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Social Security Reform Thursday: Week Twenty-Six -- AmeriSave.


Thursdays are good days for reform, because they fall between Wednesdays and Fridays.

That's why WILLisms.com offers a chart or graph, every Thursday, pertinent to Social Security reform.

This week's topic:

The Democrats' AmeriSave Non-Plan.

Democrats this week announced their plan for "retirement security" in America. It's called "AmeriSave."


It is awful.

Just dreadfully bad.

It is so horribly atrocious that it's hard not to break out in a hyena-like, cackling laugh, or vomit a little in your mouth. It's just hilariously dumb.

This is not hyperbole, either.

Many of the ideas in the plan are not entirely objectionable, and there are even some decent (if recycled and non-responsive) ideas. Indeed, Nancy Pelosi even (awkwardly) extolled the virtues of compound interest as she announced the plan:

"Our plan will expand and improve existing investment accounts, such as 401(k)s and IRAs, so that American families can benefit from compound interest while retaining Social Security's guaranteed benefit, creating a comprehensive retirement strategy" said Pelosi.

But in the end AmeriSave is a complete non-sequiter. It does nothing whatsoever to save Social Security.

It's sort of like those Geico commercials.

"I have great news!"

"Oh yeah?"

"I just saved a bunch on my car insurance!"

Well, fantastic for you. But what does that have to do with the price of tea in China?


Absolutely nothing.

Even if Democrats were serious about this AmeriSave business, Social Security's current trust fund surplus would still become a deficit in 2017, Social Security would still be unable to pay its promised benefits beginning in 2041, we'd still see the same miserable rate of return on the 1 out of every 8 or so dollars we earn that goes toward Social Security, and Social Security would still have an unfunded long-term liability of 11 trillion dollars.

In other words, the Democrats' AmeriSave plan is no plan at all. It's posturing, so as to avoid the appearance of complete do-nothingism and obstruction.

Here is the problem:


Here is what would happen to the problem if we pass AmeriSave:


Nothing. The Democrats' plan is not a plan. This is just so silly. Poor Americans are not going to participate in these AmeriSave accounts, because so much of their paycheck each month already goes toward Social Security payroll taxes.

Most Americans believe we need to have some sort of safety net for our elderly. No American who works his or her entire life should retire into poverty. But we don't need dogmatic adherence to a broken program to achieve that lofty aim. We need real, creative, pro-growth solutions.

What is so unfortunate is that in 2000, the Democratic Leadership Council (DLC), the once-moderate wing of the Democratic Party, (it seems, at least) endorsed meaningful Social Security reform (underlining mine):

An ever-growing share of the federal budget today consists of automatic transfers from working Americans to retirees. Moreover, the costs of the big entitlements for the elderly -- Social Security and Medicare -- are growing at rates that will eventually bankrupt them and that could leave little to pay for everything else government does. We can't just spend our way out of the problem; we must find a way to contain future costs. The federal government already spends seven times as much on the elderly as it does on children. To allow that ratio to grow even more imbalanced would be grossly unfair to today's workers and future generations.

In addition, Social Security and Medicare need to be modernized to reflect conditions not envisioned when they were created in the 1930s and the 1960s. Social Security, for example, needs a stronger basic benefit to bolster its critical role in reducing poverty in old age. Medicare needs to offer retirees more choices and a modern benefit package that includes prescription drugs. Such changes, however, will only add to the cost of the programs unless they are accompanied by structural reforms that restrain their growth and limit their claim on the working families whose taxes support the programs.

Goals for 2010

* Honor our commitment to seniors by ensuring the future solvency of Social Security and Medicare.

* Make structural reforms in Social Security and Medicare that slow their future cost growth, modernize benefits (including a prescription drug benefit for Medicare), and give beneficiaries more choice and control over their retirement and health security.

* Create Retirement Savings Accounts to enable low-income Americans to save for their own retirement.

That last point, creating retirement savings accounts for low-income Americans, is interesting. While vague enough to possibly mean "add-on" (rather than "carve-out") accounts, it's hard to argue with a straight face that poorer Americans are going to save for their own retirement on top of the mandatory amount they already pay into Social Security. What incentive is there for them to do so?

The above document, which could have been written by today's Social Security reformers, was signed by 73 elected Democrats at the time, including these high profile officials who remain in office:

U.S. Senators Evan Bayh (IN), John Kerry (MA), Mary Landrieu (LA), Joseph Lieberman (CT), and Blanche Lincoln (AR); U.S. Representatives Jim Davis (FL), James Moran, Jr. (VA), Allyson Schwartz (PA), Ellen Tauscher (CA); and Governors Janet Napolitano (AZ), Kathleen Sebelius (KS), and Tom Vilsack (IA).

Where is the leadership on this issue? Why have these Democrats allowed the DailyKos/MoveOn.org/Howard Dean wing of the party to "just say no" to crucial reform of a broken program, one that President Clinton declared a "crisis" numerous and distinct times?

It's well past time to reform Social Security. Let's get to it, right after the August recess.

The clock is ticking.


Previous Reform Thursday graphics can be seen here:

-Week One (Costs Exceed Revenues).
-Week Two (Social Security Can't Pay Promised Benefits).
-Week Three (Americans Getting Older).
-Week Three, bonus (The Templeton Curve).
-Week Four (Fewer Workers, More Retirees).
-Week Five (History of Payroll Tax Base Increases).
-Week Six (Seniors Living Longer).
-Week Six, bonus (Less Workers, More Beneficiaries).
-Week Seven (History of Payroll Tax Increases).
-Week Seven, bonus (Personal Accounts Do Achieve Solvency).
-Week Eight (Forty Year Trend Of Increasing Mandatory Spending).
-Week Nine (Diminishing Benefits Sans Reform).
-Week Ten (Elderly Dependence On Social Security).
-Week Eleven (Entitlement Spending Eating The Budget).
-Week Twelve (Benefit Comparison, Bush's Plan versus No Plan).
-Week Thirteen (Younger Americans and Lifecycle Funds).
-Week Fourteen (The Thrift Savings Plan).
-Week Fifteen (Understanding Progressive Indexing).
-Week Sixteen (The Graying of America).
-Week Seventeen (Debunking Myths).
-Week Eighteen (Debunking Myths).
-Week Nineteen (Reform Needed Sooner Rather Than Later).
-Week Twenty (Global Success With Personal Accounts).
-Week Twenty-One (GROW Accounts: Stopping The Raid).
-Week Twenty-Two (Millions of Lockboxes).
-Week Twenty-Three (Support for Ryan-DeMint).
-Week Twenty-Four (KidSave Accounts).
-Week Twenty-Five (Latinos and Social Security).

Tune into WILLisms.com each Thursday for more important graphical data supporting Social Security reform.

Posted by Will Franklin · 28 July 2005 02:14 PM


That is fine and dandy for them! They have a wonderful retirement program they voted for, for themselves!...The fleecing of America is alive and well with the Democrats plan for Americans retirement! SOCIAL INSECURITY call it what it is! These so called leaders are LEADING THE SHEEP TO THEIR SLAUGHTER...!

Posted by: Zsa Zsa at July 28, 2005 02:35 PM


One of the best RTs yet, Will.

Posted by: Hoodlumman at July 28, 2005 04:07 PM

You know, when I heard about the Dems "plan" for social security, then heard the details, I had a sneaking suspicion that this would be the topic for Reform Thursday. Thanks for proving me right.

Posted by: Giacomo at July 28, 2005 04:36 PM

So instead of private accounts for everyone, we have private accounts for some. That'll show them Bushies!

Posted by: McGroarty at July 29, 2005 10:49 AM