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Bush's Real Victims: Young Workers

By Jeralyn, Section Other Politics
Posted on Sun Feb 06, 2005 at 11:19:50 PM EST
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According to this Minneapolis Star Tribune editorial , young workers are the real victims of Bush's proposed social security revisions.

Please pay attention, young workers, because you get taken to the cleaners by his plan.

Bush is not telling the truth when he says that private acccounts would offset the future cuts he proposes for everyone, thereby leaving younger workers better off. The paper lays out the numbers to show how twisted his logic is.

More lies concern the claimed wnership and inheritance features of Bush's proposed plan:

Bush also says you own your private account and that you can pass it on to your heirs. Neither is true. In effect, the government loans you part of your Social Security tax to invest in a private account. But through a mechanism called "benefit offsets" that loan must be repaid at retirement, with interest (starting at 3 percent but adjusted for inflation).

In addition, most of the money in your private account could be passed to your heirs only if you die before you retire. The government would convert most of the value of your account into an annuity and give it to your heirs. If you live to retirement, the annuity goes to you, and when you die, whether one day or 20 years after retirement, the remaining value of the annuity reverts to Uncle Sam.

What should younger workers take away from the discussion?

Younger workers should not be bamboozled. Something must be done to ensure Social Security pays them the benefits they deserve, but the system is in no danger of "bankruptcy." Bush's plan would make the existing problem worse rather than better, and younger people would bear the resulting financial pain.

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    Bush's Real Victims: Young Workers | 5 comments (5 topical)
    Re: Bush's Real Victims: Young Workers (none / 0) (#1)
    by bad Jim on Sun Feb 06, 2005 at 11:32:07 PM EST
    No argument, and this has been covered exhaustively by Paul Krugman, Brad DeLong, Max Sawicky, Dean Baker, Josh Marshall, Kevin Drum and Matt Yglesias, among others. The most startling point is that the administration plans to stiff the Social Security trust fund, which will be directly harm middle-aged workers, or at least those not wealthy enough to profit greatly from dividend and capital-gains tax cuts. For anyone not lucky enough to die within the next fifteen years or to be independently wealthy, the bad news is that our yawning deficits are unravelling the safety nets that have kept our nation strong for generations. In the State of the Union address, the President implied that we can no longer afford to take care of each other. We need to remind our representatives that we are certainly capable of doing what our parents and our parents did.

    Re: Bush's Real Victims: Young Workers (none / 0) (#3)
    by Talkleft Visitor on Mon Feb 07, 2005 at 06:36:50 AM EST
    If you need to see how it works, check out the results in Chile. We will be robbed blind by Enron and Arthur Anderson types if we switch from Social Security to Dubya's plan. Mission accomplished.

    Re: Bush's Real Victims: Young Workers (none / 0) (#4)
    by Talkleft Visitor on Mon Feb 07, 2005 at 11:19:19 AM EST
    The amazing fact that dawned on my after listening to extensive debate is that Dubya's solution DOES NOT FIX THE PROBLEM!! He uses an oversimplification of the Social Security system to state/imply that the large number of baby boomers about to retire cannot be supported by the payroll taxes of generation x and y ers. This seems true on the surface. EXCEPT that the baby boomers have spent their (arguably very profitable) careers paying for the retirment of a smaller number of people. If you are confused, Please ask George W. where the extra money the baby boomers have paid in went (it's called the Social Security SURPLUS if this helps. Even worse, the Bush logic goes that "The system is broken and needs to be fixed. Therefore, we're looking for new ideas but not ones that will actually fund SS with it's own surplus. Therefore, even though my solution won't solve the problem of SS going broke, it's a great time to introduce changes based on the Republican platform of Repealing the New Deal." Oh, and by the way "We'll cut the benefits that have to be cut when the time comes. Good luck with your private account - we hope it offsets the cuts!"

    Re: Bush's Real Victims: Young Workers (none / 0) (#5)
    by Talkleft Visitor on Tue Feb 08, 2005 at 06:13:10 AM EST
    Since we keep talking about what Social Security was intended to be, and whether it should be open to the kind of reform the President has now proposed, why not ask the person most responsible for setting the system in place? FDR himself said "In the important field of security for our old people, it seems necessary to adopt three principles--first, noncontributory old-age pensions for those who are now too old to build up their own insurance; it is, of course, clear that for perhaps thirty years to come funds will have to be provided by the states and the federal government to meet these pensions. Second, compulsory contributory annuities, which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the federal government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans." So FDR foresaw compulsory contributory annuities as a necessity to ensure the system's future after a mere 30 years, which would have been 1966. By that reckoning we are almost 40 years late on getting started. Sounds like private accounts to me. And what about the subject of what happens when Social Security stops taking in enough money to pay its obligations? Well, FDR had some thoughts on that too. In fact, this issue was one of the three principles he felt had to be dealt with to create the system: "Three principles should be observed in legislation on this subject. In the first place, the system adopted, except for the money necessary to initiate it, should be self-sustaining in the sense that funds for the payment of insurance benefits should not come from the proceeds of general taxation. " Translation: No general fund tax dollars should be used to pay the benefits of future retirees. If the Democrats refuse to create a system that can support itself and follow FDR's position on the use of general revenue, the only option left is to cut benefits. Link is here.

    Re: Bush's Real Victims: Young Workers (none / 0) (#6)
    by cp on Tue Feb 08, 2005 at 09:06:40 AM EST
    justpaul, we do have a system that can be self sustaining, it's called..........social security. surprisingly enough, both the cbo and the trust fund trustees have provided a reasonable list of options for ensuring total solvency for the next 100 years. weren't you listening? no general fund dollars need be used to shore up the system, if these options are taken by brave politicians. of course, the use of brave and politician, in the same sentence, makes no sense. the private accounts of which fdr was speaking do, in fact, already exist in law, they are called 401(k) accounts. the contribution made by the government is to defer taxation on funds placed into those accounts until they are withdrawn. of course, one must have income, before one can have a 401(k). ultimately, what fdr may have had in mind, versus the law as written, aren't necessarily the same thing. oddly enough, that happens quite frequently.

    Bush's Real Victims: Young Workers | 5 comments (5 topical)