I wrote to my representative, Anne Northup, regarding her support of changes to Social Security. SPECIFICALLY, I wanted to know about the "guaranteed" benefits promised by personal accounts, especially in the example of a clawback situation. I got a form response today, conveniently skirting my concerns:
My Most Esteemed and Intelligent Constituent: (not the actual intro...)
... Adding Personal accounts to Social Security will be a great asset for the system and its participants. Unfortunately, some organizations have spread false information regarding the President's proposal to add personal Accounts, and they have made the issue more about politics than sound economic policy. Within the following four categories, allow me to explain the advantages of strengthening Social Security with voluntary personal accounts:
* There will be no change for seniors and workers nearing retirement.
Under the plan I support, a personal account would be optional for workers under age 55. The benefits of those at or near retirement would not be affected
* Personal accounts are good for the Social Security program. (Anne forgets her endsnark tag here).
... The options for saving the program are limited. The government can: 1) raise taxes; 2) cut benefits; 3) borrow money; 4) allow individuals to invest a portion of their Social Security taxes in a personal account; or 5) a combination of these options. While raising taxes will restrain the growth of the economy and cutting benefits will hurt retirees, adding personal accounts will save the program from future debt and will help to finance the transition costs (emphasis mine). The President's Commission lead by former Democrat Senator Daniel Patrick Moynihan in 2001, as well as former President Bill Clinton and a host of policymakers, have recommended personal accounts in order to salvage the program. The plan I support will achieve solvency for Social Security within 30 to 40 years, eliminating the program's debt entirely, including the transition costs.
I'm going to stop here, as it's obvious that Anne is blowing air with absolutely no support of her argument. Tell me, Rep. Northup, how exactly do personal accounts save the program? It's basic checkbook balancing here ... the program can not afford to pay out the benefits to older workers in the future, and to solve this, you propose lessening the percentage of taxes going into the general Social Security fund. hmmmm. I get the part about me getting a higher return on my investment, but the whole premise of Social Security is that I don't get my money back. Someone else gets my money, and someday I'll get the contributions of younger workers. Maintaining the current benefit while paring off a portion of my contribution will weaken today's Social Security integrity. But that's not even the whopper of a lie here. The BIG one, is that the proposal will end up "eliminating the program's debt entirely, including the transition costs." Whoah. How the hell does this plan pull $2 Trillion +++ dollars out of its ass? Did I miss something here? Reduce the percentage of payroll taxes going into the fund, rack up trillions in debt, and voila! it all comes out in the wash??!?!!!
Anne, you're going to have to do better than this.