WSJ:
Presidential candidate Newt Gingrich said on Monday that younger workers should be allowed to divert a portion of their Social Security taxes to private investment accounts, leaving Mitt Romney as the only leading GOP contender not to advocate fundamental changes to the federal retirement program.
— the status quo sells. Get behind Mitt! Change is difficult and often unpopular, and Mitt won’t set the Team up for potential blowback!
Younger workers also could opt to remain in the current Social Security system under Mr. Gingrich’s plan.
The goal of private-account plans is to allow market returns to replace taxpayer-funded benefits, saving the government money.
[…]
Mr. Gingrich said his proposal would guarantee that anyone who invested in personal savings accounts would receive as much as traditional Social Security pays out.
Some conservative supporters of private accounts for Social Security dismissed such guarantees as impractical, saying it meant the government would retain market risk. “It doesn’t make any sense to do that … Guarantees don’t work,” said Thomas Saving, a conservative economist at Texas A&M University who helped design Mr. Bush’s plan as a member of his Social Security commission.
In describing his proposal, Mr. Gingrich cited a plan by Rep. Paul Ryan (R., Wis.) and former Republican Sen. John Sununu of New Hampshire that also included a federal guarantee. “If someone with a personal account retires with benefits lower than those offered by the current system, the Treasury will send them a check to make up the difference,” a policy paper by Mr. Gingrich said, describing that proposal. “Thus, there is a legal government obligation that—in the worst-case scenario—a retiree will be able to enjoy benefits at least as good as they would under the current Social Security system.”
Mr. Gingrich’s plan came as several polls found he is leading all GOP candidates for the nomination. He led Mr. Romney 24% to 20% in a national survey of Republicans and GOP-leaning independents by CNN/Opinion Research International. A USA Today/Gallup poll found him leading Mr. Romney by a single percentage point, 22% to 21%. In both cases, the differences were within the poll’s margin of error.
For private accounts to deliver at least the benefits currently promised to retirees, investments would have to return the historical stock market average since World War II, said Michael Tanner, a Social Security privatization advocate at the Cato Institute, a libertarian think tank. That figure is 7% to 8% annually adjusted for inflation.
Mr. Tanner said he agreed with the Social Security Administration’s projections of 6.5% real annual stock-market returns over the coming decades.
And if investors in a partly privatized Social Security system diversified into bonds as well as stocks, they should expect gains of 4.5%. That would be enough to beat what Social Security could actually pay if its reserves are drained, he said, but not enough to meet the promised benefits.
Guaranteeing benefit levels for private-account holders “creates a huge contingent liability for the federal government. It locks in a level of benefits that cannot be paid,” Mr. Tanner said.
Mr. Gingrich said the plan worked well enough in Chile that the government didn’t have to dip into its coffers. In outlining the plan, the former House speaker also said that any short-term costs would be offset in the long term by substantial savings.
Here’s all that needs to be stressed: the current system is unsustainable. Period. Full stop. Meaning that, at some point in the not too distant future those who are forced to pay into the system will lose all that they pay in, having financed the retirement of others in a government sanctioned Ponzi scheme that finally goes bust.
Gingrich’s plan offers a particular solution. The guarantee of a government match is clearly intended as a marketing incentive — and again, it is Gingrich being Gingrich, using the popularity of the current government-run system as an aid to selling his own by way piggybacking on it — but if it helps drive popular support to re-structure the program (and recall, Cain too has been pushing the Chilean model), it’s probably worth seriously considering. In the long run, the hope is that matching government promise with a private account will mean very little in the way of government outlay.
The problem is, in an era of cronyism and what we’re learning has been an odious gaming of markets and investment funds (see Corzine, eg), the sale might be more difficult than it should be.
Which is why I don’t think we can reform SS by way of a private investment component until we first overhaul the regulatory structure of the market, and then clean up the tax code.
This country and its economy are end-stage broken. Structural repairs are essential. And those can’t begin until the American people are instructed truthfully on the dire situation and what’s needed to fix it.
The current GOP leadership can’t even articulate the profound danger of raising taxes “on the rich” during what is in essence a depression. Their preferred nominee has attacked those on the GOP side who’ve discussed the necessity of change — while he ignores the warnings of chief actuaries who’ve attested to the coming collapse in order to play to the politically unsophisticated.
We can no longer “win” this way. Sure, such refusals to accept the reality staring us in the face may sell with voters who simply want to keep their heads in the sand; but in the long-term, it only means our “leaders” have voted themselves the right to kick the can down the road, content in the knowledge that they’ll be gone by the time the whole thing comes crashing down around us.
We’re being told that the time is now to “get behind Romney” — that the “anybody but Romney crowd” needs to grow up and think pragmatically about electoral politics and the realities of the defeating Obama.
To which I say, if such is so important to the entrenched GOP leadership, why don’t they ever themselves rally behind conservatives and align themselves with the base, rather than insisting the base line up behind who the GOP kingmakers give us?
People will have to make important decisions coming up here soon. But I’m not one of those who believes a refusal to vote for Romney is a vote for Obama. It isn’t. It is a vote against a GOP establishment who relies upon our having to take what they give us lest we be accused of helping Democrats.
But the way I think of it is, it is they who continue to help Democrats by refusing to honor the wishes of the conservative base.
I will promote and help get elected classical liberals and legal conservatives in whatever down-ticket races I can. But I’m done giving the GOP my vote simply because they sell me on the lesser of two evils.
There is one evil: statism. And just because the GOP likes to expand the state more slowly doesn’t mean they get my support.
(h/t TerryH)
The more people tell me Romney is the only chance to beat Obama and the rest are done, all before one primary vote has been cast, the more I’m disinclined to vote for Romney in the general.
I could almost rationalize to myself that a republican congress would get more of what I want done with an Obama foil in the white house. Romney in the white house might convince them repeal of Obamacare isn’t really necessary. Just a tweak or two would be enough.
Screw that.
Why on earth is Social Security “popular”?
We’ve known it was a Ponzi scheme from the off, and my generation has been pretty cynical about getting any payout from it since we were old enough to understand it.
Same with Medicaid. Why the Sam Hill would anyone want to rely on the gubmint to take your money today just to give it back to you in 50 years, if at all?
I’d far rather pay into a private insurance account—or into a tin can in my back yard—than into a gubmint-administered program.
Their preferred nominee has attacked those on the GOP side who’ve discussed the necessity of change — while he ignores the warnings of chief actuaries who’ve attested to the coming collapse in order to play to the politically unsophisticated.
That may be Mitt’s biggest flaw: he doesn’t see the storm coming—or he thinks he can weather it just fine—because like most people in the financial arena, he’s cursed with a bad case of normalcy bias. Or worse, with the cock-eyed “things will always get better” optimism that inevitably inflates those infernal bubbles.
Morons like Glenn Beck and Mark Steyn—neither of whom went to college—can see exactly how close we are to catastrophic collapse, but the “experts” in high finance (never mind politics) never even foresaw the housing bubble collapse.
Too smart and too experienced. He might be able to say that things are headed the wrong direction, but he doesn’t see how close we are to the edge or how he himself has put us there.
Givens:
-Progressivism is the political form of denial — the mind over reality, damn the reality
-Despite its various temporary, sound-bite mewlings, Team R denies the insolvency of the Welfare State
Therefore Team R is in denial and the Republicans are progressives.
There are other tells, but this one adds to and does not refute them.
Au contraire, dicentra. These things are holy in the cant of a century of progg creep. Holy I say.
Why on earth is Social Security “popular”?
I don’t know if it’s “popular” so much as that people (especially those now 70+) who have paid 15% of their salary to the gov expect to get that property back.
Social Security is as American as apple pie.
I think this owes to Newt’s ability to speak somewhat like a statesman and historian, a missing figure on the national stage for all this time. We must truly yearn for that talent like at precious few times in the past.
Speaking of contrast, what a spectacular waste Gingrich would lay to TOTUS in true debate, if the press ever offers the chance. Maybe we’re just setting ourselves up for that mighty, delicious comeuppance.
This it true Darleen, people do want their money back. Trouble is, those same people have to be brought to understand that under the present system as configured, there is likely no possible way that can come about. The system will collapse (and only partly on its own account — which is a serious enough flaw — owing to the faster growth of larger entitlements like Medicaid and Medicare). These conditions, as we understand them, are posed as mathematical certainties (certainties, mostly because the underlying assumptions that would augur otherwise are too horrifying to take up in the alternative — like for instance, a nuclear weapons exchange wiping out vast fractions of population, say).
So while their expectations are reasonable as an expectation of justice, it is equally reasonable to require the tax-payer contributors to understand that justice can’t be done entirely for everyone. Some people, actually large populations of someones, to put it crudely, are going to be screwed. So the choice. Mitigate the severity of injustice, or put it to the unfortunate good and hard?
if there’s a guarantee there’s going to be a limit on the amount of risk you can take with “your” money and next thing you know the failshit government of failmerica is calling the investment shots I think
I’ve quit worrying about it… what cannot be paid WILL not be paid, regardless of the laws that get passed.
King Canute knew this a millennium ago.
Which likely came from Germany with the Pennsylvania Dutch.
Social Security is more like that Ritz Cracker Mock Apple Pie. I mean, who wants to waste perfectly good apples on a pie?
Or simply that he underestimates its danger. We’re watching the kind of conditions develop, politically and economically, that had weather forecasters warning people in the Southeast a week in advance about the storms that ended up leveling Tuscaloosa — and our political “leaders” have had that day penciled in for a huge garden party for months and what do a bunch of silly meteorologists know about weather anyway?
Worse, I think. The thing (storm, if you like, but really?) is here already — has been for years, decades even — and Mitt doesn’t take it seriously. And the “thing” isn’t as simple as the failure of Social Security as a program design, but the more fundamental abnegation of the political-philosophical grounds of our Constitutional order. Romney’s failure on those terms seems a plausible disqualification for the crisis of the times, if not of the office he seeks.
The warning signs of this political peril were brought to light nearly 50 years ago, at minimum. Attentive thinkers said as much then, and quite plainly. They have been ignored in the main. Mitt, if he wishes to help himself, let alone the rest of us, would do well to go back and pay some mind to what he finds there.
More simply: Where better to be insulated against what’s coming than up there pulling its levers? Remember that the banksters never made more than during the crisis of their own creation.
I never assume ignorance or apathy anymore. I assume corruption and intent. If we plebes can deduce the handwriting it’s because they put it there.
The conditions we see today — and are increasingly cognizant of as our new truthful reality; that hindbrain tickling finally seeps into the collective consciousness and we realize we knew it all along — started with the dawn of American progressivism. Back then was when all these unstable systems were designed and jammed into law, and even back then ‘we’ were railing against them because of their obvious folly.
Add decades of relatively minor official opportunism and deceit and looking the other way while you took yours and distributed theirs to your tribe back home, and you have a disaster in the making even in a passive sense: You can do nothing and yet the thing will fall in a heap, so wrong is its foundational basis.
Now start thinking Cloward Piven.
The only question in this malaise of pending disaster is, still, how can I get mine. After all, I uniquely represent not only reason and enlightenment, I represent myself. I’m owed. I can and I will so I must.
This is the political mindset and we see downright overt manifestations of it all over that wretched landscape. It’s no longer a question of ignorance or even apathy. It’s a question of the known, traditional, deadly sins compounded by time.
I’d put that in the position of climate change (as touted by its cultists, at least), which has made the oncoming storm both inevitable and potentially unsurvivable.
To put it another way, the hurricane’s storm surge itself isn’t necessarily what washes away the beach house — but when the water is higher because of it, the waves reach higher as well.
My objection to a meterological metaphor goes merely to the human caused aspects of our political-philosophical problem (having been a matter of choice, though poor choice the rub), though I guess if we focus on the presence of the human habitation on the shoreline as the problem in the metaphor, as opposed to the storm, my objection would disappear.
How about Alice in Wonderland as a metaphor?
I don’t know much about the subject, but I’ve heard it told that Dodgson was, among other things, a teacher of “projective” geometry, and that his imaginative works put those mathematics to work on the phenomena of the world he creates in Alice and Through. The “projective” part might have some application to the imaginative aspects of progressive politics, I reckon.
Heh.
But don’t forget the climate change cultists do insist it’s all manmade…
Indeed. But is Romney the lesser of the two evils? I oppose Romney for the same reason I opposed McCoot. So long as we have Obama in the White House the Republican establishment is obligated to put up at least token resistence to the push for ever bigger government. Put a RINO in the White House and he’s likely to convince at least the squishy Republicans to go along for the ride, and god knows quite a few of them are just looking for an excuse. They really don’t have a problem with ever bigger government, they just want to be in charge of distributing the loot.
If we can’t have a true fiscal conservative in the White House then I think we’d be better off with Obama. Besides, another four years of King Putt will do untold damage to the liberal/progressive brand. Dark clouds, silver linings and all that.