Posted on 03/08/2005 8:39:25 PM PST by FairOpinion
WASHINGTON - The heart of President Bush (news - web sites)'s plan for Social Security (news - web sites), allowing younger workers to create personal accounts in exchange for a lower guaranteed government benefit, is among the least popular elements with the public, Republican pollsters told House GOP leaders Tuesday.
The pollsters also stressed the political stakes involved in pursuing Bush's plan to overhaul the Depression-era program, according to a memo circulated at a session in the Capitol.
Older voters consider a candidate's views on Social Security to be "as important, or in some cases, more important than issues like the war, health care and education," they wrote.
Reporting on the results of 14 focus groups held last month in scattered locations, the memo said Bush has been successful in raising awareness of Social Security's financial situation. It also credited the administration with having done a "very good job" of emphasizing that current and near retirees would not be affected by his plan.
At the same time, the public "knows little or nothing about the details and specifics" of Bush's proposal for individual accounts, "and a good bit of what they think they know is incorrect," it said.
The focus groups, as well as earlier nationwide polling, were paid for by the National Republican Congressional Committee, the campaign arm of the House GOP. The Associated Press obtained a copy of the memo.
Unlike a poll that may survey hundreds of people, a focus group involves a moderator leading a discussion. The participants are chosen for different characteristics such as age, gender and voting behavior.
According to the memo, Americans of all age groups "were most resistant to proposals that involved cutting or reducing benefits or raising Social Security payroll taxes.
"When forced to choose a course of action, a majority ... chose raising the age of early retirement, and there was also support for further reducing starting benefits for early retirement."
Despite the general resistance to higher taxes, there is very strong support for exposing higher levels of income to the existing levy, the pollsters wrote.
Asked what they liked least, 31 percent of the participants in the sessions mentioned that the government would be responsible for keeping track of the accounts. Another 24 percent "least liked the fact that workers would be required to accept a lower traditional benefit in return for participation," a key element of Bush's plan.
The findings surfaced on the eve of a House Ways and Means Committee hearing into Social Security's finances and as the administration pushes ahead with an aggressive campaign to raise public support for changes.
At the same time, some Republicans have begun to step forward with variations on Bush's theme, in hopes of beginning a process that can coax Democrats into negotiations.
Congressional Democrats have so far maintained nearly unanimous opposition to the president's plan, accusing Bush of seeking to privatize the program and pay for it by cutting benefits.
The president asked Congress in his State of the Union address to overhaul the program, saying he wanted a bill that both made it permanently solvent and included personal accounts.
Under the president's approach, Social Security would remain unchanged for retirees and workers age 55 and over.
Younger workers would have the option of investing a portion of their payroll taxes on their own and would receive a lower guaranteed government benefit when they retire. Supporters of the plan argue that earnings on the investments would make up the difference.
Republican officials briefed by White House aides have said even younger Americans who decide not to establish a private account would receive a lower government guaranteed benefit.
Nope. But I will not dig up the links tonight. The Washington Post suggested that there was no real vesting in the private accounts. There is in the Bush proposal. But the offset is as I described. There is no real free lunch available on this one Maggie. Deal with it.
By the way, I grew up in the Valley. It's amazing I have any literacy at all.
Yes, it is wonderful they don't have to deal with the actuarial deficit.
Slashing benefits will square the circle without higher taxes. No doubt about it. Why don't you run for office?
It's not a "free lunch," babe, it's the ability to invest one's own money.
And before you settle yourself in your know-it-all dogmatic pessimism, get your facts straight.
Yes! That's what Ronaldus Maximus (PBUH) would have done. Get right on the TV, and lay it all out.
Personally, I think these "younger workers" will change their tune in a few years, when they start thinking about how they wil get by in their later years.
The poor, indulgent, MTV-addled fools.
Not everyone believes benefit cuts are inevitable. Why should they be? Most of us do believe some intervention must be done to turn SS into a solvent program.
The [personal] accounts are backed up by a safety net guaranteeing that workers would receive at least as much as Social Security promises under current law.
From The Ryan-Sununu Social Security Personal Savings Guarantee and Prosperity Act
The actuarial problem, by that I am assuming you mean solvency, is caused by borrowing from the trust fund and spending it in the general budget.
Your analysis is deeply flawed. It is exactly the reverse of what you said. Social security taxes actually result in the govt borrowing at 0.86% because that is the real return on social security. No other sector of the economy can borrow at that rate. The (real) equity premium over 30-40 years during any period from 1926-now is much higher than that.
Also, the benefit of social security privatization is like getting a tax-cut on your labor income. If you know that a marginal hour of labor will produce benefit that can be put in a private account that is for yours to keep, then people will work longer. The marginal investment in personal accounts from working a marginal hour is not a tax, as it is the case now, but a tax-cut.
As I said, it will bring about people chaning their labor input and also will make people more risk-averse and people will engage in risky activities less and less.
I can't really argue with you there as I am skeptical about the actual numbers myself.
Your posts remind me of things Rush has said in the past (yes, that is a compliment! ;-).
"the least popular"
What?? I have not seen one honest poll saying the personal account are the least popular. All I've heard is that younger workers are really happy about this change.
Ok.
If you know that a marginal hour of labor will produce benefit that can be put in a private account that is for yours to keep, then people will work longer.
Why would they work longer? I don't see anything in your reasoning to support this hypothetical syllogism. I mean, your conclusion does not follow from the premise. Some people might well prefer to go fishing. It only takes one to spoil the argument.
As I said, it will bring about people chaning their labor input and also will make people more risk-averse and people will engage in risky activities less and less.
Again, this requires quite a leap. Will a twenty-two year old high school graduate be more or less likely to be a risk taker than a forty-five year old high school graduate?
This seems to assume a level of rationality I simply do not believe we commonly share.
Weaning a baby... My wife has done that 5 times. It is the natural course of things. What I haven't seen her do is stick her hand down her throat and rip a 15 foot tapeworm out of her gut. That's Social Security Reform.
It doesn't matter what individuals may do, it is what people do in aggregate that matters. In the aggregate people have to behave rationally, otherwise we will notice massive dis-equilibrium in the economy, which we don't. In fact, a lot of honest behavioral economists will admit that in the aggregate people are a lot more rational than we think they are.
I will tell you why people will work longer. Keeping wages constant, if the marginal output of labor increased your marginal wages/wealth you will increase the output of labor. In countries with high taxes, people also work less. People work a lot longer in countries with low taxes. If your marginal labor will be taxed at a higher amount, you will consider all your other elasticities before you commit to the extra hour of working. Maybe you would rather go fishing than have govt take 60% of what you would make if you worked that extra hour.
Social security represents such a tax. Govt borrows at a real rate of .86%. So, when you work an extra hour you know that 12.4% of your earnings will give you .86% on average. If you knew that it will get a higher return, then it represents a tax-cut. People will allocate labor more efficiently.
The government borrows at rates higher than that. The return on SS is simply a function of the generousity of the benefits. It is a residual number. It is generated by demographics and the claim for benefits. It has nothing to do with rates of return on investment. The equity premia of the past was generated by much higher dividend rates than now, and a doubling of the PE ratios. It won't be that high in the future. It will be closer to 3% rather than 6%. See ya.
What is so hard to understand
It's like having a 401K that the politicians can't touch .. nor steal from you
And for the Republican .. HELLO .. get off your butts and discuss the issues
Hopefully the younger workers will get their young little butts behind SS reform! :-)
And .. hopefully, some honest pollsters will tell the truth about the younger workers' desires FOR the changes.
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