2 year history of DJIA:
10 year history of DJIA:
Notwithstanding occasional downturns in the short run, the long term growth trend is undeniable.
Posted on 04/26/2005 8:28:07 AM PDT by KyleM
Some congressional Republicans who have been trying to craft a Social Security reform package say their efforts have been undercut by an unlikely source: conservatives whose top priority is to restructure the program.
As President Bush has struggled to gain traction on Social Security reform, Republicans have repeatedly criticized Democrats for refusing to negotiate on changing the entitlement system.
But some say that Bush should look to his right for scapegoats if Congress does not pass a Social Security bill this year. They blame conservatives for drawing several lines in the sand and refusing to consider compromises.
Conservatives have been outspoken on what should — and should not — be in a Social Security reform measure. Outside groups that are a driving force in the GOP have attacked Republicans for suggesting that raising taxes could be part of reform legislation.
A Senate Republican leadership aide expressed frustration with conservative groups’ rhetoric. While Bush and GOP congressional leaders say they are open to many ideas, conservatives have panned the everything-is-on-the-table approach.
“We should have no conditions before we start talking,” the Senate leadership staffer said. “If you start narrowing the ideas, there’s nothing left to negotiate.”
“There is a splinter in the Republican Party on how this should be addressed,” another Senate Republican aide said.
Rep. Clay Shaw (R-Fla.), a senior Ways and Means Committee member, said he has noticed “some negative stuff coming out” of certain groups, which he declined to name.
“They don’t understand that politics is the art of compromise,” he added.
Shaw’s Social Security reform plan proposes “add-on” accounts instead of “carve-outs” favored by many conservatives. The carve-outs would be financed from diverting payroll taxes, while add-ons would be paid for through tax credits.
“The problem with the far left and the far right,” Shaw said, “is that they have a my-way-or-the-highway approach.”
Shaw, who has been working on Social Security matters for more than six years, said critical comments from conservatives “didn’t start happening until recently. I hope we stop it.”
Without GOP unity, the effort to revamp Social Security will be doomed, Shaw suggested: “If we’re fractured, Democrats will see this as a political opportunity.”
In television commercials that have run in South Carolina, the Club for Growth rebuked Sen. Lindsey Graham (R-S.C.) for seeking to lift the $90,000 Social Security tax cap and Americans for Tax Reform (ATR) sent a letter to Congress rebutting Graham’s skepticism about Bush’s insistence on personal accounts.
The groups did not hold back. The Club’s ad said Graham’s idea of “a huge tax hike” is a “really bad idea” that “would hit millions of families, wipe out much of the Bush tax cut and punish small businesses.”
In his letter to Capitol Hill, ATR President Grover Norquist said, “Sen. Graham’s comments are a recipe for destroying the second term of the Bush administration and if acted upon will squander the opportunity for at least another generation to preserve and modernize Social Security.”
Conservatives have embraced a reform plan introduced by Rep. Paul Ryan (R-Wis.) and Sen. John Sununu (R-N.H.) while making it clear that they will be wary of any plan that strays from that bill.
In contrast, Ryan has said he is open to negotiating on changing Social Security.
Even though Bush has put Social Security on Congress’s plate, the White House has also been the target of ire from the right.
In a memo to White House Deputy Chief of Staff Karl Rove, Cato Institute President Ed Crane said, “[Bush] has been heroically bold in raising [Social Security reform]. But it seems to me that he’s been timid in the manner in which he has chosen to promote it.” Excerpts of the memo were reprinted in The Wall Street Journal last week.
Peter Ferrara, a senior fellow at the Institute for Policy Innovation (IPI) who is credited as the author of the Ryan-Sununu bill, wrote an op-ed in The Washington Times two months ago that mocked the White House for trying to send the president out to sell personal accounts with a message that they don’t really solve the problem. Ferrara wrote, “Is it any wonder then that the more George W. Bush talks about personal accounts the lower they sink in the polls?”
Ferrara told The Hill he is trying to help Republicans get on track on Social Security. He accused top Bush administration officials — including Rove and White House Chief of Staff Andy Card — of urging people to tell him to “shut the hell up.” Ferrara, who is scheduled to testify on Social Security before the Senate Finance Committee today, said Rove, Card and Office of Management and Budget (OMB) Director Josh Bolten lack expertise on the entitlement system and mistakenly believe some Democrats are close to embracing the president’s plan.
“Rove thinks he’s been beatified by the last election,” Ferrara added.
The White House declined to respond to Ferrara’s comments. Spokespeople for the Department of the Treasury and the OMB said the administration is open to input from all groups on Social Security reform.
The IPI has also gone after Graham and Senate Finance Committee Chairman Chuck Grassley (R-Iowa). In a strongly worded release, IPI President Tom Giovanetti said, “The movement to fix Social Security through personal retirement accounts is in serious trouble when some Republican leaders demonstrate utter ignorance about how they work.”
The IPI’s comments came in the wake of doubts expressed by Graham and Grassley about personal accounts.
“Perhaps we need new people leading the cause of personal retirement accounts,” Giovanetti said. “Graham and Grassley just don’t get it.”
Ferrara defended the IPI’s statements: “All we are doing is telling the truth.”
Both senators are proponents of personal accounts but are concerned that insisting on the accounts could imperil Social Security reform this year.
Some conservative groups believe that could be a good thing — even though such a scenario would be regarded as a huge political setback for Bush.
The Free Enterprise Fund, which has championed personal accounts, suggested that no action on Social Security would be better than moving a reform bill without personal accounts: “If Republicans move ahead on Social Security with no personal accounts, or accounts so small as to be financially inconsequential to voters, then it is the GOP that may win the battle but lose the war. … Social Security reform without personal accounts will lead to a political Waterloo for Republicans and could jeopardize the GOP’s majorities in the House and Senate in 2006.”
Norquist contends that Social Security reform may not happen this year but will be passed eventually. However, Grassley last month told The Hill that Social Security reform must happen in 2005 — or it won’t for the next eight or nine years.
In an interview with The Washington Post, Grassley likened a vote on Social Security reform to “walk[ing] the plank.”
Certainly, a sizeable number of Republicans — such as Reps. Jo Ann Emerson (Mo.) and Rob Simmons (Conn.) — are wary of reshaping the Social Security system with private accounts. The notion that Social Security will return as a top issue in the next Congress is debatable and may largely depend how it plays out in the 2006 election.
Senate Majority Whip Rick Santorum (R-Pa.), who is admired by conservatives, has also conveyed disappointment with groups representing the right. An irked Santorum earlier this month responded to conservative commentary written by Free Enterprise Fund’s Stephen Moore and IPI’s Ferrara on National Review Online (NRO).
After Moore and Ferrara blasted Senate Republicans for allegedly selling out on Social Security, Santorum responded with his own NRO commentary: “If [Moore and Ferrara] had asked me what Senate Republicans were up to instead of quoting a report by the Associated Press, perhaps there would be no need to set the record straight. Again.”
Political observers believe that the hard line conservatives have taken is a shrewd negotiating maneuver.
“It’s all part of the legislative process,” a House GOP leadership aide said. “I do think in the end [the conservative groups] will jump on board.”
Rep. Jim McCrery (R-La.), chair of the Ways and Means subcommittee on Social Security, said he is not bothered by critics on the right. He added that he has urged his colleagues not to draw lines in the sand.
But others say conservatives are overplaying their hand.
“They don’t have near the votes [to pass the Ryan-Sununu bill],” the Senate Republican staffer said.
The Ryan legislation has been praised by House Speaker Dennis Hastert (R-Ill.), Majority Leader Tom DeLay (R-Texas) and the Republican Study Committee, a group of over 100 House conservatives.
That group has told top Bush administration officials that it will strongly back a Social Security bill with personal accounts. It has also warned that it will vehemently oppose any legislation that raises taxes or lacks carve-out accounts.
Conservative lawmakers are still bitter about being pressured to vote for the prescription-drug bill that deteriorated the financial future of Medicare. That experience has emboldened them to get a Social Security bill to their liking.
The bickering among Republicans on Social Security over the past several months is a clear indication that GOP leaders will have to worry about votes from conservatives when they are already struggling to attract support from centrists.
Right-wing groups have been pushing for Social Security reform for years. Now that it’s Bush’s top domestic priority, they are not eager to strike deals with Democrats.
Ultimately, Republicans say, it is up to the White House to settle the GOP’s deep divisions on Social Security.
“The president has to give us more guidance,” the Senate Republican staffer said.
True. Those who can't afford "add ons" would not get them and those that could afford them would probably prefer to stay outside that system and go with 401k's and IRA's. Add ons are a loser of an idea.
1. It is a PROJECTION, based on a lot of assumptions and based on plan balances and market values as of a certain date.
2. Unless you are planning to retire in the next 2 to 3 years, it would be foolish for you to make a lot of plans based on projections, since the market values and other factors upon which the projections are based will certainly change over the next 5 to 20 years. (And if you are planning to retire that soon then NONE of the proposals out there will affect you in any way.
3. It sounds like you are comparing dissimilar items anyway, and perhaps what you are calling a "pension" is some type of savings plan like a 401K for example. Pensions are usually defined benefit plans which would not vary to the extent you are describing. A 401K plan could see a substantial drop like you are describing if it is heavily invested in volatile equity funds, but again the value/balance of the plan accounts today is not a reliable predictor of what the balances and thus the monthly payout of the plan will be in 15 to 20 years.
Let me offer an evaluation of your "real-life" anecdotal example of private pensions versus social security as it relates to the debate over social security reform: In a discussion on strategies for ensuring a long-lasting marriage, somebody points to the hillary rodham and bill clinton marriage and concludes that serial philandering and procuring bl*wjobs from adoring sycophants with the assistance of government employees seems to improve the health of a marriage. The "experience" seems to support the notion, but it is far from evidence that the conclusion is a universal truth.
I don't even want to hear it. They do it right or they don't do it all. I praise the conservatives for holding firm. NO TAX Increases. Private Accounts. Fix solvency with responsible spending.
2 year history of DJIA:
10 year history of DJIA:
Notwithstanding occasional downturns in the short run, the long term growth trend is undeniable.
Exactly macaroona's point. If she goes to retire and her pension is worth zero because some radical muslim just dropped a nuke on Wallstreet, all this "put your money in the market for longterm growth" becomes a lot of hooey. I haven't seen anyone suggest that 10% of your assets should be in hard currency, like gold and silver, and in your safe, just in case of the above scenario.
It's OK, he's from Wisconsin.
Do you have a chart from 1968 to 1982? It would tell a different story.
Many would claim that the big increase in the 1990s was a structural adjustment that reflected how undervalued stocks were for so long. We can't count on that to happen again.
Stocks have some risks. That's why the rewards are potentially higher than with bonds.
Yes, and if some radical muslim dropped a nuke on Wallstreet, then the value of your pension is probably the least of your worries.
Gold and silver are not hard currency, they are commodities. And, in the case of the above scenario, you would probably be much better off with several guns and LOTS of ammo rather than gold and silver stuffed in your safe.
Won't argue either point as both are correct. And I have two safes......;)
Here you go: Jan 1968 through Dec 1982.
Two major downturns coinciding with (1) the supply-side shocks of the OPEC actions from 73-75 (think "stagflation") and (2) the economic disaster that was known as the Jimmy Carter Era notwithstanding, there is still a definite growth trend in this same timeframe. If you were to consistently invest a small amount each month during this time period (such as a portion of one's FICA taxes for example), your investment would have realized substantial returns.
Now, how about another interesting time period -- Jan 1964 through Dec 2004:
As more and more of the middle-class become owner-investors through their 401k savings plans, the market will continue to be a growth engine.
That is the kind of thinking that keeps poor people poor and allows rich people to get richer.
How about chalking up failure to a bad solution to the SS shortfall problem?
The key to an appropriate investment strategy is to match your investment vehicle with your investment horizon. If you are retiring next year, then you should move most of your accumulated investment out of volatile equity markets and into something more stable. On the other hand, if your investment horizon is 10 to 15 years or more, then you need the power of compounding and growth to work for you. If you prefer to rely on the ponzei scheme known as social security, then enjoy your remaining years as a dependant of the government.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.