Social Security Reform In Budget Proposal?

Social Security Reform In Budget Proposal?


This latest move by Bush is ridiculously underhanded.

Last year, even though Bush talked endlessly about the supposed joys of private accounts, he never proposed a specific plan to Congress and never put privatization costs in the budget. But this year, with no fanfare whatsoever, Bush stuck a big Social Security privatization plan in the federal budget proposal, which he sent to Congress on Monday.

His plan would let people set up private accounts starting in 2010 and would divert more than $700 billion of Social Security tax revenues to pay for them over the first seven years.

Here’s what this plan means in real numbers…

On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion.

In the first year of private accounts, people would be allowed to divert up to 4 percent of their wages covered by Social Security into what Bush called “voluntary private accounts.” The maximum contribution to such accounts would start at $1,100 annually and rise by $100 a year through 2016.

It’s not clear how big a reduction in the basic benefit Social Security recipients would have to take in return for being able to set up these accounts, or precisely how the accounts would work.

Good lord, what is he trying to pull with all of this? And I’m not the only one complaining. Look at the overwhelming social security poll numbers from Americans who do not like Bush’s handling of this situation.


  • probligo

    Time for another war?

  • Tom

    If we’re going to have “voluntary private accounts” (which I’m not too keen on), why not just let us stick the money in our IRAs? I mean, why have yet another retirement account? And this would keep management costs down somewhat.

  • DosPeros

    Tom – excellent point. Fantastic point. And I’m very much in favor of privatizing social security. I think that what you just stated as an alternative (simply letting us put the $ into our already existing IRA’s)would be much simpler.

    It is not Dubya’s fault (and I fault Dubya for many things) that Social Security can not survive its own weight. It is failing system — which most systems of income redistribution tend to be. Justin, would you support a lock-box for social security — i.e. the “trust” that it is suppose to be?

  • hiraethin

    Evidently you’re not a fan of Bush’s approach to social security reform – either what he’s trying to do or how he’s trying to do it. But everyone seems to agree that social security needs to be reformed – that there is a large, and increasing, financial liability that will need to be tackled sooner or later, and that later will be harder. So what is the solution – what will be acceptable to Americans, and will actually solve the problem?

  • Justin Gardner

    Justin, would you support a lock-box for social security � i.e. the “trust� that it is suppose to be?

    A lock-box would be an interesting idea. I wish we would’ve kept it locked in 2000.

    Oh well….

  • pjm

    The administrative costs are estimated to be around $3 per 1000 invested. That seems reasonable to me. Also the government would want to give you limited options to invest in to keep your risk lower. If you had total control you may invest in an option that tanks defeating the purpose of the account in the first place.