Hmm, It Must Be Some Other Liberal Media

Max Sawicky catches Diamond Jim VandeHei of the WaPo framing the debate over Social Security reform just the way Karl Rove might have scripted it - killjoy Dems want to raise taxes or cut benefits, while kindly Reps want to provide personal accounts for you.  Who luvs ya!?!

Yes, I am troubled - although no one ever went broke underestimating the intelligence of the press corps, I worry that eventually the truth will out: personal accounts may have many virtues, but solving the financing problem facing Social Security is not one of them.  If Reps generally, and Bush specifically, are seen to have been pushing this angle, a day may come when folks feel as if they have been lied to.  For those needing reassurance, these Reps were on the proper side of the line a few weeks back.

Meanwhile, back at the WaPo, we get a snippet of the AARP do-nothing ad campaign:

Republicans are expediting their fundraising plans after learning that AARP, the influential seniors group that supported Bush's Medicare program but opposes his Social Security designs, will spend $5 million in the first two weeks of this month attacking the president's plan to allow younger workers to invest part of their Social Security contributions in the stock market. AARP plans to run full-page ads in 50 large newspapers to coincide with the return of Congress next week. In one ad, a couple in their forties says, "If we feel like gambling, we'll play the slots."

Gambling?  That's it?  C'mon, bring on the real rebuttal - this AARP line will sway no one.

First of all, over 40 million Americans participate in 401(k) plans, so we are not talking about terra incognita here.  Take stock in America!

Secondly, the Bush Commission in 2001 (and Bush again at his conference) suggested that private accounts would be structured in a way that is similar to the Federal Thrift Savings Plan, which looks like a 401(k) rather than a self-directed IRA.  For the riverboat gamblers amongst us, the Thrift Savings Plan offers an S&P 500 index fund (with an annual expense ratio of 0.10%, but don't tell Paul Krugman).

However, non-gamblers (or more accurately, alternatively-oriented gamblers) may lean to the Government Securities Investment Fund, which essentially mimics the Social Security "Trust" Fund by holding the same special issue securities.  Someone who feels comfortable with the Trust Fund bonds can put their private account in exactly that.

The risk of even this type of personal account is that a person can outlive their assets - a lump sum in a personal account at age 65 may be less appealing to a healthy, prospectively long-lived person than a Government sponsored annuity.  However, this is hardly the idea being communicated by "playing the slots".

Both the AARP and the WaPo need to raise their game.

Comments

[Tim]

There seems to be something noteworthy here. Something about the comparative level of discourse, and the detail brought forward, on blogs such as this one, Kevin Drum's, and so many others in light of this WaPo column, AARP and our politicos.

I'm just not sure what it is. Hmmmm ....

[TM]

It is almost like we are having a civil discussion of a fairly complicated issue. Well, let's not get used to it.

[LYNN HARGROVE]

I am 58, "retired" and an AARP member. However, they do not speak for me. I am cancelling my membership. We do need to do something. I am in favor of the private ownership idea, needs some work. I am glad that there MAY be a discussion of the issues. 'If your not part of the solution, you are a part of the problem'.

[Mike N]

LH:
I had a membership in AARP once too but I let it expire and won't re-join. It seems to me that they consider any and all new and different ideas as a threat to their status quo. This "don't rock the Boat" attitude cannot be in the best interests of seniors.

[Jor]

Wow, the dems are setting themselves up to get steam rolled, I'm shocked. At least in terms of blogging discussions, the SS debate should be much more interesting when some hard details are released. Its a much more wonky issue, and maybe, not as bitter as other issues, yet.

[ordi]

The Dems are going to get rolled on this one. All Repsu have to do is remind Voters Congress and Fed Employees have something akin to what is going to be offering.

Then ask Why it is good for them and not for you?

[meep]

Private accounts are just the sugar to get younger workers (like me) to take the medicine of lowered benefits... which we will already be looking at in the future, whether we get higher payroll taxes or not. And by lower benefits, I mean a lower replacement ratio (that is, a lower amount compared to one's pre-retirement income) -- the absolute amounts will be larger, but go try to see a movie, with drink and popcorn for a quarter now. Just comparing absolute sustainable benefits is misleading.

Another aspect of the privatizing plan is to get people to realizing they can't depend on Social Security for retirement income. I just read some stats on the %age of people who do some really dumb moves: those start taking SS bens at age 62 (argh! Only if you're going to die relatively young! Like before you turn 70!); and those who save up almost nothing for retirement.

When one sees what the average =current= Social Security paycheck is - which should be trumpeted more at younger ages - one will see that SS alone won't give you very much, even at current "generous" levels.

[Jor]

Times editorial from today on SS seems good to me. More "fuzzy math". Surprise, Surprise.

[bride]

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