Re: Reid v. Bush, round 2 on SS

Topics: Welfare
06 Apr 2005

From: Ervan Darnell









No, I'm not interested in defending the Bush plan in detail (your fear
is that it will destroy social security, my fear is that it will save
it, or at least succeed in raising taxes even further). Rather my
point here is that the Democrats are even worse as they are in full
denial. For the purpose of my points below, it doesn't matter if Bush
even has an SS plan (In my last sentence, change "Bush's plan" to
"Bush's comments" and the rest of what I wrote applies absent a plan).
Bush at least made a valid observation about SS and its woes. Reid,
whom you defended, replied in a (more) deceptive and counter-productive
way. What he (Reid) writes when on the record may be defensible as
true (though still a bad plan), but what he says for general public
consumption is disingenuous.

------------------------
Having written that, if you want to attack the plan, here it is:
http://www.whitehouse.gov/infocus/social-security/200501/strengthening-socialsecurity.html
I make it to be:
1) Workers can set aside 1/3 of their SS tax in a 401(k)-like vehicle,
with limited investment options.
2) That account cannot be tapped pre-retirement and in retirement will
be paid as an immediate
annuity (i.e. you cannot spend it on a retirement home or college for
the grandkids).
3) There are various floors and ceilings built-in.
4) There is an implicit special tax on any profits from the private
account based on the payout floor calculation.
5) The plan skips on the question of how the shortfall is paid for,
though increased borrowing to pay current benefits seems the most
likely (a steeply progressive income tax intentionally mislabelled a
"payroll" tax is another).

My plan A is what Cato suggested: raise the retirement age 1 year every
5 years. That's fair to people already in the system and as fair as
possible to people a long way from the system.

If I had to contrive a plan along the lines of what Bush is working on,
it would be difficult. I suppose the advantage to this approach is
incrementalism. The liberals have almost succeeded in socializing
health care by virtue of 'helping' the poor, then the old, then the
young, then moving the qualifying conditions, all of the while
regulating private delivery and insurance into unsustainability (and
then blaming the victim). If Bush contrives a similar play on SS, that
would be good no matter that the first step is useless.


Clive Woodward wrote:
type="cite">




What exactly is the Bush plan for SS?


----- Original Message -----

style="border-left: 2px solid rgb(0, 0, 0); padding-right: 0px; padding-left: 5px; margin-left: 5px; margin-right: 0px;">
style="background: rgb(228, 228, 228) none repeat scroll 0%; -moz-background-clip: initial; -moz-background-origin: initial; -moz-background-inline-policy: initial; font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;">From:
Ervan
Darnell
style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;">To:
ragnar@kelvinist.com

style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;">Sent:
Wednesday, April 06, 2005 6:08 PM
style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;">Subject:
[Ragnar] Reid v. Bush, round 2 on SS


Yesterday, Bush said:
size="2">You see, a lot of people in America think there's a trust, in
this sense -- that we take your money through payroll taxes and then we
hold it for you, and then when you retire, we give it back to you. But
that's not the way it works.

There is no
"trust fund," just IOUs that I saw firsthand, that future generations
will pay -- will pay for either in higher taxes, or reduced benefits,
or cuts to other critical government programs. [2]



That's fair enough. The amount in the trust fund is a tiny fraction of
the total obligation.

The Democratic response was from Harry Reid and Nancy Pelosi. Reid was
previously mentioned in this group as having sensible comments on the
subject. I offer the following as evidence that he too is towing the
Democratic line of denial instead of sensibility:

"These statements could raise needless
doubts among American and foreign investors about the United States'
willingness to meet its fiscal obligations. " [1]

This is a response of the form 'How dare one observe the
Democratic emperor has no clothes', by ignoring the main point. If
you failed to parse what Reid said, he was trying to imply that Bush
was arguing that T-Bill interest payments would not be made, when Bush
said no such thing.

But, it gets worse, R&P also said:

"We urge you [Bush] to commit to paying
back every Social Security dollar that has been used for other
purposes."

Bush has not spent any Social Security dollars for other
purposes. This is shameless demagoguery on Reid's part. The fantasy
that Reid is referring to is the Democratic "plan" (not that it was
ever passed as a law, nor I think even specifically proposed as on) to
pay for the Social Security shortfall from the (general) budget
surplus. Even were that a bill, it would be absurd on the face of it
to assume the surplus would continue to exist and could be so dedicated
(indeed, once one counts the SS trust fund, there was never any surplus
anyway). So, the Democratic plan for rescuing SS is to spend income
tax revenue on the theory of continued surpluses while pillorying
Bush's plan of spending income tax revenue from obligated T-Bills.
Here's the Dem position in short "Budget deficits are Bush's fault
therefore we can ignore SS insolvency." And we're supposed to believe
the Dems are seriously addressing the issue?

Again, I'm not a fan of Bush's plan, but the head-in-sand contest is
being won by the Dems in this case.


[1] href="http://story.news.yahoo.com/news?tmpl=story&cid=584&e=1&u=/nm/20050405/pl_nm/retirement_bush_dc">http://story.news.yahoo.com/news?tmpl=story&cid=584&e=1&u=/nm/20050405/pl_nm/retirement_bush_dc
[2] href="http://www.whitehouse.gov/news/releases/2005/04/20050405-4.html">http://www.whitehouse.gov/news/releases/2005/04/20050405-4.html


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