Bush on Social Security

[Silicon]

I'm still waiting for BPSCG's response to really my key question about remaking social security.

***KEY QUESTION: If investment in the stock market is the solution for Social Security, and nobody can do less than the minimum they'd get under a do-nothing plan, why not guarantee a floor-level benefit? And if we do NOT guarantee a floor-level benefit, can we really call it Social Security? *********

In the meanwhile, here's a couple of points.

GOP senators say go slow on Social Security
...
"It's going to require just a tremendous education effort," said Sen. George Voinovich (news, bio, voting record) (R-Ohio), part of a group of senators meeting to discuss possible approaches to shoring up the long-term fiscal health of the retirement program. "I don't think a lot of senators really understand the program yet."

http://story.news.yahoo.com/news?tm...cagotrib/gopsenatorssaygoslowonsocialsecurity


And this, from TalkingPointsMemo, a blog focused currently on the battle over SS.

There is great public interest and notice. Many people are worried, in most cases with good reason. And yet the president says again and again that he won't say just what he wants to do to Social Security.

When a reporter asked him about this at the conversation in the White House yesterday, he said this ...

"The tendency in Washington is, ‘OK, Mr. President, you play your cards now and we’ll decide if we’re going to play ours. I’m not going to do that. I’m keeping them close to the vest."

Shouldn't there be some pressure on this guy to just come clean? To say what he wants to do?

Sure, yes, there's legislative politicking and making the first move and all that. But this goes a bit beyond that. The president is pushing this. This is all about him. Absent initiative from him, replacing Social Security with private accounts wouldn't even be on the agenda. Though the policy has some ardent Republican supporters, the impetus all comes from him.

When you brush away all the legislative gobbledygook and beltway jockeying, you have a president who wants to put what is probably the most popular government program in American history under the knife and he won't even say what he wants to do to it.

Shouldn't his critics just be saying over and over: level with the public? Tell them what you want to do to Social Security.

http://www.talkingpointsmemo.com/




I think that's what's really gumming up our discussion here. We have a president who won't put forth his plan, but he keeps saying PARTS of it.

No numbers at all, and the only parts he DOES talk about are things like privitization which doesn't even address the issue of solvency.

He keeps running around saying "solvency is the problem," and then proposes a solution that even fans of privitization say don't address solvency.

 

[jay gw]

Here's something from the Social Security Administration

http://www.ssa.gov/history/hfaq.html
http://www.ssa.gov/history/pdf/4a.pdf

Q29: Do the Social Security Trust Funds earn interest?

A: Yes they do. By law, the assets of the Social Security program must be invested in securities guaranteed as to both principal and interest. The Trust Funds hold a mix of short-term and long-term government bonds. The Trust Funds can hold both regular Treasury securities and "special obligation" securities issued only to federal trust funds. In practice, most of the securities in the Social Security Trust Funds are of the "special obligation" type. (See additional explanation from SSA's Office of the Actuary.)

The Trust Funds earn interest which is set at the average market yield on long-term Treasury securities. Interest earnings on the invested assets of the combined OASI and DI Trust Funds were $55.5 billion in calendar year 1999. This represented an effective annual interest rate of 6.9 percent.

The Trust Funds have earned interest in every year since the program began.

(See table of transactions to Old-Age & Survivors Trust Fund; and Disability Trust Fund for annual amounts of interest earned.) More detailed information on the Trust Fund investments can be found in the Annual Report of the Social Security Trustees.
___

So, in order for private accounts to do better, would that mean that they would have to get much higher interest than 7 percent?

That's not going to be easy, given they are for conservative investments only.

 

[Random]

So, in order for private accounts to do better, would that mean that they would have to get much higher interest than 7 percent?

That's not going to be easy, given they are for conservative investments only.

It’s absolutely bonkers if the economy is supposed to be growing at 1.9 percent annually for the indefinite future, which Bush says it will. Remember, the numbers that Bushies have been throwing around on the economy and stock market are different. The economy will only grow at 1.9 percent annually according to Bush, while the stock market will grow by about 6.5 percent annually according to Bush.

Now some economists agree with the 1.9 number, while others think it is too low. Some economists agree with the 6.5 number, while others say it is too high. But nobody but Bush is saying that both numbers are right. It’s possible that both numbers are right (they are measuring different things after all), but if both numbers are right, the stock market in 2040 would look utterly incomprehensible to investors today. When a stock hits a price earnings ratio of 80:1, investors are looking for the door. Under the Bush system, people will have to be buying at 100:1, and keep buying as that ratio goes higher and higher, forever.

You can do better than average in the stock market by dumping poorly performing stocks and hooking up with winners on the way up, but with a growth rate of 1.9 percent, and a minimum of 6-7% that you would have to make annually, there would never be enough winners to go around in the long run, especially if we added a few hundred million new investors to the system.

I would kind of like to see some right-wing economists pinned down on those numbers and asked to make sense of them, but our “liberal” media shies away from anything resembling numbers or “complexity”. Instead, we get a media that basically regurgitates what both sides say and try to act balanced.

“Congressman White claims that two plus two equals four. Congressman Black claims that two plus two equals five. Clearly, this is a divisive issue, but perhaps a compromise can be found somewhere in between. This is Ronald Grey reporting.”

 

[Silicon]

Well, still waiting for an answer to my key question above, the one about a guaranteed floor-level promise.

Don't think I'm likely to get one. That's because the plan on the table (the part that Bush is showing) doesn't provide for one.

I think that's the core limitation that the White House will have to overcome if they expect any plan to pass.


What they need is a system that makes the numbers at this calculator go up above the zero point.

I ran this calculator for a 30 year old, and it said I get 26% less under Bush's plan than under Social Security. The President has said that a 30 year old worker is looking at a 27% cut currently if we do nothing to save Social Security.


So one percent? That's "Strengthening Social Security?"


http://www.schumer.senate.gov/calc/#


See how you do.


I recognize that this is Chuck Schumer's website. Why doesn't the White House have a website with its plan, so I can plug in the numbers and see all the added wealth that I will certainly attain safely and securely?