Congress.org is a nice resource:

Elected Officials

Media Guide

One thing that never gets mentioned is that in its current form, Social Security is a defined benefit plan.  Based upon your earning history, you receive a benefit for your life with provision for spousal payments.

Private accounts would be in effect converting Social Security to a defined contribution plan. Your benefit would be limited to the value of your contributions to the program.  While it might be better for some, there would be no guarantee that anyone's account would be able to provide a benefit for the remainder of the live of the individual and his or her spouse.  

As the CSM commentary indicates, private accounts in Britain have led to greater poverty among the elderly and speculation that a government program might have to be created. (If so, might I suggest that they call it Social Security.)

Wall St could make a social security killing

Stephen Ellis

December 28, 2004

IT'S not often even the best-connected and most powerful industry encounters a group of equally powerful politicians desperate to put $US1 trillion ($1.3 trillion) in its collective pocket.

So it is unsurprising Wall Street has so far been silent on the Bush administration's post-election push for social security reform, including redirection of a share of new contributions to private retirement accounts.

Although most financial leaders support the idea and industry groups (plus armies of lobbyists) are working behind the scenes in Washington to make a case for private accounts, no CEO of a major financial firm is likely to go public soon.

That's because Wall Street has learnt from the past two times the idea of legislating trillions of dollars into its hands came up, in the late 1990s and again in 2001.

Both times private accounts were advocated as a means of repairing social security - the politically sacred but creaky pay-as-you-go retirement scheme projected to run into increasing financial trouble over the next 50 years as the US's population ages.

And both times the financial sector came out as a vociferous supporter, only to be accused by opponents of having little interest in reform of social security, and (gasp) simply wanting to line its pockets with management fees.

Supporters say laws channelling funds into private accounts owning high-yield assets (such as equities) will lift overall returns on US retirement savings. In the late 1990s, some enthusiasts said private accounts combined with "New Economy" equity returns could solve the whole damned problem.

But there is fairly widespread agreement among economists that gains from such proposals (after accounting for transaction costs) are insignificant compared to the gap between social security entitlements and contributions looming in most projections.

High-return assets are also usually high-risk assets - creating a separate set of political and regulatory problems around fairness, variances in returns and moral hazard.

As a result, everyone from Reserve Bank chairman Alan Greenspan to two members of President George W. Bush's economics team has warned that private accounts, as envisaged so far, are no free lunch and do little to raise US retirement saving - the underlying problem.

On the other hand, some economists feel the scurrilous suggestion that the Wall Street firms are simply interested in lining their pockets may have some basis. They argue that diversion of social security contributions into private accounts could generate a colossal windfall.

One of the most prominent critics of the concept, University of Chicago economist Austan Goolsbee, estimates the net present value of management fees that Wall Street would collect over the next 75 years from partial privatisation of social security as somewhere between $US424 billion and $US1.1 trillion.

That compares with a net present value of about $US3.3 trillion for the projected fees Wall Street firms will generate from all other activities over the same period. We're talking real money.

This week, the Securities Industry Association hit back with its own projections, showing a net present value for fees of as little as $US39 billion. That, on the other hand, is loose change by the standards of the Street and the Feds.

Goolsbee's estimates assume annual management fees on private accounts of at least 0.3 per cent of assets, and more likely 0.8 per cent. His numbers are based on a modest privatisation scheme put forward by the Bush-appointed 2001 Commission to Save Social Security.

In countering, the SIA instead assumed holders of private accounts would be limited to investing in simple low-risk funds with annual management fees of only 0.1 per cent.

The average management fee across all US mutual and pension funds is currently 1.1 per cent. But this includes high fees on exotic investment options that not even diehard libertarian Republicans advocate as a good place to put social security contributions.

Until a social security reform plan appears that has some chance of getting through Congress (which may not happen at all if it depends too heavily on even more federal borrowing), the debate will remain heatedly imprecise. But there are precedents - some close to home - that suggest Wall Street stands to do very well indeed if reform mandates a flow of cash into private accounts, whatever its spokesmen may say.

The Hawke Government's introduction of award-based superannuation in 1986 and the superannuation guarantee in 1992 created a bonanza for financial firms. Australian superannuation assets rose from about $60 billion in 1986 to $470 billion today, with managers collecting annual fees on almost all of it.

http://www.theaustralian.news.com.au/common/story_page/0,5744,11793164%255E643,00.html

This is a fine, informative article.  Even most of those who favor a privatization element believe Social Security is really "social insurance."  Reasonable care for all older Americans is a worthy goal.

As the debate rages, remember this critical fact: privatization plans originate in a need to save the current system!  Even if you believe that it will not go broke by around 2014, you must agree that the future of an unchanged social security involves at a minimum severe disruption and potential "age warfare."

Anyone who disagrees with Bush's approach must suggest alternatives.

Actually, 2014 is the projected date when Social Security stops net financing the rest of the US budget.  This is hardly the same as "going broke."  If you read a little closer, 2014 is a good guess for when the entire US goes broke with current policies!

Is the US going broke because it can't rip off the Social Security surplus any more?  Well, not really.  It is incredible to me all the focus on Social Security (which is in pretty good shape now and for the "foreseeable" future) when there are real giant money problems in the US government.

Yes, Social Security might be in trouble 40 years from now.  Then again, it may not be.  40-year projections are inherently a trick -- yes that's right, small changes in assumptions can prove any point you choose.

2004 OASDI Trustees Report

I'm no expert, but as I understand it, because current benefits are paid from current revenue, there will always be cash flow to fund some level of benefits. Period.

Right now, cash flow exceeds benefits, and will continue to do until around 2018. The surplus is used to purchase bonds. Interest generated by the bonds is also reinvested.

Around 2018, benefits are projected to begin exceeding income. Thus we will have to divert some of the interest generated by the bonds into paying the benefits (assuming we want to keep benefits at the level to which granny has grown accustomed).

We can do this for a few years before we will have to start cashing in the bonds to keep fully funding the benefits. We can keep doing this until at least 2042 (this date is consistent with the Social Security Trustee's somewhat pessimistic assumptions about how well the economy has performing), when we will have cashed in all the bonds. At that point, we would be forced to cut benefits to about 80% of what they otherwise would be if they'd been fully funded. This declines into  the 2070s until it hits about 2/3rds. This is as far out as the projection goes.

And this is if we do nothing.

Solutions?

1. Pop the cap. Right now, what we pay is capped at $87,900 of income. Anything more than that is not included. Increase that to include income of at least $150,000. That will increase revenue. Right now.

Me, I do pretty well so I would pay more. But you know what? I don't care. I'd rather pay a wee bit more than have your granny eating catfood to make ends meet.

2. Phase down the maximum benefit for retirees with income in excess of some amount, say $150,000 a year. Begin there and reduce it by 5% per $20,000, up to a max of 50%. Meaning that anyone with retirement income of $250,000 or more would only get 50% of benefits instead of 100%.

Max benefit is something like $2,042 a month for retirement at age 66. If someone's got income of $20,000 a month, it doesn't seem especially burdensome to cut their benefits back to $1,021 a month.

I haven't made up my mind one way or the other, except on this point: I want the issue debated on a non-partisan basis!  Many of you begin your deliberations by resurrecting a hatred of Bush and everything he stands for.  THAT WON'T GET US ANYWHERE!

See this site for a good, impartial discussion:

http://www.teamncpa.org/quick_facts.htm

Or, this one:

http://www.heritage.org/Research/SocialSecurity/bg1802.cfm

Or, this one that cites an LA Times editorial:

http://www.socialsecurity.org/daily/12-27-04.html

You may consider these biased sources (I consider all sources biased), but they all address the subject with researchable facts and figures.  While I haven't made up my mind yet, most people more knowledgeable than I say that doing nothing is not a good idea.

To repeat for emphasis: STOP COLORING YOUR OPINION OF THIS IMPORTANT ISSUE WITH UNADULTERATED HATRED OF BUSH.

Is someone saying that the Bush administration is trying to scare the American people into believing in an imaginary threat cooked up to serve their ideology? That they'd say anything, truth be damned, to get it done? That they plan to give their buddies sweetheart deals worth billions? Right! Next you'll be telling me that W's brother was hip deep in the S&L scandals and Dick Cheney waltzed hand in hand with Arthur Andersen.

Submitted by Elbow

Plan for Social Security relies on an immediate, familiar Bush strategy
Peter S. Canellos | Washington DC | December 28

Boston Globe - The run-up to President Bush's plan to deal with Social Security is looking a lot like the run-up to his plan to deal with Saddam Hussein.

The expected Social Security shortfall has been a perennial domestic concern in much the same way that Hussein's intransigence with arms inspectors was a perennial foreign-policy concern: From the White House to Congress to think tanks, policy makers worried about it, but presidents (including Bush) felt no immediate need to deal with it.

Then Bush decided to focus on it, and suddenly a long-term concern became intense and immediate.

I think that the main issues are:

1. Does the privatization proposal do anything to address whatever problems Social Security may face in the future? I don't see how it does. In the short  run it means more borrowing. Whether there will be a long-term savings is debatable if you consider what Britain is contemplating with regard to its own privatized system.
   
2. Are private accounts a better way to insure for a comfortable retirement?  I believe that the article demonstrates that it all depends upon market fluctuations and when you enter and leave the work force.  Some may do considerably better.  Others could end up worse off.  Will the government have to provide for the latter?

Uh-oh, unless he can change their minds, this means it's going the way of Hillary's health plan:

WASHINGTON | December 30, 2004    

In Ads, AARP Criticizes Plan on Privatizing

By ROBERT PEAR   (NYT)   News  

The lobbying group, which supported President Bush's Medicare plan, will fight his plan to privatize Social Security accounts.

http://www.nytimes.com/2004/12/30/politics/30retire.html

It's Alan Greenspan who deserves to be hated, not George Bush.  As we all know, Greenspan already saved Social Security in 1982.  Since then the Social Security Trust Fund has been growing and now it is ENORMOUS.  So now when the Trust Fund is near it's maximum (www.ssa.gov/OACT/STATS/table4a3.html), Greenspan turns around and says Social Security is in immediate trouble.  He doesn't mention that trust fund any more.  Like, it doesn't exist.

I would like to know, has anybody asked Greenspan what demographic projections have changed between 1982 and 2004, so that the "saved" 1982 Social Security has become the "in trouble" 2004 Social Security?

WASHINGTON | December 31, 2004    

Social Security Underestimates Future Life Spans, Critics Say

By ROBERT PEAR   (NYT)   News

http://www.nytimes.com/2004/12/31/politics/31benefit.html

Graphic: A Disagreement on Life Expectancy

This analysis is from 2000. Five years ago, the trustees' report was projecting full solvency to 2037. Today it's out to 2042. Go figure.

Board of Trustees Announce Social Security Fully Funded for 37 Years

There are six trustees: the Secretaries of the Treasury, Labor, and Health and Human Services, the Commissioner of Social Security, and two members appointed by the President and confirmed by the Senate.  The trustees make 75-year projections for the Social Security Trust Fund based on economic growth, wages, inflation, unemployment, fertility, lengthening life expectancy, and other factors.

Because no one can accurately predict the future, the trustees use three different sets of demographic and economic assumptions, creating three alternative projections.  The "low-cost" alternative predicts a moderate rate of economic growth and only slightly longer life expectancies.  The "high-cost" alternative predicts a very slow rate of growth and much longer life spans.  The middle level projection is most commonly cited, and projects at least 37 years of full funding.

This middle estimate is based on the very cautious assumption that the long-term rate of economic growth will be only 1.7% annually between 2020 and 2050 and 1.6% after 2050.  

In contrast, the actual rate of economic growth has averaged 3% for the past 75 years, including periods of depression and recession.  Since the mid-1980s, the Trustees have been gradually lowering their projections for long term annual growth.

In 1983, when the trustees announced that Social Security was fully solvent for the next 75 years, they assumed in their mid-range alternative that economic growth would average 2.6% annually after 2000.  

From 1989 to 1991, they used a long term growth rate of 1.8% and forecast a small future deficit that, in the opinion of the trustees, required no immediate policy adjustments.  

From 1993 through 1999, when the trustees issued dire warnings about the health of the trust fund, they projected an extremely pessimistic 1.4% annual growth rate through 2050, and only 1.3% thereafter.  These pessimistic assumptions are completely counter to actual historical experience.

So we have the trustees using a decreasing annual growth rate over the past twenty years, to just about half of what the 75-year average is. It's better to be safe than sorry, but how far should you go?

Here's another analysis, again from 2000. It's very comprehensive.

Social Security Long-term Financing and Reform

(T)he reason for the looming Social Security crisis lays not in the demographics, but rather in the increasingly pessimistic economic assumptions adopted by the Trustees in their reports in the 1980s and 1990s. The main economic assumptions that lead to the financing gap are low growth of real wages and a falling taxable base.

In 1999, the Trustees projected that real wages would grow at only 0.9% per year. Real wage growth, in turn, is related to productivity gains. The Trustees assume that productivity will grow at just 1.3% annually over the long-range period-well below long-term U.S. averages. If real wages were to grow at 2 percent per year more than half of the actuarial gap would be eliminated. Emphasis supplied.

As usual there is lots of propaganda in apparently neutral statistics -- Even from the New York Times!!  As an extreme example look at that graphic arta posted, the very dramatic difference of 5 years life expectency at the limit of the graph.  

Why do we care whether children born in 2075 live 5 years longer?  Do we really want to "save" Social Security until the year 2160, when these people will be dying?

A Big Push On Social Security

Private Accounts Are Bush Priority

By Jim VandeHei

Washington Post Staff Writer

Saturday, January 1, 2005; Page A01

President Bush's political allies are raising millions of dollars for an election-style campaign to promote private Social Security accounts, as Democrats and Republicans prepare for what they predict will be the most expensive and extensive public policy debate since the 1993 fight over the Clinton administration's failed health care plan.

With Bush planning to unveil the details of his Social Security plan this month, several GOP groups close to the White House are asking the same donors who helped reelect Bush to fund an extensive campaign to convince Americans -- and skeptical lawmakers -- that Social Security is in crisis and that private accounts are the only cure.  

Progress for America, an independent conservative group that backed Bush in the campaign, has set aside about $9 million to support the president's Social Security plan as well as other White House domestic priorities in the new year, said spokesman Brian McCabe. The group is asking its donors for much more, he said.

Stephen Moore, head of the conservative Club for Growth, has raised $1.5 million and hopes to hit a $15 million target when his fundraising drive ends.

But their contributions are likely to be dwarfed by those from corporate trade associations, spearheaded by the National Association of Manufacturers. Other likely contributors include the financial services and securities industries and other Fortune 500 companies, GOP officials say. White House officials, led by Karl Rove and Charles P. Blahous III, the president's policy point man on Social Security, are helping to shape the public relations campaign, said the officials, who talked about private discussions with the White House on the condition of anonymity.

"It could easily be a $50 million to $100 million cost to convince people this is legislation that needs to be enacted," Moore said. "It's going to be expensive" because "it's the most important public policy fight in 25 years," he said....

continued

http://www.washingtonpost.com/wp-dyn/articles/A39791-2004Dec31.html

It is not going broke. That's propaganda.

The administration started from the ideological position that Social Security is bad per se simply because it is ideologically opposed to their own beliefs.

They then started looking for ways to privatize Social Security.

It's actually been a very hard job for them to do this, as the facts are against them, and Social Security is not going broke in 2014.

2014 is when Social Security begins to pay out more money than it is taking in according to the administration. This is your government speaking. This is a fact.

So how did the term going broke enter your consciousness?

They've simply started a propaganda campaign to make it look like it is going broke, but they are not saying it because it isn't true. They get FOX and Limbaugh to say it instead, because they can't, because it isn't true. And you bought it.

Or... put another way... it isn't true.

Or... in yet another way... it isn't true.

You didn't get that it goes broke in 2014 date from the government, Sonny. They didn't say it. So... where do you think you heard it?

You got it from non-accountable media sources who cannot be held legally accountable for lying. That is how propaganda is done nowadays. That is how you are manipulated. They tell people who cannot be impeached what they wish said or disseminated on their behalf. Their hands are clean.

Naturally, Sonny, you are shaking your head and smiling right now. You're thinking to yourself "He doesn't know me. I'm a strong willed, independent thinker. I see right through propaganda. He's the one who's bought lefty propaganda."

There are links at the end of this message. Follow them. Come back. Discuss.

To them, it's just an ideological War Of Ideas, Sonny, and they intend to win it. I sincerely doubt they give a rat's ass about Social Security in your old age. They will be long out of office by then and wintering in Barbados on their investments. Show me one single person involved in the strategy for privatization, or the media campaign behind it that actually intends to use their Social Security check to live on in their old age.

That should have been the first place you smelled a rat.

And no... the media figures supporting their campaign are not being controlled or manipulated. They quite often share the ideology. That is why they were hired. Nobody works as well for you as another true believer. Why force a visibly uncomfortable person to deliver the message when there are people like Limbaugh and O'Reilly who would slit a throat for the opportunity to sit in that chair?

They also feel themselves financially quite insulated from the outcomes. None of them feel themselves at potential risk of living out of a tin of cat food, sick in an unheated room in their eighties, unable to afford medicine to get well.

It has nothing whatsoever to do with truth, Sonny. It only has to do with winning.

Read this to see how you have been manipulated. Don't worry, this is a reputable and non-partisan site (or more properly speaking, this site educates on propaganda in a non-partisan way).

http://www.propagandacritic.com/

I seriously recommend you read it all the way through.

And here is a view of the makeup of your economy in the absolute simplest terms. It's greatly simplified, but the ratios are factual and may surprise you. The creators in this do have a political agenda, but I wouldn't link it if it weren't free from smearing or negativity. It's simple, but it's a brilliant educational tool.

Please watch it to the end, it's short.

http://ww11.e-tractions.com/truemajority/run/oreo?rd=436

Let me know your impressions.

Oh, and here is some historical perspective on propaganda and political manipulation in the US. Think WMD and al Qaeda. Think "propaganda to advance pre-existing agendas"

Lest you think I'm saying the Left is above using tactics like this, I'm certainly not. I'm aggressive in exposing it wherever I see it. It's a blow against democracy. You can't vote properly if you can't think properly, and you can't think properly if you are lied to.

William Randolph Hearst and Yellow Journalism

Perhaps the most famous anecdote surrounding Hearst's zeal for the war involves a legendary communication between illustrator Frederick Remington and Hearst. As the story goes, Remington, who had been sent to Cuba to cover the insurrection, cabled to Hearst that there was no war to cover. Hearst allegedly replied with, "You furnish the pictures. I'll furnish the war."

http://www.pbs.org/crucible/bio_hearst.html

Kuwait, Iraq and Incubator Babies

... he was a father, and he had just heard that Iraqi soldiers had taken scores of babies out of incubators in Kuwait City and left them to die... A pacifist by nature, my brother was not in a peaceful mood that day. "We've got to go and get Saddam Hussein. Now," he said passionately...

,,,Too bad it never happened.

http://www.csmonitor.com/2002/0906/p25s02-cogn.html

I just went back to the second link I posted and saw a cartoon of Bush in the entry screen that could give offense.

I apologize for that. It was impossible to link to the accompanying video without going through that screen, and if I'd spotted it before I posted it, I would have tried another way.

It's not my purpose to anger you, but to help you examine and challenge your POV.

But they weren't about social security at all!  I'm aware of propaganda, so really don't need a refresher course in that.  I look for "spin" and incorrect facts all the time... from everyone!

I'm not offended by caricatures of anyone. least of all national policians, sitting Presidents or self-important Hollywood bafoons.

Hardly. My opinion on this issue has nothing whatsoever to do with Mr. Bush.

Do nothing? Nope. Didn't say that either. The sooner we do something, the better.

As your TeamNCPA link says, "the government must increase the program's income (raise taxes), decrease its expenses (reduce benefits) or find a new source of funding."

As I mentioned, we could raise income by popping the cap to include income above $87,900. If you make less than this, popping the cap would't effect you one bit.

We could decrease expenses by phasing down benefits paid to the highest income retirees. Unless your retirement income is in excess of $150,000 a year, phasing down benefits wouldn't effect you one bit either.

These two measures alone would be enough so that we wouldn't even need any new sources of funds.

As for the surpluses, they are currently invested in special issue Treaury securities. It's special issue, but it's still a security issued by the Treasury.

As such, it's an IOU from the Treasury to a purchaser. It's the same basic instrument that you or I get when we buy a Treasury security on the open market. Think US Savings Bond for example.

Your Heritage Foundation link has a footnote (footnote 3) to a very good CRS Report that sums it up: "These securities, like those sold to the public, are legal obligations of the government..." They "earn interest at market rates, have specific maturity dates, and by law represent obligations of the U.S. government." - Social Security Taxes: Where Do Surplus Taxes Go and How Are They Used?

For that matter, the Treasury just sold $36 billion worth of short-term securities Monday. Where are the funds to pay these back are going to come from? Yep. Same place as the funds to pay the Social Security notes. Here's a good overview from the New York Fed.

Also, bear in mind that the obligations to Social Security don't have to all be paid at once. In fact, given current projections, these will be redeemed over a twenty-four year period, from 2018 to 2042.

In addition to those raised in the CSM article, here's some other questions to ask about privatization:

    * Which governmental entity would assume authority for monitoring and enforcement, and at what price? You might ask who'd end up paying for this, but hey, you know the answer to that one.

    * In case of mismanagement or fraud, would there be any guarantee you'd ever see any of your money again? If there were a guarantee, who'd end up footing the bill for that? Bet you know the answer to this one too.

But again sonny, rest assured I do not hate George Bush.  

Also rest assured that Social Security is not broke, and it is not insolvent.

I was not refering to you when I chastised those whose opinion is formed on the opposite side of Bush... regardless of which position Bush takes.  Several commenters, however, deserve that critique.

Your erudite comments are informative and will help me decide what I will eventually communicate to my representatives.

I'm still going to wait until there are definitative proposals.  I'm still attracted by the partial privitization because it begins to address a current problem: dying too soon and leaving your family too little.  Also, allowing the wealthy to opt out of any future payments in return for a lower contribution (letting them avoid any payment is not right) is attractive.

Good points for me to mull over, ElBow!

I definitely appreciate your kind comments!!

As part of an estate plan, especially for folks in their 20's, 30's, with kids, the tried and true way to make sure the survivors are financially protected if the primary wage earner dies is with (drum roll please) life insurance!!

Yep. A plain old, mom and pop life insurance policy. It's as much a fundamental of a comprehensive estate plan as retirement savings/investment. It's probably the most overlooked too.

AND it is something to consider very seriously whether privatization happens or not.

if the desire to keep Social Security public were there, I have so far seen no real evidence (certainly not from that NYT article) that the United States would be unable to find a way to fund it.

I see here on this site about what "news" is, what it has always been, at least what I think "news" is.

The headline of the story clearly says "Critics Say".

The graphic is clearly labeled "A Disagreement."

(Here's a link to it above, since the "reply" function was not used.)

http://agonist.org/comments/2004/12/26/18146/413/19#19

NOWHERE does it say "the truth about the situation." If the reporter is giving his own interpretation of the truth of the argument being presented, I want it labeled as such.

You would rather not be informed about what "critics are saying"? You would not want to know the ammunition that is being prepared to argue a case? You want a reporter to opinionate and say "this side is presenting garbage" and "this side is not presenting garbage" without labeling it analysis?

To my mind, this is exactly what a good reporter on a topic should do. The reporter, who has been following the story over days, has, in this article, compiled what some of the major "critics" are saying.

Here's an excellent informative excerpt, mho, from the article, for an example:

The Social Security Administration defends its assumptions.

"There is a wide range of opinion among experts on this issue," said Mark Hinkle, a spokesman for the agency. "In the last few years, we've moved a bit closer to the position of other agencies and demographers."

Here he's informing me of what thinking is going on at the Social Security Administration itself! A very important thing to do.

Is one of the bad sides of the internet and blogs, mho. People take separate articles out of the context of an edited product, and put their own editorial interpretation on it. If you read NYT articles on the Social Security situation for the last few weeks, you would see an attempt to present everything every party involved is saying on it. That's an attempt to keep you truly informed. You can either follow news over time, read it day to day, or wait for the whole thing, whatever it is, to be over and read a round-up on it, or read a long, detailed research paper arguing giving what all sides have been saying to date, or read a summary that doesn't give you true understanding.

Sometimes I wonder if this whole news blogging thing is a bad idea, because things are taken out of the context the editors put them in, and put into another context where less experienced people "edit" them. Then the media source gets blamed for being biased, when they really weren't.

to see why expression of an opinion on assumptions underlying an article means that any analytic articles which have been presented are rendered uselessand or a waste of effort to have posted.

The Times articles, all of which I read, were good to post and your last response interesting to read as well.

This thread,which was not limited in scope by the Times analysis series, has I think  room for both simple opinions and analysis, and opinion doesn't ruin or make the analysis a waste of time.

Sometimes it may get in the way or sometimes lead to a new and interesting wrinkle....

Agonist readers, I think, are tolerant enough to wade through both.

BTW Happy New Year to everybody

-mole

From the NYT article referenced above:

------------------------------------

'There are no lifestyle changes, surgical procedures, vitamins, antioxidants, hormones or techniques of genetic engineering available today with the capacity to repeat the gains in life expectancy that were achieved in the 20th century' with antibiotics, vaccinations and improvements in sanitation, Dr. Olshansky said.

Indeed, he said, without new measures on obesity and communicable diseases, "human life expectancy could decline in the 21st century."  

As this is one of the less-examined views in the "on the one hand, on the other hand" march of expertise in the Times article, anyone who'd like to read more detailed on some factors behind this

possibility can look at the article paradoxically titled for our current thread):

Why is Life Expectancy So Low in the United States?

http://www.bc.edu/centers/crr/issues/ib_21.pdf

which examines in more detail factors such as the epidemic of obesity and reduced spending on health care as factors which may in fact reverse the "problem" for Social Security planning This way of tackling "future life expectancy" refocuses the issue in terms of public health, but still connects it to the actuarial disagreements.

Framing arguments and responses on SS solvency to explicitly discuss general "what can we expect on changes in public health" goes further than just mastering the most high-profile arguments in the current SS life-expectancy debate, it can help us attempt to broaden the debate.

http://www.nytimes.com/2005/01/03/opinion/03mon1.html

NYT

January 3, 2005

EDITORIAL

The Social Security Fear Factor

If you've lent even one ear to the administration's recent comments on Social Security, you have no doubt heard President Bush and his aides asserting that a $10 trillion shortfall threatens the retirement system - and the economy itself. That $10 trillion hole is the basis of the president's claim last month that "the [Social Security] crisis is now." It's also the basis of the administration's claim that the cost of doing nothing to reform the system would be far greater than the cost of acting now.

Well, the $10 trillion figure is the closest you can get to pulling a number out of the air. Make that the ether. Starting last year, as the groundwork was being set for the emerging debate, the Social Security trustees took the liberty of projecting the system's solvency over infinity, rather than sticking to the traditional 75-year time horizon. That world-without-end assumption generates the scary $10 trillion estimate, and with it, Mr. Bush's putative rationale for dismantling Social Security in favor of a system centered on private savings accounts. The American Academy of Actuaries, the profession's premier trade association, objected to the change. In a letter to the trustees, the actuaries wrote that infinite projections provide "little if any useful information about the program's long-range finances and indeed are likely to mislead any [nonexpert] into believing that the program is in far worse financial condition than is actually indicated."

As it often does with dissenting professional opinion, the administration is ignoring the actuaries. But that doesn't alter the facts or common sense. If the $10 trillion figure is essentially bogus, so is the claim that Social Security is in crisis. The assertion that doing nothing would be costlier than enacting a privatization plan also turns out to be wrong, by the estimates of Congress's own budget agency.

Over a 75-year time frame, Social Security's shortfall is estimated by the Congressional Budget Office at $2 trillion and by the Social Security trustees at $3.7 trillion, a manageable sliver of the economy in each case. If the shortfall is on the low side, Social Security will be in the black until 2052, when it will be able to pay out 80 percent of the promised benefits. If it is on the high side, the system will pay full benefits until 2042, when it will cover 70 percent.

Contrary to Mr. Bush's frequent assertion that Social Security is constantly imperiled by political meddling, it has in fact been preserved and improved by political intervention throughout its 70-year history, most significantly in 1983. The system could - and should - be strengthened again by a modest package of benefit cuts and tax increases phased in over decades.

Instead, the administration wants workers to divert some of the payroll taxes that currently pay for Social Security into private investment accounts, in exchange for a much-reduced government benefit. To replace the taxes it would otherwise have collected - money it needs to pay benefits to current and near retirees - the government would borrow an estimated $2 trillion over the next 10 years or so and even more thereafter.

In effect, the administration's plan would get rid of the financial burden of Social Security by getting rid of Social Security. The plan shifts the financial risk of growing old onto each individual and off of the government - where it is dispersed among a very large population, as with any sensible insurance policy. In a privatized system, you may do fine, but your fellow retirees may not, or vice versa.

In any event, doing well under privatization is relative. Congress's budget agency analyzed the privatized plan that is widely regarded as the template for future legislation and found that total retirement benefits - including payouts from the private account plus the government subsidy - would be less than under the present system. The amount available from the privatized system was less even after midcentury, when the current system is projected to come up short.

It should come as no shock that individual investors might not do as well as hoped. The stock market's historical returns - some 7 percent a year - are predicated on a hypothetical investor who bought an array of stocks in the past, reinvested all dividends, never cashed in and never paid commissions or fees. That's not how investing works in the real world. An especially grave danger is that investors would withdraw their funds before retirement, a pattern that is pronounced in 401(k) plans. It would be politically very difficult to refuse people access to accounts that were sold to them on the premise that they - not the government - would own them.

The Congressional Budget Office analysis also likely understates the costs to individuals of privatizing Social Security. The borrowing that would be needed to establish private accounts could lead to higher interest rates, a weaker dollar and slower economic growth. It is also likely that future tax hikes would be required to cover the interest payments on the additional national debt.

The only hands-down winner would be Wall Street, as fees to manage millions of accounts poured in. (Those fees, not incidentally, would come out of your return.) Current stockholders would also stand to benefit, as increased demand pushed up stock prices, giving existing owners a gain at the expense of newcomers who would be forced to buy high. The affluent, who could afford professional investing advice, would also be advantaged, even though everyone would be taking the same risks.

The zeal over privatization is fueled by the belief of Mr. Bush and his supporters that free-market fixes are appropriate for virtually every problem. That faith is misguided. For a society to be functional and humane, it's not enough that some people have a chance to be rich in old age. Rather, all old people must have the dignity of financial security, and that requires universal coverage.

Social Security is the core tier of old-age support, replacing about a third of preretirement income for a typical retiree and providing inflation-proof income for life - a feature not available in private accounts. Its purpose is not to supplant other retirement investing, but to provide a crucial safety net. Anyone who wants to maintain his or her standard of living into old age must also amass substantial personal savings and investments. To introduce the same risk into the core tier of benefits that already exists for the bulk of one's retirement savings would be as unfair as it is unwise.

If Mr. Bush were not so serious about privatizing Social Security, his urgency would be silly. Compared with other challenges looming for the government, it's a non-problem. The shortfall in the Medicare hospital insurance fund is two to three times the size of the Social Security shortfall, and that fund is projected to be insolvent some two to three decades before Social Security. Taken together, the costs of the Medicare prescription benefit and of making the tax cuts permanent - Mr. Bush's two main domestic initiatives - are 5 to 8.5 times larger. And his hair is on fire over Social Security?

One of the most distressing aspects of the debate over Social Security privatization is that it distracts from more pressing issues and obscures better solutions to the problem of secure retirement. A future editorial will discuss new strategies to increase private savings outside of Social Security that draw on market theory and behavioral economics and are more promising than rehashing the same tired formula of tax-sheltered savings accounts. In the meantime, however, Mr. Bush and his supporters will be pursuing their idée fixe of privatization. It's bad policy. And it's bad politics, too, driven by reflex, ideology and special interests, and sustained by conformism that masquerades as party discipline. Lawmakers who still value their right and obligation to think for themselves - and to act in the best interest of their constituents - must champion solutions that will build on Social Security, not undermine it.

A previous editorial, "How to Save Social Security," is available online at http://www.nytimes.com/2004/10/02/opinion/02sat1.html

what their arguments are going to be.

Hillary didn't prepare for that, and she lost.

We will, no doubt, see "Harry and Louise" clones with select scary cherry-picked talking points on the downside of Social Security for the future.

(Would be nice if the left of center did a pre-emptive for once: offense, not defense; now, not later. Study their preliminary spin, and get the offense out there. See Jan Egeland; it works. Hell, even just review "Harry & Louise" for pointers. )

)

as per above:

...History also teaches us two deeper lessons about what separates successful societies from those heading toward failure. A society contains a built-in blueprint for failure if the elite insulates itself from the consequences of its actions. That's why Maya kings, Norse Greenlanders and Easter Island chiefs made choices that eventually undermined their societies. They themselves did not begin to feel deprived until they had irreversibly destroyed their landscape.

Could this happen in the United States? It's a thought that often occurs to me here in Los Angeles, when I drive by gated communities, guarded by private security patrols, and filled with people who drink bottled water, depend on private pensions, and send their children to private schools. By doing these things, they lose the motivation to support the police force, the municipal water supply, Social Security and public schools. If conditions deteriorate too much for poorer people, gates will not keep the rioters out. Rioters eventually burned the palaces of Maya kings and tore down the statues of Easter Island chiefs; they have also already threatened wealthy districts in Los Angeles twice in recent decades....

Jared Diamond from article @

http://agonist.org/comments/2004/12/30/211140/17/1#1

http://www.nytimes.com/2005/01/06/politics/06social.html

NYT

January 6, 2005

G.O.P. Divided as Bush Views Social Security

By RICHARD W. STEVENSON

WASHINGTON, Jan. 5 - As he begins deciding on details of his plan to add personal investment accounts to Social Security, President Bush is confronting a deep split within his own party over how to proceed.

Two Republican camps are pitted against each other over how big the accounts should be and whether the president should embrace cuts in benefits.

Mr. Bush intends to step up his involvement in the issue in coming days. He is meeting with Republican leaders at the White House on Thursday and giving a speech next week.

In addition, he is dispatching his Treasury secretary, John W. Snow, to New York to reassure Wall Street that his approach, which could involve trillions of dollars in new government borrowing, is consistent with efforts to reduce the budget deficit and improve the nation's financial condition.

But even as groups opposed to Mr. Bush's call for personal accounts intensify their efforts, the White House is still trying to develop a plan that can hold Republicans together while attracting at least a handful of Democrats in Congress, say administration officials, conservative activists, members of Congress and economists.

The main issues, they said, are whether Mr. Bush should back a proposal to reduce substantially the guaranteed government retirement benefit through a change in the way the benefit is calculated, and whether workers should be allowed to contribute all of their Social Security payroll taxes into their accounts or only a part.

The indications so far, they said, are that Mr. Bush will stick with his inclination to reduce scheduled benefits to assure the retirement system's long-term solvency, and that he will back smaller accounts than many of his supporters would like. But to bridge the gap between the sides in the debate, they said, the administration is considering several proposals, including phasing in increases in the size of the accounts over many years or allowing lower-income workers to invest a higher proportion of their wages in private accounts than upper-income people would be permitted to invest.

One group of Republicans is pressing the administration....

continued

explains why:

http://www.talkingpointsmemo.com/archives/week_2005_01_02.php#004330