Inouye criticizes Bush’s reforms

U.S. Sen. Daniel K. Inouye says he doubts President Bush will be able to push his Social Security reforms through Congress this year.

While Bush is urging changes to the federal government's retirement plan to allow workers to invest some portion of their retirement funds in a stock-market account, Inouye says the plan is risky, costly and lacks the support of Republicans.

"The president is not going to have an easy time with Social Security; in fact, he may not make it," Inouye said.

Hawaii's senior Democratic senator made his comments during the taping of the PBS show "Island Insights," which is co-sponsored by the Honolulu Star-Bulletin. The broadcast will be shown at 7:30 p.m. tomorrow on PBS.

"Before you make such a massive change, I think it would take a colossal study," Inouye said. "One cannot help but conclude that maybe he wants to dismantle Social Security."

President Bush is doing something no one has been successful in before. Sen Inouye implies that not finishing is failing, President Bush is not going to finish Social Security reform, so why try. But Sen Inouye has failed to understand lessons many people have learned before.

Failing isn't not finishing, it is not starting.

Thomas Edison could have been labeled as a failure. He tried many times to invent the lightbulb. Failed many times. Imagine if the first time Edison tried someone told him to quit because his first try would be a failure. Imagine how our lives would have been different.

President Bush understands something most people, including his enemies don't. The goal is not to reform Social Security, it is to begin it. President Bush isn't a failure if Social Security is reformed this year, don't forget that. I don't expect it to happen this year. But I expect President Bush to light the torch and carry forward the fight to reform Social Security.

Can One Change Their Position on Social Security?

In 1996 Senator Richard Bryan, D-Nev. told the Incline Village Rotary Club that Social Security was broken and needed immediate fixing. Several years later Sen. John Breaux, D-La. co-chaired a bipartisan committee formed to study Social Security and concluded that the system was headed for insolvency.

A few years later Sen. Daniel Patrick Moynihan, D-N.Y. chaired still another Social Security study committee which concluded that the system could not survive.

Despite all the studies and warnings, lawmakers just hoped the problem would go away because the conventional cures involve real pain ... raising payroll taxes, cutting benefits and/or increasing the retirement age. They ignored the issue, that is, until newly reelected President George Bush announced a plan built around the Moynihan recommendations to save Social Security. Then, in an abrupt about face, Sen. Harry Reid, D-Nev. claimed "There is no Social Security crisis." Reid must have been dropped on his head as a baby.

People change views. They have the right and willingness to reevaluate positions and choose positions that better represent the solutions needed today.

Republicans are changing their positions, mostly for the better. But Democrats seem to be changing their positions simply to hurt young Americans futures, just out of spite because they are not in power anymore. To throw out their positions that Social Security needed to be reformed is dangerous, reckless, and needlessly gambling with young Americans futures. This a harsh position to take just because they are not in power anymore.

Social Security 'Transition Costs' a Myth, Say Economists

By Jeff Johnson

(CNSNews.com) - Transition costs, trumpeted by Democrats as a chief reason not to support President Bush's Social Security reforms, are a myth, according to several prominent economists, including the 2004 Nobel Prize winner.

The trillion dollar totals that Democrats cite as "transition costs" are actually the amount the government is borrowing to pay current Social Security benefits combined with the massive debt already owed to the so-called Social Security "Trust Fund."

"We hear a lot about transition costs," Arizona State University professor Edward Prescott, 2004 winner of the Bank of Sweden Nobel Prize in Economics, said. "But I'm going to use some economic jargon, not 'political accounting' jargon.

"There are no transition costs," Prescott said at the Cato Institute Feb, 9. "Re-labeling debt is not a cost."

Social Security Reform: A Free-Market Alternative

By George Reisman

Considerable public discussion and debate now rages over Social Security and how to reform it. As the system currently stands, as early as 2018, it will be necessary to finance a growing portion of its outlays to retirees by means of outside sources of funds, since at that point the sums paid into the system in the form of payroll taxes will begin to fall short of the sums it is obligated to pay out. What will bring this about is a substantial increase in the number of retirees, who draw from the system, relative to the number of workers, who pay into it.

Some observers believe that the difficulties faced by the system will not begin until later, in 2042 or 2052. Between 2018 and that time, they believe, the system can draw down its vast accumulations of United States Government securities, which it has acquired over the many years in which it took in more in payroll taxes than it has had to pay out.

I believe that 2018 is in fact the time when the difficulties will begin. The reason is that the government securities held by the Social Security system are not any kind of actual asset. They are a claim against the US Government to pay money that it does not possess and which it cannot obtain in any way other than by raising taxes, borrowing from the public, or inflating the money supply. Probably, just as has been the case many times since the system was established seventy years ago, social security payroll taxes will be increased one or more times again between now and 2018, and that will provide the funds. In other words, the tax system of the United States will come to resemble that of Sweden more than it does now.

The common theme to the future Social Security crisis is that the crisis is not protecting the social security safety net, or not paying retirement benefits. Those will be paid, no matter what the cost the the American people, unfortunately. The real crisis that is coming is how are we going to get the funds to pay back the surplus? Think about it, where is all that money going to come from?

Gil Gutknecht: For our kids' sake, reform Social Security

I understand how some people are concerned about adjusting a system that has been in place for decades and has worked all these years. However, it is important to understand the demographic challenge we face. Social Security, as designed by Franklin Roosevelt, is a pay-as-you-go system, meaning that the payroll taxes paid by current workers support current retirees. This worked out well in 1950, when there were 16 workers for each retiree. However, now there are about three workers for every retiree. When today's younger workers are ready to retire there will be only two workers for every retiree. Americans are living longer. Thus, they are collecting more benefits. This has put an additional strain on the system.

These changing demographics will mean that, while the Social Security system is now collecting more in payroll taxes than it is paying out in benefits, by 2018 payroll taxes will not be adequate to pay expected benefit levels. In 2018, the Social Security Administration (SSA) will have to start redeeming Treasury bonds, drawing upon the general tax revenue of the federal government. This means that either taxes will have to be raised, the government will have to go deeper into debt, or other government programs will have to be cut. According to the SSA, "under the intermediate assumptions the combined Old-Age and Survivors Insurance and Disability Insurance Trust Funds are projected to become exhausted in 2042" (2004 OASDI Trustees Report). This is not a situation that we want to leave to our children.

Some argue that we should wait until this is truly a crisis before attempting to solve this problem. I take a different view. Imagine an ocean liner headed for an iceberg 5 miles away. A course correction 5 miles out would hardly be noticed by the passengers, and the ship would pass by the iceberg with room to spare. However, if the ship waits until the iceberg is 50 yards away, and the captain then decides to alter course, a drastic turn of the rudder would knock passengers off their feet. The sooner we fix this, the less extreme the changes that will have to be made.

Making changes today will be better for the system as a whole and a lot fairer to working Americans who need to plan for their retirement. It would be immoral to suddenly alter a worker's expected benefits before retirement simply because Congress did not do the right thing when we had the chance.

Rep Gutknecht is correct. It's a lot easier to plan for the future today, then it is to fix a crisis when it happens. Some people are right, there is no social security crisis right now. But, there will have to be some change in the future if Social Security benefits are going to continue to be paid to everyone. Those change are easier and less painful to plan for now, then to correct at the time needed.

Social Security money isn't `gone'

In U.S. Rep. E. Clay Shaw's interview published Sunday, he states, "There is no money in the [Social Security] trust fund.... The money that doesn't go out as benefits is put into the general fund and Congress has been spending it since 1940. It's all gone."

It's all gone?

That statement, coming from a man who used the word "lie" in the same paragraph, seems to be disingenuous. He might have said, "The Social Security trust fund operates on a pay-as-you-go basis. The income is used to pay benefits. The surplus income is invested in U.S. Treasury bonds."

It is not "gone." Unless, of course, his position is that money invested in U.S. Treasury bonds is "gone," which is to say, worthless. Is that the position of the current U.S. government? Why didn't your interviewer ask that obvious question?

Uh, yeah, it's gone. The US Treasury bonds where the social security surplus goes, which is not disputed by the article's author, is put into the general fund. This is where all the US Treasury bond money goes, there is no special seperate account for Social Security surpluses.

What happens when we need the surplus, or the Treasury Department needs to pay off bonds in general? The general fund is assessed to pay off the bonds. IOW, the money for the Social Security surplus is long spent, like Shaw said. But unlike the author charges, the bonds aren't worthless. The US Treasury doesn't default on bonds, because it has a source of income that normal people don't have. That is the power to tax.

Yes, ladies and gentlemen, if you haven't picked up on it yet, the taxes that you are paying are already gone. But not in vain, because in 2018, you will start paying for those surpluses again, only this time not through a payroll tax, but a "tax" to the general fund to pay back the bonds. You figure out what that means.

And that is the Social Security crisis we all hear about.

Dems dishonest on Social Security

By Judy Ducayne

Over the years, Democrats have raised serious anxiety over the state of the social security program. All their harping convinced most of us that we would never get our share, and caused us to accept the fact that the system was bankrupt.

The wails and cries of the Democratic party are being addressed by the President. Bush is proposing new adjustments to the faltering, almost non-existent system. For decades the conservatives have been warning us that the tax-and-spend strategy practiced by our government was leading us down a one-way street to fiscal disaster.

Now, here we are in dire straits.

To combat the problem, the president is suggesting that we give individual wage-earners control over their own money. In essence, they can keep their money where it currently is or they can invest it privately; like some elected officials already have the option of doing.

What's so bad about that? It's your own option. Nobody is forcing you to keep your money where it is and no one will force you to invest it elsewhere. The Democrats say that Bush is bad because he has answered their cries.

Which is it?

First Social Security was bankrupt; now Social Security is fine. Have they been crying "wolf" all these years? Finally, someone has called their bluff and all of a sudden the system is A-Okay. It's impossible to keep track of all their lies. We all know that when things get hot the liberal Democrats will jump up on the fence and talk out of both sides of their mouth.

That way they never have to actually take a public stance on anything, and can continue to avert the public's attention to those who'd speak the truth about where they stand.

Bush takes on crucial debate about reforming Social Security

ROD GRAMS

When talking about Social Security reform, we need to make two points extremely clear: No one is going to end Social Security or reduce or take away any benefits you have earned over the years. And discussing other options is healthy for our country.

Our Social Security system, in its current form, was designed for another era. It cannot meet the needs of today's demographics and it cannot support the benefits it has promised for tomorrow.

A program that 50 years ago relied on 16 workers for each beneficiary now relies on three workers. And in less than 30 years Social Security will rely on only two workers for each retiree. More retirees will collect benefits and more retirees will collect benefits for a longer period of time as life spans increase. Therefore, an even larger financial burden will be placed on future generations.

We should admit, as countless studies and reports have confirmed, our Social Security system is facing some real problems without real reforms. And countless studies and reports have also concluded that the only way to preserve our ailing system is to increase payroll taxes, increase the retirement age and reduce benefits. Why do we want to preserve a retirement system that costs more, makes us wait longer to retire and pays less?

Don't privatize Social Security

By JACK KNOWLES Hillsboro, Wis.

In his State of the Union address, President Bush tried to sell us a lemon, and I'm not buying it.

He's trying to dress up a risky Social Security privatization scheme � which, in reality, would guarantee benefit cuts for the American people, and divert billions in taxpayer money to the president's Wall Street friends.

President Bush talks about Social Security as if the sky were falling. The facts are that Social Security can meet 100 percent of its obligations for the next 37 years with no changes to the current system, according to the Social Security Administration itself.

Everyone agrees that there are things we should do to make Social Security stronger, but the real Social Security crisis would be the president's own privatization plan, which would cut my benefits and unravel our nation's most successful anti-poverty program.

Rather than limit solutions to privatization, I think the president should focus on solutions that don't involve taking money out of my pocket.

For example, the president himself pays Social Security taxes on less than one quarter of his salary.

That's right, the law today exempts every penny of income over $90,000 from Social Security taxes. If we raised that ceiling to the president's salary, we wouldn't be having this conversation.

Without Social Security, almost half of today's seniors would live in poverty.

It just doesn't make sense to replace a guaranteed benefit with a guaranteed gamble.

Mr. Knowles may feel that in 37 years he'll not depend on Social Security anymore, but as a young American I plan on living a lot longer then 37 years. What's going to happen after 37 years. Mr. Knowles doesn't tell us. Maybe he hasn't thought it through yet. However, Democrat leaders have told us what will happen. Benefits will be cut by almost 30%.

Is a 30% cut acceptable to you? If your paycheck were to be cut by 30% in 37 months would you just wait until your paycheck was cut to do anything about it? Investing is something that is planned for. If the benefits are being cut in 37 years, then the best time to start planning ahead to keep or hopefully improve our social security retirement benefit is this year.

It is discouraging to hear Mr. Knowles and others say that we shouldn't plan for the decrease in social security benefits because the benefits will be paid out at a 100% for the next 37 years. To ignore a problem like that is to let young Americans down.

Safety Net Or Investment Program?

Critics of President Bush's Social Security proposal should quit moaning and start thinking about how to improve the program.

The primary source of disagreement comes from the confusion over whether Social Security is a retirement investment program or a safety net. The president's proposal can be used to sharpen the focus on both of these aspects of the program.

By creating new personal accounts that best perform the functions of an investment program, it will become possible to take what remains of the old Social Security program and tailor it more effectively as a safety net.

As much as defenders of the old program like to talk about its value as a safety net, Social Security has become poorly suited to this function.

The Social Security tax is wildly regressive, while benefits are hardly means-tested.

By separating the investment aspect into personal accounts, the remaining safety net can be more clearly defined to focus benefits on the people who need them most and focus costs on those with the greatest ability to pay.

Gerald P. Neily
Baltimore

Hastert Warns Not to Hurry Overhaul of Social Security

WASHINGTON, Feb. 11 - Speaker J. Dennis Hastert, warning that "you can't jam change down the American people's throat," has become the latest and most prominent Congressional Republican to call for more public education and debate before Congress acts on transforming Social Security, President Bush's top legislative priority.

In an interview with The Chicago Tribune published on Friday, Mr. Hastert said he could not predict how long it would take to pass a major Social Security overhaul - perhaps six months, perhaps two years, he said. The White House has been pressing for fast action this year, hoping to take advantage of the president's political strength before any second-term inertia kicks in.

But Mr. Hastert said he had told the White House that "before we try to fix something," Americans "have to realize there's a problem with the system and what was good for the 1930's isn't going to work for the 2030's."

Speaker Hastert speaks with great wisdom. More public education is the reason President Bush is going around talking to the people about Social Security. And debate is the first thing that President Bush has asked for. I glad President Bush started out his second term choosing Social Security as his priority.

It's disappointing that Democrats have decided to obstruct instead of debate, and to deceive instead of educate. We could make great strides to improve Social Security that benefited both sides if Democrats would get involved. But I'm afraid that all reforms will be Republican leaning, and the people it helps, who are largely in the Democrat demographic now will switch parties to not hurt themselves.

As I've been watching people's responses to hearing about what needs to be done to reform Social Security, I can tell that very few people really understand what happens under the cover to make Social Security work, and what's been done to fungle the numbers. And liberals lying about how the Social Security works isn't really constructive. Unfortunately, because people don't understand Social Security they are easily deceived.

President Bush has a hard uphill path ahead of him to educate the public as Speaker Hastert understands. But President Bush is a man of resolve, and not of political expediency and I think that he will be successful in beginning to educate the public over the next few years.

Dem Says He's Open to Private Soc. Sec.

WASHINGTON (AP) - A second Senate Democrat said Friday he was open to President Bush's idea of letting people divert some of their Social Security taxes to personal retirement accounts as Republican Party leaders tried to allay re-election fears among wavering GOP lawmakers.

Sen. Tom Carper, D-Del., said any plan should be bipartisan, in part to give lawmakers from both parties political cover for supporting major changes to such the popular retirement program.

"I don't believe that we should rule out the accounts," Carper said Friday in an interview. "We have a very low savings rate in this country and clearly need to find ways to stimulate savings, and I think we should be open to a wide range of ideas and not dismiss them out of hand."

It's good to see Democrats acknowledging what the party leaders were saying in 1999, that the Social Security program needed reform. We don't need partisan obstructionist politics when it comes to an issue like providing for the retirement of young Americans. Democrats should be stepping up and proposing solutions, not obstructing solely on the basis that their party isn't in control.

Save Social Security: Invest in the Private Sector

"[By] 2013, payroll taxes will no longer be sufficient to cover monthly payments. And by 2032, the trust fund will be exhausted, and Social Security will be unable to pay out the full benefits older Americans have been promised... I propose that we... [invest] a small portion in the private sector just as any private or state government pension would do. This will earn a higher return and keep Social Security sound for 55 years."

No, that wasn't a line out of President Bush's most recent State of the Union Address: that was from President Clinton's 1999 State of the Union Address.

That same year, Democrat Senator Harry Reid of Nevada, now the Senate Minority Leader, said, "Most of us have no problem with taking a small amount of the Social Security proceeds and putting it into the private sector."

So now that President Bush is making a similar proposal citing the same reasons, why are the Democrats resorting to obstructionism and fear-mongering?

Either Democrats like Reid were lying to us in 1999, or they are lying to us now. Why was it acceptable in 1999 to divert payroll taxes to private accounts and now it is not? It is telling that the Democrats are silent on their new non-crisis position on social security.

How Much Social Security Do We Need?

Most people fear Social Security reform because they view the whole social security problem indelibly interweaved with a social safety net program. Touch any part of Social Security and you imperil the whole social safety net that has been in place for decades.

The problem is that there are at least 2 major legs to Social Security today. One is a safety net, but Social Security is also a retirement stipend program, giving a small stipend to every retired person whether they need it or not.

When Social Security reform is talked about, it is the retirement program that is being talked about. Private accounts are intended to replace the retirement part. This is part of the ownership society. When people's retirement can be taken care of themselves, that frees up the Social Security program to be a safety net again.

Social Security and Medicare are programs with split personalities. They're part "safety net" (the common view) and part retirement subsidies. By retirement subsidies, I mean that older people are paid—by the government, meaning taxpayers—to stop working and to enjoy themselves. How? Well, about 20 percent of cruise ship passengers are retired; so are 17 percent of casino gamblers. In its magazine, the AARP offers its 35 million members motorcycle insurance. "It's time to ride," says the ad.

It's doubtful that Franklin Roosevelt had casinos and motorcycles in mind when signing Social Security in 1935. We ought to nudge these programs back toward their original purpose as safety nets—and not retirement subsidies. When the ratio of workers to retirees was high, we could afford to blur the two roles. In 1960 there were five workers for every retiree. But now there are three, and the projection for 2030 is two. The consequences of subsidizing retirement are increasingly undesirable. It penalizes the young, threatens the economy with higher taxes and drains capable workers from the labor force.

Imagine the cost if the welfare programs had to give out money to every person whether they need it or not. It would be astronomical! Because welfare only helps people who truly need it, the program works more efficiently. We need to reform Social Security so that it functions the same way. As a safety net, for those who actually need help.

But get it right, President Bush isn't reforming Social Security to remove the safety net, but to strengthen it, so that the safety net will continue to be there in the future for those who need it most.

Poll: Social Security reform OK -- if rich pay

WASHINGTON -- Most Americans are willing to endorse painful steps to ensure Social Security's long-term solvency -- steps that nick the rich, that is.

Two-thirds of those surveyed by USA Today/CNN/Gallup say it would be a "good idea" to limit retirement benefits for the wealthy and to subject all wages to payroll taxes. Now, earnings above $90,000 aren't taxed.

A typical liberal response. Have the smallest group of people of people pay the largest amount possible. In a majority rules world, the smallest group has to pay up.

When I showed this poll to a friend, he had to dredge up the whole idea that we should cap personal earnings at $250,000 a year. If anyone would think of personally "producing" more then that a year, then we tax the excess at a 100%. Because, after all, there's no reason we should allow unmitigated success in such a fine country as the USA.

In other local news, Minnesota's most vocal opposition to Social Security reform, a wealthy Senator has announced that he won't run again for his Senate seat in 2006.

Liberals, take close look at Social Security

Democratic senators in the '90s such as Charles Robb, Bob Kerrey, John Breaux and Daniel Patrick Moynihan championed Social Security reform. After Moynihan offered a reform proposal in 1998, The Washington Post noted, "Republicans want to put Social Security reform on the back burner." But now that Republicans want it on the front burner, Democrats are screaming foul.

One objection has been that Bush will use his reform as another occasion to soak the poor. But that's a reason for Democrats to participate and suggest progressive alternatives.

Policy wonks have shown a variety of ways to organize retirement accounts so the poor are better off. "Our goal should be to eliminate poverty among the elderly" -- through progressive Social Security reforms -- Kerrey said. For example, Clinton favored private accounts as add-ons to Social Security, with the government matching contributions by low-income Americans.

Kristof also mentions Singapore as an example for private investment accounts, and points out that in Singapore their system has raised home ownership and alleviated poverty.

Groucho Marx Said It Best

I don't care what they have to say
It makes no difference anyway
Whatever it is I'm against it!
- Groucho Marx in "Horse Feathers"

Over the last few years, the Democratic party has had a simple agenda. Like Groucho Marx they have choosen to watch what President Bush proposes and then be against it. This has caused a paradox where Democrats are now pretending that issues aren't real that before President Bush was elected were forewarned by Democrats themselves.

Social Security Poker: It's Time For Liberals To Ante Up

Liberals are making a historic mistake by lining up so adamantly against Social Security reform.

It's impolite to say so in a blue state like New York, but President Bush has a point: There is a genuine problem with paying for Social Security, even if it isn't as dire as Bush suggests.

As Bill Clinton declared in 1998 about Social Security reform: "We all know a demographic crisis is looming. If we act now, it will be easier and less painful than if we wait until later." Clinton then made Social Security reform a central theme of his 1999 State of the Union address, saying, "Above all, we must save Social Security for the 21st century."

If It Ain't Broke, Don't Fix It

Drum roll please … for the World's Greatest Magician, George W. Bush, as he uses his infinite supply of smoke and mirrors to convince us that Social Security is "broke" and needs to be fixed.

In fact, Social Security is the only federal government program that isn't broke and will have enough in reserve for the next 37 years. All other programs are paid with trillions of dollars of debt and continued deficits.

Playing to our fears, Bush will convince millions of us that his plan will be the best "fix" for a program that's not broke. That's a sign of a great magician.

GREG BRINDLEY

Roseville

Apparently, Mr Brindley is not planning on being around in 37 years, or is unconcerned about what will happen to Social Security after the reserve is depleted in 2042. Readers may note at this point that if a reserve is being drawn from, that means that the input is not matching the output. However, Senator Boxer explained what will happen to young American's benefits in 2042.

Democrats routinely declare that the system is sound for decades. "There is enough money to pay full benefits until 2042," Sen. Barbara Boxer, D-Calif., said last week, adding that even then, payroll taxes will cover an estimated 73 percent of benefits.

I don't know about other young Americans, but the thought of experiencing a 27% financial cut doesn't routinely excite me. And those are the numbers that Democrats are using. The truth is that all we can do now is carefully guess what the future numbers will be, and there are a number of different projections right now, none of them very positive.

One of the fundamentals of financial security is that you have to prepare for a cashflow problem as soon as possible. Once you run out of reserve, it is too late to build another investment portfolio to replace it. To hope that your cashflow problem will correct itself against all odds in the future is a losing bet.

Saving Social Security? Try Saving Retirement

There is no real debate about Social Security running out of money. It is going to happen and the only question that concerns the democrats is when. On national TV they point to the President’s State of the Union speech and are quick to point out his big mistake was in forecasting bankruptcy a full ten years sooner than they estimate it will occur.

Social Security, just like any socialist system, is parasitic. It requires a healthy host to exist. In the case of Social Security that host is the American worker. In the “don’t worry –be happy” democrat scheme of dealing with Social Security the solution to the looming crisis is to raise the amount workers pay into the system or to vastly decrease benefits to retirees. Most think it probably would be a combination of both. Even that “solution,” however, simply pushes back the inevitable.

I can see on the distant horizon the leftist democrats wanting to shift to a different host. They will target “the rich” and corporations as new hosts. That course would place them in a destination called “between a rock and a hard place.” On the one side they have to contend with vastly raising taxes on workers while at the same time reducing benefits for AARP members. On the other side they will be biting the hand that feeds them campaign cash.

Dayton and President Bush agree on Social Security?

Mark Dayton believes that Social Security must always pass the following three tests:

• It must not reduce the amount of future revenues or their security.

• It must be likely to increase future retirement incomes.

• It cannot damage the rest of the federal government's financial foundation.

These are the tests that I believe that President Bush wants Social Security to continue to be able to pass in the future also. However, Senator Dayton's respone and President Bush's response to the tests are quite different.

Dayton would rather wait until Social Security started failing those tests before doing anything about it. Those who know about investing understand that when you need the money it's too late. If you want to have something for the future, you need to start now. To say that you shouldn't change anything now because the problem is in the future and the future is uncertain, is the wrong response. It is this poor leadership which is the reason Minnesota needs a new Senator.

I am proud of President Bush's resolve to not let the problems we face be dealt by the next generation who could only expect harsh consequences of current decisions. We must face the future now, and prepare for it.

Social Security Reform: Fact and Fiction

John Boehner, congressman from Ohio released the following FAQ on the Social Security reform.

I’m close to retirement. How will Social Security reform affect me?

It won’t. You’ll receive benefits just as you would have. The goals of reform are to strengthen the system long-term, and to give younger workers the best deal possible for their retirement.

I’m not an expert investor; won’t a personal retirement account (PRA) be too risky for me?

The history of IRAs, 401(k)s, and options like the Thrift Savings Plan available to federal government workers shows that PRAs can be structured so as to avoid scams and risky investments. Many of the most outspoken critics of reform have accounts of their own like these.

Who will benefit the most from reform?

Those who will benefit the most are workers who can’t currently afford to save, let alone invest. We already pay 12.4% of our income to Social Security; few have much money left over at the end of the month. Because PRAs belong to individual workers and not the government, they make possible for lower income people what’s previously been reserved for the wealthy: the ability to build a nest egg that can be used for retirement and passed on to family members.

Social Security has worked this long -– why change now?

Today's program is a bad deal for average workers. When President Roosevelt first pushed for old-age insurance, or what we know as Social Security, it wasn’t meant to look like it does today. In a statement to Congress on January 17, 1935, Roosevelt said, “The system adopted, except for the money necessary to initiate it, should be self-sustaining in the sense that funds for that payment of insurance benefits should not come from the proceeds of general taxation.” He later added that individuals should have the opportunity to participate in “voluntary contributory annuities,” and that the federal money used to pay benefits to early participants “ought ultimately to be supplanted by self-supporting annuity plans."

In other words, the President credited with creating Social Security was actually one of the early supporters of PRAs!

The program Roosevelt championed never advanced past the start-up stage, and instead turned into a pay-as-you-go system where today’s workers support today’s retirees. As President Bush noted, the more time that passes the fewer workers there are for each beneficiary (today the ratio is 3:1; it will soon be 2:1). The system will begin taking in less than it has to pay out in just thirteen years.

Thirteen years? That’s a long way off, and I read that we might have even longer until there’s a “crisis!”

Growing up I was always taught to work hard and avoid trouble. Whether or not we say there is a Social Security “problem” or “crisis” is irrelevant –- it’s evident that there’s something wrong with the current system, and we should work as hard as we can as soon as possible to fix it. Our children and grandchildren deserve nothing less.

Bush vows to push Social Security solvency

WASHINGTON - Fresh from a five-state tour promoting his plan to add private accounts to Social Security, President Bush pledged today to go beyond that proposal and push for an overhaul to make the retirement system permanently solvent.

The biggest opposition to Social Security reform is that President Bush wants to destroy the social security system and cause everyone to lose their benefits. But we find it is not so, President Bush wants us to know the problem so that the system can be overhauled to make the program permantly solvent.

Baucus: No crisis with Social Security, but long-term problem needs attention

Baucus said Friday that the Social Security fund "has a long-term challenge, but it is not a crisis."

Democrat Senators are lining up in support of accepting that there are obvious problems with the current Social Security program. And why shouldn't they? Clinton was the first to draw attention to the impending Social Security crisis.

Baucus attempted to explain some of the details of the president's plan, which he said are confusing.

However, Democrats aren't signing onto a solution yet. And that's ok, because there is no concrete 'solution' yet. President Bush has said this clearly, he wants people to understand that there is going to be a real crisis in the future, and there are some good proposals that can be worked into the solution. But he wants congress to come together and create solutions.

A lot of people don't realize that it is a lot harder for someone to recognize that they have a problem then to solve it. President Bush is working to convince the American people that there is a problem with Social Security. Look for acceptance of a future problem, not a specific 'solution' right now. We can't have a reasonable debate on a solution until people accept the fact that there is going to be a problem.

Some say Bush's exaggerating Social Security problem

WASHINGTON — Broke. Bust. Bankrupt. President Bush has used all these terms to describe Social Security's long-range future, but Democrats and some economists say he's painting a misleading picture to stampede the public into accepting a radical restructuring of the program.

"It's just part of a pattern of hyping and exaggerating his arguments well beyond what any facts will justify," said Rep. Lloyd Doggett, D-Texas. "It's like talking about mushroom clouds when people were needing a smoking gun on Iraq. It just is not justified."

No one can accurately prophesy the future, and this includes what the state of Social Security will be in the future. However, we do know one thing. Everyone agrees that around 2018 the SSA will have to start redeeming bonds to pay benefits and will have to continue doing that for many decades into the future as the senior population grows larger in relation to the rest of the population.

To wait until we have to deal with the consequences is just foolhardy. The right approach in my opinion is to try to reform the system now so that we reap the benefits of those reforms when we need them later.

Heritage Committed to Default?

The blog There Is No Crisis has creatively interpreted the Heritage Foundation's new report to claim that the Heritage Foundation is pushing for the Treasury Department to default on the Social Security bonds. However, this is untrue, the Heritage report concludes:

Given that, this country faces a choice. It can either condemn future generations to ever-higher taxes or sharply lower Social Security benefits, or it can change the system by allowing younger workers to place part of their taxes in safe, controlled investments. That will cost money also, but the money in those accounts would be really saved -- and grow into pools of money that could pay some of the owner’s Social Security benefits.

See, the government doesn't default on loans. But the government pays bonds by raising taxes. And in 2018, those taxes will be raised for those of us who are young Americans now. We will be doubly-taxed, in effect. The working generation in 13 years and beyond will have to pay the payroll taxes for the social security, and taxes to cover for the extra payroll taxes our parents have paid for the last 30 years.

The Heritage Foundation's warning is loud and clear. Deal with the crisis now, or face large tax burdens later. As a young American, I'm for dealing with the crisis now, I don't want to risk being forced into poverty in another decade.

Put aside politics for Social Security

From the Natchez Democrat (What an appropriate name) is this opinion piece rightly calling on Democrats to put aside their partisan politics to work together on a solution for the Social Security crisis.

While his proposals for Social Security reform were well known in advance, President Bush's State of the Union Wednesday night seems to have been the opening bell for a major fight on the issue.

As soon as Bush finished a speech in which he proposed solutions such as private retirement savings accounts, Democrats were on the attack about the plan -- although details about it were actually relatively vague.

But what we need right now is compromise, not political attacks.

While the math changes depending on which study you believe, most analysts agree that Social Security will be in trouble by the time today's younger workers should be drawing on it.

Official estimates predict that benefits will exceed tax receipts beginning in 2018. In 2042, these estimates predict the trust funds will be exhausted, and benefits will have to be cut to 73 percent of current levels.

Already, most younger workers say they won't rely on Social Security to help them by the time they retire.

Rather than partisan politics, we need real solutions to find a way to save the future of Social Security, which was established by Franklin D. Roosevelt's New Deal.

That means that Democrats need to halt their knee-jerk reactions to any Republican proposal, and Bush needs to stay true to his word that he will listen to ideas from both sides of the aisle.

Social Security Personal Investment Accounts Model

Federal employees now have access to a Thrift Savings Plan (TSP), a retirement investment account that offers lowcost and diversification. It also offers different levels of risk. One of the biggest panics of social security reform is that the government is going to set up this high-risk account and force everyone to put their retirement money into it and then when the economy crashes everyone is going to lose everything. Not true, you will be able to invest your 'social security' risk free.

There will probably be 5 different accounts available to invest in according to the USA Today article. They will be similar to the following descriptions:

• Common stock fund: Seeks to match the performance of the Standard & Poor's 500 index, an index of stocks of 500 large to midsize U.S. companies.
• Small-cap fund: Seeks to match the Wilshire 4500 index, made up of small and midsize companies not in the S&P 500 index.
• International fund: Seeks to match the Morgan Stanley Capital International index, a broad index of companies in 21 developed countries.
• Fixed-income index fund: Seeks to match the Lehman Bros. U.S. Aggregate index, an index of U.S. government bonds, mortgage-backed securities and corporate bonds.
• Government securities investment fund: Invests in U.S. short-term Treasury securities.

President Bush Steps Up To The Plate

It wasn't President Bush, but President Clinton that first warned of coming problems with the Social Security program in his State of the Union address in 1999. Now 6 years later President Bush takes up Social Security reform. In his 2005 State of the Union address he warns

Our society has changed in ways the founders of Social Security could not have foreseen. In today's world, people are living longer and, therefore, drawing benefits longer. And those benefits are scheduled to rise dramatically over the next few decades. And instead of sixteen workers paying in for every beneficiary, right now it's only about three workers. And over the next few decades that number will fall to just two workers per beneficiary. With each passing year, fewer workers are paying ever-higher benefits to an ever-larger number of retirees.

With a Democrat warning of problems and a Republican calling for reform, you would expect this to be bipartisan issue. But the bipartisanship that the Democrats have been calling for seem to be reduced to 2 parts. Republicans want to deal with a crisis now, not later; and Democrats want whatever Republicans don't.

This blog will follow the Social Security issues as they unfold. Primarily this blog will try to point out 3 things:

1. President Clinton really didn't lie about the Social Security crisis.
2. People really don't understand what social security involves; and what reform means
3. It's a lot easy to deal with the problems of Social Security now; rather then the consequences later.