6.23.2005
The Bush privatisation scheme for social security seems to be dead in the water following a meeting with GOP comngressmen. Fair play to them they struck a hardy blow for the public sector as guarantor of the security of the poor. Its about time that someone stood up against corporate greed and interests that has so badly infected the entire american political establishment.
There are alternative proposals on the table and to be fair the amount of money spent in Iraq could easily cover the deficit predicted at some stage next year. The democrats are implacably opposed to the last deconstruction of the newDeal by the Rebpublican party. However there is not just feeling opposing privatisation for the sake of it as TPM has been covering and arguing since the inception of the plan, the state can and should retain full responsibility for proteciton fo the weakest in america's deeply divided society.
Just a few links and posts but i intend to return ot this later.
RR
I'm working on this in D.C. at the moment. The media reporting is exceptionally misleading, and that's only on a factual level. Yesterday they were reporting that personal accounts were off the table, when in fact just one GOP Senator has proposed a bill that would do that. Moreover, already today GOP Senators have introduced a reform bill that includes personal accounts, which has majority backing, if not, perhaps, enough to break a filibuster.
The merits of various options are interesting stuff, but irrespective of all that, it's far more likely than not that Bush will get something resembling what he's looking for, whether or not you think that's a good thing.
I agree that any source from the US where you read about this issue is going to be either pro or anti and biased on those grounds. It has caught hold of imaginations around the states like a rerun of Roe v Wade might.
I agree, the make up and complexion of states politics currently suggests that privatisation will occur no matter what. More people will be given the personal say over their money and it is a very difficult trail to follow.
Would you mind emailiing or posting links you feel are clear or fairer as i would love to read on more and more.
email: progressiveireland@yahoo.ie
thanx for the post.
RR
Sure, I'd be happy to share links. I think the media are finding this one genuinely hard to cover, because it's not a simple matter. There are seven or eight reform models in play and the number of possible options and combinations for a final solution is huge.
www.socialsecurity.org is a great site (in my opinion) for the pro-accounts side of things.
For just the news, there are a few accounts that have covered things well. This one is from USA Today. I can't find a link for it (I've had it sent as text) so I'll just post it all and you can copy or delete it to declutter your comments section as you see fit. I think it's a decent summary of the state of play from a paper that's very middle of the road on this:
Q: How would the GOP plan work?
A: Social Security now collects more in payroll taxes from workers than it pays in benefits to retirees -- about $70 billion this year, not counting $93 billion the government adds in interest on the trust fund balance. The plan would use that surplus to create individual investment accounts for eligible workers, unless they opted out. Their regular benefits would be reduced by the amount placed in their accounts.
Q: How would the accounts be constructed?
A: The surplus would be divided among all eligible workers. Initially, the amount would come to about 2.2% of each worker's wages, up to a cap. For a worker earning $35,000 next year, that would be about $770, according to Senate sponsors. Initial investments would be limited to Treasury bonds that pay the same as current benefits. Starting in 2008, workers could diversify investments -- and assume the risk. Funding would run out in 2017, when Social Security begins paying out more in benefits than it receives in taxes.
Q: What would be the effect on the budget?
A: Currently, the Social Security surplus is used to pay the government's day-to-day expenses. Under the Senate plan, the money taken from the surplus to create investment accounts would leave a hole in the federal budget. It would have to be made up with spending cuts, tax increases or more borrowing. Under the House bill, the Social Security trust fund would be "credited" with the money used for the accounts, so no additional borrowing would be needed.
Q: Would this make the system solvent?
A: No. The threshold problem facing Social Security -- it won't have enough to pay full benefits by midcentury -- is not addressed. There are no cuts in benefits, increases in taxes or changes in the retirement age.
Q: Does President Bush support the latest plan?
A: He has not embraced it. "I was pleased to see some members, Republican members of the House and the Senate, have started laying out ideas," Bush said Thursday during a Social Security event in Maryland. But Bush still seeks larger and permanent investment accounts funded with current payroll taxes, as well as restrictions on the growth of benefits for upper-income workers.
Q: Are Democrats likely to support it?
A: No. Dozens of House Democrats, led by Rep. Dennis Moore of Kansas, have supported taking the Social Security trust fund "off budget" so that the money cannot be used for other government programs. But Moore says the new bill "is just another way to create private accounts," which only one Democrat in Congress, Rep. Allen Boyd of Florida, has been willing to endorse. Without Democratic support, no bill will be able to get through the Senate.
Q: Then what's the significance of this proposal?
A: It gives Republicans something to support that has less political risk than addressing benefits, taxes or the retirement age. And it gives them a political rallying cry -- "Stop the Raid on Social Security" was the headline on South Carolina Republican Sen. Jim DeMint's press release Thursday -- to match Democrats' rhetoric that they would "save" Social Security from "privatization." It's also an indication that investment accounts bigger than these are unlikely to pass Congress this year -- and that action on solvency is increasingly unlikely. If nothing passes, the issue is likely to resonate in the 2006 congressional elections.
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I hope to blog on this back at freedominst.org/blog.html later today once I've cleared the to-do list.
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