Critics of President Bush’s plans for social security reform often hide their reflexive opposition to all things Bush behind a mask of “original intent”, claiming that the system has always been intended to make workers support retirees, so there’s something blasphemous about the private account system that makes everyone accountable for his own retirement. So let’s look at FDR’s actual intent, as expressed in this letter he sent to Congress in 1935:
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. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.
According to the Original Design, the Ponzi Scheme should have ended in 1965, and we should be well into a system of self-supporting annuity plans.
The question the reflexive critics really should be asking is why we aren’t.
I’ve listened to Bush, read all I can find about the proposed reform, talked with people, & still can’t figure out his intent.
The reform will not exactly “save” social security. It will not cause the seniors of tomorrow the great “loss” some folks are up in arms about. Nor will it provide them particularly substantial “increases” either.
Yes, many I’ve talked to dislike it from a position of disliking all things Bush. Others (perhaps you?) like it from a position of liking all things Bush. A few I’ve talked with like the idea of their money working “for” them in spite of any risk, & they the idea of that money being made available to descendents. But they also wonder about GWB’s “original intent”, wonder if it is partly to stimulate business. One person I spoke to (a moderate, who voted Gore, then Bush this time) said “It works if you buy into the notion that what’s good for business is good for America.”
I take it that you understand more than I do, in spite of my efforts to get a handle on it. I’m open to anything that works..
I don’t feel the need to view GWB in the glow of “greatness”–radiated altruistic warmth. Nor do I see him as the coniving
demon he’s sometimes portrayed as. That the neo-cons who surround him have an “agenda” isn’t so hard to see, they’ve been pretty upfront about it even since the days of Bush Sr.
Anyway, I see “reflexive critics” on both sides.
I watched a couple of great films recently, both by the blacklisted director Jules Dassin (I’m a fan of film noir) “Rififi” & “Night and the City”. On both DVDs are interviews with Dassin (he’s very articualte & a great storyteller) where he talks a little about the “malady” of McCarthyism. I remembered that Coulter in her book “Treason” (I sold lots of copies when it first came out) writes about the greatness of McCarthy & how he “got it right” etc. I guess for an intertainer she makes these provacative statements. Like I said, weird entertainment. But there has to be a level of agreement in the minds of those who enjoy her…otherwise why would she be so popular?
The basic problem with social security as it’s presently funded is that population has to increase faster than lifespan or it goes broke. This is because one generation of workers is paying for another generation of workers. It’s also hobbled by low rate of return, which means you need even more population growth. At some point, the population growth starts to create its own set of social problems.
So they only way to square the size of the funding population with that of the receiving population is to make them the same, as FDR apparently envisioned in 1935. If everybody pays for his own retirement, it doesn’t matter how many people are working vs. the number of retired. And having our savings in the markets makes for more economic growth and wealth-creation.
So how do we make the transition from the current Ponzi scheme to the more prudent self-funded scheme? This should have been done in the 50s and 60s, but wasn’t because we were too busy paying for WW II, Korea, and Vietnam, and now it’s the 1.64 trillion dollar question.
Conservatives have taken great liberties with FDR’s words and have either ignorantly or maliciously taken them completely out of their context for their own partisan agendas.
First, the “voluntary contributory annuities” that FDR referred to were never enacted, but were intended to SUPPLEMENT Social Security benefits from the compulsory program (i.e. today’s Social Security), not replace them.
Second, FDR NEVER supported privatization of Social Security accounts, and this quote does nothing to change that record. The old-age pension plan FDR was referring to was set up to cover those who were too old to have contributed to Social Security at the time it was established — but it was NOT part of the Social Security program itself. What FDR meant was that the old-age pension plan should be phased out over time, to be fully replaced by the current “compulsory contribution” plan we know as Social Security. This had nothing to do with private accounts, and those who suggest otherwise are either ignorant or don’t care what FDR really meant.
What matters is what we want now.
[insane crap deleted by editor]
Oh, and did I mention it’s not a Ponzi scheme?
RTFL.
Odd remarks from an originalist, John K.
To the other john, how are we to interpret this sentence from FDR: “It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.”
Now as I see it, a “self-supporting annuity plan” is one where the beneficiary funds his own retirement. We still don’t have that because we depend on today’s contributions to pay today’s liabilities. This obviously doesn’t work for long, hence the Ponzi scheme nature.
Do you seriously see any way out but individual accounts?
Individual accounts, as I and others have stated, actually screws things up.
There’s ways to do this- you’ve mentioned the Singapore option, e.g., that actually fix several problems at once. Taiwan did a similar thing, too. Of course, it’s socialism, but why should we care if a cat is black or white as long as it catches mice?
But you have to keep the insurance aspect of the program and the defined benefit aspect of the program, both of which are anathema to cheap-labor conservatives.
President Bush hasn’t advocated eliminating the “insurance aspect of the program and the defined benefit aspect of the program,” and unless and until he does, your speculations about his feelings don’t amount to anything but a wild imagination on your part.
There are many reasons why the Singapore model isn’t appropriate for the US, not the least of which is the whining that would emanate from the left if the wall of separation between government and commerce were breached.
Why does everything have to be collective in order to please you?
How are we interpret what FDR meant by “self-supporting” annuity plans? Go back to the originl context of the statement, not what you THINK it means seventy years after the fact. Here is what the New York Times wrote on Page 1 the day after FDR’s statement was made, January 18, 1935:
President Roosevelt gave assurance that the Federal subsidies were needed only for initiating the system. One of the guiding principles of the whole plan, particularly relating to unemployment and old age insurance, he said, was that it should be self-sustaining “in the sense that funds for the payment of insurance benefits should not come from the proceeds of GENERAL taxation.” (emphasis added)
Right, it wasn’t supposed to be the kind of program it is today, it was supposed to be an annuity program where every worker paid for his own retirement unless he was a retard. And Bush is returning the program to its original intended structure.
Are you insincere, Richard, or just dense? John gave a supported and contextually accurate explanation of “self-supporting” that was unambiguously contrary to your own interpretation, and all you can do is spout the exact same interpretation that you gave it the first time! Frankly, I thought you were more creative than that.
I may have to reconsider the value of dropping by from time to time.
As far as you’re concerned, Rob, I’m both insincere and dense, so you really shouldn’t waste your time here.
The article john quoted from the NY Times related to the question of subsidies for old-age benefits, not the precise nature of the funding of the system vis a vis individual vs. group funding. FDR was only addressing the use of general fund monies for the system, and promising that the practice would only be temporary.
Well, it wasn’t a temporary practice, and because it wasn’t, the system is due to go bankrupt in my lifetime. That’s not pleasing to me.
Now buzz off, moron.
Have a nice life, Richard, Kim and John. Was fun while it lasted, but now it is time to move on…
All the best in your future discussions.
Rob
Actually, what FDR was stating was that the old-age pension program (which became known as old-age assistance) would cease to be the primary source for retirement funds once the Social Security Trust began to fill. This took place in the 1950s, when the “self-sustaining” Social Security system overtook what became known as OAA (Old Age Assistance). The program exists today under the SSI program as a fund of last resort for the truly need aged.
Of course, Social Security operates on a “pay-as-you-go” basis out of its own earmarked funds, and not out of general taxation, as FDR intended. Congress blurred this distinction in 1983 when they began diverting surplus funds from the trust fund into the general treasury.
It’s actually more devious than all that, because the trust fund, which isn’t really a trust fund, is invested in treasury securities. So if the deficit were eliminated, the “yield” on SS would go to zero. So it’s really not consequential that the SS trust fund is really not separate from the general fund because it doesn’t exist without government debt.
This is why it all needs to be taken out of the government’s hands.
Critics of President Bush?s plans for social security reform often hide their reflexive opposition to all things Bush behind a mask of ?original intent”, claiming that the system has always been intended to make workers support retirees, so there?s something blasphemous about the private account system that makes everyone accountable for his own retirement. So let?s look at FDR?s actual intent, as expressed in this letter he sent to Congress in 1935:
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. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.
According to the Original Design, the Ponzi Scheme should have ended in 1965, and we should be well into a system of self-supporting annuity plans.
The question the reflexive critics really should be asking is why we aren?t.
Americans’ Future In One Plan
I know that most of you are busy to read my book. As I explained previously that Taman Health Plan (www.trafford.com) takes care of all the health care, Medicare, Medicaid and social security. It will threw away all bureaucracies out of window. Let me explain shortly how it works:
1- there will be no more health care insurance companies, no Medicare, Medicaid or Social Security. My plan will take care of all.
2- Basically will be only one Big Health care organization (Taman Health Plan or THP).
3- The center of the plan will be in Washington while the health departments in every state will be the branches.
4- One organized body will be taking care of the Health Care and long term care of all Americans replacing 1500 insurance companies, Medicare, Medicaid and Social Security.
5- This will allow us to provide a uniform service to all Americans every where in both inpatients, outpatients and long term care.
6- When you go to any Duncan Donuts branch your expectation is to have a fresh coffee and a donut with no long wait. We will try to provide a similar predictable service everywhere as Duncan Donuts. With having only one body will be able to do that.
7- The Capital of the plan will be the funds of Medicare and Social Security (before the bankruptcy of both systems). The maintenance will be a yearly tax from each of us (will replace our yearly social security and Medicare holding taxes). A percent of each of us go to his account cards and a percent go to THP itself. The money of the plan will be invested by the investing sector of the plan very likely in Wall Street.
8- We will have 5 ATM cards with a corresponding accounts. Card A (children), Card B (working group 18-65years old), Card C (Medicare card >65 years old), Card D (Medicaid card), Card E ( expensive medicines or investigations).We will have the health cards devoted to health care and long term care. Thus we will have: health cards, banks with accounts to each card and credit card machines in outpatients care and hotelling part of hospitals and nursing homes.
9- Cards will pay for the outpatient medical care including doctors, emergency room visits, investigations, medical supplies, pharmacies and the hotelling part of hospitals and nursing homes. While the medical part of hospitals and nursing homes will be budget by the plan itself.
10- In the first year of issuing cards: Card B and C (most of people) will have a bonus it could be a percent of their Medicare and social security withholding (70 % or so). We will try to be fair to every one but every one has to now that most of us already lost a lot of money with the HMO’s. For next year new comers to card B at age of 18 when first issued will have a bonus of 50,000 dollars. It will change every year by a percent a according to inflation.
11- every one of us will get a statement every one or two months of his card account. Card B account will phase in card C at the age of 65. If card C account is vanished Card D will be issued (hoteling part will be less luxurious). Only few of Card B will have card D if there account vanish most likely those with severe medical problems.
12- So basically most of us will have our own account Card B then card C. Say you are 45 and you have now in your account $ 200,000 you can take one or more years out of work, you Can retire early if you like and with your card you will control all the medical services and its prices.
13- With this card system we will end all bureaucracies of health care, Medicare and Medicaid. No one will stand between you and any medical or long term service (only your card). Shop around with you card, have early health care security and responsibility and invest in your health.
14- We will not need Social Security since after age of 65 we will be able to use our cards to stay in any nursing home each according to his account in card C or card D. So when you invest well in your health you will be able to enjoy a nicer nursing home when you get old (actually it will be also a kind of tourism).
15- The money in cards do not get inherited when we pass away but recycle in the plan to support the next generations.
16- The plan will have very positive effects not only in simplifying our care, save a lot of waste in health care, give early health care security and responsibility to Americans it will also have a positive effect on the economy, saving billions of dollars to Americans, creating jobs in health care and cutting outsourcing.
Very likely, you figure it by now I could have sold the plan to one of the presidential candidate before the 2004 election for millions of dollars (they already spent 2 billion dollars). It is my gift to the American people (it will help the healing process of the two worlds America and the Muslim/Arabs).
Maged Taman.
2/20/05