Thursday, September 21, 2006

Clay Shaw Is No Friend of Seniors

Clay Shaw continues to play the senior citizens issue badly. Shaw got hammered by Democrats Robert Wexler and Debbie Wasserman Schultz, and Pete Stark for a loophole in legislation. Drugs costing over $2,250 will not be covered by Medicare. Partisans might think this is merely election year poltics. The interesting thing is Shaw is backtracking from a fight.

Robert Wexler wrote an op-ed piece for the Palm Beach Post. Shaw wrote a op-ed for the Post that attacked Wexler's op-ed. Shaw even said he called Wexler's office to apologize.


Shaw said he was “stunned by the press conference … because it seemed to have more to do with beating up on me than it had with defending his position on the bill, and I think that’s very unfortunate.

“We in the Congress and in the Florida delegation shouldn’t spend time going after each other, we should spend time working together. And I think it’s very unfortunate that this happened.”


Shaw jumped at the chance to join President Bush's Social Security privatization plan. Shaw's campaign manager Larry Casey released this statement.


"Shaw's Social Security Guarantee Plus plan does not privatize the system, does not increase taxes, does not raise the retirement age, and absolutely does not cut benefits.


Shaw sponsored H.R.3497. It spells out quite clearly that it is a privatization plan.


Requires designation of a certified account manager by or on behalf of each covered individual to hold the individual's Social Security guarantee account assets for investment, including in common stock portfolios and fixed income securities.


Shaw's bill would have used the Social Security surplus for private accounts in the stock market. This would not make Social Security more solvent. The market is also risky and would not be guaranteed to give the same return for retirees as Social Security. Conseratives got this nutty privatization idea from Chile.

23 Comments:

At September 21, 2006 11:46 AM , Blogger Bryan White said...

This comment has been removed by a blog administrator.

 
At September 21, 2006 11:48 AM , Blogger Bryan White said...

The Bush plan for Social Security was a privatization plan, but it would be improper (as many Democrats have done) to suggest or imply that the proposal wholly privatized Social Security.

The plan specifically guaranteed benefits to those over 50 at the time of the legislation (to whatever extent the government can actually make such a guarantee), so there was no reason to try to scare seniors on the basis of the proposal--unless one were intent on playing a misleading brand of political football with the issue.

Maybe it's just that the Democrats involved in such actions were too stupid to understand the issue, on the other hand, which would at least give them the benefit of the doubt as to morality.

 
At September 21, 2006 3:26 PM , Blogger Michael Hussey said...

Bryan, the plan was the selection of either private accounts or Social Security. Bush hinted that younger generations may have only private accounts. He was very vague in his speeches about the details.

Exactly, who are these Democrats who suggest what you say. Certainly, not me. My post is about how Social Security would by in debt with the private accounts plan. Shaw's statements are misleading. Or he doesn't understand his own proposal.

 
At September 21, 2006 3:49 PM , Blogger Bryan White said...

Bryan, the plan was the selection of either private accounts or Social Security.

No, it wasn't.
Check your facts.
You'll find that there was no option out of Social Security, simply the option of investing part of the SS deduction in a private account.
You don't know what you're talking about, Michael.

Exactly, who are these Democrats who suggest what you say.

We can stick with you, since you're here.
Did you read your post?
Shaw jumped at the chance to join President Bush's Social Security privatization plan.
...
Shaw's bill would have used the Social Security surplus for private accounts in the stock market. This would not make Social Security more solvent. The market is also risky and would not be guaranteed to give the same return for retirees as Social Security.


Not so much as a hint of "a portion of" or "a part of" or anything like that.
You're either a despicable liar or an inept writer, Michael.

 
At September 21, 2006 4:02 PM , Blogger Michael Hussey said...

Bryan, the plan was the selection of either private accounts or Social Security.

That was the choice Bush gave younger generations. Bob X could choose a private account or Social Security. He couldn't have both as retirement plans.

Shaw would have used the surplus. He is the one denying that he endorsed private accounts.

I was wondering where you were Bryan. Unlike Branches of Flame, I actually enjoy these back and forth debates.

 
At September 21, 2006 4:44 PM , Blogger Bryan White said...

That was the choice Bush gave younger generations

Incorrect again, Michael.
The choice was Social Security with under 10% of the total SS deduction placed in a private account, or Social Security without under 10% of the total SS deduction placed in a private account.
Private investments tend to perform far better than the government's promises, by percentage.

He couldn't have both as retirement plans.

People have always had the option of having both as retirement plans, and that would not have changed under Bush's proposal.
The only thing that would have changed is that there would have been an incremental shift toward (optional) personal responsibility for retirement preparation, along with an expectation that SS benefits apart from the portion owned by the individual would decrease for those under 50 years of age.

The system eventually needs to either increase its cash inflow or decrease the benefits.
How far into the GDP would you bite, Michael?

The move toward self-responsibility decreases the need for future benefits paid out through the Ponzi scheme version of SS given us by Roosevelt.

Shaw would have used the surplus.

It doesn't work quite like that.

There is a surplus year-to-year, but the government spends it (on other stuff), so the surplus is pretty much an illusion.
The private accounts do bite into the surplus year-by-year, especially since the government won't be able to run out and spend the money. It is not a spending of the surplus, however. It is a decreased inflow to the broad SS fund (the surplus shrinks faster because of decreased income).

Saying that the proposal spends the surplus would tend to give people the wrong idea about what's really happening.

That's not by design, is it? ;)

I actually enjoy these back and forth debates.

Good--I'll hold out the hope you'll learn something. :)

I was wondering where you were Bryan.

Busy. When I have time, I surf around for new points of view (left, right, other).
I'm afraid you can't expect me to be a regular reader of your blog.
I prefer to work against people better able to defend their views.
Yeah, that's a slam, but it's nothing personal. At least you're not at risk of being categorized among the worst I've seen.

I wish you the best (including the hope that you'll start checking your facts).

 
At September 21, 2006 5:18 PM , Blogger Michael Hussey said...

The choice was Social Security with under 10% of the total SS deduction placed in a private account, or Social Security without under 10% of the total SS deduction placed in a private account.

There were many versions of the plan. That wasn't what Bush was selling. Another points was where this money was going to be invested in the private market. This isn't like T bonds. There is no guarantee to get your money back. That is how the market works.

Bush advocated

The system eventually needs to either increase its cash inflow or decrease the benefits.

I'm all for raising the retirement age to 70 and SS taxes on all incomes. Make Social Security taxes universal. Might as well. Everyone can collect. So, it already is universal in that aspect.

The private accounts do bite into the surplus year-by-year, especially since the government won't be able to run out and spend the money.

Social Security is a regressive tax. That's why conservatives hate it. The fund constantly has money going into the fund paycheck to paycheck. But there is no lock box (to quote Al Gore.)

 
At September 21, 2006 5:37 PM , Blogger Michael Hussey said...

This is what Bush was advocating in 2004. The fact is he would not have enough money to start up private accounts.

"A starting point is a plan proposed by a presidential commission in 2001 that would divert 2 percent of workers' payroll taxes into private accounts. The remaining 4.2 percent, and the Social Security taxes employers pay, would go into the system, helping fund benefits for current retirees. That leaves a shortfall of at least $2 trillion to continue funding benefits for current retirees."

 
At September 21, 2006 8:49 PM , Blogger Bryan White said...

NPR has three versions of the plan listed.
You figure out which one you think Bush was selling, then we'll talk.
http://www.npr.org/templates/story/story.php?storyId=4164384

http://www.npr.org/templates/story/story.php?
storyId=4164384

Again, you may have to piece the URL together.

 
At September 21, 2006 8:55 PM , Blogger Bryan White said...

This is what Bush was advocating in 2004. The fact is he would not have enough money to start up private accounts.

"A starting point is a plan proposed by a presidential commission in 2001 ..."


You don't seem to have a firm idea of how to support your claims.
You're saying that Bush advocated a particular plan, then you quote an article supposedly supporting your statement and it calls the description a "starting point".

Keep trying. We'll see how long it takes before you'll admit that you didn't know what you were talking about.

 
At September 21, 2006 9:07 PM , Blogger Bryan White said...

http://www.whitehouse.gov/infocus/social-security/200501/socialsecurity.pdf#search=%22bush's%20social%20security%20plan%20site%3A.gov%22

http://www.whitehouse.gov/infocus/
social-security/200501/social
security.pdf#search=%22bush's%20
social%20security%20plan

Figured I'd give you a clue, otherwise we might not ever get anywhere.

 
At September 21, 2006 9:10 PM , Blogger Bryan White said...

Hint:
Just c&p the first part, then type in the rest manually until you enter the "f" in .pdf.
Hit return after that and off you go.

 
At September 21, 2006 10:13 PM , Blogger Michael Hussey said...

Bryan, if you're implying that Bush wasn't selling private accounts for younger generation to take, instead of Social Security, then that's false. Why else would he be saying Social Security is in danger? The program is solvent until 2041.

So, the more received from private accounts is more taken from Social Security. Plus, those taking just Social Security will recieve benefits cuts. The private accounts program would require outside tax dollars to start up. Roughly, a trillion dollars. Current SS administrative costs is only 1%.

How is that not either or. It's not getting full benefits from both. That would be nice, but the government couldn't fund it. If they could then I could get behind private accounts.

The Congressional Budget Office figured that private accounts get 3.3 percent return. 0.3 for administrative cost. That doesn't cover cost of living increases. The interesting thing is they factor no stock risk. It still sucks. The CBO state that if a retiree makes less than 3 percent interest off private accounts they be worse off than with Social Security.

People aren't getting ahead with this proposal. It treats the poor and elderly like shit.

Private retirement plans can suck. See Enron. Many companies are cutting 401k plans. The Chile model Bush was wooed by went broke. That's fact.

 
At September 22, 2006 10:51 AM , Blogger Bryan White said...

Bryan, if you're implying that Bush wasn't selling private accounts for younger generation to take, instead of Social Security, then that's false.

No, it's not false.
You just don't know what you're talking about.
The private accounts are an adjunct to SS. The are a government-tended retirement fund. The only difference is that the person owns the private account instead of the funds magically going to the government when you die (as happens with your Soc. Sec. deductions if you die prematurely).

So, if you're a black male (for example) who happened to die before your benefits kicked in, your family would receive the benefits set aside in the private account.

It has always been possible to keep a private account in addition to SS. If the Bush proposal were simply that, then it wouldn't be needed.
The accounts proposed as a voluntary option by Bush are a Social Security plan administered by the government but owned by the citizen.

Solvent until 2041? Great. Let's not do anything about SS except raise taxes (maybe tax all foreigners living abroad?) when the time comes.

So, the more received from private accounts is more taken from Social Security.

Both benefit the pensioners, however. It's a zero-sum game if the private accounts perform as poorly as the government promise, but that is exceptionally unlikely.
Retirees with the private account will end up with more retirement funds from the same initial overall outlay.

Plus, those taking just Social Security will recieve benefits cuts.

That's going to happen anyway, unless you figure out a way to turn straw into gold (or keep the economy going as SS begins to take an increasing hunk of the GDP).

Keep your eyes closed and maybe it won't affect you.
To most under Baby Boomer age, the secret's out. They don't expect to receive much return (if any) on their SS benefits.

The private accounts program would require outside tax dollars to start up. Roughly, a trillion dollars. Current SS administrative costs is only 1%.

Could you demonstrate how the startup costs must come from someplace other than from the contributions of those opting in to the system? Or do you mean those payroll tax deductions when you refer to "outside tax dollars"?
It appeears you are comparing raisins to watermelons. Perhaps because you don't know what you're talking about?

 
At September 22, 2006 11:30 AM , Blogger Bryan White said...

Private retirement plans can suck. See Enron.

Government pay-as-you-go retirement plans can suck.
See China (or Italy)
Enron's not a magic word; it has no power in this debate. The worst examples of each model are irrelevant.
The principles underlying the difficulties are relevant, however.

"China's pay-as-you-go pension system, created in 1995, is on the verge of bankruptcy ..."
http://www.forbes.com/2002/04/22/0422mckinsey2.html

"Europe's ageing population is creating a pensions crisis. Maintaining the continent's pay-as-you-go systems, whereby state benefits to retirees are paid out of contributions from current workers, will consume a growing, and ultimately intolerable, proportion of national incomes."
http://www.globalaging.org/pension/world/pay-as-you-go.htm

Many companies are cutting 401k plans.

Explain what you mean.
Are you describing the removal of a savings option, or confiscation of employee contributions?

The Chile model Bush was wooed by went broke. That's fact.

"The expert advisory council concluded that the system is not in crisis, but acknowledged that, as it stands, it will not be able to meet the country's pension needs. The shortfall is largely due to demographic changes and shifting labour trends, among them high turnover rates and extended periods of high unemployment rates.

While it highlights a number of reported benefits attributable to the individual capitalisation system, such as the growth of the country's capital markets, the report criticises the inadequate coverage for portions of the population, gender inequalities and high operating costs."


Broke? Not at all. The Chilean people own their retirement accounts,such as they are.

Chile's private pension funds do a great deal to power its economy through investment.
It would be appropriate to ponder how much worse things would be in Chile today under a pay-as-you-go system, given the demographic shifts similar to those in Italy (aging population)

 
At September 22, 2006 2:31 PM , Blogger Bryan White said...

A post over at Captain's Quarters seems relevant to our conversation:

"The Dishonesty in the Deficit"

 
At September 22, 2006 5:01 PM , Blogger Michael Hussey said...

Bryan, two problems with private companies pension funds. Some companies inflate the value of their stock and mismanage funds. Enron is the extreme example. Other companies are cutting 401k plans. Less overhead.

GAO report stated private accounts would not keep up the the cost of living.

FDR created SS to lift the elderly out of poverty. Since the inception of the program in 1939, the program has been solvent. Conservatives kept saying SS would go broke. Hasn't happened yet.

Apparently, you don't know what you are talking about. The White House admitted that they would have to borrow money to start up private accounts.

"Administration officials have been downplaying the significance of the $2 trillion in transition costs required by some individual accounts plans, by comparing that cost to the unfunded liability in Social Security over an infinite time horizon, which totals more than $10 trillion. For example, White House Press Secretary Scott McClellan responded recently to a question about how the White House would pay for the $2 trillion transition cost by arguing “It’s a savings, because the cost is $10 trillion of doing nothing, and this will actually be a savings from that cost of doing nothing.”[2]"

Where Scottie gets his $10 trillion number is beyond me. $2 trillion during a deficit is not a savings. I actually lowballed the borrowing number by a trillion. Silly me.

Side note: what happened to your post explaining Rumsfeld Powerpoint planning. I really like to read that.

 
At September 22, 2006 9:29 PM , Blogger cubsfandc said...

if you're implying that Bush wasn't selling private accounts for younger generation to take, instead of Social Security, then that's false. Why else would he be saying Social Security is in danger? The program is solvent until 2041.


Since you quote GAO and CBO approvingly in other posts, then you should know that both agencies warn that the problems begin in the next decade when the system begins paying out more in benefits than it collects in revenues. They also have repeatedly warned that we need to take action to put the system on a sound financial basis sooner than later and that the longer we wait, the more difficult the task will be.

Since you apparently are confused by what the President proposed, I have attached the outline the White House put out. The individual account proposal he put forward would allow a worker to put 4% of their wages into an individual account, with a cap of $1000. A worker making $50,000 a year will pay over $6000 in payroll taxes, so allowing that worker to divert $1000 of that amount into a personal account is a far cry from "choosing Social Security or an individual account.

Here is what the Washington Post said about those who continue to refer to the President's proposal as privatization:

The Social Security reform that President Bush pushed last year involved personal retirement accounts. But it did not involve 'privatization': The accounts, which were to be optional, were to be designed and administered by the government, with no opportunities for Wall Street salesmen to foist enormous hidden fees on unsuspecting workers.

The Washington Post also said this in response to claims that the system is just fine.

If entitlement programs are not reformed, they will squeeze out other spending programs that Democrats care about; they will create a budget crunch that no responsible party could want.

The Congressional Budget Office figured that private accounts get 3.3 percent return. 0.3 for administrative cost. That doesn't cover cost of living increases. The interesting thing is they factor no stock risk.

Two huge factual mistakes in one brief paragraph. The CBO 3.3% return was a real rate of return, i.e. after inflation. So the account balance would grow faster than cost of living. Second, the CBO analysis used a risk-adjusted returns, which is specifically intended to take into account stock return. The Social Security actuaries, who do not use risk adjusted returns, estimate a net average yield of 4.6% under a balanced portfolio (based on models developed during the Clinton administration, BTW)

 
At September 22, 2006 11:09 PM , Blogger Bryan White said...

"Some companies inflate the value of their stock and mismanage funds."

That's why sustaining competition is important.
Some governments mismanage pay-as-you-go programs. So automatically the latter are better?

Do I need to start identifying your fallacies and placing them on an easy-to-understand Powerpoint chart for you?

"Hasn't happened yet."

The only thing that will sustain such a Ponzi scheme is continued growth. Just wait until you get your way economically (assuming that your economic ideal doesn't rely on importing cheap labor from Mexico).

"GAO report stated private accounts would not keep up the the cost of living."

But it's too much trouble for you to provide a citation.

If you're going to cite a report, I expect you to either name it or cite it using an appropriate URL.

FDR created SS to lift the elderly out of poverty.

No, he didn't.
Apparently you created this blog in order to misinform others.
"The program for social security now pending before the Congress is a necessary part of the future unemployment policy of the government. While our present and projected expenditures for work relief are wholly within the reasonable limits of our national credit resources, it is obvious that we cannot continue to create governmental deficits for that purpose year after year. We must begin now to make provision for the future. That is why our social security program is an important part of the complete picture. It proposes, by means of old age pensions, to help those who have reached the age of retirement to give up their jobs and thus give to the younger generation greater opportunities for work and to give to all a feeling of security as they look toward old age."
--FDR

In the important field of security for our old people, it seems necessary to adopt three principles: First, noncontributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps 30 years to come funds will have to be provided by the States and the Federal Government to meet these pensions. Second, compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age.
--FDR (bold emphasis added)

Modern Democrats wish to stick with point #2, despite the fact that it has become clear that changing demographics may doom that system.
Plus, scaring seniors is a great way to get votes.

"Other companies are cutting 401k plans. Less overhead."

If you mean that companies are eliminating established 401k accounts, I do not believe you. If you mean that they are ceasing to offer 401k as an option for their employees, then your observation is irrelevant. Employees still have the ability to fund their own retirement accounts, regardless of options provided by employers. You would keep workers from doing that under SS, of course.

"Apparently, you don't know what you are talking about. The White House admitted that they would have to borrow money to start up private accounts."

Huh. Is that your way of dodging this question(?):
"Could you demonstrate how the startup costs must come from someplace other than from the contributions of those opting in to the system? Or do you mean those payroll tax deductions when you refer to "outside tax dollars"?

Perhaps in addition to belatedly addressing my questions you will also answer how my asking you reasonable questions might indicate that I don't know what I'm talking about.
Answer the questions and we'd find that out soon enough. Don't be a chicken.
(your link saying the Whitehouse admitted thus & such contained no admission by the White House, but instead contained assertions by an apparently biased party)

Side note: what happened to your post explaining Rumsfeld Powerpoint planning. I really like to read that.

If you're complaining about being left in suspense, blame the guy in the mirror. I posted that description on September 1 (roughly three weeks ago).
Where were you?

 
At September 23, 2006 4:34 PM , Blogger Michael Hussey said...

Bryan, where's your post on Rumsfeld's Powerpoints. As for dodging the question, I have played with you for a long time in this thread. You didn't even know the government was borrowing 2 trillion to start up private accounts. America does not have the money to start up Bush's program. The last thing we need to do is sell more treasury bonds.

Chile's retirement program is a bust. It's broke and you are actually advocating something created by a distatorship government. The army set up their own retirement fund. They knew it was crap.

Bush's sales pitch was to sell private accounts to younger generation.

Companies have 401k plans and other benefits.

I maintain Roosevelt created Social Security to keep the elderly out of poverty. What kind of job do you think a 70 year-old person could get in 1939? (If get a job at all.)

Bryan, you are the king of straw man arguments. Write your post on your blog about Bush's social security program. I think you seek attention from me and you have gotten plenty of it. So, be happy my little partisan.

 
At September 24, 2006 12:40 AM , Blogger cubsfandc said...

you have no time to give any attention to me, not even to either defend your statements that were contradicted by facts in my post?

 
At September 24, 2006 6:36 PM , Blogger Bryan White said...

"Bryan, where's your post on Rumsfeld's Powerpoints."

It's on your site, genius. Follow the hotlink "September 1" in my previous post.

"You didn't even know the government was borrowing 2 trillion to start up private accounts.

I still don't know it, since you refuse to provide evidence in support of the claim, particularly evidence that supports your claim that the money will come from new taxation instead of from payroll deductions.
Are you going to argue by repeating yourself over and over, or will you be presenting evidence, Michael?

"America does not have the money to start up Bush's program. The last thing we need to do is sell more treasury bonds."

Then maybe we should end Social Security right away:
Q.Does Social Security have dedicated assets invested for my retirement?

A.Social Security is largely a "pay-as-you-go" system with today's taxpayers paying for the benefits of today's retirees. Money not needed to pay today's benefits is invested in special-issue Treasury bonds.

ssa.gov

Are you going to admit now that you have no idea what you're talking about, or do you wish to simply keep proving it over and again by example?

"Chile's retirement program is a bust."

Incorrect, but even if it were correct it is irrelevant since Italy's and China's pay-as-you-go systems are a bust.
You don't pay attention very well, Michael.

It's broke and you are actually advocating something created by a distatorship government.

Ever heard of the gentic fallacy, Michael? Take a wild guess as to what type of government set up China's pay-as-you-go system.

"Bush's sales pitch was to sell private accounts to younger generation."

Yes, and?
You had been claiming that their choice is between private accounts (with no social security) and no private accounts (with social security).
You're flat wrong. You do not know what you are talking about.

"Companies have 401k plans and other benefits."

Hmmm? What issue are you trying to address with that comment?

"I maintain Roosevelt created Social Security to keep the elderly out of poverty."

Why should I believe you over Roosevelt himself?

"What kind of job do you think a 70 year-old person could get in 1939? (If get a job at all.)"

If you would bother to listen to Roosevelt, you should be able to figure out that the problem was older folk who were hanging onto their jobs because they could not afford retirement. That increased the crunch for jobs for younger workers (jobs were extremely scarce), and that's the problem that Roosevelt was trying to address.
You don't pay attention very well, Michael.

"Bryan, you are the king of straw man arguments."

Actually, I'm an expert at avoiding straw man arguments.
You try to give us one example where I presented a straw man argument. See how far you get. I guarantee it won't be far, because you don't know what you're talking about (a condition that covers multiple areas).

"I think you seek attention from me and you have gotten plenty of it. So, be happy my little partisan."

I don't suppose you could stay on topic enough to address the issues?

It's like this, Michael:
I'm a conservative and I have good reasons for my views. I love to argue my views, and I've gotten good at it over the years. It's fun, and ideally somebody learns something nearly every time (sometimes me, sometimes the other guy).
If you don't want to answer the comments, that's fine. I do not claim victory in the face of silent opposition.
Let the reader judge who has the better argument.

Try to answer the arguments. If you can't, then admit where you're wrong and get a clue.

Don't forget to give us that example where I argued a straw man, now.
I can use a few more laughs at your expense.

 
At September 24, 2006 6:37 PM , Blogger Bryan White said...

"you have no time to give any attention to me, not even to either defend your statements that were contradicted by facts in my post?"

You did a fine job, but give Michael a break.
He was in over his head even before you chimed in.

 

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