Redstate

They expected the media to run with such a hot story.

I don't want to divert this thread, but could the reason they didn't be because the stories of dishonorable deeds by Kerry in Vietnam were not supported with evidence and promoted by avowed political opponents of John Kerry?  You can't really blame them for passing on that one.  That it did eventually get widespread coverage in the media really makes claims of liberal media bias look dubious.  Don't get me started about unquestioning media coverage of the run-up to the Iraq war.  Mostly, the media is just uncurious and easily manipulated.  Both sides have a legitimate gripe there.

(1) Conduct a poll with this question: Do you support allowing individuals to voluntarily divert part of their Social Security into a personal account that is invested in stocks and bonds?

How about this one:

"As you may know, a proposal has been made that would allow workers to invest part of their Social Security taxes in the stock market or in bonds, while the rest of those taxes would remain in the Social Security system. Do you favor or oppose this proposal?"  (Favor: 44%; Oppose: 52%)

How about this:

"Would you support or oppose a plan in which people who chose to could invest some of their Social Security contributions in the stock market?" (Support: 45%; Oppose: 51%)

It seems like most people realize it's voluntary:

"Based on what you know about the Social Security proposal for personal investment accounts, is it your understanding that individuals could continue under the current system if they wanted, or is it your understanding that everyone would be required to put a portion of their retirement money in stocks and mutual funds?" (not required: 57%; required: 27%)

It looks like PRA's just aren't popular.  Maybe it's that Bush was saying we should "fix" S.S., but then toured the country promoting something which does nothing toward "fixing" S.S.  I don't think you ought to be blaming pollsters or the media - Bush got lots of media coverage, but his poll ratings went down.  The solution isn't saying  a bunch of economists like PRA's - what do Joe and Jane Sixpack care about a bunch of economists?

You seem to think the public is just misinformed about S.S. and PRA's.  I happen to agree with the majority of the public, so I don't think they are misinformed, but the excuse is a cop-out.  Democrats think Bush won because people were misinformed.  Either way, it's beside the point.  You have to work with the electorate you have, not the one you want.  You have to manipulate the media you have, not wish we had a media which informed the public rather than just entertain them.  Both sides have the same handicaps - if you lose, it's because either a) your strategy was worse than the other side's or b) your ideas were worse than the other side's.  Either way, you can't complain about the verdict because it's your own fault.

On any account.  

If 27% of people still think it requires people to put their money into a personal account, there is still significant misinformation.

Here is a set of Rasmussen polls that show the affect of changing the wording (usually an indication that opinions are shallow, i.e. changable).

However, when told that personal retirement accounts would be a choice, not a requirement for younger workers--and that those over 55 would be fully protected--support jumps by 13 percentage points to 51%. Even more dramatically, opposition to the plan falls by 20 points to 27%....

Given a straight-up choice between leaving Social Security unchanged and a proposal for personal retirement accounts (with protections as described above), 45% prefer personal retirement accounts while 37% say doing nothing would be the better path to follow.

FOX poll:

"Thinking about Social Security contributions, do you think people under age 55 should have the right to choose between keeping all of their contributions in the current system and investing a portion of their contributions?"

          Yes No Unsure    

ALL        79 13 8    

Under 55   84 11 5    

55 & older 74 15 11....

"Based on what you know about the Social Security personal investment proposal, would you want the choice to invest a portion of your Social Security contributions in stocks or mutual funds?"

           Yes No Unsure    

4/25-26/05 53 37 9    

2/8-9/05   48 40 12....

"Do you favor or oppose giving individuals the choice to invest a portion of their Social Security contributions in stocks or mutual funds?"

       Favor Oppose Unsure    

ALL      60 28 12    

Under 30 76 16 9    

30-45    65 24 10    

46-55    54 33 13    

Over 55  56 31 14....

CNN Poll:

CNN/USA Today/Gallup Poll. Feb. 25-27, 2005. Nationwide.

"Which do you think is riskier for average American workers today: investing some of their Social Security taxes in stocks and bonds, or relying on the Social Security system to pay them the current level of benefits when they retire?" Options rotated. Form B (N=482 adults, MoE ± 5).

Investing In Market or Relying on S.S. System

2/25-27/05 46 50...

In every poll where the word "choice" was included, PRAs have majority support.  But somehow I have missed the front-page Washington Post articles discussing those findings.  Funny that.

Come on! When are you guys going to accept that either (a) GWB just doesn't know how to sell this idea or (b) the country just doesn't want it?

Bush has been all over this. He has gone to how many cities? You can't chalk this up to media bias. At the end of the day, it is GWB's responsibility to sell his program. Now that it appears that he is not going to get the job done, you are whining that the game was unfair.

Well, nuts.

The game is what it is. I don't know if its fair or not, but I know that it is transparent.

You can also move things the other way.  Here's a Time poll from March:

"President Bush favors changing the Social Security system to allow people to invest part of their Social Security payroll tax in stocks and bonds. Do you favor or oppose this proposed change to Social Security?"  (Favor 40%; Oppose 52%)

Follow up 1:

"What if under President Bush's proposed Social Security plan for personal investment accounts, you would get less guaranteed money from Social Security when you retire, but you also get the money you invested in your personal investment account. Would you then favor or oppose the President's plan for personal investment accounts?" (Favor: 42%; Oppose 51%)

Follow up 2, being generous in my opinion since the borrowing would continue for alot longer than 10 years:

"Under the Bush plan, the federal government would have to borrow between one trillion and two trillion dollars or more over the next 10 years or so to provide Social Security to retirees in order to make up for the money going into the personal investment accounts. The money would be paid back later, over time. Would you now favor or oppose allowing some Social Security money to be invested in personal accounts and reducing benefits if the government had to borrow up to two trillion dollars in the next 10 years to pay for the new plan?"  (Favor: 24; Oppose: 67)

From the looks of it, a fully-informed electorate is not at all likely to support PRA's.

If selling your proposal requires using "choice" rather than "allow", it shows why we are supposed to be a republic, not a democracy.  Polling has warped our system on both ends: we base policy off of polls even when it is impossible to have a fully-informed electorate responding to polls, and we run campaigns based on polls to exploit our poorly informed electorate.  It's a lousy way to run a country, but the media is there to be manipulated by whoever is the most skillful, and it in turn will manipulate the masses.  You've gotta love America!

There are no guaranteed funds.  There are promised funds that can be taken away according to Nestor vs. Flemming, 1960.  Acting as if they are guaranteed definitely skews results with misinformation and was part of my original objection.

You will no doubt agree that there are no "guaranteed" funds from the stock market either.  It's pretty obvious that poll respondants are not tuned in enough to be able to evaluate all the pros and cons in one poll question to give the same answer all the time.  The final question is, "Do the people want it?"  If you have to have the question asked in the right way to get the answer you want, the answer is probably "no".

them or not...They may be ideologues, like those in the CATO Institute itself, the originator of the petition....The fact remains that we would have to incur additional debt of $5T-$15T to implement them at a time when our deficit is completely out of control and to add insult to injury, they would not help any solvency problems, which have themselves been greatly exaggerated through the use of extremely conservative GDP growth estimates and actuarial estimates of longevity, and they would up the risk quotient without a correspondingly beneficial reward.

Petitions like this mean nothing unless you know WHY signers "endorse." You will have to make a case for private accounts, not simply say that some "smart people" like them.

in my well-considered opinion, private accounts would be a disaster and destroy Social Security as we know it.  If you want that, yeah they're great. I don't.

First, I never argued that the stock market was guaranteed to profit nor do any of the questions.  However, several polls have stated the "guaranteed" benefits vs. the stock market setup which is not the choice since there are no guaranteed benefits.

Second, I entirely agree with your last statement which is why I am bothered that news media is writing questions to get their prefered response.  The truth is that people will say yes or no depending on how you describe the current SS system and how you describe PRAs.  That means opinion is shallow and can be shaped.  But that is not being reported by the MSM.  They are reporting widespread opposition based on polls they wrote with biased questions that imply that there are "guaranteed" benefits and without mentioning the "choice" of PRAs.  Any poll using the word "choice" and leaving out guaranteed (which is the most accurate way of doing a question) show support.  Granted if you mention large short-term deficits, support goes away.  If you mention long-term bankruptcy of SS, all reforms probably get more support.

Finally, the answer to "do the people want it?" is not answerable right now since the reforms are complicated and the questions are simplified (and somewhat biased).  Hopefully the media will realize that "If you have to have the question asked in the right way to get the answer you want, the answer is probably 'no'."

SS policy should not focus so much on polls.  We need a long-term solution to the solvency problem.  I support PRAs strongly (gee that isn't obvious, huh) but they are not the only solution.  The only way we are sure to go bankrupt is with no changes.  I think whoever gets reform through will reap benefits (which is why I think moderate Dems are resisting so much lest Republicans get credit for reform).  Basing policy off these polls is rather silly.  Then again, the media plays up these polls as if they are 100% accurate and they have deep meaning.  The difference between shallow and deep opinion is important and somehow lost on journalists.  Maybe they should hire a few statisticians or economists to help out the writers.

That is what I don't believe.  I think the reforms are too complicated to be polled in this way.  More importantly, the polls are using biased language ("guaranteed" benefits).  Finally, the media is ignoring a major story because it is positive for the pro-PRA side.  That's their right to do so, but I think it should be pointed out.  That's transparency.

That's about the bottom line.  Where are you pulling out the number $5T-$15T?  Over what time period?  Over the long-run PRAs can't add to the debt by definition.  They can bring down the debt if those who take a PRA pass up more in promised benefits than they get in their PRA.  In the short run, there is a transition cost which is paid back in full (or more) in the long run.  But the "worst" predictions are $2T in the next 10-20 years which we then make back over the next 20-40 years.  Furthermore, PRAs help make the whole system self-financing in the long-run which is the problem we keep running into.  Payroll taxes started at 2% and is now 12.4% because we've raised taxes each time promised benefits exceeded revenues.  It's time for a new solution besides raising taxes.  PRAs are that solution.

On an entirely different note, it seems Dems can say "smart people think global warming is happening" or "smart people think evolution is occuring" and if you disagree you are anti-science.  But when a huge number of professionals (who understand the issue better than many of us could) side on one side of an issue, why aren't PRA opponents branded as anti-science?  Because the media won't cover pro-PRA news.  Hopefully that will change.

KISS principle.  Simply have the treasury issue marketable bonds to the SSA for use of the trust fund surplus that way we get the government to quit picking our pockets thro FICA taxes, we increase restraint on government spending (no more hiding debt in SS's surplus) and the 'full faith and credit' of retirement benifits is restored.  It's a three'fer, and if we need to tweak the retirement benefit formula, retirement age, or FICA taxes to keep the system humming along then do so.

Failing that, do nothing and wait for GWB to leave office.

ramifications of the Privatization Proposal.  It involves taking money out of the Social Security cash flow stream up to around 4 percentage points or 2/3's of the employee contribution of 6.2%.  But because Social Security is "pay as you go" that means that there will not be enough cash flow, over time, to meet expenses, thus creating a debt of up to $15T over time.  Paul Krugman has explained this and I am using his figures on that. Democrats are way underestimating the magnitude of the debt that will be incurred. But it all depends on the time frame. I'm not saying the cost will be $15T in one year but over reasonable period of time, say 25 years IIRC, that would be the cost.

As for the "in the long run we'll save money" argument, that's off the wall as far as I'm concerned. Why don't you try going to your banker and borrowing money with the promise that yeah, I'll borrow for the next 40 years but THEN I'll pay you back more than I borrowed.  That is what I call the "Wimpy Argument" from the cartoon Popeye...Wimpy always asserted "I will gladly pay you Tuesday for a hamburger today." Privatization advocates want to pay on "Tuesday" for the humongous borrowing today. Only fools would accept that argument as a likely outcome.  In addition, SS will be "sustainable" in your words, not because of Private Accounts but because of GUARANTEED BENEFIT CUTS.

As for global warming, it's a matter of verifiable, peer reviewable science so scientific experts' opinions do matter. Private accounts are not a matter of scientific verification of natural facts but, at least in part, matters of ideological persuasion, which cannot be scientifically verifiable as "right or wrong" but their effects are "economincally" predictable and according to the best predictions they will be a long term economic disaster for the Social Security program.  Since we don't know their reasons for supporting private accounts, perhaps they are against the very concept of Social Security or against the concept of a government safety net for retirees, the disabled and dependents of deceased individuals younger than retirement age. That would make them "right" according to their own ideology but "wrong" if you want, like I do, to preserve the safety net with the least amount of risk possible.

At least you're proposing something instead of throwing snark.

First, this has nothing to do with the full faith and credit clause.  We don't owe this money to Americans or foreigners, the government owes itself.  Congress is entirely within its right (according to Nestor vs. Flemming, 1960) to end SS tomorrow and stop giving out benefits.  Benefits are not guaranteed by law; they are merely promises made by Congress.

Second, you downplay the long-run financial problems.  It's not "if we need to tweak...," it is a question of how soon we fix the problem.  And by "tweak" you mean raising payroll taxes from 12.4% to 15.5% or cutting benefits 27% in 2041 (assuming we pay back the Trust Fund).  The default (i.e. "do nothing") policy will cut all benefits by 27% in 2041 and cut them deeper after that.  Since I'll be turning 60 then, I'm somewhat worried about that policy idea.  I'd prefer to put some of my money into a PRA that I have ownership rights over and that the government cannot take away.  Call me crazy.

I wonder how those numbers would change if you replaced only the 'President Bush' with 'Senator Lieberman'. I mean, we've NEVER seen dems oppose something based SOLELY on the source being Bush right? Right, Mr. Bolton?

Krugman is not a reliable source on this.  I won't quote Hannity or Rush, but quoting Krugman is no different.  The 4% is about a third of payroll taxes (12.4%).

To better understand PRAs, lets take this to the individual level.  Bob puts in 12.4% of his income from 2000-2040.  He is then due $1000 a month in retirement.  Introduce PRAs.  Now Bob puts 8.4% into SS and is due $600 a month in retirement.  He puts the other 4% into a PRA which grows with the market and pays out $700 a month when he retires (because the market return is much higher than Gov bonds over the long run).  So he makes $1300 a month now.

Lets see how that affects the national debt.  When he started putting 8.4% instead of 12.4% into the SS Trust Fund, the debt grew because it received less money.  But when the Trust Fund paid him in retirement around 2040, it paid out less to him and thus saved that money.  If those amounts are equal then it is a wash.  If (as I suspect), he actually gets less in his PRA than he gives up in promised benefits, then it saves money for the government.

Please provide some links to a reputable source for your $15T number.  I contend that it's made up or based on faulty economics.

"according to the best predictions they will be a long term economic disaster for the Social Security program"

Clearly not according to the 'best' predictions. Isn't that exactly the point of the petition? You can't have it both ways. Either experts are useless and biased, or their predictions are science and useful. Either predictions are useful and scientific or they are not. If you are ready to dismiss our scientists, then you should dismiss the predictions as well.

To compare an award winningn Ivy League economist with Rush and Hannity is way off the mark.  The smaller estimates are simply for shorter periods of time....

KRUGMAN (1/11/05): Advocates of privatization almost always pretend that all we have to do is borrow a bit of money up front, and then the system will become self-sustaining. The [White House] memo talks of borrowing $1 trillion to $2 trillion ''to cover transition costs.'' Similar numbers have been widely reported in the news media.

But that's just the borrowing over the next decade. Privatization would cost an additional $3 trillion in its second decade, $5 trillion in the decade after that and another $5 trillion in the decade after that. By the time privatization started to save money, if it ever did, the federal government would have run up around $15 trillion in extra debt.

These numbers are based on a Congressional Budget Office analysis of Plan2, which was devised by a special presidential commission in 2001 and is widely expected to be the basis for President Bush's plan.

The interesting thing is that the long term cost of Bush's tax cut is far greater than the unfunded liability for the SS Program over the 75 year Trustees' period of estimation.

And the second part of your reply, when pared down to its essence is "I will gladly pay you Tuesday..." No sensible banker on earth would loan money under those conditions.

As for the long term disaster for Social Security that means testing and privatization would insure, just look at what is happening to Medicaid, healthcare for the poor.  The poor don't vote and certainly don't contribute to campaigns so they are quite expendable. That's why means testing would be a disaster.

I know Krugman's qualification.  But he is now a shrill.  If his numbers are right, please find an unbaised report that backs them up.  I doubt one exists.

The system we have now follows your "i'll pay Tuesday mentality" just in reverse.  The government paid a generation of eldery SS without collecting from them.  At some point, someone has to pay twice which is why the "Ponzi scheme" claim has some validity.  By transitioning to guaranteed PRAs from a promised SS benefit, we would be the generation paying twice but ending up with a better and more secure system in the future.  Right now we are dependent on the government to take more of our money to pay their promised benefits.  I don't want to see a 15.5% payroll tax.  We pay enough in taxes as it is.

yourself...If you can analyze it and show that Krugman's analysis based on that plan (as he states) is wrong, I'd be glad to hear it.  Here's the link:http://www.cbo.gov/showdoc.cfm?index=5666&sequence=0

And you know that hypothetical 15.5% you mention is really pretty small when you put it in perspective because it would be only 3.1% more than the 12.4% it is now for BOTH employer and employee.  Dividing that by 2 to get the worker's contribution you get around 1.5% in increases which on a $50K median income would be only $62.50 per month or $14 per week; the costs of a couple of nights of eating out at McDonalds.  And that is all if NOTHING else is done, like raising the cap from the current $90K per annum.  And of course, if you earn more than $90K your PER CENT of payroll taxes goes WAY down below the 15.5% you mention or the current 12.4%.  On a $200K salary the worker's portion would be 2.79%, on $500K the worker's portion would be 1.1% and on $1M the worker's portion would only be 0.5%

And please don't  tell me that the employee pays the full 12.4% in taxes now as there is no way that IF THE PAYROLL tax was reduced, the employer would pass that along to the worker. So the worker only pays 6.2%, the same as the employer pays.

Look, this is an economics question.  Yes, salaries would rise if the payroll tax was totally eliminated.  The whole 6.2% may not be passed on, but much of it would.  If you don't believe that, you're just rejecting mainstream economics.

I don't want to pay 15.5% of my salary to payroll taxes and then get hit with another 20-30% of my salary to income taxes.  I'm glad that's a fine solution in your eyes, but I'd rather think outside the box on this one.  Pre-funded PRAs solve the funding gap problem in the long-run and put us on the path to solvency.  As long as the worker/retiree ratio keeps worsening, we're going to have to keep raising taxes to meet the obligations of government.  I want off that path and onto a pre-funding scheme.  I guess we differ on that.

to the worker-retiree red-herring argument.  This argument is used speciously over and over again. I  guess because it SOUNDS deceptively persuasive even though it isn't valid.  It's not valid because right now, the worker to retiree ratio is around 3 to 1 and we're running a big SURPLUS.  The meaningful ratio to look at is WORKERS TO BENEFICIARIES.  Beneficiaries, I hope you know, are made up of about 2/3's retirees and 1/3 disabled and surviving spouses and dependents under age 16.

The ratio of workers to BENEFICIARIES has already been worse than it is projected to be in the future with no particular problem.  

Prefunding, as you call it, is simply BORROWING to my lights.  When you look at the looming healthcare problems, the need to deal with the alternative minimum tax and the "no end in sight" funds for war fighting, I don't want to see more short term borrowing , especially when, as I said, any savings for SS 40 years out are due to guaranteed BENEFIT CUTS, not the private accounts. The debt run up by that borrowing will be passed on to my children and grandchildren, something I can't abide.  What Private Accounts does is substitute a defined contribution system for a defined benefits system.  That's more risk for beneficiaries.  And of course the whole basis for even talking about doing anything is a very conservatively based 75 year projection based on extremely conservative estimates of GDP (1.8% vs. a more historically realistic 3.5%) If the assumptions are altered the problem goes away.

And of course, we haven't even discussed administrative costs and their drain on ROI and the harm that might be done if a large amount of cash enters the market and the possible bubble effect of such a large amount of money chasing equities.

"What Private Accounts does is substitute a defined contribution system for a defined benefits system.  That's more risk for beneficiaries."

This is only true if you think the government can afford to pay what it has promised beneficiaries.  As most young people know, the government can't pay what they have promised.  Thus, this falls flat.  There is a lot of risk involved in not reforming SS.

WORKERS to RETIREES ratio:

Look... the current path is unsustainable.  My solution is PRAs; yours is a tax hike of 3.1% of salary.  I applaud you for at least having a solution which is more than the Dem party has achieved.  But if that choice was put in front of Congress or the voters, I'd win.  

While the private accounts will be ours, as I understand it there will be rules regarding withdrawing money from them before retirement.  The government will be acting as a trustee for those accounts until the time comes to withdraw the money.

Since the government will be holding onto those accounts, why can't they simply borrow against them in the short-term?

I support PRAs strongly (gee that isn't obvious, huh) but they are not the only solution.

For someone so concerned about semantics, I would think you would be careful not to imply that PRAs do anything for solvency!

The only way we are sure to go bankrupt is with no changes.

Actually, it depends on economic factors like productivity.  Based on the past performance of Social Security solvency projections, there is indeed the possibility of never draining of the trust fund.

I think whoever gets reform through will reap benefits (which is why I think moderate Dems are resisting so much lest Republicans get credit for reform).

I disagree completely.  Bitter medicine is certain to be punished.  Republicans don't want to do anything without Democrats because it would be walking off a cliff.

Even if the polls were in Bush's favor, that wouldn't necessarily make it a good election issue.  Democrats made that mistake with the assault weapons ban in 1994.  If the minority votes based on the issue, it can be a heck of a loser.

Since they are our PRAs, we can place the money in our choice of broad-based funds.  Since the money is actually being used (in investments), it can't be misused by Congress.  Furthermore, government doesn't need anything to "borrow against."  They can borrow all the money they want until voters vote them out of office of the economy tanks.  Fortunately our debt/GDP ratio is still rather strong compared to other developed nations.