Social Security Crisis

Pay Your Taxes

2005-04-03T08:41:00.000-07:00

At a forum in Connecticut, an elderly man had some input:

"Social Security is unsustainable as a pay-as-you-go system," Lockhart said, assuring those attending that people over the age of 55 aren't going to be affected by the problems and proposed changes. Some of the solutions discussed during the forum included raising Social Security taxes, slowing the growth of benefits or increasing the rate of return on the Social Security's trust fund.
"I believe the solution to the problem will probably be a combination of these things," Shays said.
Although most in attendance remained calm during the discussion, an angry Trumbull man briefly disrupted the forum. "I don't give a damn," said Leo Adelson, who appeared to be in his late 80s. "People have to pay their taxes."

Pay your taxes...

How Social Security could narrow rich-poor gap

2005-03-27T15:35:00.000-08:00

When Congress created the Social Security system in 1935, 8 of 11 people reaching retirement age were not just poor - they were indigent. They had almost no income. Some lived on the street, many with their children. They relied heavily on charity to survive.
Those drafting the Social Security bill wanted to redistribute income to these destitute retirees. They succeeded. Today's seniors are relatively flush.

Now, the income gap between the rich and poor in the United States has gotten wider again. A reformed Social Security could help readjust that balance.

It's unclear whether President Bush's plan will do that. But Social Security could be altered to accomplish that goal, says Robert Shiller, an economist at Yale University. He frets that the growing rich-poor gap "is going to fester eventually. It will be a source of resentment."

I "Get It"

2005-03-16T17:42:00.000-08:00

A local MN citizen has written these profound words on Social Security reform which I have the honor of posting here tonight.

I "get it" -- unlike Senator Dayton and the others in the Democratic party crying fowl. The private accounts being proposed are no different than what most people have access to with respect to deferred comp and the various accounts they can put their defferred comp monies toward. People won't actually have the money in their hands to with as they want -- they will simply defer it through payroll deduction like is currently done -- only to a different account that will invest it as you choose. The options will be limited like they are through deferred comp. You have low risk options to more high risk options. It's that simple. I think our deferred comp plan has 5 options of varying risk levels. How complicated is that? What could possibly be wrong with workers actually owning their retirement accounts? It's our money -- let us have it!

But consider this. Welfare reform was a huge struggle too -- why? As you probably know, the federal government first authorized the Aid to Dependent Children (ADC) program under Title IV-A of the Social Security Act back in the '30s -- about the time Social Security was enacted. Times were tough back then -- ya, tougher than they are right now, Nancy Pelosi!! People had survived WWI, the depression, etc. The ADC program was started to aid widows and orphans -- widows whose husbands had been killed in WWI, leaving them to raise orphaned children with no income, resources and no ability to make a living. Back then, women didn't traditionally work out of the home, they didn't traditionally have ready access to educational opportunities, they didn't have access to reliable birth control (did reliable birth control even exist?), or abortion on-demand. Obviously times have changed because everything women didn't have back then, we have now. But our welfare programs essentially treat women like we are still back in the '30s -- poor, helpless, uneducated women with no opportunities available to them.

The same is true with Social Security. When that was enacted, the average worker didn't have access to saving for retirement, investing in their future, IRAs, deferred comp, 401Ks, etc. etc. But the average worker can or should have access to these investment opportunites now so why do we -- or our government -- feel compelled to continue to treat workers like workers of the '30s?

And another thing. Before the invention of government programs such as Social Security and welfare, people had to rely on their families in their old age -- elderly parents lived with their children until they died. The elderly weren't shuffled off to a nursing home because no one could afford such care. And if a women was widowed, or God forbid, she turned up pregnant and not married, she would have to turn to her family for help. Both the Social Security system and the welfare system essentially replaced the roll of the family. Once these goverment programs were in place, families gradually began to relinquish their traditional rolls of caring for one generation to the next, and for taking care of each other in financially difficult times, because they learned that the government would do it if the family didn't. From my perspective, this is, probably the saddest and most destructive aspect of these programs.

Again, times have changed. Opportunities have changed. But neither our welfare system, and especially the Social Security system, has kept up with the changing times. Reforming Social Security is overdue and I support the President's proposal wholeheartedly!!

Paige Turner

Alternative to Social Security?

2005-03-15T09:38:00.000-08:00

WASHINGTON — For 5 million American workers, including Kansas City's police officers and firefighters, the debate over Social Security overhaul has little meaning: They're already exempt from the system.

So are most of Missouri's teachers.

That class of public sector workers — who don't pay taxes into Social Security during their working years and don't receive Social Security benefits when they retire — accounts for about 6 percent of the U.S. work force.

Instead of Social Security, they pay into pension funds that invest in stocks, bonds and other investment instruments, much as President Bush wants individual Americans to be allowed to do with a portion of their Social Security payroll taxes.

But as the fight in Washington heats up over how to reform the massive safety net, opinions vary as to whether such pension systems — many of them quite successful — could be copied on a larger scale.

What Made America Great?

2005-03-10T21:39:00.000-08:00

Mr. Hasson believes he knows what made America great. It wasn't that Americans believed in personal freedoms, or personal sacrifice, or any other noble attribute.

Democratic moderates (sometimes maligned as "tax and spend liberals") need to make their voices heard in Congress to the effect that raising taxes in order to stabilize Social Security is not such a bad thing. Taxes made this country great. Paying taxes assures our society that everyone has a stake in the common good and brings us that much closer to dealing with deficits, rather than borrowing money from foreign sources.

Our regressive system of taxation ensures that small subsets have the greatest stake in the common good, and a large subset has a greater stake in reaping the benefits. Is this something that makes Americans proud?

Cash me out now

2005-03-05T20:29:00.000-08:00

I linked to Tim Penny's editorial on the Social Security crisis earlier. Now someone comments in a letter to the editor:

Tim Penny argues that the Social Security trust fund is simply an IOU from one part of government to another.

If Republicans truly believe this, then I want a refund of all the money I've been paying into the trust fund for the past 22 years, and I want to stop paying into it right now.

Joy Jacques, Cannon Falls, Minn.

I want a refund of my money too, and start putting it in a private account where I won't have to pay for it again later.

For extra credit, read the other letter to the editor on the page with the analogy to the trust fund being like a bank. It's true. But the difference between a bank and a Treasury bond that the Social Security surplus is banked into is where the money comes from when I make a withdrawal. The bank invests my savings in private sectors and it gains a return and the bank gives me my money and interest back. The government, when it needs to pay back bonds, it just taxes Americans workers, and then uses that to pay it's bonds.

I'm sure you can see the difference. It's time to invest the Social Security into the private sector where it will increase value, rather then have the government put it in trust funds so that we will have to be taxed again on it when the surplus needs to be used.

Remember, the government never defaults on loans. They repay them through increased taxes on us, working Americans.

Retirement Plan A Success

2005-03-04T05:02:00.000-08:00

By JAMES (PETE) CONROY, Mason City

The other evening, I had my dinner disturbed by one of those unsolicited phone calls. This one was a recorded message from AFSCEM (Association of Federal State and County Employees). It explained to me the horrors of the (personal savings account) legislation that is being considered in the modernization of the existing Social Security program.

I listened to the whole pitch and when it was finished, I went back to my dinner. While I was finishing up the no- longer-warm cheese ravioli, I pondered with amusement the thought of the AFSCEM pitch being made to the municipal employees of Galveston County, Texas.

In 1980, 72 percent of the employees opted out of Social Security and approved creation of a privately funded retirement plan that also included life insurance and disability components similar to Social Security. Brazoria and Matagorda counties joined the Galveston Plan over the next two years. (Congress closed this option in 1983.)

The Galveston plan has been a success. Since 1981, more than 5,000 retirees in the three counties have enjoyed market retirement yields averaging 7.5 percent compared to less than 2 percent under Social Security.

A worker under this plan will receive 90 percent of his pre-retirement income as opposed to 35 percent of pre-retirement income under Social Security.

These retirement accounts (personal) are used to purchase commercial banking and life insurance products such as certificates of deposit and annuities as well as conservative government and commercial bonds. With this 25-year-old example for the public to compare with the AFSCEM horror story I listened to, I had to laugh, even though my raviolis were cold.

Just another letter to the editor from someone who gets it...

Timothy J. Penny: Social Security trust fund is no more than an IOU

2005-03-03T06:32:00.000-08:00

Tim Penny wrote in a Star Tribune article that the Social Security Trust fund does not consist of "real" money. He's right, it's put in Treasury Bonds, which means that when it is needed, the government has to get the money from somewhere else to pay the bonds back.

That's why it does no good to generate a surplus now, unless it is invested in an annuity type account. We can raise the payroll cap now, but the extra surplus we generate is just more taxes we need to raise through the general fund later to get the surplus back. What we need is not a surplus, but a invest plan that will return the guarenteed benefits when they are needed.

Raising the interest rate on bonds issued to the trust fund simply raises the amount of general fund revenue that the government will eventually be required to transfer back to Social Security.

These transfers to the trust fund are not free: They must come from raising income taxes, reducing other government programs or increasing the national debt.

Even at the current rate of interest, repaying these trust fund dollars would within 20 years require cuts in the general fund totaling about $120 billion annually.

We don't need to turn a Social Security problem into a general fund problem later. We have the answers and time to prepare for a secure Social Security now. We should take advantage of this opportunity.

Sen Dayton to MN: Social Security Needs Change

2005-03-01T19:09:00.000-08:00

It's a surprising turn, but after reacting extremely, a lot of Democrats are coming back to agree with President Bush that Social Security needs changes. This article which talks about Dayton's views on changing Social Security has some great points.

While Dayton agrees with President Bush that the program needs to be fixed, and he is pleased that the president wants to do something to save it, Dayton believes that the president's proposal for privatizing part of Social Security is not the answer, Gelbman said. "There is a problem with Social Security, but it's not a crisis," he said.

There is a problem with Social Security, that's something we all can agree on. There's no need to quibble over labels, if you want to call it a crisis or not, that's your choice. But let's agree that Social Security needs changes.

Dayton has proposed removing the income cap on Social Security taxes as the answer, according to Gelbman. Currently, U.S. workers are only taxed on the first $90,000 of their income for Social Security.

If the cap, which was established in 1984, was removed, said Gelbman, income for Social Security would increase, and this would reduce any funding problems for Social Security. Raising the cap has been examined by Democrats and Republicans alike and has received support from both sides, added Gelbman.

Raising the cap now would not help. We don't need more money put into Social Security now. We are running a surplus for at least 12 years. If we generate a larger surplus now, that would just be that much more we need to tax from the general fund later when we need the surplus. That's the problem we have now, in 2018 we'll need to generate taxes to pay the surplus we've been generating for the last 20 years. We don't need to make that situation worse.

"If you're a senior now, your benefit will not be affected," Gelbman told the audience. "But it could hurt your children and your grandchildren."

The changes we make now aren't for noe, they are for later. We have 2 choices: We can save with a private annuity type program so that our children and grandchildren will have a guarenteed retirement fund when they need it, or we'll have to raise taxes on those who have jobs to pay for the retirement we didn't prepare for now.

Inouye criticizes Bush’s reforms

2005-02-27T19:34:00.000-08:00

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?

2005-02-27T07:27:00.000-08:00

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

2005-02-22T06:12:00.000-08:00

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

2005-02-21T10:02:00.000-08:00

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

2005-02-21T05:07:00.000-08:00

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'

2005-02-18T10:10:00.000-08:00

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

2005-02-17T04:51:00.000-08:00

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

2005-02-15T15:34:00.000-08:00

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

2005-02-13T19:24:00.000-08:00

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?

2005-02-12T06:53:00.000-08:00

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

2005-02-12T03:43:00.000-08:00

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.

2005-02-11T18:29:00.000-08:00

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

2005-02-10T22:33:00.000-08:00

"[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?

2005-02-10T03:55:00.000-08:00

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

2005-02-09T18:25:00.000-08:00

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

2005-02-09T09:56:00.000-08:00

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.