Monday, February 07, 2005

Go Look at Talking Points Memo Again!

I've pointed you there often enough on this Social Security issue, so what's one more time? Mr. Marshall wrote a good long post discussing several aspects of how what the President is proposing differs from Social Security. Here's a good section of it.
Is it fair to say that President Bush is trying to "phase out" Social Security? Well, what is Social Security? For seventy years it has existed as a defined benefit social insurance program. What does that mean? It is a social program in which everyone who works during their lifetime gets a guaranteed benefit in retirement. It's not meant to be a sole means of support. Those who pay in more get more back; and those who pay in less a bit less. But everyone who works is guaranteed a benefit which provides at least a modicum of comfort and dignity in old age. Have the benefit structures changed over time? Yes. But they change for everyone together, not by the vagaries of chance or individual fortune.

Social Security envisions a retirement in which recipients, hopefully, have three sources of income: Social Security, some employer-based pension and personal savings. The latter two, in varying degrees depend on how hard you work, how much you make, how wisely you invest and the vagaries of chance. Social Security, as a defined benefit program, is meant to be the one leg of the stool which is a flat guarantee.

At root, with all the statistics and flimflam over words, President Bush wants to change that. He wants to phase out Social Security in favor of private investment accounts. In the latter case, there is no guarantee at all, just as there is no guarantee in private nesting, which of course is just as is should be. He wants to get rid of the defined benefit program and change it to a defined contribution program -- not partially, but totally. Indeed, he said this in his recent press conference quite clearly. But few of the reporters present latched on to the statement or its significance. Social Security, he said, is "now in a precarious position. And the question is whether or not our society has got the will necessary to adjust from a defined benefit plan to a defined contribution plan. And I believe the will will be there. (emphasis added)."

There's no 'partial' here. He's talking about phasing out one and replacing it with the other. Reporters and commentators don't seem to get that this is a category difference, though this is something that is widely understood in the pension policy community.
I would suggest reading the whole post--he also takes on the question of whether or not Clinton proposed something like this back in the nineties.

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