Redstate

Fixourfuture.org is not the only group of Americans under 30 who are working to support Voluntary Personal Accounts.

Students for Saving Social Security (www.secureourfuture.org) is a non-partisan, grassroots organization dedicated to making sure that any Social Security solution includes Voluntary Personal Accounts.

We're having a big event this Wednesday!!!  We're going to storm the capitol and let our elected representatives know that we're watching them.

RINO WATCH -- We'll be lobbying Olymipa Snowe and Gordon Smith in particular.

The cited numbers are no longer accurate.

Social Security: Young People Less Supportive

While public opinion on private investment accounts has not changed much in the past month, support for the idea among younger Americans - who up to this point have been the most reliable backers of the proposal - has weakened significantly. In February, people age 18-29 favored the idea of private accounts by a 66%-19% margin. Today, just 49% favor private accounts, while 25% are opposed, and nearly as many (26%) say they don't know how they feel about the issue.

Link from the same polling group.

Additionally, if private accounts are linked to lower guaranteed benefits support drops to ~40%.  The public does not like the Bush plan for SS reform.

This is why I think the media is left leaning.  There is no such thing as a guaranteed benefit right now.  You have no legal right to your SS check.  It is a promised benefit yes, but one than can be taken away.

If you call it guaranteed in a question, you are biasing the question and thus it is not reliable.

Find a survey that isn't biasing that question to make your point.

As for the movement on the PRA question, the number has bounced around but it fluctuates between 50-66% while the opposition rarely breaks 25-30%.  

outside of the whole "trust fund" issue (in reality there isn't one, the government is essentially loaning itself the money) is the truth that the congress could vote to eliminate social security tomorrow-and opt to keep all the taxes collected, and nobody would have a remedy in court for it-there is not "right" to social security benefits, only the promise of politicians, and we all know how much we can trust those.

SSSS is doing good work.  I'm watching y'all too.  How did the event WED go?  How many people came?  Got any anecdotes worth telling?

the Social Security trust fund consists of Treasury bonds, backed by the full faith and credit of the government. The same credit that funds much of the government's daily workings. It's inconceivable that Congress would allow the government to renege on its promise to redeem those bonds.

Certainly, Congress could vote to do away with Social Security, but even conservative economists nix that idea. In the Denver Post Wall Street Journal section on May 1, 2005, Bruce Bartlett, former Reagan administration Treasury official, was quoted as saying, "It really makes no difference whether there is $1 or $100 trillion in the Trust Fund, since the government will always make sure that Social Security benefits are paid."

We will have Social Security reform, but I can see why support for the President's plan has waned as people learn more about it. What you will get back from your private account is the earnings that exceed inflation-adjusted gains over 3 percent. In addition, you will get a (reduced) guaranteed Social Security benefit. So, in essence, the government will keep part of your private account earnings, as though you had taken out a loan. You get to keep anything above a 3 percent real rate of return. This really reduces that chances that you'll reap a windfall from your private account.

"you will get a (reduced) guaranteed Social Security benefit"

I will retire in the late 2040s... they are promising me more than they can pay out by then.  Since the Trust Fund dries up by 2041 (assuming it is paid back in full by my generation), they can't pay the promised benefit.  I will get something around 65-75% of that promised amount if nothing changes.  So when people talk about cutting "guaranteed" benefits, they are being misleading.  I am not guaranteed to get that benefit.  It is a promise.  And one that is not affordable.

This is why I think the media is left leaning.

And this is why, with respect, I think you are being somewhat disingenuous.

Yes, the government could turn around and say, "no more benefits for you!".  So, yes the benefit is not "guaranteed" in the same way that, for instance, if you drop a rock it's guaranteed to fall to the earth.  

They are, however, "guaranteed" in the sense that the US government is committed to funding them and paying them, and can't be changed except by legislative changes.  In particular, they are not dependent on the performance of the market or other relatively volatile entity.

The bottom line on SS as far as I can tell is this:  there are going to be fewer people paying in relative to those receiving benefits.  This isn't the fault of liberals, conservatives, Bill Clinton, Karl Rove, or the general decline of western civilization (Thomas, Cella, et al, your disagreement on this last item vis a vis the decline in population is noted in advance).  If you want to address that problem, you youngsters need to have lots and lots of kids.  Good luck.

I find the idea of private accounts attractive for one and only one reason -- it may make it difficult or impossible for Congress to spend funds allocated for the payment of benefits on anything else.  That would be a good thing.  But, it will raise other taxes, or take away other benefits, that are currently funded by raiding SS.  Dumping that much money into the market might also have other interesting unintended consequences, such as raising P2E ratios even higher than they are now.

In any case, PSAs aren't going to be a magic wand that will make the underlying problem go away.

If you want to make it attractive for people to save money, the thing to do is incentivize saving.  This is normally done by messing with the tax code, rather than by dedicating large government programs to that purpose.

Cheers -

I was wondering what the YRs thought of 2008 and the various candidates out there.  Would be interested to compare it with the conservative blogosphere, where Condi gets high marks, Allen gets reasonably high reviews, Rudy gets mixed reviews (some love 'em, some hate 'em), and McCain is perpetually in the doghouse.

"They are, however, "guaranteed" in the sense that the US government is committed to funding them and paying them, and can't be changed except by legislative changes.  In particular, they are not dependent on the performance of the market or other relatively volatile entity."

I'm retiring in the late 2040s (at the earliest).  They have promised me benefits in the same proportion as you they have promised you.  But the Trust Fund will have dried up by then and my "guaranteed" benefits will be cut by roughly 30% without any legislative changes.  These are promises and they cannot be fulfilled right now.  Why the media refuses to call them promises says more about their inherent bias than a conscious effort to discredit conservative ideas, but that is the worst form of bias.  If the media wasn't 9-1 for Kerry in DC, maybe someone would have pointed out that there are no "guaranteed" benefits, especially not for youngsters like myself.

I would like for the government to stop spending the retirement funds of my parents on other programs (which is why I support the DeMint-Ryan Bill) so that there is some chance we can fix this raid on the Trust Fund.  But even that solution doesn't affect me much as the Trust Fund won't be there when I retire.  I want to put some of my payroll into guaranteed legally-owned personal accounts that cannot be cut 30% by a legislature that is too old to care about what happens in the 2040s.

McCain is still mainly in the doghouse, although the big city chapters were somewhat more receptive (and my sample was not exhaustive).  Otherwise, regional support for candidates was strong.  TN guys liked Frist and AR guys liked Huckabee, for example.  The 2008 discussion was not big nor on the forefront, although I bet the 2007 conference will be different.

SEN Brownback spoke to the convention and got high marks by those I talked to, including some social moderates who were skeptical.  

To be honest, from where I'm sitting I'm not depending on SS.  My wife and I are more or less planning around it.  I'm 48, my wife's in her early 50's, we're right in the middle, between the folks who everyone agrees will receive their currently planned benefits, and you young folks who will have time to take advantage of Plan B, whatever that turns out to be.

We've had the huddle with the retirement planner and are waiting to see what they recommend.  I, personally, may not see retirement until my early 70's.  I'm in pretty good shape and I like what I do, so things could be worse.

In any case, it's highly unlikely that I'll be sitting by the cabana drinking mojitos on anybody else's dime.

Good luck with the PSAs, I hope they're everything you think they will be.

Cheers -

kudos to you for planning ahead for retirement. But if I were young I wouldn't count on a windfall from a private Social Security account. After all, you wouldn't invest in a mutual fund with 3% operating expenses. I've advised my 20 year old to open a Roth IRA. He can let his money ride as long as he wants, and pull it out tax free when he retires.

As a final comment...

Solutions that involve borrowing $2 trillion, at a time when we're already in hock to the people's republic of China for as far out as anyone can project, is AFAIC a non-starter.

I don't know if this part of your proposal, but if it is, you'll need to try harder before you'll get my vote.

Cheers -

I just wrote a diary entry here at RS outlining why I belive the problem is actually very urgent as well as why the current system actually works against the ideals that supposedly form the bedrock of the Democratic Party's platform.

Here's a link to my diary here at RS

-Big Tom

First, I take contention with the 3% number.  TSP runs with under a .1% expense ratio.

Second, the current SS setup will earn a negative return in the 1-5% range.  Even if the charge is 3%, it is probably a better deal than the current system.

Third, PRAs are voluntary.  If you don't want one, fine.  I want my money in an account with my name on it and with my legal ownership.

refers to the government "claw back" provision of the private accounts.

If you opt out of a private account, you get a full guaranteed benefit instead. If you do opt for one, you get a reduced guaranteed benefit, plus anything in your private account that exceeds a 3% real rate of return (that is, 3% after adjusting for inflation.)

So, you must do better than a 3% real rate of return each year, or you get nothing from your private account. You are left with your reduced guaranteed benefit.

features the 3% item? Do you have an HR/SR number?

Which bills or proposals have this "clawback."  I've only heard of it on liberal blogs and I haven't seen it in any of the bills (DeMint-Ryan being the most recent).

And your continued use of "guaranteed" without responding to the difference between a promise and a guarantee is frustrating.

It's a promise, often written.

PRA's are no more guaranteed than anything else as Congress can change the legislation to take the money back.  Indeed, at least one of the earlier privatization proposals was written so that if your stock market portfolio exceeded the return you would have gotten through SS the excess would be taken back into the SS Trust Fund to make up for the shortfall incurred through initiating the Private Accounts.  

Would be if you legally owned your SS.  As of right now, you own nothing.  It is a generational compact where my 12.4% pays for someone else's country club fees.  And I wouldn't mind that if it was set up in a way that was affordable.  But we are paying enough to cover the elderly knowing that we will get less back when we retire.  Putting it in a personal account with my name on it and with my legal ownership over it is different.  If I die, I can pass it on.  That money can't be spent on other programs and pork projects, etc.  That is a guarantee.

Politicians make promises all the time, why do we never call them guarantees except in this case?

I have been referring to the Bush proposal, which does differ from Demint.

just link to the text of the "Bush proposal."

Link

The original story (available here) should have made clear that, under the proposal, workers who opt to invest in the new private accounts would lose a proportionate share of their guaranteed payment from Social Security plus interest. They should be able to recoup those lost benefits through their private accounts, as long as their investments realize a return greater than the 3 percent that the money would have made if it had stayed in the traditional plan.

Additionally from The Center on Budget and Policy Priorities

If the earnings in Ms. Jackson's account grew at a rate of 3 percent above the inflation rate, the funds in her account would exactly offset the reduction in her Social Security benefits.  In dollar terms, her account would contain $152,000 (in 2004 dollars) when she retired, and her Social Security benefits would be reduced by an amount equivalent to the income from $152,000, or nearly $1,000 per month.  (This is a 50 percent reduction in her scheduled Social Security benefit.[3])  Thus the expected income from the private account would be exactly offset by the reduction in her Social Security benefits.

If Ms. Jackson's account earned more than 3 percent above inflation, it would more than offset the benefit cut imposed on holders of private accounts.  If, for example, her account grew at an annual rate of 4.6 percent above the inflation rate, it would total $222,000 upon her retirement.[4]  After the $152,000 reduction in her Social Security benefits was netted out, she would be left with an increase in total income (from Social Security and the private account) equivalent to the income from $70,000, an amount equal to about one-third of her account.

On the other hand, if Ms. Jackson's account earned less than 3 percent above inflation, it would be insufficient to offset the additional Social Security benefit cut that would be imposed on holders of private accounts, and she would be poorer in old age as a result of having opted for the private account.

And that clears up the fact that Lucy99 was mistaken.  From the same article:

The Post mistakenly reported that the balance of a worker's personal account would be reduced by the worker's total annual contributions, plus 3 percent interest. In fact, the balance in the account would belong to the worker upon retirement, according to White House officials.

The point they are making is that PRAs would have to get a higher return than 3% a year to outpace SS.  This would be true, if I expected to receive what they are promising me.  But since I will retire after 2041, I know they can't afford their promises.  So in my case, if I can earn more than -1 or -2% on a PRA, it is a good deal.  I think that is highly possible, in fact, I think it is 99% probable.

Thanks for the link and clearing up that discussion.

I was indeed wrong about the mechanism of the benefit offset.

The details of these things are mindnumbingly dull and confusing (sometimes I even think that is on purpose).  Anyway, that's what sources are for, the blogosphere would be dead without hotlinking.

When independent groups check the published plans, they come out with certain results.  The administration will then state certain aspects are not part of their plan.  However, its not clear whether they are refuting the results of the analysis or saying the plan they checked was not the administration's plan.  Its so obfuscated and complicated that any discussion of it is almost made irrelevent.