Dissension At The AARP

We have (scorching) e-mail, from a chap who is fed up with the AARP opposition to Bush's effort to reform Social Security:

Mr. William Novelli
President
AARP
601 E. Street, NW
Washington, D.C. 20049

Dear Mr. Novelli:

I have operated a public relations firm for the last 26 years and, so, I write this letter both as a former industry colleague from your career at Porter Novelli and as one of your members.

Put simply, I am incensed that my dues are being used to fund AARP’s opposition to the President’s efforts to reform the Social Security System. Moreover, I was left dumbfounded by your explanation of that opposition during your interview with Ron Insana this afternoon on CNBC.

The Bush proposal, while still open to improvement, is an important attempt to modernize a system that grows increasingly irrelevant to the American workers who will be called on to bear the financial burden for its support in the years ahead. Their motivation is paramount to the ongoing solvency of the system and to our competitiveness as a nation. Private accounts strike me as a progressive attempt to preserve the incentive of younger Americans to support Social Security and encourage their productivity. Even at the age of 52, I would still expect to benefit from the change and would welcome the opportunity to pass my private account on to my heirs.

Which brings me to your CNBC appearance. You seemed confused by the President’s proposal, especially with regard to private accounts. While you said that you do not oppose them as “add-ons” to the present system, you neglected to mention that we already have such accounts: IRAs and 401ks. Your suggestion is clearly beside the point. Further, you evinced no understanding of the estate-planning benefits of these accounts. The ability to pass such accounts to future generations gives one and all a real stake in the Social Security System and in its health. Instead, you seem to focus reflexively on criticisms of the proposal that cast your lot – and that of us whose interests you claim to represent – with others who look back to the New Deal instead of to the future. I am dismayed that instead of crediting the President for putting forward the subject of reform, you are doing your best to thwart the dialogue.

Enclosed please find my AARP membership card. Please remove me from your membership rolls; I no longer wish you to represent my interests in this important matter, sir.

    Sincerely,

    Michael Weiser
    Chairman

    The Weiser Group

Comments

[David E...]

This is all very confusing. And the confusion is due to President Bush's decision to not negotiate with himself. He is pushing for private accounts and leaving it up to others to define what "private accounts" means.

So what I recently read is that upon retiring, to prevent the retiree from blowing his pension on a "Harley" and "fast women" for instance, must buy an annuity.

I think the implications of private accounts needs a lot more scrutiny. I like the current system, where there is a floor under which you cannot go. Replacing that floor with an opportunity to prosper or incredibly screw up does not seem wise to me. I don't like the idea of additional taxes needed to bring fools back from the levels they will descend.

President Bush should tell us what his plan is, and also explain to us how to ensure that everyone will act responsibly - so the rest of us don't have to save their bacon.

It is very hard for me to feel united with someone whose corporate pension will be a multiple of his social security pension. I doubt very much that he can imagine the prospect that a minor blowout on motorcycles and a few fast women would collapse a guy's financial future.

I too wrote Mr Novelli a letter resigning from the AARP. I resigned after the bastard medicare prescription drug bill was passed. I was concerned then that the AARP was a total sellout. I was wrong, and now want back in.

[LYNN HARGROVE]

I canceled my AARP membership last month over its stand on SS. I was asked why I was cancelling and told them. They did not care. More should resign. By the way I am 58 and my major retirement will be 401's and my wifes teacher retirement.

[David E...]

Hi Lynn,

Just a hint about the 401k's. Convert as much of them to Roth's as you can before RMD's start at 71. I am saying this because you are hinting that your means are modest. If you and your wife have over $34,000 in income (including 401K withdrawals, you face the prospect of paying taxes on 85% of your social security). If you have converted everything to Roth's you can save thousands in taxes. (model these transactions with Tax-Cut to make sure this advice applies to you-it will be very expensive to pay a CPA to do this)

Lynn, what do you think about the possibility that people will squander their private account investments? Will you be cheerful about paying more taxes to take care of them?

[creech]

Why do you care if I "blow" my retirement account on a Harley, a long-dreamed trip around the world, on Habitat for Humanity, or on orthodontia for my grandkids? It's none of your business ---- until I come crying to you begging for a handout. You are free to say "no" and I wouldn't blame you. If I'm truly in distress, then there are various religious and socially aware organizations that will help me. If your objection is that the government will send men with guns to take your money to give to me, then I'm with you 100%. So let's work and vote to take that kind of power away from government! And perhaps far more people will make rational decisions, knowing that the
safety net is far smaller and less comfortable.

[Forbes]

Well, creech is certainly onto an important point about limiting the reach of the government, if not rolling it back. As someone earlier mentioned, a safety net is something you should not plan on using. If the policy recommendation regarding private account choice for a potion of FICA taxes is the annuitization of the proceeds at retirement--how is that worse than the existing SS benefit? (Uh, it's not.)

[David E...]

Creech,

I love your motorcyle helmet theory of freedom - and like Forbes said, you are certainly onto an important point about controlling the reach of government.

But - "If I'm truly in distress, then there are various religious and socially aware organizations that will help me."

I think you are expecting too much. You have much more faith that I, in the kindness of strangers. The level of help you will get be 3rd world level help. And it will be ugly - you can see the beginning of it now now, our Reagan homeless are sleeping on the streets. There is a huge contradiction coming, we think the US is 1st world, but soon without the safety nets, it can become 3rd world. When leaving your enclave you will see the poverty, disease, and hunger from the safety of your car. The US will not be the land of the free and the home of the brave then.