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Bush's Unacceptable Plan on Social Security

Now that I've had a few days to reflect on Bush's proposed plan for social security, I unequivocally find it warrants rejection. The New York Times reports today on how it would work:

Under Mr. Bush's approach of "progressive indexation," a typical low-income worker who earns about $16,000 a year today would be entitled to retirement benefits equal to about 49 percent of his or her wages, the same amount that is promised today.

But those earning an average income, about $36,500 in today's dollars, would see big changes. Instead of replacing 36 percent of that person's working pay, as promised under today's system, benefits would cover only 26 percent of pay by 2075. And people who earn $90,000 a year in today's dollars would continue to pay as much as ever in taxes but would receive benefits equal to only 12 percent of their pay.

There are intellectual and economic reasons to oppose the plan, as Josh Marshall points out every day. I like the plain English reasons, like this one from Matt Yglesias who is guest-blogging for Josh this week.

Yes, meeting all our promises under Social Security and Medicare will cost a lot of money in the future. But the great thing about the future, is that between now and then our economy will grow, just as today's economy is much larger than was the economy back when Social Security was first created. With that additional wealth, we should be able to take care of retirees and children alike without too much trouble.....don't buy Bush's brand of snake-oil. He's not taking from granny to help out my generation. He's taking from us -- and even more from our future children and grandchildren -- to finance tax cuts and generate administrative fees for his contributors in the financial services industry.

There's lots of reasons for young people to oppose it. And there are nothing but reasons for baby boomers and millions of other Americans who have paid into the system their entire adult lives to oppose it:

Look, I’ve worked hard my entire career, and I’ve watched a goodly chunk of each paycheck go to Social Security. I’ve been paying into the system all of these years, and all I want and expect is my due. I am not paying into Social Security to support other people. It’s MY retirement, and I want to know that it will be there AS IT HAS BEEN PROMISED TO ME ALL THESE YEARS. If that makes me narrow and self-interested, I’m guilty as charged.

I’m not saying that we should abandon the poor or the lower middle class- far from it. What I AM saying is that taking away my Social Security is not the way to meet this obligation. All my life I’ve had the promise of Social Security representing a mental finish line. I’m not going to get rich or live well off it, but that is MY money, damnit. I’ve paid into the system over the years, and I expect to see the benefit of my long years of hard work.

....ow Our Sainted President is telling me that I am going to be penalized if I happen to work hard and achieve a degree of financial success? I realize that I’m probably beginning to sound like an arch-Conservative here, but since when are Republicans in the business of disincentivizing hard work and financial success?? Or is George W. Bush so afraid of losing face that he is willing to gut the very promise that Social Security has represented to generations of Americans? Could the man BE any more craven or nakedly political? Or is his “legacy” so important to him that he is willing to force even a bad program down the collective throat of this country?

We need a lockbox. We need Congress to leave Social Security alone. There is no crisis.

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    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#29)
    by ppjakajim on Sat Dec 17, 2005 at 12:53:04 PM EST
    kdog - I agree on having the ability to opt out. I wish I could have. I'd be commenting from my palatial beach front retirement compound. But really, the fees won't enrich WS. But if they make you money, why begrudge them?

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#30)
    by pigwiggle on Sat Dec 17, 2005 at 12:53:05 PM EST
    Opting out would hardly work. SS is designed as a wealth transfer program. Most folks putting money in do not receive benefits equivalent to taxes withheld. It is the poorest that receive reasonable ‘returns’, i.e. the bottom quintile receives a ~200% return. Folks with nothing to gain support the system, and certainly would be the first to opt out.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#31)
    by MikeDitto on Sat Dec 17, 2005 at 12:53:08 PM EST
    Social Security is an insurance policy, not a savings account. The nature of insurance is that sometimes you get out of it less than you put into it, and sometimes you get a helluva lot more out of it than you put into it. The best think Washington can do is figure out the solvency problem (which will take practically no thought compared to figuring out Medicare) and raise the 401k caps, leave FICA where it is, stop causing damage to the economy be referring to US Treasury Bonds as "worthless IOU's". Social security is not like a sewer. What you get out of it does not necessarily depend upon what you put into it. Some people on SSI have never paid a dime into Social Security, and most people who die before age 65 never take a dime out if it. It's overly simplistic to state that raising or eliminating the cap would have a net zero effect.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#17)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:54:08 PM EST
    Tim Russert and the Democrats are disappointing me on this one. The questions I want answered would have gone more like this. "Speaking of Al Gores "lockbox, Mr. Card. On the record does the President plan on honoring the IOU's that the govt. owes the Baby Boomers approaching retirement. The money they paid in to fund their own retirement - the so-called surplus that the government has spent."? "If so - how are you going to do it? Where is the money coming from? We shouldn't have to "replace" it with more taxpayer $$ should we?" If not, aren't you asking seniors to PAY for their retirement TWICE by having the money they paid in squandered and then having benefits cut so they have to fund the difference between what they paid in and what's left?? AM I CRAZY OR ISN'T THIS THE REAL ISSUE?????

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#18)
    by ppjakajim on Sat Dec 17, 2005 at 12:54:09 PM EST
    mfox - The President has stated that the change will not affect those 45 and older. Does that answer your question? As for the "Lock box." It didn't exist after 1964. You gotta understand. They spent your money. And the only way they have to replace it is to get it from some other taxpayers. That's why it is called a Ponzi Scheme.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#19)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:54:16 PM EST
    I am not parsing words, I am suggesting a formula to make the fund healthier. If you pay the max, you get the max. But if you change maximum income on which FICA taxes are collected without raising the maximum benefit paid out, the fund gets healthier. So I will ask you again, do you recognize that there is a maximum benefit payable, yes or no. You have previously said no. You want to change your position on that? These are simple yes or no questions.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#1)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Way to go Jeralyn!! Blaghdaddy's been watching the nonsense on Sunday Talk and they're all saying the same thing: We'll try anything except A, B, and C. An exercise in schizophrenia. Lift the cap on S.S. payroll taxes...end of story. A guy making $90,000 can pay a little extra rather than decrease yours or his or her benefits...doesn't that sound reasonable? Blaghdaddy has his own take on it too, but let's have some discussion, folks...

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#2)
    by pigwiggle on Sat Dec 17, 2005 at 12:58:38 PM EST
    “Lift the cap on S.S. payroll taxes...end of story.” The single largest tax hike ever; political suicide. The greatest benefit of privatizing social security is to take the money out of the general revenue. Asking the feds to save your money is like asking a junkie to hold your smack.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#3)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Blaghdaddy disagrees...let's say you raise the cap from 90,000 to 150,000...how many more millions would that bring in? As for political suicide...Blaghdaddy bets there are more people who'd rather see a higher tax on +$90K earners than a reduction in their own benefits...that is pure political suicide, 'cause if I was 54 today and someone told me I'd start S.S. in 11 years but all the money I'd paid in would now get me a 75% share of what someone a year older than me is going to get, there'd be hell to pay.... So, who's thinking what?

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#4)
    by mpower1952 on Sat Dec 17, 2005 at 12:58:38 PM EST
    'cause if I was 54 today and someone told me I'd start S.S. in 11 years but all the money I'd paid in would now get me a 75% share of what someone a year older than me is going to get, there'd be hell to pay.... Blaghdaddy- You can say that again. My husband and I are 54. I think the cap should be raised since Bush's speech did not rule that out. Also, I think the Dems should suggest the cap be raised to $200k. Many making over $100k are Repugs. They would hate this cut in benefits. Yet it wouldn't be a cut per se since their previous ss amount was equal to the $90k amount. Just a little juggling and they come out as the whiners.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#5)
    by Andreas on Sat Dec 17, 2005 at 12:58:38 PM EST
    Among the lies and distortions that filled Bush’s opening ten-minute speech and the answers to subsequent questions, the following stood out: “Franklin Roosevelt did a wonderful thing when he created Social Security. The system has meant a lot for a lot of people. Social Security has provided a safety net that has provided dignity and peace of mind for millions of Americans in their retirement.” Those who devised the Bush administration battle plan against Social Security and who are leading the fight for its implementation by Congress are inveterate enemies of the retirement system. They seek the scrapping of all that remains of the New Deal and every other measure introduced over the past century to ameliorate social misery by means of government intervention. They are the political heirs of the right-wing business interests who in the 1930s branded Roosevelt as a communist and a traitor to his class, saw his New Deal programs as a bid to “Sovietize” America and rejected the Democratic president’s insistence that minimal social measures were required to save capitalism and stave off the threat of a social revolution. Now they are selling their retrograde program as a reform, much in same cynical way that a war of aggression in Iraq was promoted as a defense of America against terrorism.
    Bush demands deep cuts in Social Security benefits By Bill Van Auken, 30 April 2005

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#6)
    by DawesFred60 on Sat Dec 17, 2005 at 12:58:38 PM EST
    Look its just away! to remove social security over the next 30 years, while still getting the money from the young, who will never see one dollar back. its a Bush plan that is about the same lie as Iraq, and soon the lie will be understood by all people.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#7)
    by Mreddieb on Sat Dec 17, 2005 at 12:58:38 PM EST
    This time I pray the Bush Unwillingness to raise taxes becomes His and the Repiglican's Touch of death!

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#8)
    by jackl2400 on Sat Dec 17, 2005 at 12:58:38 PM EST
    Just do away with the estate tax ("death tax" repealer) which affects the top 0.3 percent of income of inheritances greater than 3 Million and, presto, the social security problem is fixed. Paris Hilton inherits half of the billions she was going to before and your mom and you won't be eating cat food.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#9)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Remove the cap on income subject to SS tax, fund any remaining shortfall with estate tax. There, it's fixed. On to the next problem, please. I will feel bad for the folks making more than $90K per year who pay more and for the people like Paris Hilton who won't inherit as much money as they want, but I will get over it.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#10)
    by ppjakajim on Sat Dec 17, 2005 at 12:58:38 PM EST
    Baghdady writes - Lift the cap on S.S. payroll taxes...end of story. A guy making $90,000 can pay a little extra rather than decrease yours or his or her benefits...doesn't that sound reasonable?" What would be really reasonable would be for Baghdaddy, and others, to understand that the way SC works is this. The more you pay in, the more you get back. So you can raise the cap to a gadzillion dollars, and all that will happen is: You take in more, you pay out more. Net change is zero. CA - We've been through this point before. So I have to assume that you know better.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#11)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    There is a maximum Social Security benefit Jim. It's around $1600 per month. If you think there is no cap on the benefit, provide link to the change in the rules.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#12)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Here are the 2001 and 2002 caps on benefits: Maximum Social Security Benefit: Worker Retiring at Age 65 in January 2001 $1,536/mo. 2002 $1,660/mo. Here is the website

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#13)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Jim, is there a cap on Social Security benefits? It's a simple yes or no question.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#14)
    by ppjakajim on Sat Dec 17, 2005 at 12:58:38 PM EST
    CA - There is no cap. The amount you draw is exactly dependent on the amount you pay in. If you think otherwise, you are 100% wrong. I invite you to schedule you a meeting with a SC represntative. They will fully explain the program, and why you won't be drawing as much as I. BTW - I started drawing in June of 03, and was right at $1800 a month because I had paid the maximum.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#15)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    What is SC? Are you talking about the Social Security Administration? There is a cap. You are probably drawing the capped amount. If you had paid in on twice the amount of income your SSA benefit would still be the same as it is now. Look at the website. The Social Security Administration and I think there is a maximum benefit. Maybe SC has some other formula?

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#16)
    by ppjakajim on Sat Dec 17, 2005 at 12:58:38 PM EST
    CA - I think you are trying to parse words. The current plan collects FICA taxes up to around $87K. The amount you receive is based on how much you paid in. i.e. If you pay the max, you get the max. If your income is onnly $30K, you will pay is based on the $30K, which is not the max, and you will not receive the max. So the benefits, without question, are based on the amount paid in. Now, if you increase the salary level, you will pay in more, and you will receive more. Net change, zero. Are you saying we increase the salary level but cap the benefits? Sounds like stealing to me.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#20)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    All taxes sound like stealing to you, Jim, but as George Washington said: It is essential to bear in mind that toward the payment of debts there must be revenue; that to have revenue, there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant. George Washington, 1796

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#21)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Budget deficits to fund the war in Iraq? Sounds like stealing from my childrena and grandchildren, but I don't hear Jim talking about military larceny. Is there a cap on Social Security benefits, Jim? Social Security Administration and I think there is.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#22)
    by ppjakajim on Sat Dec 17, 2005 at 12:58:38 PM EST
    CA - What you are trying to say is that if you remove the cap on salary, that will solve the problem. That is not true. Because the pay out will increase, because the pay in has increased. All you have done is moved the target. Now, is that too complicated for you? Quit being dishonest.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#23)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    Just how dumb are you? I am suggesting removing the cap on the income that is taxed for Social Security without changing the maximum benefit that can be paid. More money into the coffers, the same payout. So tell me just what is SC that you refer to? I guess maybe we are talking about entirely different systems. I am talking about the Social Security system. What is SC? You seemed to understand some part of the suggestion earlier when you thought it was theft, but you see it's only taxes.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#24)
    by ppjakajim on Sat Dec 17, 2005 at 12:58:38 PM EST
    CA - It aint rocket science. Under the current plan, you pay in about 6% up to about $87K. The amount you receive back is dependent on the amount you have paid in. If you have paid in the max, you get back the max. Now. Let us say we increase the max to $200K. Some of you will pay the additional dollars. Those that do will receive a greater pay back. So, the system isn't capped, and the greater pay in results in a greater pay out. So the system dollars remains the same. Now, that didn't hurt, did it?? Now, if you take in more money, and pay out the same, then you will have more money. But under current law that isn't possible. Who do you know, outside of the Left, who wants to increase taxes? And if you don't like how, and how much, we are funding the military, elect a John Kerry type. If you can.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#25)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:38 PM EST
    I am sure you are correct, Jim. There is no cap in the SC system. We never had it so good.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#26)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:39 PM EST
    CA Don't even go there. You've been baited and hooked - just ignore trolls.

    "I will feel bad for the folks making more than $90K per year [snip] but I will get over it." CA, clarification please. Are you not an attorney? And you don't make $90K?!

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#28)
    by kdog on Sat Dec 17, 2005 at 12:58:39 PM EST
    The new plan has the same fundamental flaw as the old plan, it is administered by the US govt. The new plan enriches Wall St and the govt., the old plan just the govt. Trust me, we'd all be better off on our own when it comes to retirement. Put $10 a week under the matress, it's our only hope. SS was a great idea with a lousy administrator. They stole all the money. The supposed "solution" is putting two hands in the cookie jar as opposed to the current one hand. What a joke. I'm not listening to anymore SS debate until I'm given the option of having no part of any of it. That'll be the day.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#32)
    by ppjakajim on Sat Dec 17, 2005 at 12:58:39 PM EST
    Michael D - Problem is, the insurance policy got sold and re-sold as retirement. And when it reaached 8%, 9% or the current 12.6% level, it had reached a point that it was taking all many people could afford for retirement.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#33)
    by Talkleft Visitor on Sat Dec 17, 2005 at 12:58:39 PM EST
    No, I am a freelance paralegal, no attorney privileges. I do some pro bono work in administrative law settings and contract services. I am making a good living. I will not mind if the cap is removed on the Social Security taxes. But I am still trying now to get into the SC system which is treating Jim so well. My wife is retired CS, but that's a different system altogether.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#34)
    by kdog on Sat Dec 17, 2005 at 12:58:40 PM EST
    But if they make you money, why begrudge them?
    Honestly, I want no part of the game.

    Re: Bush's Unacceptable Plan on Social Security (none / 0) (#35)
    by pigwiggle on Sat Dec 17, 2005 at 12:58:40 PM EST
    Micheal- “Social Security is an insurance policy, not a savings account. The nature of insurance is that sometimes you get out of it less than you put into it” Calling SS insurance is simply spin. Can you imagine your heath insurance provider writing your healthy neighbor the same check it writes you to cover your cancer treatment? SS is better described as an investment program. Insurance policies are constructed so that following some event a company will pay either a predetermined amount or some portion of the cost of the consequences of the event. The only part of SS that comes close is disability benefits, and this is a very small portion of the program. SS pays benefits based on a lifetime contribution. The return on the lifetime contribution is then effectively scaled by how a specific contribution compares to the average contribution. SS always pays; if I strike it big with my investments SS pays, if I lose every penny of my retirement in Vegas SS pays the exact same amount. How many fools do you think would purchase a homeowner’s or an automobile policy or heath insurance constructed like SS? I guess you don’t need to be foolish, simply have the federal government garnish your wages, willing or not.