Tuesday, January 04, 2005

Keeping It Real Politik: Pissing on the Third Rail

Looks like it’s finally happening:

Social Security Formula Weighed: Bush Plan to Cut Promised Benefits

(Link: http://www.washingtonpost.com/wp-dyn/articles/A45726-2005Jan3.html)

The Bush administration has signaled that it will propose changing the formula that sets initial Social Security benefit levels, cutting promised benefits by nearly a third in the coming decades, according to several Republicans close to the White House.

Under the proposal, the first-year benefits for retirees would be calculated using inflation rates rather than the rise in wages over a worker's lifetime. Because wages tend to rise considerably faster than inflation, the new formula would stunt the growth of benefits, slowly at first but more quickly by the middle of the century. The White House hopes that some, if not all, of those benefit cuts would be made up by gains in newly created personal investment accounts that would harness returns on stocks and bonds.


This could well be the issue, the Big Issue, that rolls right through the ’06 and ’08 elections. Even for a river boat gambler of a president like this one, aiming to reform social security in any shape or form could be like trying to roll a snake eyes while being held at full-nelson by angry bears. For that, Bush deserves a degree of credit.

However, I see this maneuver as nothing short of the continuation of an eight-year project to “Starve the Beast.” For those unfamiliar with the term, it’s basically akin to shrinking federal revenues generated by taxes (see = a consistent pre-9/11, post-9/11, recession-long, war-time call for tax cuts tax cuts tax cuts) then crying that we must cut federal expenditures because… there simply isn’t enough money.

So, the tax cuts went mostly to the rich, and now the Bush Administration is looking to bilk seniors out of one-third of their promised benefits. It’s dishonest and it could be devastating to millions of seniors.

The good news, if there is any, is that it looks as though we’ll be in for a bloodbath of conflict in Washington unseen since Russell Crowe took out the Germanic tribes single-handedly in Gladiator. Republicans could be ripping their own party apart before the Dems even get a swipe in.

Post-election blues political junkies may now feel free to fire up the C-SPAN and get that popcorn poppin’.

6 comments:

MRBenning said...

I just find it decidedly convenient that Mr. Bush decided to wait until a disaster has struck to enact something that the public, if they were paying attention, would be up in arms about. While they're off raving about how Sandra Bullock, "you know, the one from Miss Congeniality," donated 1 million dollars to the relief effort, he's slowly pushing his papers through the ranks.

The Sore Loser said...

Well, fortunately Bush isn't planning to roll out his complete SS reform package until February or March. Let's pray that there's no convenient disaster then to distract us.

This way of transitioning to private accounts is truly idiotic. While it won't hurt seniors now, it will considerably hurt future retirees. Perhaps some of these losses can be offset with private accounts, but it's clear that, on this model, very few future retirees will do better with a private account system than with the current system. So then, if not retirees, who benefits from the transition? It seems that only Wall Street will benefit.

Eric Berlin said...

I hadn't really thought about the wag-the-dog implications until you brought it up, MR. That one's hard to say: they have been talking about this move for some time, and to their credit, even mentioned it from time-to-time during the campaign. I think the problem there was that people (the media, mostly) didn't believe that Bush would actually do a thing about Social Security.

I rely on my bitter post-election mantra here: This is what we want, this is what we get.

Mr. SL - From reports I've read, not only will seniors be worse off in the long run, but that transition costs will cost additional trillions. I'm not sure how the current plan combats that problem, but you'll excuse me if I'm a bit skeptical.

And you're right in saying that only Wall Street will benefit. It's been obvious to me for four years that Bush is really only interested in helping himself and his pals on Wall Street and over at Big Oil, Big Defense, etc.

It's Starve the Beast time all the way, as far as I'm concerned. I'm just waiting to see who will call him on it, and how loudly... not that it will do much good (sniff).

I just hope that Denny's still has the $2.99 Grand Slam special going when I hit retirement age.

The Sore Loser said...

Sir DB,

We wouldn't need to pay trillions for the transition if, as the article in the Post suggests, Bush is planning to reduce benefits. The transition would be funded through borrowing and through slight reductions in current benefits. The money we borrow will be payed back in the future with the SS trust fund money when the benefits are significantly reduced. At that point, Bush claims that our private accounts will compensate for the loss in benefits. Bah!

Eric Berlin said...

Ah, my head is hurting from all this fuzzy math. I'm going back to listening to Minor Threat now.

DB Edict: No more Social Security talk. One week!

Eric Berlin said...

I'm breaking my pledge.

Check out this nugget from The Wall Street Journal:

"Senate Republicans signaled their wariness yesterday in a private retreat on the year's legislative agenda with White House adviser Karl Rove. An attendee said the senators gave Mr. Rove 'a subtle but clearly identifiable message that the GOP [Grand Old Party] would go along…but they were scared to death.' The senators indicated that the president 'had to step up his activity' to sell his initiative to Americans, which Mr. Rove said Mr. Bush would do. But the attendee said senators also warned the Social Security proposal 'needed to be bipartisan or else no go.'"

"Still, some Republicans are resigned to uniting behind the president, given his determination. 'The president is going to go ahead,' said Rep. Tom Cole of Oklahoma, a Republican leadership lieutenant. 'He cannot afford to fail. It would have repercussions for the rest of his program, including foreign policy. We can't hand the president a defeat on his major domestic initiative at a time of war.'"

Looks like I'll have to come out of my political hybernation a little early to check up on this one... interesting stuff.