Memo Gives New Details on Workings of Bush's Social Security Plan

[truthpusher]

http://www.nytimes.com/2005/02/05/politics/05benefits.html

Memo Gives New Details on Workings of Bush's Social Security Plan
By DAVID E. ROSENBAUM

Published: February 5, 2005

snip

Now these details of the memorandum from the Social Security actuary, Stephen C. Goss, to Charles P. Blahous, the main White House staff expert on the program, are circulating among policy experts:

Mr. Goss said a "shadow account" would be calculated based on how much the retiree's investment account would have been worth if it had all been invested in bonds with an average yield of three percentage points above inflation.

snip

Those who had low wages in their working years would be required to put at least part of the money in their accounts into lifetime annuities, instruments that make a guaranteed monthly payment for life but then expire and cannot be left to heirs.

Retirees who were more affluent could invest or spend their accounts as they wished.

But the guaranteed monthly payments from the government would be determined as if the tax money they had paid to the government were reduced by the amount in the hypothetical shadow account.

complete story:

http://www.nytimes.com/2005/02/05/politics/05benefits.html

[bluestateguy]

1. Very wonkish

The Bush team may lose the American people because of all the wonkish details in much the same way the Clintons lost people with the complexity of their health care plan.

[merwin]

2. Sorry Mr *, thats a risk I'm just not supid enough (err, willing) to take.

[htuttle]

3. The poor can't pass on their money, but the rich can?

Those who had low wages in their working years would be required to put at least part of the money in their accounts into lifetime annuities, instruments that make a guaranteed monthly payment for life but then expire and cannot be left to heirs.

Retirees who were more affluent could invest or spend their accounts as they wished.

If that doesn't institutionalize our aristocracy, I don't know what else would...

[Coastie for Truth]

5. And there are no "survivor" insurance features

as Laura - in her charming Midland-Odessa accent waves from the White House and says "Let them eat cake."

[Wrinkle_In_Time]

10. Wow. How long until the Guillotine appears? n/t

[Coastie for Truth]

4. And the GOP said Hillary's Health Plan was too complicated

The reductions and the credits and the deductions based on yield above CPI - a good "Harry and Louise" infomercial with a dealer at a casino moving chips around a craps table would be effective here.

Don't even try to rebut with Ross Perot (or Al Gore) Powerpoints- Just mock it with Newt Gingrich "Harry and Louise" infomercials.

We have to make the point - this will end up costing both the taxpayers and the beneficiaries more --- just to satisfy GOP ideologues.

[papau]

7. I agree - mocking this bait and switch is the best approach.

:-)

[w4rma]

6. The details don't matter. This policy is to destroy social security.

It reduces payments and it is written to get Wall Street's food in the door so they can mess around with Social Security towards the goal of destroying it utterly.

Heck this plan even reduces benefits right off the bat *and* puts our nation into debt (to China and the banking industry) by another 2 Trillion dollars.

Don't think about it, just fight it. Don't even acknowledge the details. Just learn the worst ones.

[snippy]

8. The inflation risk assumed by the individual under Bush's plan seems huge.

If inflation is high, which is very possible once the deflationary impacts of China's and India's current high rates of growth decrease, an indivdual could lose a huge portion of his Social Security benefits. And during periods of high inflation neither stocks nor bonds return much if anything.

"During the 1970s, the inflation-adjusted returns of the S&P 500, bonds and T-bills were all negative -- and about the same."

http://www.fool.com/School/BuyandHold3.htm

If a retiree's guaranteed benefit is reduced by an amount equal to 3% above inflation and inflation is high, it seems that the guaranteed benefit could be reduced to near zero over a long period of time. And if the retiree's private account has a negative return after adjusting for inflation, the retiree will have lost way too much to have any hope of supporting himself.

[Cobalt Violet]

9. What are "low wages" by GOP standards anyway?

[noamnety]

11. Two Americas

One for the rich, another for everyone else. This fits that theme perfectly. The elite get to pass their money on to their heirs, the poor will have their accounts repossessed by the government.

[struggle4progress]

12. kick