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Social Security Reform Thursday: Week Fifty-Eight -- Private Accounts and Presidential Proposals

Thursdays are good days for reform, because they fall between Wednesdays and Fridays. And reform is a long-haul process, not a fleeting event. So we're going to keep plugging along with the case for reform, even as the issue goes off the political radar screen.

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

This week's topic:

Testimony of James Roosevelt, Jr., Associate Commissioner for Retirement Policy at the Social Security Administration.

In school I was always taught that before solving a math problem, you need to define the terms. Once you know what the issues and problems are, you can come up with a solution. From James Roosevelt, Jr.'s Testimony to the House Ways and Means Committee:

Changing Demographics

I have mentioned "demographics" in a general way, but I have some specific facts to share with you that may be helpful to our discussion today:

• In the U.S. in 1995, the elderly population (aged 65 and over) was about 34 million, making up about 12% of the population. In contrast, there were about 9 million aged people in the U.S. in 1940, and then they accounted for less than 7 percent of the population.
• And Americans are living longer. When benefits were first paid in 1940, a 65-year old on average lived about 12 ½ more years. Today, a 65-year old could expect to live about 17 ½ more years and by 2070, life expectancy at age 65 is projected to be an additional 20 ½ years.
• The elderly population growth rate is expected to be modest from now through 2010, but it will increase dramatically between 2010 and 2030 as the baby-boom generation ages into the 65-or-older age group. For every 100 working age people, there will be more than 35 people aged 65 and over by 2030.
• In 1994, 60% of the elderly were women and 40% were men. Among the oldest of these (85 or older), over 70% were women and fewer than 30% were men.

Clearly, many millions of people are depending on us for strong and decisive action to preserve and protect the multi-tiered structure of retirement income security. [The] President... stated that we must act now to tackle this tough, long-term challenge.

So we all understand the problem, right? Let's come up with a solution, there Jimbo:

Three weeks ago, in his State of the Union address, [the] President... proposed historic steps to ensure the solvency of Social Security. When putting together his framework for a solution to the long-range Social Security solvency problem facing our country, [the]President... wanted to increase national savings to reduce burdens on future generations, and reduce publicly held debt. His plan, therefore, draws on the approach taken by Canada and Sweden and State and local pension systems in this country to diversify the fund portfolio. Through the provision of Universal Savings Accounts (USA accounts), the President's framework draws on the experience of countries that have added individual retirement accounts as a voluntary supplement to social insurance protection.

Specifically, the President proposed the following three actions to solve the Social Security program financing problem:

• Transfer 62 percent of projected federal budget surpluses over the next 15 years-about $2.8 trillion--to the Social Security system and use the money to pay down the publicly held debt, which would strengthen our economy for the future. Thus the President's plan provides for debt reduction while giving Social Security the benefit of the gains from reducing publicly held debt.
• Invest a portion of the trust funds, which would never exceed about 15 percent, in the private sector to achieve higher returns for Social Security. Funds would be invested in broad market indexes by private managers, not the government.
• A bipartisan effort to take further action to ensure the system's solvency until at least 2075. There are hard choices that we must face. To assure confidence in Social Security it is important to bring the program into 75-year actuarial balance.

I like it. Makes sense right? President Bush proposed this and Harry Reid had this to say about Social Security Privatization:

But maybe most of all, the Bush plan isn't really Social Security reform. It's more like Social Security roulette. Democrats are all for giving Americans more of a say and more choices when it comes to their retirement savings. But that doesn't mean taking Social Security's guarantee and gambling with it. And that's coming from a senator who represents Las Vegas.

Funny thing was that this was not President Bush's Commissioner for Social Security or Bush's plan, but rather that of PRESIDENT BILL CLINTON IN 1999. Regardless of party and regardless of politics, it seems that now the Democrats have not only poo-poo'ed the solutions they themselves advocated for, but went one step further and denied the problems that they themselves testified would bankrupt the country in 1999. Were they lying about the problem in 1999 to be overly dramatic or are they lying now about the fact that no problem exists?

I guess if they can blame Bush for the Intel that Clinton provided on WMD's and get away with it, why not call Bush a liar on Social Security too.

THEY ARE GAMBLING WITH MY KIDS' FUTURE over petty politics.

It's time for reform.

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).
-Week Twenty-Six (AmeriSave).
-Week Twenty-Seven (Cost Of Doing Nothing).
-Week Twenty-Eight (Chile).
-Week Twenty-Nine (Entitlement Spending Out Of Control).
-Week Thirty (Reform Better Deal Than Status Quo).
-Week Thirty-One (Social Security As A Labor Cost).
-Week Thirty-Two (Social Security And Dependence On Government).
-Week Thirty-Three (Social Security, Currently A Bad Deal For African-Americans).
-Week Thirty-Four (Longer Life Expectancies Straining Social Security).
-Week Thirty-Five (Howard Dean & Salami).
-Week Thirty-Six (Growing Numbers of Beneficiaries Draining Social Security).
-Week Thirty-Seven (The Crisis Is Now).
-Week Thirty-Eight (Disability Benefits).
-Week Thirty-Nine (Broken Benefit Calculation Formula).
-Week Forty (German Social Security Disaster).
-Week Forty-One (Crumbling Pyramid Scheme).
-Week Forty-Two (Overpromising, Globally).
-Week Forty-Three (Demographic Wave).
-Week Forty-Four (The Jerk Store).
-Week Forty-Five (Defined Benefit Plans).
-Week Forty-Six (Even The Empty Promises Are A Bad Deal).
-Week Forty-Seven (Our Aging Population).
-Week Forty-Eight (The Tax Increases Required To Cover Social Security's Costs).
-Week Forty-Nine (Much Longer To Get Your Money Back From Social Security).
-Week Fifty (A Vote, At Last).
-Week Fifty-One (We Can Do Better).
-Week Fifty-Two (Socialist Security).
-Week Fifty-Three (China Has The Same Problem, Only Worse).
-Week Fifty-Four (Potential Crisis Size).
-Week Fifty-Five (The Crisis Moves Closer).
-Week Fifty-Six (Big Brother Social Security).

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

Posted by Justin B. · 20 July 2006 12:01 AM

Comments

Posted by: Zsa Zsa at July 21, 2006 09:39 PM

Posted by: Zsa Zsa at July 23, 2006 05:12 PM

Posted by: Justin B at July 24, 2006 06:37 PM