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The administration is trying to "baffle you with bullspit," as we used to say back on the farm.
The White House has pulled out all the stops on shady, shifty and sly, so here's what you need to know in a nutshell:
1. "Privatization" will not cure the Social Security shortfall.
2. The president's "$11 trillion" is meaningless and an attempt to pull the wool over your eyes.
3. This president appointed most of Social Security Trustees and they're shading things to make you think there's a crisis.
4. He's using 1, 2 and 3 to mask the real issue: sneaking in "re-indexing" to cut your benefits in a major way.
5. I'll also get into why they might be doing all this.
1. "Privatization" is not a solution
The White House and those on the right know this.
Last month, a memo from Bush adviser Peter H. Wehner got out and it explicitly says so:
"We simply cannot solve the Social Security problem with Personal Retirement Accounts [PRAs] alone. If the goal is permanent solvency and sustainability — as we believe it should be — then [PRAs], for all their virtues, are insufficient to that task." [Washington Times 01/13/2005] (Story links open in new windows)
We hear the same story from the Heritage Foundation, bastion of right-wing thinking:
"Says David C. John, a research fellow at the conservative Heritage Foundation who is a leading advocate of private accounts: 'It's wrong to say that private accounts can fill Social Security's shortfall. They're not a magic bullet.'" [Business Week 01/24/2005 subscription]
So it's agreed - by the left, right and center - that "privatization" will not cure whatever ills Social Security may have.
Which begs the question: So why do it? (I'll suggest an answer later.)
2. The magical, mysterious $11 trillion
You may have heard the president and the vice-president using that number recently as a measure of the problem with Social Security.
What you need to know is that is a number cooked up by 4 of the 6 Trustees appointed by the president.
Their "lifetime" projection 75 years into the future is $3.7 trillion. This projection is the one that has been used for policy purposes since the inception of the trust fund. This is the one you should use.
Article comments
1 - Roy Smith
Hal writes: You might want to think of it as a "tithe" that goes to the less able and the less fortunate, or a membership fee in the Greater American Club.
What every privatization scheme proposal that has been put forward has in common is that they will reduce benefits for the less able and less fortunate.
Just remember, according to pundits, GWB was reelected on the strength of "values" voters.
2 - Mike Kole
Hal, you're starting to become a sort of Serdar Argic of Social Security.
You may like to think of Social Security as "insurance", but real insurance is voluntarily purchased. This is more like "protection".
I agree that privatization won't fix this 'system', but you've not sold me on the merits of this compulsory program.
3 - Dave Nalle
Hal, why do you keep perpetuating these deceptions? Surely all the accurate data I've thrown at you over the last week must have had some impact on you?
I know, everyone in the administration is lying, the Social Security Trustees are evil gnomes bent on destroying the world, etc.
But aside from paranoia, what do you have to peddle here? Your numbers are even more bogus than those you decry, and anyone who can do simple math can figure out that the system is inherently non-viable.
It needs to be changed or replaced. The longer we delay the worse it will be when we finally bite the bullet and fix it.
Dave
4 - Hal Pawluk
Mike, my position is that we have it, so it should do what it was set up to do.
If Bush wants to eliminate it, he should be a man and say so instead of engaging in under-handed tactics.
I'm confident that you'd do it right.
5 - Hal Pawluk
It’s okay to ignore Dave, folks.
As you can see, he’s just a right-wing troll - when facts don’t agree with him, he calls them names.
Ah, to be so blissful.
6 - Dave Nalle
It's OK to ignore Hal, folks. He's just telling you his selected version of the truth.
Instead of reading his post, go read the actual Trustees Report at http://www.ssa.gov/OACT/TR/TR04/index.html and read it for yourself, paying particular attention to the projections on pages 191 and 192.
And you know, if you don't trust the Bush administrations figures, why don't you try out the Clinton era version at http://www.ssa.gov/OACT/TR/TR00/index.html. The numbers are more conservative, but the end result is basically the same.
Regardless of what report you read or what numbers you throw in, the current system becomes increasingly insolvent as time goes by, and the longer we wait to fix or replace it the higher the cost to do so will be.
It IS a crisis.
Dave
7 - Roy Smith
The President has now publicly stated that "Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. . . . There is not trust."
Since there is a trust fund, this apparently signals a willingness by the President to default on Treasury bonds held by the trust fund. This almost certainly violates his oath of office in which he swears to "preserve, protect, and defend the Constitution of the United States." The Constitution reads (Am.XIV, Section 4): "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
Even if the trust fund has been raided to balance the budget and replaced with IOUs from Congress, those IOUs are still public debt, and "The validity of the public debt . . . shall not be questioned."
8 - Roy Smith
Oops, typo. The quote from the President should say "There is no trust", not "There is not trust." Freudian slip, I guess.
9 - Dave Nalle
I think what he's questioning is the 'liquidity' of the public debt, not the 'validity'.
Dave
10 - Roy Smith
The only way the public debt is illiquid is if the United States defaults on it.
11 - maged taman
Americans' Future In One Plan
I know that most of you are busy to read my book. As I explained previously that Taman Health Plan (www.trafford.com) takes care of all the health care, Medicare, Medicaid and social security. It will threw away all bureaucracies out of window. Let me explain shortly how it works:
1- there will be no more health care insurance companies, no Medicare, Medicaid or Social Security. My plan will take care of all.
2- Basically will be only one Big Health care organization (Taman Health Plan or THP).
3- The center of the plan will be in Washington while the health departments in every state will be the branches.
4- One organized body will be taking care of the Health Care and long term care of all Americans replacing 1500 insurance companies, Medicare, Medicaid and Social Security.
5- This will allow us to provide a uniform service to all Americans every where in both inpatients, outpatients and long term care.
6- When you go to any Duncan Donuts branch your expectation is to have a fresh coffee and a donut with no long wait. We will try to provide a similar predictable service everywhere as Duncan Donuts. With having only one body will be able to do that.
7- The Capital of the plan will be the funds of Medicare and Social Security (before the bankruptcy of both systems). The maintenance will be a yearly tax from each of us (will replace our yearly social security and Medicare holding taxes). A percent of each of us go to his account cards and a percent go to THP itself. The money of the plan will be invested by the investing sector of the plan very likely in Wall Street.
8- We will have 5 ATM cards with a corresponding accounts. Card A (children), Card B (working group 18-65years old), Card C (Medicare card >65 years old), Card D (Medicaid card), Card E ( expensive medicines or investigations).We will have the health cards devoted to health care and long term care. Thus we will have: health cards, banks with accounts to each card and credit card machines in outpatients care and hotelling part of hospitals and nursing homes.
9- Cards will pay for the outpatient medical care including doctors, emergency room visits, investigations, medical supplies, pharmacies and the hotelling part of hospitals and nursing homes. While the medical part of hospitals and nursing homes will be budget by the plan itself.
10- In the first year of issuing cards: Card B and C (most of people) will have a bonus it could be a percent of their Medicare and social security withholding (70 % or so). We will try to be fair to every one but every one has to now that most of us already lost a lot of money with the HMO's. For next year new comers to card B at age of 18 when first issued will have a bonus of 50,000 dollars. It will change every year by a percent a according to inflation.
11- every one of us will get a statement every one or two months of his card account. Card B account will phase in card C at the age of 65. If card C account is vanished Card D will be issued (hoteling part will be less luxurious). Only few of Card B will have card D if there account vanish most likely those with severe medical problems.
12- So basically most of us will have our own account Card B then card C. Say you are 45 and you have now in your account $ 200,000 you can take one or more years out of work, you Can retire early if you like and with your card you will control all the medical services and its prices.
13- With this card system we will end all bureaucracies of health care, Medicare and Medicaid. No one will stand between you and any medical or long term service (only your card). Shop around with you card, have early health care security and responsibility and invest in your health.
14- We will not need Social Security since after age of 65 we will be able to use our cards to stay in any nursing home each according to his account in card C or card D. So when you invest well in your health you will be able to enjoy a nicer nursing home when you get old (actually it will be also a kind of tourism).
15- The money in cards do not get inherited when we pass away but recycle in the plan to support the next generations.
16- The plan will have very positive effects not only in simplifying our care, save a lot of waste in health care, give early health care security and responsibility to Americans it will also have a positive effect on the economy, saving billions of dollars to Americans, creating jobs in health care and cutting outsourcing.
Very likely, you figure it by now I could have sold the plan to one of the presidential candidate before the 2004 election for millions of dollars (they already spent 2 billion dollars). It is my gift to the American people (it will help the healing process of the two worlds America and the Muslim/Arabs).
Maged Taman.
2/20/05
12 - Mike Kole
Hal said, I'm confident that you'd do it right, with regards to how I would address Social Security versus how President Bush is.
Well, I would explain exactly how it works, so this would separate me from Bush right away. I would explain how a portion of your paycheck is taken from you, and how your employer sends in a matching amount. I would show how much the average American who worked from 1950-1990 put in, and how much that same average worker drew back from 1990-2000.
I would describe Social Security as a Ponzi Scheme, and to advise the American people that Ponzi Schemes are illegal when private business and private citizens try to execute them.
Then, I would become the idealist, and say that I support the right of Americans to continue to be a part of this program if they wish to, and that I support their right to opt out, if they also wish to. Opting out would mean walking away from all that has been contributed previously.
I think that would be the most honest way to discuss the issue from the Oval Office.
13 - Maged Taman
Eureka: Taman Health Plan.
Taman Health Plan (can be ordered from www.trafford.com) is as simple as your ABC:
What it covers?
All Americans for Health Care and Long Term care.
Who run it?
As a big corporation it will have a central command "Human Health Services" in Washington and branches in the states "health departments". This will help us to provide standard health and long term care services to all Americans.
What it replaces?
All the current systems of HMO's, Medicare, Medicaid and Social Security.
How it works?
We are replacing all of the above systems with Health Credit Cards. Every American will have a health card with a corresponding account in the Bank of the plan. He will get a bank statement every two months.
What these Cards?
Card A: for all children.
Card B: for all working group 18-65 years old.
Card C: for Medicare above 65 years old.
Card D: for few of card B, for all Card C if they run out of money in account.
Card E: for few who will need expensive medicines and investigations.
What cards pay for?
Cards pay for all health care as outpatient (doctors fees, investigations, health products and medications) as well for the hotel part of hospitals and nursing homes. Thus credit card machines that are devoted to all these services will be in the corresponding places ( doctors offices, pharmacies, hospitals and nursing homes).
What covers the medical part of hospitals and nursing home?
The plan itself and not the cards. The plan will budget the medical part of hospitals and nursing homes.
How the plan revenues, expenses and investments work?
Revenues: first year all funds of Medicare and Social Security. Yearly revenues from taxes.
Expenses: budget medical part of hospitals and nursing homes and pay for cards A, D and E.
Investments: in wall street in diverse stocks (as mutual funds).
What card B and C accounts come from?
Most Americans will be in cards B and as they hit 65 years old their account will be continued but as Cards C. First year of the plan all of us will get bonus in our account ( B and C cards) from what each of us had accumulated over the years. Say we starting the plan 2006 and suppose I have with the government 200,000 dollars as my Medicare and social security that was withheld from me over the years. 70% or so of that will be the bonus of my account and 30% will go to the plan if we need to. Second year of the plan bonus of say 50,000 dollars will go to new card B comers ( 18 years old as the card B first issued). Then a yearly tax withholding say 5% of income or pay roll will go as 3% to the person card and 2% to the plan.
Why cards?
Cards will provide these functions:
1- Eliminate bureaucracy.
2- Will save more than 200 billion dollars a year paper work.
3- Will insure all Americans.
4- As every American has a medical record and a health card he will be shopping for his health care and understands well his medical condition and as he invests in his health he save the system a lot of wasted money.
I will let you entertain this quiz: If you can mention 10 or more benefits to Taman Health Plan over our current systems of Social Security, Medicare, Medicaid and Health care I will pay you a check for 20 dollars (first 50 rightful respondents).
Maged Taman
E-mail: magedtaman2000@yahoo.com
14 - Dan
re: comment #12, Mike, if you and Walter Williams were on the same ticket, you'd probably get a lot of votes, not enough to win, but maybe enough to get someone else "Nadered" in.
For you, or Walter, to be even more candidly straightforward, you might also address the situation of those who would have the hardest choice. The ones who have invested a lot, but aren't near retirement.
For the young, it's a no-brainer, personal savings vs ponzi. And the old timers are going to ride their guarantee to the grave. And squall like butchered rabbits at the slightest reduction in increase.
In-betweeners though, wouldn't have the time to build their accounts, and they could reasonably presume that if they achieve even moderate wealth come retirement age, their "guarantee" could be stripped via "means testing" or whatever euphemism for stealing a future government might employ.
When you view the Social Security paradigm as 'a big pile of Socialist ponzi dog crap on the living room rug', as many do, it seems reasonable that all age groups should share equally in the clean up.
One way that might be palatable to in-betweeners is to allow accelerated private account diversions indexed to age. You could still hold the line on the 4% or whatever it is over-all.