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Social Security Reform Thursday: Week Sixty-Six -- The 7.65% Solution.


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 7.65% Solution.

Democrats now control the House and Senate. Social Security reform, which might very well require 60 solid reformers in the Senate, just took a major leap backward. Sure, some Republicans also opposed reform, but it was primarily Democrats pretending everything's just fine as is.

That leaves us in a depressing limbo. While there certainly are prominent Democrats out there who have called for Social Security modernization based on market principles, they are almost all former members of Congress, like former Representative Tim Penny (whom I personally campaigned against in the 2002 Minnesota gubernatorial race), former Senator Bob Kerrey of Nebraska, and former Representative Charlie Stenholm of Texas. President Clinton even once seemed receptive to personal accounts, before his liberal constituencies changed his mind for him. There are plenty of elected Democrats, past, current, and future, who know in their heads that Social Security needs reform and know in their hearts that personal accounts are the only win-win-win solution, but they would rather cut and run than endorse a marginally controversial idea.

Those in charge of Congress today, especially the chairs of committees that deal with entitlement reform, are simply unreasonable socialists who may never agree to even the most basic and uncontroversial reforms, let alone anything meaningful.

Thus, to all the Republicans in Congress who were too timid to act in 2005, shame on you. You missed an opportunity to leave a profound positive legacy, improving the lives of real working people, and keeping America the greatest economy in the world.

You also missed a chance to eliminate left-wing scaremongering on Social Security once and for all, while winning over skeptics (especially young professionals, who are somewhat liberal on social issues but extremely conservative on fiscal ones; incidentally, 2 million more young voters turned out in 2006 than in 2002 and went 3-2 for Democrats, with particularly strong turnout in states with tight Senate races, according to this .pdf from "CIRCLE") as the personal account portfolios showed real growth in the short run and eye-opening potential over the long run.

In essence, failing to advance the ball on Social Security reform was part of an overall failed Congressional GOP game plan in which the lack of offense on just about any issue whatsoever over the past two years led to easy touchdowns on November 7 for the inferior team, the Democrats.

And that's where we find ourselves today.

But the Social Security reform movement is a growing, idea-based movement. We're so right and reasonable on the issue, I am cringeworthily embarrassed-- personally-- for those who reject reform.

So let's keep advancing the ball, shall we?

There's a great website called "America Is Listening" which has a reform plan called the 7.65% Solution.

Here's a bit of how it works (.pdf):


Medicare and Social Security are both looming crises for our nation. Social Security was supposed to be the easy one. We were supposed to be able to knock that one out and in the meantime pray for a solution on Medicare. Unfortunately, some ostensibly pro-reform folks in Congress used Medicare's larger crisis as an excuse not to act on Social Security.

Good thinking, guys!

So, clearly we face a drastically different America without major entitlement reform. The longer we wait, the more impractical and painful reform becomes. The sooner we act, the better.

Without getting too wonky, here's the gist of the 7.65% Solution (.pdf):

All workers would immediately redirect 6.2 percent of their taxable Social Security earnings and 1.45 percent of their taxable Medicare earnings into their Protected Personal Accounts for a total of 7.65 percent. Workers will own and control these Protected Accounts just as they do today with a 401k or an IRA.

Here's how an individual's benefits would look over time (.pdf):


Meanwhile, protected personal accounts would prevent insolvency (.pdf):


So, we'd achieve true, permanent solvency, without tax increases, benefit cuts, or pushing the retirement age back.

Here's a timeline on how this reform plan would enhance our free enterprise system (.pdf):


Instead of entitlements consuming ever more of our economy, reform would actually provide our free market engine with more fuel to improve our nation's standard of living and stature in the world.

These calculations, however, are only good if we act before mid-2007.

The clock is still ticking:

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


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).
-Week Fifty-Seven (Personal Accounts Are Awesome).
-Week Fifty-Eight (Private Accounts and Presidential Proposals).
-Week Fifty-Nine (The False Promises Of Social Security = Unwise Investing/Saving).
-Week Sixty (Declining Rate Of Return).
-Week Sixty-One (Entitlement Spending Threatens America's Defense Capabilities).
-Week Sixty-Two (Dismal Rates Of Return Only Getting Worse).
-Week Sixty-Three (Lost Time, Growing Shortfall).
-Week Sixty-Four (Solutions & Consequences).
-Week Sixty-Five (Totalization Agreements).

Posted by Will Franklin · 9 November 2006 11:34 AM


Fred Barnes recently wrote that the failure to act on Social Security cost Congressional Republicans dearly.

There is a compelling logic to this. The politics of Social Security are hazardous before a vote, but not after. After the vote, all the scare tactics melt away. Prior to a vote, they're difficult to refute with any finality, as we've seeen.

Ramesh Ponnuru has written a particularly apt description of the current political and substantive environment in Social Security, very much worth reading.

Also, NCPA has published an interesting paper on the various ways that current Social Security punishes work. They didn't catch every work disincentive in the program, but they cover the more obvious ones.

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