The Latest Bush Scheme To Slash Social Security Benefits: Price Indexing

[Itsthetruth]

Bush Says Retirement Benefit Growth Not Realistic
By REUTERS
February 15, 2005

WASHINGTON (Reuters) - President Bush said on Tuesday that limiting the growth of future retirement benefits for Americans would be an ``adjustment to reality.''

Bush said in an interview with local newspapers that he was not expressing a preference for one idea that would link benefit growth to increases in prices rather than wages. That idea, backed by some White House officials, would effectively slow the growth of the benefits.

``Benefits are scheduled to grow at a certain rate, and one of the suggestions, for example ... was they grow ...they grow, but not at a rate as fast as projected. You can call it anything you want. I would call it an adjustment to reality,'' he said.

http://www.nytimes.com/reuters/politics/politics-retire...



Economic Policy Institute
Snapshot for February 9, 2005

Proposed Social Security price indexing would slash benefits.

The Bush Administration has spoken favorably about substituting price indexing for wage indexing, a change that was a centerpiece of Plan 2 of the President's Social Security commission. Under this change, benefits would no longer reflect improvements in the country's standard of living, but would just be indexed to prices. It is hard to overstate the effect of that substitution on hypothetical future benefits.

Recent research by the non-partisan Congressional Research Service (CRS) sheds light on this issue. The CRS estimated what the effect on current Social Security retirees' benefits would have been if initial benefits had been calculated based on increases in prices—using the consumer price index—instead of increases in average national wages.1

Figure 1 shows that, with a price indexation formula, retiree benefits would have been cut substantially. Under the current wage indexation, the Social Security benefit for a person with average earnings over one's lifetime and retiring in 2005 would be $15,336 per year, replacing 42% of the average worker's income. If, however, price indexing had been used instead of wage indexing, that same 2005 retiree would receive only $6,180 per year, replacing just 17% of income. In other words, as the figure shows, a change from wage indexation to price indexation would have meant a 60% cut in Social Security benefits for today's retirees.

http://www.epinet.org/content.cfm/webfeatures_snapshots_20050209

Leaked White House Memo Proposes Social Security Price Indexing

White House Memo Admits Individual Accounts Would Do Nothing to Close the Shortfall

In a White House memo to conservative allies that leaked in early January, Peter Wehner, the White House Director of Strategic Initiatives, acknowledged that individual accounts themselves would do nothing to close the projected Social Security shortfall and that the White House is looking to “price indexing” to close all of the shortfall. Wehner wrote: “If we borrow $1-2 trillion to cover transition costs for personal savings accounts and make no changes to wage indexing, we will have borrowed trillions and will still confront more than $10 trillion in unfunded liabilities.”


http://www.cbpp.org/12-17-04socsec.htm#_ftnref2
Center On Budget And Policy Priorities
Revised January 28, 2005

SO-CALLED "PRICE INDEXING" PROPOSAL WOULD RESULT IN
DEEP REDUCTIONS OVER TIME IN SOCIAL SECURITY BENEFITS<*>
by Robert Greenstein


This proposal is now in the news. In comments shortly after the election, President Bush said the plans that his Social Security Commission produced, the principal one of which includes this proposal, are a good place to start the debate. On December 2, the chairman of the President’s Council of Economic Advisers, N. Gregory Mankiw, criticized “wage indexing” — the shorthand term used to describe the current approach — in a speech, while stating that “the Commission’s proposals are consistent with the President’s principles for reform.” Most recently, White House Director of Strategic Initiatives, Peter Wehner, explicitly endorsed shifting to price indexing in a memo to Administration supporters that leaked in early January. It also may be noted that a Social Security bill introduced last year by Senator Lindsey Graham (R-S.C.), which essentially turns the principal Commission plan into legislation, includes this proposal; the Graham plan reportedly was developed with the help of White House staff. These developments strongly suggest that the proposal to change the Social Security benefit formula by lowering the replacement rates is receiving serious White House consideration.

The Effect on Social Security Benefits

Advocates of this proposal have sometimes sought to portray it as not representing a benefit reduction and as simply curbing excessive growth in Social Security benefits. But the change would, in fact, represent a substantial reduction in benefits, as compared to the benefits payable under the current benefit structure. According to estimates from the Social Security Administration’s Office of the Chief Actuary:

Under the proposal, a worker born in 1977 who earned average wages throughout his or her career and retired at age 65 in 2042 would receive monthly Social Security benefits 26 percent lower than under the current benefit structure. Instead of this worker’s annual benefit being $19,423, the benefit would be $14,432, a $4,992 reduction. (These figures are in 2004 dollars)

http://www.cbpp.org/12-17-04socsec.htm

 

[CSM]

So what is your suggestion for the Social Security issue. Or dont you think Social Security is an issue?

 

[Itsthetruth]

So what is your suggestion for the Social Security issue. Or dont you think Social Security is an issue?

It's not an issue, much less crisis. The system isn't broke so don't "fix" it.

In order to "sell" the public on any of their schemes to "fix" social security the Bush government must first convince the public that a problem exists that must be solved "right now". They hope to convince most younger workers (below the age of 40 especially) that the system will be bankrupt and therefor they will never collect social security. That of course is a deception.

My suggesition is: Leave it alone, don't do anything now. In 20, 30, or 40 years we can always raise the cap on incomes that are tax or increase the employers share of social security taxes if a real problem emerges.

But for now just leave well enough alone!

 

[CSM]

It's not an issue, much less crisis. The system isn't broke so don't "fix" it.

In order to "sell" the public on any of their schemes to "fix" social security the Bush government must first convince the public that a problem exists that must be solved "right now". They hope to convince most younger workers (below the age of 40 especially) that the system will be bankrupt and therefor they will never collect social security. That of course is a deception.

My suggesition is: Leave it alone, don't do anything now. In 20, 30, or 40 years we can always raise the cap on incomes that are tax or increase the employers share of social security taxes if a real problem emerges.

But for now just leave well enough alone!

So I take it that all those others outside the Bush administration who claimed Social Security was a problem were wrong too? I seem to remember Al Gore whining about Social Security during his run for the presidency....

 

[Avatar4321]

It's not an issue, much less crisis. The system isn't broke so don't "fix" it.

You obviously dont plan to be living off SS do you?

 

[musicman]

Read: It's not an urgent problem unless a DEMOCRAT says it's an urgent problem.

We've got the first president in any of our lifetimes who possesses the courage and the opportunity to address the "third rail" of American politics, and all Democrats can do is sling partisan mud. They don't give a rat's ass about this country, or it's future. There is no principle they wouldn't sell out, if it meant strengthening their political position. If President Bush made abortion mandatory, they'd all become pro-lifers.

 

[007]

It's not an issue, much less crisis. The system isn't broke so don't "fix" it.

Hey dumbass... here's your own piece of shit, sexual predator, IMPEACHED President and what he said about social security at his STATE OF THE UNION ADDRESS....

Social Security tops Clinton State of Union address

Traditional Speech Given Amid Impeachment Drama

January 19, 1999
Web posted at: 9:48 p.m. EDT (2148 GMT)

WASHINGTON (AllPolitics, January 19) -- President Clinton delivered his annual State of the Union address Tuesday before a Congress torn over impeachment, outlining a bold plan to bolster Social Security, save Medicare and create new 401(k)-style retirement accounts for American workers.


President Clinton entering the House chamber
Clinton smiled often and looked comfortable as he greeted lawmakers upon entering the House chamber. For their part, members of Congress gave him a cordial bipartisan welcome for his seventh State of the Union address.

Although the president's speech focuses on policy, at least four House Republicans boycotted Clinton's speech, despite Speaker Dennis Hastert (R-Illinois) urging that all House members attend.

Clinton began his speech by welcoming Hastert to the speakership and mentioning two special guests sitting with Hastert's wife in the House Gallery -- Lyn Gibson and Wei Lung Chestnut. They are the widows of the two Capitol Police officers who were killed by a gunman in the Rotunda last summer.

In an attempt to wrench public attention away from the impeachment debate, Clinton highlighted U.S. economic gains made during his administration.

He cited "the highest home ownership in history, the smallest welfare rolls in 30 years and the lowest peacetime unemployment since 1957."

"For the first time in three decades, the budget is balanced. From a deficit of $290 billion in 1992, we had a surplus of $70 billion last year. We are on course for budget surpluses for the next 25 years," Clinton said.

The surpluses are the result of spending curbs lawmakers set in the 1997 balanced-budget act and tax revenue flowing from the healthy U.S. economy.

Top priority: Social Security
Saving Social Security was the main focus of the president's speech. Many Republicans have eyed the budget surplus for tax cuts. but Clinton stated other plans.

"First and above all, we must save Social Security for the 21st century," Clinton said.


President Clinton delivering the State of the Union address
"Last year we wisely reserved all the surplus until we knew what it would take to save Social Security. Again, I say we should not spend any of it until after Social Security is truly saved," he said.

The president suggested using 60 percent of the extra money over the next 15 years -- or $2.8 trillion -- to directly bolster Social Security's cash reserves.

Of that, Clinton proposed "investing a small portion in the private sector just as any private or state government pension would do."

Many Republicans strongly oppose government-controlled investment of Social Security money, citing the risk of political interference in private companies.

http://www.cnn.com/ALLPOLITICS/stories/1999/01/19/sotu/

And he wasn't the only democrap who made the same claims. His lock step liberal following echoed everything he said.

Now you stinking liberals are all telling us something COMPLETELY DIFFERENT, and want us to LISTEN TO YOU???!!!

This is a prime example of why so many people are turning to the conservatives today. democraps are liars and two faced, and will say ANYTHING to further their own agenda.

 

[Itsthetruth]

Hey dumbass... here's your own piece of shit, sexual predator, IMPEACHED President and what he said about social security at his STATE OF THE UNION ADDRESS....

[
Top priority: Social Security
Saving Social Security was the main focus of the president's speech. Many Republicans have eyed the budget surplus for tax cuts. but Clinton stated other plans.

"First and above all, we must save Social Security for the 21st century," Clinton said.


President Clinton delivering the State of the Union address
"Last year we wisely reserved all the surplus until we knew what it would take to save Social Security. Again, I say we should not spend any of it until after Social Security is truly saved," he said.

And you believed President William Clinton when he claimed social security needed to be saved? Guess he pulled one over on you and other Republicans and Democrats!

Oh. Clinton did propose using budget surpluses for the social security trust fund. I have only one question. What happened to those surpluses? Good thing we have a "conservative" President in office who believes in a balanced budget. What will the surplus be this year?

The social security system is in better shape now than it has ever been and unlike you I'm not easily fooled by propaganda put out by the Clinton or Bush administration.

 

[Avatar4321]

And you believed President William Clinton when he claimed social security needed to be saved? Guess he pulled one over on you and other Republicans and Democrats!

Oh. Clinton did propose using budget surpluses for the social security trust fund. I have only one question. What happened to those surpluses? Good thing we have a "conservative" President in office who believes in a balanced budget. What will the surplus be this year?

The social security system is in better shape now than it has ever been and unlike you I'm not easily fooled by propaganda put out by the Clinton or Bush administration.

The so called budget surpluses never existed because they were based on innaccurate numbers the Clinton administration provided as well as destroyed by the recession President Clinton left us his final year in office and then destroyed further by the 911 attacks which occured because 8 years of dropping the ball against terror. Thats where the imaginary non existant surplus went.

Also to be a fiscal conservative you need to do more than want to balance the budget. you have to want to shrink the size of government. The federal government has two main responsibilities. To defend this nation and to regulate commerce between states. Thats it. Everything else the federal government spends tax money on does is unnecessary and is probably quite unconstitional. Every additional program the federl government spends money on gives the government power that no freedom loving American would really want it to have if they understood.

Hence the social security situation. The President wants the people to have the freedom to control their own money. It takes our money away from the government who desont deserve to have it to begin with. And you know that scares Democrats. Because if people dont need the government to solve their problems, then how will they be able to scare people to vote for them?

So even if SS wasnt in a crisis. It still needs to be reformed because the system sucks. You never answered before. do you plan to retire on SS? I sure dont. Why on earth does any sane thinking American want to see 15% of their income go into a system that doesnt even give you what you put in? The ultimate question is do you want to control your own destiny or do you want politicians in Washington controling what happens to your money?

 

[no1tovote4]

And you believed President William Clinton when he claimed social security needed to be saved? Guess he pulled one over on you and other Republicans and Democrats!

Oh. Clinton did propose using budget surpluses for the social security trust fund. I have only one question. What happened to those surpluses? Good thing we have a "conservative" President in office who believes in a balanced budget. What will the surplus be this year?

The social security system is in better shape now than it has ever been and unlike you I'm not easily fooled by propaganda put out by the Clinton or Bush administration.

No matter how many times you tell them they never seem to understand that the "surplus" was made up. When you borrow over 100 Billion to pay the interest payments on the debt you are not in any way in a "surplus". Since the whole "surplus" was created by taking all the money in SS and spending it as if it was regular funds it certainly didn't help that we were in a "surplus".

Proposing spending a non-existant projected surplus that never came to be because it was based on fake numbers and worse economic practice wouldn't save SS even if the projected numbers had come to pass.

Tax cuts are necessary during time of recession. Every major economist I have ever read, even Keynesian Economics state this, state that during a recession and at the beginning of the recovery deficit spending is necessary. Since the economy began its decline in the last year of Clinton it wouldn't matter who the President was we would still be in the same economic situation we are right now.

Now, having some money set aside in order to have gauranteed benefits for the future would be wise. It will be expensive to set up, but in the end it will be worth it. I just wish SS was actually set aside as it was originally promised, if it was we would have more than enough to pay for people's retirement. As it is now, we will not have enough people paying in for the Baby Boomer's retirement when it comes their time to retire.

 

[Merlin1047]

And you believed President William Clinton when he claimed social security needed to be saved? Guess he pulled one over on you and other Republicans and Democrats!

Don't pat yourself on the back too hard.

Clinton had lots of company. This from an interview with Sen Flipflop:
======================================
http://www.centristpolicynetwork.org/archives/000071.html

Kerry Talks Social Security
Yesterday, Democratic presidential candidate John Kerry was questioned on Social Security reform by Tim Russert of Meet the Press (transcript).

Unfortunately, Kerry’s main idea to sustain the program -- faster economic growth -- and his fall-back idea, means-testing, fall well short of what should be expected. And Sen. Kerry's sidebar on Medicare solvency would be laughable if that program's cost problems weren't so serious.

Russert: “There are now 40 million Americans on [Social Security and Medicare]. There's soon to be 80 million. The trustees of Social Security told us this, that if the programs remain in their current form, we're going to have to either cut benefits by a third or double the payroll tax from 7.5 percent to 15 percent for the average wage earner. Back in 1995, you said we have to be bold. And it might be unpopular, but we should consider raising the retirement age and means testing. Do you stand by those statements?

Kerry: No, I rejected that. We looked at that and we found that we don't have to do it. But you know what's interesting, Tim--I wish I had the power to press this button and put up on the screen what you said, because back in 1997, on November 9, you sat with Bill Clinton, and what you said to Bill Clinton is--you said, "Mr. President, by the year 2001 Medicare is going to be bankrupt and you're going to have to raise the retirement age. You're going to have to raise the premiums and you're going to have to cut the benefits." That's what you said. Guess what, Tim? He didn't do it. We didn't do it. And we made Medicare whole until the year 2029. We made Social Security whole until 2037.
===========================================

Note the sleazy answer. Kerry does a fast about-face, disavows his previous position and then attacks Russert's statements. Well, I don't believe that Russert was running for office.

Oh. Clinton did propose using budget surpluses for the social security trust fund. I have only one question. What happened to those surpluses? Good thing we have a "conservative" President in office who believes in a balanced budget. What will the surplus be this year?

There never was a surplus. It was an accounting trick. There was a projected surplus based on the current economy and tax revenues vs expenditures. Only bonehead leftists did not realize that these numbers were completely bogus. Guess Slick Willie fooled YOU.

The social security system is in better shape now than it has ever been and unlike you I'm not easily fooled by propaganda put out by the Clinton or Bush administration.

That is one of the most patently ludicrous statements anyone has made on this board since I've been here. Congratulations. You're my nominee for the "moron of the month" award.

If you would spend less time gazing at yourself in the mirror and admiring what a wonderful, highly intelligent little leftist you are and do a little reading, you might acquire a few opinions which are based on something more than the left wing pablum which has rotted your brain.

Oh - and that reading should be from a source which is factual. Not from the Democratic Underground where your kindred spirits reside.

 

[OCA]

The stats don't matter....what this all boils down to is giving people the freedom to choose what they want to do with their own money that they earn. If people choose to blow it and not invest in a retirement fund, well so be it. It is not government's responsibility to invest the money I earn.