth by 0.16 percentage points. Since the trustees' baseline projections are supposed to assume no changes in future tax rates, a pure extrapolation from the past forty years should show wage growth that is 0.16 percentage points higher than the actual wage growth over the prior forty years, since the projection should assume no increase in future tax rates.
The article includes a discussion of investing Social Security funds in the stock market. It refers to projections that the stock market will provide annual returns of 7.0 percentage points above the rate of inflation, the same rate of return the market has averaged over the past 70 years. Actually, this rate of return is impossible given current price to earnings ratios and the profit growth projections of the trustees. If the trustees are correct in their relatively pessimistic projections of economic growth, then the rate of return on stocks will average approximately 4.5 percentage points above the rate of inflation (see the see the "No Economist/Policy Analyst Left Behind Test").
Bush to Return to ‘Ownership Society’ Theme in Push for Social Security Changes
David E. Rosenbaum
New York Times, January 16, 2005, Page A17
This article discusses the themes that President Bush is expected to emphasize in his inaugural address. It repeatedly attributes his drive for Social Security privatization and other goals, such as reducing taxes on investment income and the promotion of health savings accounts, as a philosophical belief in promoting individual efforts rather than encouraging people to rely on the government.
It is important to note that President Bush is a politician, not a political philosopher. Politicians get elected by courting powerful interest groups. All of the proposals cited in this article provide substantial economic benefits to the constituencies that backed President Bush in his campaigns.
For example, the financial industry is likely to earn tens of billions in fees and commissions if it can gain access to the private accounts created by President Bush’s Social Security plan. Higher-income taxpayers will save themselves several thousand dollars a year, if more of the tax burden is shifted away from investment income and onto wage income. And the health insurance industry may gain a bonanza by offering the high-deductible insurance policies encouraged by Bush’s medical savings accounts. (These accounts would also allow wealthier and healthier people to get into a more favorable risk pool, thereby saving themselves money on insurance.)
While it is possible that President Bush is partially motivated by ideology in his proposals, it is not clear that his ideology really makes much difference in determining these policies. Politicians will almost always claim that they are motivated by their beliefs, rather than a desire to serve powerful political backers, but that does not mean that their claims are true, as this article appears to assume.
At one point the article asserts that investing $1000 annually in an individual account will lead to an accumulation of $140,000 after a 44 year working career. Actually, using stock return projections derived from the Social Security trustees' profit growth projections, the account would grow to just over $100,000 after 44 years.
Political Divisions Persist After Election
Richard Morin and Dan Balz
Washington Post, January 18, 2005, Page A1
This article reports on the results of a Washington Post-ABC News poll examining political attitudes in the country following the election. At one point the article comments that “Democratic leaders may be out of step with their rank and file on the severity of the problems facing Social Security.” It then reports “two-thirds of all Democrats worry that there is not enough money to keep Social Security funded until they retire.”
This is not a case of leadership being out of step with rank and file – this is evidence that the public is poorly informed about the financial state of Social Security. The trustees' projections show that the fund can pay all scheduled benefits through the year 2042, while the Congressional Budget Office projects that the program can pay all scheduled benefits through 2052. Both years are long past the retirement date of the vast majority of current voters. Even after these dates, both sets of projections show the program can always pay a higher benefit than the price-indexed one that President Bush has suggested, and that the poll claims most voters find acceptable.
The projected depletion date of Social Security is a factual matter, like the shape of the earth. If voters believe that the program will not be able to pay benefits at any earlier date than the standard projections, then it must be due to the fact that they have been misinformed. It does not reflect a differing political view.
Is the Social Security really in crisis?
David Gregory
NBC Nightly News, January 18, 2005
This segment explores the terms of the debate on Social Security. At one point correspondent David Gregory notes that the system’s “financial gap runs into trillions of dollars” over the next 75 years. It would have been helpful to pinpoint the exact number of the shortfall; 3.7 trillion. The Social Security trustees estimate that this Social Security deficit is equal to 0.7 percent of GDP over the 75 year planning period.
Report on Social Security Debate
Major Garrett
Fox Special Report with Brit Hume, January 18, 2005, 6 pm
This television segment reports that President Bush appears to be backing away from his earlier assertion that Social Security currently faces a “crisis.” At one point, the segment tells viewers, “Democrats continue to argue that Social Security benefits won’t decline for decades, and then when they do, only slightly.”
While Democrats do point this out, it is misleading to attribute the assertion only to President Bush’s critics. In fact, the Social Security trustees, the majority of whom are appointed by President Bush, are the ones who project that the program will first not be able to pay full scheduled benefits in 2042. Even at that point, benefits are not actually projected to decline from current levels. Because the projected benefit for 2042 is nearly 47 percent higher than current benefits (adjusted for inflation), the payable benefit projected for 2042 is still more than 7 percent higher (adjusted for inflation) than the average benefit today. The trustees project that the payable benefit will continue to rise by about 1 percent annually, in the years after 2042, although it is not projected to keep pace with the scheduled benefit for these years.
The nonpartisan Congressional Budget Office (CBO) is even more optimistic, projecting that the program will make full scheduled benefits until the year 2052. At that point, the payable benefit will be approximately 50 percent higher (adjusted for inflation) than the average benefit received by current retirees.
It is also worth noting that, under either the trustees projections or the CBO projections, the payable benefit under the current system would always be larger than the benefit that would be provided by Plan 2 from President Bush’s Social Security commission. The CBO projections imply that the average payable benefit in 2080 would be approximately twice as large (adjusted for inflation) as the benefit provided by Plan 2 from President Bush’s commission. In other words, the fact that the program may not be able to pay full scheduled benefits without changes would not appear to be an argument for adopting President Bush’s reform proposals.
Chile Offers Preview of Privatization
Kevin G. Hall
Miami Herald, January 20, 2005, Section A; Page 1
This article examines the record of Chile’s privatized Social Security system, put in place under the dictatorship of Augusto Pinochet. It claims at one point that “privatized pension funds can bring retirees higher returns than they would get from the government.”
One important lesson from Chile’s system, which should have been noted in this article, is that the administrative costs have been very high. Between 15 and 20 percent of the money flowing into the system was siphoned away by the financial industry in fees and commissions. By comparison, the administrative cost of the Social Security system is less than 0.5 percent of the annual flow of revenue into the system. The high administrative costs of the Chilean system was one of the major criticisms raised in the World Bank’s recent review of Social Security privatization in Latin America (Keeping the Promise of Social Security in Latin America, 2004, lead author Indermit Gill).
In assessing rates of return, the relevant measure is not past performance of stocks and bonds, but future performance. (Chile’ system originally offered a high rate of return, because its primary asset, Chilean government bonds were viewed as very risky and therefore paid high interest rates.) The article does not specify the rate of return that is assumed for the stock and bond markets. However, there is no rate of return, consistent with the Social Security trustees’ projections and current stock valuations, that would compensate for President Bush’s proposed benefit cuts, even if all Social Security taxes were invested in a private account (see the "No Economist/Policy Analyst Left Behind Test").
Additionally, at one point, the article states that Social Security’s shortfalls are “at least 13 years away.” This is inconsistent with the projections of the Social Security trustees, who project that the shortfalls are 37 years away. In 13 years, Social Security will begin benefiting from the interest on the trust fund that has been building since the 1980s. Those reserves will be enough to prevent shortfalls, according to the trustees, until 2042.
--------------------------------------------------------------------------------
Center for Economic and Policy Research, 1621 Connecticut Ave, NW, Suite 500, Washington, DC 20009
Phone: (202) 293-5380, Fax: (202) 588-1356, Home: www.cepr.net
http://www.ombwatch.org/article/articlevie...9/1/2?TopicID=1
Social Security Reform Comes Front and Center
Social Security Reform Comes Front and Center
http://www.ombwatch.org/article/articleview/2631/1/313
Social Security Will Impact More Than Just Seniors
Social Security Will Impact More Than Just Seniors
http://www.ombwatch.org/article/articleview/2630/1/313
Will Bush's Social Security Reform Plan Succeed?
Will Bush's Social Security Reform Plan Succeed?
..................
Senators Urge Bush to Sell Overhaul of Social Security
By DAVID E. ROSENBAUM
Republican senators told President Bush on Tuesday that the
drive to change the Social Security system is faltering
because the public is not convinced an overhaul is
necessary.
http://www.nytimes.com/2005/01/26/politics/26social.html?th
Senators Urge Bush to Sell Overhaul of Social Security
By DAVID E. ROSENBAUM
Republican senators told President Bush on Tuesday that the
drive to change the Social Security system is faltering
because the public is not convinced an overhaul is
necessary.
http://www.nytimes.com/2005/01/26/politics/26social.html?th
Social Security crisis? Not if wealthy pay their way
Under Reagan reforms, top earners were to start paying higher income
taxes in 2018. By Kevin Drum
http://www.csmonitor.com/2005/0127/p09s01-coop.html?s=hns
Under Reagan reforms, top earners were to start paying higher income
taxes in 2018. By Kevin Drum
http://www.csmonitor.com/2005/0127/p09s01-coop.html?s=hns
--------------------
Privatizing Social Security: 'Me' Over 'We'
--------------------
By Benjamin R. Barber
Benjamin R. Barber, a professor of political science at the University of Maryland, is the author of "Jihad vs. McWorld" (Ballantine, 1996) and other books.
January 27 2005
Social Security privatization has been vigorously challenged on both economic and technical grounds. It has been said again and again that privatization increases risk for prospective retirees without solving the long-term Social Security financing shortfall (if there actually is one). It has been argued that privatization is merely a scheme to divert money from the Social Security trust fund for speculative stock market investments. And it has been noted that it creates new costs (portfolio management, government oversight) without being able to guarantee workers future retirement benefits.
The complete article can be viewed at:
http://www.latimes.com/news/opinion/la-oe-...0,3156114.story
Privatizing Social Security: 'Me' Over 'We'
--------------------
By Benjamin R. Barber
Benjamin R. Barber, a professor of political science at the University of Maryland, is the author of "Jihad vs. McWorld" (Ballantine, 1996) and other books.
January 27 2005
Social Security privatization has been vigorously challenged on both economic and technical grounds. It has been said again and again that privatization increases risk for prospective retirees without solving the long-term Social Security financing shortfall (if there actually is one). It has been argued that privatization is merely a scheme to divert money from the Social Security trust fund for speculative stock market investments. And it has been noted that it creates new costs (portfolio management, government oversight) without being able to guarantee workers future retirement benefits.
The complete article can be viewed at:
http://www.latimes.com/news/opinion/la-oe-...0,3156114.story
..................
OP-ED COLUMNIST
Little Black Lies
By PAUL KRUGMAN
President Bush's claim that we must privatize Social
Security to avert an imminent crisis has evidently fallen
flat. So now he's playing the race card.
http://www.nytimes.com/2005/01/28/opinion/28krugman.html?th
OP-ED COLUMNIST
Little Black Lies
By PAUL KRUGMAN
President Bush's claim that we must privatize Social
Security to avert an imminent crisis has evidently fallen
flat. So now he's playing the race card.
http://www.nytimes.com/2005/01/28/opinion/28krugman.html?th
--------------------
Ominous Ring to Calls About Social Security
--------------------
Automated messages to constituents in dozens of districts accuse several Republicans in Congress of trying to jeopardize the retirement program.
By Richard Simon and Peter Wallsten
Times Staff Writers
January 28 2005
WASHINGTON — In a sign of the political dangers surrounding President Bush's plans for Social Security, a number of congressional Republicans said Thursday that their constituents had received anonymous, automated phone calls accusing the lawmakers of trying to damage the government retirement program by "privatizing" it.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Ominous Ring to Calls About Social Security
--------------------
Automated messages to constituents in dozens of districts accuse several Republicans in Congress of trying to jeopardize the retirement program.
By Richard Simon and Peter Wallsten
Times Staff Writers
January 28 2005
WASHINGTON — In a sign of the political dangers surrounding President Bush's plans for Social Security, a number of congressional Republicans said Thursday that their constituents had received anonymous, automated phone calls accusing the lawmakers of trying to damage the government retirement program by "privatizing" it.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Pelosi: Privatization Details are Simply an Attempt to Distract from Republican Plan to Cut Social Security Benefits
1/28/2005 11:38:00 AM
Contact: Brendan Daly or Jennifer Crider, 202-226-7616, both of the Office of House Democratic Leader Nancy Pelosi
WASHINGTON, Jan. 28 /U.S. Newswire/ -- House Democratic Leader Nancy Pelosi released the following statement today in response to news reports that the Bush Administration has settled on a structure for its proposal to create private accounts within the Social Security program:
"The newest details from the Bush Administration on their plan to privatize Social Security are really nothing new. They are simply an attempt to distract from the fundamental flaws of the Administration's proposal -- it cuts benefits by almost 50 percent in the coming decades and requires at least $2 trillion in new debt to foreign countries. How the Bush Administration proposes to address the real problems Social Security faces is an open question.
"Mr. President, the American people deserve honest answers, not just another public relations strategy.
"Democrats are ready to work with Republicans to protect Social Security. But the President must make a good faith effort to work in a bipartisan way. A good first step would be for the President to put forth a plan that does not reduce Social Security funding, harm the middle class, or begin by cutting guaranteed benefits."
http://www.usnewswire.com/
1/28/2005 11:38:00 AM
Contact: Brendan Daly or Jennifer Crider, 202-226-7616, both of the Office of House Democratic Leader Nancy Pelosi
WASHINGTON, Jan. 28 /U.S. Newswire/ -- House Democratic Leader Nancy Pelosi released the following statement today in response to news reports that the Bush Administration has settled on a structure for its proposal to create private accounts within the Social Security program:
"The newest details from the Bush Administration on their plan to privatize Social Security are really nothing new. They are simply an attempt to distract from the fundamental flaws of the Administration's proposal -- it cuts benefits by almost 50 percent in the coming decades and requires at least $2 trillion in new debt to foreign countries. How the Bush Administration proposes to address the real problems Social Security faces is an open question.
"Mr. President, the American people deserve honest answers, not just another public relations strategy.
"Democrats are ready to work with Republicans to protect Social Security. But the President must make a good faith effort to work in a bipartisan way. A good first step would be for the President to put forth a plan that does not reduce Social Security funding, harm the middle class, or begin by cutting guaranteed benefits."
http://www.usnewswire.com/
Bond, Gandy: Mr. President, Social Security Should Not Be Separate But Equal; NAACP, NOW Leaders Challenge GOP Suggestion that Social Security Benefit Cuts Be Determined by Race, Gender
1/28/2005 3:10:00 PM
Contact: Toby Chaudhuri of Campaign for America's Future, 202-955-5665; Web: http://www.ourfuture.org
WASHINGTON, Jan. 28 /U.S. Newswire/ -- National Association for the Advancement of Colored People Chairman Julian Bond and National Organization for Women President Kim Gandy today called on President Bush to denounce Rep. Bill Thomas, R-Calif. who suggested that Congress adjust Social Security benefits based on race and gender. Bond and Gandy charged that the Bush privatization proposal would, in fact, cut benefits severely for African-Americans and women.
Gandy leads the largest organization of feminist activists in the United States, which has worked for nearly four decades to bring about equality and justice for women in our society.
Bond, who serves as chairman of the nation's oldest organization fighting to ensure equal rights and the end of racial hatred and discrimination, was not invited to private meetings President Bush held this week with leaders of the black community to sell his plan to privatize Social Security.
"We are appalled by your failure to publicly denounce Congressman Bill Thomas's suggestion that Congress create a 'separate but equal' Social Security system that allocates benefits according to race and gender," Bond and Gandy wrote in the letter delivered today to the White House.
"The administration is clearly determined to reduce Social Security benefits," said NOW President Kim Gandy. "It's not surprising that women and people of color are being targeted for the harshest cuts."
Campaign for America's Future Co-director Roger Hickey, whose group is helping to coordinate efforts opposing President Bush's plan to privatize Social Security and cut benefits, said that the White House has actually reinforced Thomas' irresponsible claims.
"The president's comments yesterday to African-American leaders have perpetuated the myth that his plan would help African-Americans and women, when in fact the exact opposite is true. Every American should have an equal opportunity from the start and a secure retirement at the end of a life of work, no matter their race, their creed or their gender," said Hickey. "The American people will not stand for using race or gender to determine the amount of money in a Social Security check and they will not stand for a privatization plan that cuts benefits and costs by $2 trillion."
http://www.usnewswire.com/
1/28/2005 3:10:00 PM
Contact: Toby Chaudhuri of Campaign for America's Future, 202-955-5665; Web: http://www.ourfuture.org
WASHINGTON, Jan. 28 /U.S. Newswire/ -- National Association for the Advancement of Colored People Chairman Julian Bond and National Organization for Women President Kim Gandy today called on President Bush to denounce Rep. Bill Thomas, R-Calif. who suggested that Congress adjust Social Security benefits based on race and gender. Bond and Gandy charged that the Bush privatization proposal would, in fact, cut benefits severely for African-Americans and women.
Gandy leads the largest organization of feminist activists in the United States, which has worked for nearly four decades to bring about equality and justice for women in our society.
Bond, who serves as chairman of the nation's oldest organization fighting to ensure equal rights and the end of racial hatred and discrimination, was not invited to private meetings President Bush held this week with leaders of the black community to sell his plan to privatize Social Security.
"We are appalled by your failure to publicly denounce Congressman Bill Thomas's suggestion that Congress create a 'separate but equal' Social Security system that allocates benefits according to race and gender," Bond and Gandy wrote in the letter delivered today to the White House.
"The administration is clearly determined to reduce Social Security benefits," said NOW President Kim Gandy. "It's not surprising that women and people of color are being targeted for the harshest cuts."
Campaign for America's Future Co-director Roger Hickey, whose group is helping to coordinate efforts opposing President Bush's plan to privatize Social Security and cut benefits, said that the White House has actually reinforced Thomas' irresponsible claims.
"The president's comments yesterday to African-American leaders have perpetuated the myth that his plan would help African-Americans and women, when in fact the exact opposite is true. Every American should have an equal opportunity from the start and a secure retirement at the end of a life of work, no matter their race, their creed or their gender," said Hickey. "The American people will not stand for using race or gender to determine the amount of money in a Social Security check and they will not stand for a privatization plan that cuts benefits and costs by $2 trillion."
http://www.usnewswire.com/
--------------------
New Idea for This Side of the Pond
--------------------
The House Ways and Means chair proposes funding Social Security and more with a value-added tax like those used in Europe.
By Ronald Brownstein
Times Staff Writer
January 29 2005
WASHINGTON — A provocative proposal from the Californian who chairs the House's powerful tax-writing committee may represent a high-risk opportunity to jump-start President Bush's Social Security initiative, even as it underscores the difficulties confronting the administration plan, analysts in both parties say.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
New Idea for This Side of the Pond
--------------------
The House Ways and Means chair proposes funding Social Security and more with a value-added tax like those used in Europe.
By Ronald Brownstein
Times Staff Writer
January 29 2005
WASHINGTON — A provocative proposal from the Californian who chairs the House's powerful tax-writing committee may represent a high-risk opportunity to jump-start President Bush's Social Security initiative, even as it underscores the difficulties confronting the administration plan, analysts in both parties say.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
--------------------
Both Parties Rally Their Forces Over Social Security
--------------------
Bush trumpets his overhaul plan at a GOP retreat. A Roosevelt tells Democrats that the president's proposal would kill the system.
By Richard Simon Times Staff Writer
Times Staff Writer
January 29 2005
WASHINGTON — In rooms about 200 miles apart, the two political parties Friday firmed up the battle lines over Social Security.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Both Parties Rally Their Forces Over Social Security
--------------------
Bush trumpets his overhaul plan at a GOP retreat. A Roosevelt tells Democrats that the president's proposal would kill the system.
By Richard Simon Times Staff Writer
Times Staff Writer
January 29 2005
WASHINGTON — In rooms about 200 miles apart, the two political parties Friday firmed up the battle lines over Social Security.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
http://story.news.yahoo.com/news?tmpl=stor...social_security
Democrats bash Bush Social Security Plan
Democrats bash Bush Social Security Plan
Democrats Decry Use of Agency in Social Security Battle
By Charles Babington
Congressional Democrats yesterday called on the Bush administration to refrain from using federal agencies and resources to promote the president's bid to change Social Security, part of an increasingly sharp Democratic attack on his proposal.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
By Charles Babington
Congressional Democrats yesterday called on the Bush administration to refrain from using federal agencies and resources to promote the president's bid to change Social Security, part of an increasingly sharp Democratic attack on his proposal.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
Bush Pledges to Take the Lead on Social Security Changes
By Mike Allen
WHITE SULPHUR SPRINGS, W.Va., Jan. 28 -- President Bush on Friday promised House and Senate Republicans gathered here that he will provide them with political cover as he campaigns this year for passage of profound but politically risky changes in Social Security.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
By Mike Allen
WHITE SULPHUR SPRINGS, W.Va., Jan. 28 -- President Bush on Friday promised House and Senate Republicans gathered here that he will provide them with political cover as he campaigns this year for passage of profound but politically risky changes in Social Security.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
--------------------
They Invested Years in Private Accounts
--------------------
Conservatives who want to alter Social Security have long worked to nudge public opinion. Bush will likely advance the cause this week.
By Janet Hook
Times Staff Writer
January 30 2005
WASHINGTON — Back in 1997, proponents of overhauling Social Security met with the man who would become their most powerful convert: Texas Gov. George W. Bush, whose presidential ambitions were beginning to gel.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...0,0,77382.story
They Invested Years in Private Accounts
--------------------
Conservatives who want to alter Social Security have long worked to nudge public opinion. Bush will likely advance the cause this week.
By Janet Hook
Times Staff Writer
January 30 2005
WASHINGTON — Back in 1997, proponents of overhauling Social Security met with the man who would become their most powerful convert: Texas Gov. George W. Bush, whose presidential ambitions were beginning to gel.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...0,0,77382.story
The article below was in the Boston Globe today. The full court press is on. The snake oil is flowing:
Bush argues his Social Security plan aids blacks
By Michael Kranish, Globe Staff | January 30, 2005
Second in a series of occasional articles examining the economic and political stakes involved in the Bush administration's proposed overhaul of Social Security.
ADVERTISEMENT
WASHINGTON -- As President Bush prepares to accelerate his sales pitch for overhauling Social Security, he is increasingly wrapping his rhetoric in racial terms. The system, he argues, is ''inherently unfair" to many blacks.
The solution, Bush says, is to embrace his plan for private accounts, details of which he may provide in his annual State of the Union address Wednesday.
Under a system based on wages, the average monthly Social Security retirement benefit received by African-Americans is $775, compared with $912 for whites. In addition, many blacks never receive the benefits because a disproportionate number die before they are eligible. On average, black males die six years sooner than white males.
But some groups representing African-Americans say that Bush's logic is faulty and that creating private accounts would hurt blacks rather than help them. They maintain that Bush is playing a race card to boost his plan.
Representative Charles B. Rangel, a New York City Democrat who was among black members of Congress who met with Bush last week, said he is ''really offended" that the White House and some Republicans are trying to sell Bush's plan for private accounts on grounds that it would be more beneficial to African-Americans.
''It is one of the cruelest things that I have ever read, and I regret that it comes from the office of the president," Rangel said. If Bush wants to do something about inequities between the races, Rangel said, he should address issues including the lack of access to healthcare among many blacks, higher unemployment, and lower wages. Rangel added that unless blacks have better economic prospects, private Social Security accounts will not help them.
''I told the president, 'You can't get out what you can't put in,' " he said.
Whichever side is right, the controversy has put a spotlight on what some say has been missing in the national discussion over Social Security: Is the system filled with inequities that discriminate against certain demographic groups?
Advocates for gays and lesbians, for example, say they are treated unfairly because the federal government does not recognize civil unions or same-sex marriages, and thus does not pay survivor benefits to partners. This could amount to a loss of more than $1,000 a month to a surviving partner. The system is also under fire for its treatment of unmarried retired women, particularly African-American women. This group faces poverty rates among the nation's highest, even with Social Security benefits, according to a Social Security Administration study.
The question of whether the system is tilted against blacks has become a central argument in the debate over private accounts. The White House strategy for selling the idea of private accounts includes an effort to win over African-Americans, on grounds that black males, on average, die at age 69, compared with 75 years for white males. Social Security's full retirement benefits begin to be paid between age 65 and 67.
Bush, at a forum on Jan. 11, said: ''African-American males die sooner than other males do, which means the system is inherently unfair to a certain group of people. And that needs to be fixed."
The president appeared at the Washington forum with an African-American, Robert McFadden of New Jersey, who said his father died at 57. He said all that the family received after his father's death was a $255 check to help with burial expenses.
McFadden's father was too young to have received retirement benefits, and his brother was in college and did not qualify for survivor benefits, which usually are given to children until they graduate high school or turn 18.
''I don't think people realize how painful it is to receive a check like that and have a child in college," McFadden, a Republican and a Bush supporter, said in a telephone interview. ''That is why I think the president is suggesting people have an option" for private accounts.
Maya Rockeymoore, who has studied the issue at the Congressional Black Caucus Foundation, said Bush's plan for private accounts is not a good solution. The average age of death for blacks, she said, is earlier than for whites because homicide, poverty, and a lack of health care kills many black men at a young age.
She also said blacks get a higher return on benefits for the disabled and survivors. While blacks make up 12 percent of the population, they account for only 8.1 percent of those receiving direct retirement benefits. But blacks make up for that deficit by collecting more from other parts of the program -- the benefits for disabled persons and survivors, Rockeymoore said. African-Americans account for 18 percent of those receiving Social Security disability payments and 23 percent of children receiving survivor benefits, she said.
Rockeymoore said Bush's proposal for private Social Security accounts was flawed because many blacks' low incomes would prevent them from contributing significantly. Asserting that some proposals call for cutting benefits in addition to the creation of private accounts, she said that the plan would hurt many blacks.
''He would be dealing with health care if he really cared about it," Rockeymoore said, when asked about Bush's comment that the Social Security system is inherently unfair to blacks. Rockeymoore said Bush is ''playing a race card" as ''an excuse to change the system for their own narrow ends."
She noted that the Census Bureau says 11 percent of whites do not have health insurance, compared with 20 percent of blacks.
Generally, whites have a significantly higher average monthly retirement benefit than blacks because they had higher wages. Social Security payments are based on wage history, although there are adjustments to compensate for some of the difference.
A White House official denied that Bush is playing a race card and said the president is pushing a program for health insurance tax credits, as well as tax cuts to stimulate the economy. The official did not say whether Bush plans to cut future Social Security benefits because the president has not unveiled his plan.
Jeffrey Liebman, an associate professor of public policy at Harvard's John F. Kennedy School of Government, has studied the issue of whether blacks are treated unfairly by Social Security. He has concluded that blacks and whites receive roughly the same return on payroll taxes.
Agreeing with Rockeymoore, Liebman said: ''Black retirees on average receive benefits for fewer years than white retirees. But blacks are benefited by the current system because low earners get a higher return on their payroll taxes and because blacks are more likely to receive disability and young survivor benefits."
Liebman also disputed Bush's assertion that his plan for private accounts would make the system more fair to blacks. Even with the accounts, the same disparities between whites and blacks would exist, he said. Liebman, a former adviser to President Clinton, favors a plan for adding private accounts on top of Social Security, not replacing part of the existing system.
Advocates for gays and lesbians, meanwhile, say they are discriminated against because the federal government does not recognize same-sex marriages or civil unions.
An analysis by the National Gay and Lesbian Task Force presented a case study in which the denial of joint retirement benefits costs a typical same-sex couple $500 per month and the denial of survivor benefits costs the survivor $1,224 per month. ''For couples who are paying into the system their whole lives, if one dies before retirement age, it is unfair that their partner can't get the same benefits," said Sean Cahill, head of the body's policy institute.
A Social Security spokesman, Mark Lassiter, acknowledged that based on federal law, including the 1996 Defense of Marriage Act, the agency must deny any application for survivor benefits from a gay partner. The benefits ''are not payable based on a gay marriage," Lassiter said. He said he did not know of any case in which a same-sex survivor has applied for benefits. Advocates for gays and lesbians said it seems inevitable that there will be a court test.
The Democratic National Committee is on record as supporting benefits for same-sex partners. A White House official said Bush, who backs a ban on same-sex marriage, does not support such benefits for gay and lesbian partners.
Analysts said some inequities in the Social Security system have developed because the program was designed for the 1930s, when women usually remained at home and most people did not have significant assets. As a result, the system pays benefits based only on work history, not on wealth. Indeed, a multimillionaire whose wealth is based on investments, not salary, could be given extra money by the Social Security system, which assumes that a person with a lower wage history needs extra benefits.
''Social Security is a one-size-fits-all and it doesn't take into consideration changes because of income levels, gender, and many other things," said David John, who studies the issue at the conservative Heritage Foundation.
An article on this topic appeared in the Globe of Jan. 14.
Michael Kranish can be reached at kranish@globe.com
© Copyright 2005 Globe Newspaper Company.
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Bush argues his Social Security plan aids blacks
By Michael Kranish, Globe Staff | January 30, 2005
Second in a series of occasional articles examining the economic and political stakes involved in the Bush administration's proposed overhaul of Social Security.
ADVERTISEMENT
WASHINGTON -- As President Bush prepares to accelerate his sales pitch for overhauling Social Security, he is increasingly wrapping his rhetoric in racial terms. The system, he argues, is ''inherently unfair" to many blacks.
The solution, Bush says, is to embrace his plan for private accounts, details of which he may provide in his annual State of the Union address Wednesday.
Under a system based on wages, the average monthly Social Security retirement benefit received by African-Americans is $775, compared with $912 for whites. In addition, many blacks never receive the benefits because a disproportionate number die before they are eligible. On average, black males die six years sooner than white males.
But some groups representing African-Americans say that Bush's logic is faulty and that creating private accounts would hurt blacks rather than help them. They maintain that Bush is playing a race card to boost his plan.
Representative Charles B. Rangel, a New York City Democrat who was among black members of Congress who met with Bush last week, said he is ''really offended" that the White House and some Republicans are trying to sell Bush's plan for private accounts on grounds that it would be more beneficial to African-Americans.
''It is one of the cruelest things that I have ever read, and I regret that it comes from the office of the president," Rangel said. If Bush wants to do something about inequities between the races, Rangel said, he should address issues including the lack of access to healthcare among many blacks, higher unemployment, and lower wages. Rangel added that unless blacks have better economic prospects, private Social Security accounts will not help them.
''I told the president, 'You can't get out what you can't put in,' " he said.
Whichever side is right, the controversy has put a spotlight on what some say has been missing in the national discussion over Social Security: Is the system filled with inequities that discriminate against certain demographic groups?
Advocates for gays and lesbians, for example, say they are treated unfairly because the federal government does not recognize civil unions or same-sex marriages, and thus does not pay survivor benefits to partners. This could amount to a loss of more than $1,000 a month to a surviving partner. The system is also under fire for its treatment of unmarried retired women, particularly African-American women. This group faces poverty rates among the nation's highest, even with Social Security benefits, according to a Social Security Administration study.
The question of whether the system is tilted against blacks has become a central argument in the debate over private accounts. The White House strategy for selling the idea of private accounts includes an effort to win over African-Americans, on grounds that black males, on average, die at age 69, compared with 75 years for white males. Social Security's full retirement benefits begin to be paid between age 65 and 67.
Bush, at a forum on Jan. 11, said: ''African-American males die sooner than other males do, which means the system is inherently unfair to a certain group of people. And that needs to be fixed."
The president appeared at the Washington forum with an African-American, Robert McFadden of New Jersey, who said his father died at 57. He said all that the family received after his father's death was a $255 check to help with burial expenses.
McFadden's father was too young to have received retirement benefits, and his brother was in college and did not qualify for survivor benefits, which usually are given to children until they graduate high school or turn 18.
''I don't think people realize how painful it is to receive a check like that and have a child in college," McFadden, a Republican and a Bush supporter, said in a telephone interview. ''That is why I think the president is suggesting people have an option" for private accounts.
Maya Rockeymoore, who has studied the issue at the Congressional Black Caucus Foundation, said Bush's plan for private accounts is not a good solution. The average age of death for blacks, she said, is earlier than for whites because homicide, poverty, and a lack of health care kills many black men at a young age.
She also said blacks get a higher return on benefits for the disabled and survivors. While blacks make up 12 percent of the population, they account for only 8.1 percent of those receiving direct retirement benefits. But blacks make up for that deficit by collecting more from other parts of the program -- the benefits for disabled persons and survivors, Rockeymoore said. African-Americans account for 18 percent of those receiving Social Security disability payments and 23 percent of children receiving survivor benefits, she said.
Rockeymoore said Bush's proposal for private Social Security accounts was flawed because many blacks' low incomes would prevent them from contributing significantly. Asserting that some proposals call for cutting benefits in addition to the creation of private accounts, she said that the plan would hurt many blacks.
''He would be dealing with health care if he really cared about it," Rockeymoore said, when asked about Bush's comment that the Social Security system is inherently unfair to blacks. Rockeymoore said Bush is ''playing a race card" as ''an excuse to change the system for their own narrow ends."
She noted that the Census Bureau says 11 percent of whites do not have health insurance, compared with 20 percent of blacks.
Generally, whites have a significantly higher average monthly retirement benefit than blacks because they had higher wages. Social Security payments are based on wage history, although there are adjustments to compensate for some of the difference.
A White House official denied that Bush is playing a race card and said the president is pushing a program for health insurance tax credits, as well as tax cuts to stimulate the economy. The official did not say whether Bush plans to cut future Social Security benefits because the president has not unveiled his plan.
Jeffrey Liebman, an associate professor of public policy at Harvard's John F. Kennedy School of Government, has studied the issue of whether blacks are treated unfairly by Social Security. He has concluded that blacks and whites receive roughly the same return on payroll taxes.
Agreeing with Rockeymoore, Liebman said: ''Black retirees on average receive benefits for fewer years than white retirees. But blacks are benefited by the current system because low earners get a higher return on their payroll taxes and because blacks are more likely to receive disability and young survivor benefits."
Liebman also disputed Bush's assertion that his plan for private accounts would make the system more fair to blacks. Even with the accounts, the same disparities between whites and blacks would exist, he said. Liebman, a former adviser to President Clinton, favors a plan for adding private accounts on top of Social Security, not replacing part of the existing system.
Advocates for gays and lesbians, meanwhile, say they are discriminated against because the federal government does not recognize same-sex marriages or civil unions.
An analysis by the National Gay and Lesbian Task Force presented a case study in which the denial of joint retirement benefits costs a typical same-sex couple $500 per month and the denial of survivor benefits costs the survivor $1,224 per month. ''For couples who are paying into the system their whole lives, if one dies before retirement age, it is unfair that their partner can't get the same benefits," said Sean Cahill, head of the body's policy institute.
A Social Security spokesman, Mark Lassiter, acknowledged that based on federal law, including the 1996 Defense of Marriage Act, the agency must deny any application for survivor benefits from a gay partner. The benefits ''are not payable based on a gay marriage," Lassiter said. He said he did not know of any case in which a same-sex survivor has applied for benefits. Advocates for gays and lesbians said it seems inevitable that there will be a court test.
The Democratic National Committee is on record as supporting benefits for same-sex partners. A White House official said Bush, who backs a ban on same-sex marriage, does not support such benefits for gay and lesbian partners.
Analysts said some inequities in the Social Security system have developed because the program was designed for the 1930s, when women usually remained at home and most people did not have significant assets. As a result, the system pays benefits based only on work history, not on wealth. Indeed, a multimillionaire whose wealth is based on investments, not salary, could be given extra money by the Social Security system, which assumes that a person with a lower wage history needs extra benefits.
''Social Security is a one-size-fits-all and it doesn't take into consideration changes because of income levels, gender, and many other things," said David John, who studies the issue at the conservative Heritage Foundation.
An article on this topic appeared in the Globe of Jan. 14.
Michael Kranish can be reached at kranish@globe.com
© Copyright 2005 Globe Newspaper Company.
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Congressional Republicans Agree to Launch Social Security Campaign
By Mike Allen
WHITE SULPHUR SPRINGS, W.Va. -- Congressional Republicans, after three months of internal debate, this weekend launched a months-long campaign to try to convince constituents that rewriting the Social Security law would be cheaper and less risky than leaving it alone, as the White House opened a campaign to pressure several Senate Democrats to support the changes.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
By Mike Allen
WHITE SULPHUR SPRINGS, W.Va. -- Congressional Republicans, after three months of internal debate, this weekend launched a months-long campaign to try to convince constituents that rewriting the Social Security law would be cheaper and less risky than leaving it alone, as the White House opened a campaign to pressure several Senate Democrats to support the changes.
To view the entire article, go to http://www.washingtonpost.com/wp-dyn/artic...er=emailarticle
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Social Security Losses Projected After 2020
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From Times Wire Reports
February 1 2005
The Social Security system will take in more money annually than it pays out in benefits until 2020, two years later than earlier estimated, the Congressional Budget Office reported.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Social Security Losses Projected After 2020
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From Times Wire Reports
February 1 2005
The Social Security system will take in more money annually than it pays out in benefits until 2020, two years later than earlier estimated, the Congressional Budget Office reported.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
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Spitzer Against Privatizing Social Security
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From Newsday
February 1 2005
WASHINGTON — In one of his first speeches since announcing that he's running for governor, New York State Atty. Gen. Eliot Spitzer on Monday waded into the national debate about privatizing Social Security, saying the Bush administration has no credibility because it opposed his efforts to clean up corruption on Wall Street.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Spitzer Against Privatizing Social Security
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From Newsday
February 1 2005
WASHINGTON — In one of his first speeches since announcing that he's running for governor, New York State Atty. Gen. Eliot Spitzer on Monday waded into the national debate about privatizing Social Security, saying the Bush administration has no credibility because it opposed his efforts to clean up corruption on Wall Street.
The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation
Seniors Shouldn't Trust Social Security Privatization's Rosy Rhetoric; Benefit Cuts Will Be in Grandchildren's Future
2/1/2005 1:00:00 PM
Contact: Patti Reilly of the Alliance for Retired Americans, 202-974-8271 or 202-330-1913 (cell)
WASHINGTON, Feb. 2 /U.S. Newswire/ -- The following is a statement by Edward F. Coyle, executive director, Alliance for Retired Americans, for inclusion in State of the Union stories:
"When George Bush purposely omits the fact that he intends to dramatically cut benefits while adding trillions of dollars to the national debt, America's seniors know better than to believe him when he says privatizing Social Security is key to ensuring a financially sound future for their grandchildren
"Nothing is guaranteed about the Bush Plan but risk and benefit cuts. What seniors are worried about is the massive deficits Bush's private accounts will generate and leave for their children and grandchildren to worry about.
"The answer to a secure retirement is to strengthen Social Security so that tomorrow's retirees can plan for benefits they earned and deserve. Seniors owe it to their families to rebut the president's rosy rhetoric and expose privatization's empty promises."
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The Alliance for Retired Americans is a national organization that advocates for the rights and well being of more than 3 million retirees and their families.
http://www.usnewswire.com/
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2/1/2005 1:00:00 PM
Contact: Patti Reilly of the Alliance for Retired Americans, 202-974-8271 or 202-330-1913 (cell)
WASHINGTON, Feb. 2 /U.S. Newswire/ -- The following is a statement by Edward F. Coyle, executive director, Alliance for Retired Americans, for inclusion in State of the Union stories:
"When George Bush purposely omits the fact that he intends to dramatically cut benefits while adding trillions of dollars to the national debt, America's seniors know better than to believe him when he says privatizing Social Security is key to ensuring a financially sound future for their grandchildren
"Nothing is guaranteed about the Bush Plan but risk and benefit cuts. What seniors are worried about is the massive deficits Bush's private accounts will generate and leave for their children and grandchildren to worry about.
"The answer to a secure retirement is to strengthen Social Security so that tomorrow's retirees can plan for benefits they earned and deserve. Seniors owe it to their families to rebut the president's rosy rhetoric and expose privatization's empty promises."
------
The Alliance for Retired Americans is a national organization that advocates for the rights and well being of more than 3 million retirees and their families.
http://www.usnewswire.com/
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