House conservatives harden backing for Social Security plan (less delay, larger accounts)

Washington Times ^ | 2/05/05 | Stephen Dinan

[Libloather]

House conservatives harden backing for Social Security plan
By Stephen Dinan
THE WASHINGTON TIMES

BALTIMORE — House conservatives said yesterday they will fight for a Social Security plan that goes into effect immediately and includes larger private accounts than the president is calling for, and they will not accept an overall increase in Social Security entitlement spending.

"Conservatives want to see personal retirement accounts that have immediate relevance to younger Americans, that they can see the value, and that will require that they be big and that they be implemented in the final bill without delay," said Rep. Mike Pence, Indiana Republican and chairman of the 100-member Republican Study Committee (RSC).

About half of the RSC's members have been brainstorming in Baltimore the past two days at a retreat sponsored by the Heritage Foundation. Mr. Pence said the group has come to agreement on principles for fiscal discipline and Social Security, and are prepared to be the conservative balance trying to give the president the backing to pursue the boldest possible plans on both issues.

Mr. Pence has said he wanted to stake out a position early enough to avoid a repeat of the 2003 Medicare debate, when he thinks conservatives were late to object to the direction of the bill. Many conservatives were angered when President Bush signed off on a bill that lacked the reforms they had wanted.

Mr. Pence said this time around feels different.

"They're starting on conservative principles and working toward the middle instead of starting in the middle and then coming to the right," he said.

[Libloather]

Bust a move...

[Grampa Dave]

This is going to be very interesting.

American workers under the age of 55 have to get really involved in this battle.

Those of us over 65 have to neutralize the AARP Free Lunch Geezers.

[Racehorse]

"They're starting on conservative principles and working toward the middle instead of starting in the middle and then coming to the right," he [Pence] said.

I suppose what this really means is U.S. Treasury notes valued at billions of dollars, debt claims held by the Social Security Trust Account on behalf of American tax payers, aren't worth a Continental.  Nor does it appear the United States Congress takes responsibility for their part in creating this mess through decades of fiscal negligence.

If the United States can default by simply ignoring debts owed to its own citizen's, I wonder what them foreigners who bought them U.S. Treasury notes must be wondering . . .

This gonna get real interesting and real bloody once the real plans and the real counter plans start rolling into view . . .

[Danae]

Man, this is gonna be a catfight of monumental proportions! Better than the WWF!

[Libloather]

Those of us over 65 have to neutralize the AARP Free Lunch Geezers.

From the AARP.org

The Thrift Savings Plan for Federal Employees

The Federal Employee Retirement System (FERS) uses a three tiered approach to retirement income: The FERS comprises Social Security, a defined benefit pension, and an individual savings plan called the Thrift Savings Plan (TSP). A number of the plans to reform Social Security include providing individuals with the opportunity to save and invest on their own. This 29-page paper by Laurel Beedon of PPI examines the TSP from a number of perspectives to determine whether the TSP is a viable model for an individual investment tier for Social Security. The paper begins by describing what Congress intended when it created the TSP, how the plan's administrative design and investment options reflect that intent. It goes on to discuss how employees have responded to the plan and what it offers. The paper concludes that the TSP provides some valuable information on how an individual, tax-favored, voluntary savings/investment account works when added to a program that includes Social Security and a pension. If, however, it is to be used as a model for reform of Social Security it must be remembered that the TSP represents 2.3 million workers, whereas Social Security represents 129 million. Thus, using the TSP as a model requires some caution.

Download or view The Thrift Savings Plan for Federal Employees in Portable Document Format. You will need Adobe Acrobat Reader to view the file. The file size is 197484 bytes; approximate download time with a 28.8 modem is 55 seconds.

[Gipper08]

Mike Pence has proved once again that he is the leader of the conservative movement(even if the rest of you do not know it)

[USS Alaska]

I'm 63, retired and collecting social security {80% since I chose to take it at 62}. I have "contributed" into the system since 1959 when I was drafted into the US Army. Having paid into the system for over 40 years, I went back {using government supplied figures of my "contributions" } and calculated the present value of my "contributions". I used three sets of "rate of return" 5%, 7% and the real rate of return that I had earned with my personal investment {IRA's, 401K's} which was 13.8%. I used an HP Financial calculator and checked the numbers with an excell program. They may not be to the penny, but are very close.

The numbers should make every young person scream for personal accounts. These are based on real numbers, that I paid into social security, not some hypothetical crap.

At a 5% return, at 65, the amount would be roughly $3.3 Million.

At 7% return, at 65, the amount would be about $ 5.53 Million.
The reason for the much higher number is the effect of compounding over a 45 year period.

At 13% return the number makes me cry, but since I really did earn that return on my own money {that I didn't contribute, I have nothing to cry about}.

Instead, I receive slightly less than $20,000 per year. Even with the government's generous 2.3% annual increase, I would have to live to be 228 years old to break even on the $ 3.3 million, and that doesn't count the interest that could have been earned on the $ 3.3.

The point is simple, personal accounts are way better. Here is a simple calculation. If a 20 year old person invests $ 1,000 per year, with a 5% rate of return, for 40 years, they will have $ 126,840 at age 60, and that jumps to $ 167,685 at age 65. So in the five years from 60 to 65 they would earn and additional $ 40,000. If the rate of return were 7% then the number at 65 years old would be $ 305,751.

[SteveAustin]

I'm not there yet, and think the President is dumb for introducing this scheme.....the whole point of SS was for those who are not particularly bright nor big earners to have money coming to them in old age so they would have money to live on, out of a sense of decency and to maintain social order in society.

The problem is the that govt. decided to keep expanding the benefits ring of things emanating from SS. And also to keep spending the contribution money in the general budget, rather than putting it in trust. (Maybe I'm wrong on my facts here)

Now, all we are doing with these private accounts is creating the most massive new federal bureaucracy (the "investment account" bureacracy) on top of the SS bureaucracy. The lawyers will love it....and best yet we get to deficit finance it. I thought some commentators said the plan won't go revenue neutral for 75 years....

Bush should have used his political capital to reform the tax code and simplify it, in order to get rid of the army of lawyers and accountants needed to comply with the current code, and stop allowing people like Tereza Heinz Kerry end up paying nothing.

Then he could have gone further by abolishing the junk depts. like Education, etc. And get real tort reform done. And get conservative justices on a re-made supreme court.

I'm a Bush voter and supporter, but I am afraid he's going to waste his ammo on a big mess, when he could have done more good elsewhere. This may be Bush's version of the doomed "Hillarycare" from 1994.

[USS Alaska]

The social security "plan" goes revenue neutral in 13 years not 75 years {which dommentators, chrissy mathews, paul begala or the snake}. 2018 will be the last year that more comes into the ponzi scheme than goes out in benefit payments. From then on, it is a downhill slide.

President Bush, God Bless him, has the brains and the balls to address this problem, while weak kneed politicians are headed for the weeds.

Just do the math.

[ChuckK]

Agreed, Pence is everything Santorum was supposed to be and more. I hope he ends up in Lugar's seat eventually.

[q_an_a]

state of texas teachers have had private accounts for years; so too city of galveston. If teachers can do this so too the nation.

While some say that Chile is not as great as first thought, I think the stories are not wide enough for us to know what is the truth. Singapore has private accounts and they seem to be able to manage. Are we not as capable as people in Asia or S. America?

[longtermmemmory]

http://www.heritage.org/research/features/socialsecurity/

the above is a calculator to see how much MORE money an individual would have based on private accounts.

Why are democrats opposed to letting people have MORE money? Why do democrats fear private property?

[Grampa Dave]

Hopefully someone is creating a list of American workers and foriegn workers with the option of investing in the markets.

[Serenissima Venezia]

"I'm not there yet, and think the President is dumb for introducing this scheme.....the whole point of SS was for those who are not particularly bright nor big earners to have money coming to them in old age so they would have money to live on..."

I agree with your general premise as to why SS was created and that it has grown out of control with the addition of more entitlements. But - the problem now is that the higher wage-earners are the ones supporting the lower wage-earners with their SS taxes. It is indeed a 'socialized' security, with those who work the hardest getting much less of their money back and in effect, supporting the rest. I think that creating private accounts would at least let the higher wage-earner get to keep part of their money and pass some on to their heirs.

I agree that going back in time and reducing SS and taxes to how they were in the 40's would be great! But - alas, we can't so we have to come up with another fix. (BTW, when my step dad starting working and paying into SS, he was taxed at 1/2 of 1%! Now we're taxed at 3000% higher than that. Controversial statement ahead: I wish the socialzed entitlement was never created and if those who chose not to save for their old age don't, well it IS the fittest of the species that survives, after all!)

Michelle

[Racehorse]

Serenissima Venezia:  It is indeed a 'socialized' security, with those who work the hardest getting much less of their money back and in effect, supporting the rest. I think that creating private accounts would at least let the higher wage-earner get to keep part of their money and pass some on to their heirs.

Whatever Congress does, be very attentive and do pay attention to every detail and to every implication.  Congress screwed up every chance they had to anticipate and fix the problems when surpluses were the rule.  There are no guiltless hands in this. Don't believe for a second the fault is inherent in the system. Fault is inherent in the negligence demostrated over decades by Congress.

USS Alaska:  I'm not there yet, and think the President is dumb for introducing this scheme.....the whole point of SS was for those who are not particularly bright nor big earners to have money coming to them in old age so they would have money to live on, out of a sense of decency and to maintain social order in society

Exactly right.  Congress, especially Republicans, seem to be setting the stage to ignore or default on the debt owed to Social Security.  But, I'm not so sure Bush is dumb for trying to actually do something for the coming generations.  Still, you're also right, I think, that whatever Congress will define as individual or personal investment accounts will expand or certainly add a new layer to the social security bureaucracy.

USS Alaska: 2018 will be the last year that more comes into the ponzi scheme than goes out in benefit payments. From then on, it is a downhill slide.

Social Security, if it ever was, became a so-called ponzi scheme because Congress has been negligently irresponsible by not making good on those Treasury notes held by SSA.  Either "full faith and credit" of the U.S. stands for something, or it does not.  We can't lay this mess off on individual Presidents, even the ones I'd love to blame and curse.  Congress is responsible for not doing the right thing when they were spending the surplus SS money.

q_an_a:  state of texas teachers have had private accounts for years; so too city of galveston. If teachers can do this so too the nation.

I generally agree.  But, what happens when a teacher stops, voluntarily or not, working for the school district or the City of Galveston.  And, these are not true investment accounts over which individuals have any real control.  Investment decisions are made for them, though it does seem good decisions have been made with good results.

Lots to be learned as the administration and the Congress roll out their ideas.

[q_an_a]

What happens is that their accounts can roll like an IRA or 401K -under the correct circumstances. I've known people to leave, pay off debt - start a company and move on. Now if this is changed to a National social Retirement program the rules would be modified.

[PGalt]

FREEDOM

[Racehorse]

Unfortunately, not all districts in Texas followed the lead of Galveston and some school districts. I have a retired teacher friend, a lady with a master's degree, who depends quite heavily on her daughter's financial assistance, because her pension does not cover expenses.

Can't say why.

She changed locations (different districts in different cities) several times. Perhaps the plan was not available, or when it was available it required a buy in she did not wish to pay or could not afford to pay, or perhaps she opted out.

I suppose we'll read many stories, good and bad, in the coming weeks.

[q_an_a]

I am sure that many stories will be told. part of the problem is like MSM what is left out. time will tell. thanks for your comment.