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SS Reform is Dead; Long Live SS Reform
Posted by: Jon Henke on Tuesday, March 15, 2005

To the delight of the Opposition Party—and bloggers throughout the Left side of the sphere — the Washington Post reports that Bush's Social Security reform plan is quite unpopular...

Three months after President Bush launched his drive to restructure Social Security by creating private investment accounts, public support for his program remains weak, with only 35 percent of Americans now saying they approve of his handling of the issue, according to a new Washington Post-ABC News poll.

But there's something very interesting buried deep in the polling data.  Very interesting indeed.   The public overwhelmingly disapproves of 1) the way Bush is handling Social Security (56% - 35%), and 2) "Bush's proposals on Social Security" (55% - 37%). 

But the public also overwhelmingly supports by a margin of 56% - 41%  "a plan in which people who chose to could invest some of their Social Security contributions in the stock market".   

Uh.....

That brings up a couple questions:

  1. Where have I seen a plan like that before?
  2. If the public supports personal accounts, then to which of Bush's "proposals on Social Security" do they object?   Because the only thing he's actually proposed is the option to "invest some of their Social Security contributions in the stock market".

And why does the Washington Post bury the fact that the public dislikes every part of Social Security reform except what has actually been proposed by President Bush?  That seems important.

Still, with polls going against him, the Democrats united against, and even David Brooks losing hope, it may be end-game for Personal Accounts.  Which may explain why tax reform —which had taken a backseat to Social Security reform — is back...

 A presidential advisory panel has quietly begun work on the critically important issue of tax reform. It does so against a political backdrop that makes it appear increasingly likely that the president's twin domestic goals of reforming Social Security and the tax system will merge by the summer.

The Democrats know very well what Milton Friedman described in Tyranny of the Status Quo:

A new administration has some six to nine months in which to achieve major changes; if it does not seize the opportunity to act decisively during that period, it will not have another such opportunity. Further changes come slowly or not at all, and counterattacks develop against the initial changes.  The temporarily routed political forces regroup, and then tend to mobilize everyone who was adversely affected by the changes, while the proponents of the changes tend to relax after their initial victories.

The Democrats have to play a Prevent Defense for just a little while...and they're doing it rather well. 

 
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Previous Comments to this Post 

Comments

Interesting.

Never underestimate the sheer gullibleness of the average american...

 
Written By: b-psycho
URL: http://psychopolitik.blogspot.com
I think the reason why those results came back the way they did is people support the principle, but not the specifics of Bush’s plan.  I think in theory its a great idea, but when you bring up the annuities portion of Bush’s proposal things don’t look so good anymore.  And then the massive transitional costs, which is probably more than the shortfall in the first place....thats why the government needs to stay out of the private sector.  Washington is the only place where you solve a funding problem by spending more money.  Bush had the right idea in his first term by just cutting taxes.  Whatever happened to "I believe you can spend YOUR money better than the government can?  See, I already have a private account that utilizes stocks and bonds to achieve a superior rate of growth—IT’S AT BANK OF AMERICA!
 
Written By: Anonymous
URL: http://www.qando.net
I think the reason why those results came back the way they did is people support the principle, but not the specifics of Bush’s plan.  I think in theory its a great idea, but when you bring up the annuities portion of Bush’s proposal things don’t look so good anymore.  And then the massive transitional costs, which is probably more than the shortfall in the first place....thats why the government needs to stay out of the private sector.  Washington is the only place where you solve a funding problem by spending more money.  Bush had the right idea in his first term by just cutting taxes.  Whatever happened to "I believe you can spend YOUR money better than the government can?  See, I already have a private account that utilizes stocks and bonds to achieve a superior rate of growth—IT’S AT BANK OF AMERICA!
 
Written By: Anonymous
URL: http://www.qando.net
Even absent a real "proposal," per se, people have turned against Bush’s plan because it doesn’t do what he promised it would out of the gate, and he’s been forced to backtrack on it.  People want to invest their money in the stock market to get more off of it because people are greedy in general, and just like the common wisdom about all teenagers, everybody thinks that they know better than anybody.
 
Written By: Fargus
URL: http://fargazmo.blogspot.com

Common saying about a prevent defense: The only thing it does is prevent you from winning.

Intervening events will determine the details of the next election cycle.  But it’s hard to imagine that the Democrats have any chance of electoral victory if they are the  party of criticism, obstruction, nay-saying, and tear down the ramparts.

I believe there is a principled case to be made that if Congress can not address the realtively easy probelm of Social Security, there is no hope for the much bigger problem of Medicare. Bush will get credit for putting Social Security on the table, although I’m not sure the Republican Congress will get any for its handling of the issue.

 

 
Written By: pilsener
URL: http://
It’s because of what they quote later in that article... young people think it’s a good idea, but since it’s the cool thing to do to hate Bush, they won’t support *Bush’s* plan, whether or not it’s good. If anyone else was supporting the same plan, they’d like it.

People are stupid; details at 11.
 
Written By: Anonymous
URL: http://www.qando.net
This reminds me of the polls of people prior to the election who disliked Bush’s handling of the economy, even though unemployment was going down (and at that point was about the historic average), GDP was growing at a fast clip, interest rates were low, etc. 
 
Written By: Anonymous
URL: http://www.qando.net
(1) Bush has offered no "plan. Just an idea.

(2) Bush has been campaigning around the country talking about the plan’s insolvency and private accounts, which really have nothing to do with each other, and he admits it.

(3) Yes, people are dumb about their personal finances. The credit card debt in America really tells the story on this. And you wouldn’t believe how many people with 401(k) accounts with employer matching don’t utilize them at all. It’s like throwing money away.

(4) Better than 40% of Americans still think that the 9/11 hijackers were Iraqis.
 
Written By: seamus
URL: http://3martini.typepad.com
Core’s Law of Old Media: We see the Democrats in Self-Destruct Mode partly because America’s liberals believe their own lying propaganda.
 
Written By: ELC
URL: http://weblog.theviewfromthecore.com/
"only 35 percent of Americans now saying they approve of his handling of the issue"

Notice the wording. If you are a strong backer of personal accounts and have been frustrated at the way the administration has (not) made the case for them, you could very well answer that you do not approve of his handling of the issue.

But there is something more to it than that.

Last night I was watching "Blind Justice". In it, the police questioned a guy who was a little nuts. Basically, he said "yes" to just about everything they asked. One of the detectives commented that he would have said "yes" if they asked him if he was the Queen of England.

Similarly, there is a significant portion of Democrats who will oppose anything that has the name "Bush" associated with it. If Bush is for it, they are against it, period.

If you look down in the poll results, you will find that just 50% of those surveyed said they know either a great deal (13%) or a good amount (37%) about Bush’s plan. More people (51%) feel strongly about his plan than say they know at least a good amount about it. And since it is highly unlikely that 100% of those who know a good or great deal about the plan feel strongly about it (there are undoubtably plenty who are ambivalent), that means a significant percentage of people feel strongly about the plan without knowing much about it at all. Given that those who feel strongly about the plan oppose it 2-1, it does not take a stretch of the imagination to think that, perhaps, there is some knee-jerk anti-Bushism at play here.

I have more on this and other Social Security polling here:

Daly Thoughts.

Gerry
 
Written By: Gerry
URL: http://dalythoughts.com

Heh,

I wonder if a prevent defense works the same in politics as football ie "the only thing a prevent defense prevents is the defense from winning."

 
Written By: Brett
URL: http://law-b.blogspot.com
I think the answer behind this conundrum is rather simple, and the Post story gives only part of it.  It’s just like the polls that show large majorities in favor of universal health care. But when people start to consider what that means in practice they start to shy away. With Social Security people like the idea of investing the market but they don’t like giving up their guaranteed government benefits. Thus, the more people learn about the plan - whether "Bush’s" plan or partial privatization in theory - the less they like it. Why? Because people want their retirement guaranteed - or at least a minimum portion of it.  When people learn that investing in the stock market means their retirement is at risk - and I don’t mean the sort of "Social Security is going bankrupt" kind of risk, which would actually mean the entire United States government was broke, and nobody really sees privatization as a way to shore up the Trust Fund - they don’t support it anymore. It has very little to do with knee-jerk anti-Bushism - with the possible exception of the twentysomething nonvoting crowd.
 
Written By: Anonymous
URL: http://www.qando.net
I apologize for that coming out in bold. I didn’t mean for it to (and if you can edit it to not, I would appreciate it).
 
Written By: Gerry
URL: http://dalythoughts.com
I have a post today on Social Security and whether personal accounts would achieve solvency at my blog:

http://www.WILLisms.com

Specifically, at: http://www.willisms.com/archives/2005/03/do_personal_acc.html

I think part of the public’s problem is indeed some knee-jerk anti-Bush stuff on the left, really unfavorable media coverage, but mostly just a misunderstanding of what Bush’s plan is and isn’t.

It seems absolutely bizarre that people could generally identify that there is a problem/crisis, that people could like personal accounts, but then not support reforming the system.
 
Written By: Will Franklin
URL: http://www.WILLisms.com
The people support private accounts.

The people oppose the President’s plan because he has allowed the Democrats to define the plan.  The transitional costs scare people away from the plan.  Who is talking about the transitional costs?

Don’t make me search the congressional record for the number of citations of "transitional costs" from the floor of the House and Senate chambers by the Democrat party.

The Democrat Party has played the politics of SS reform quite well.  I know.  Who knew they still had any plays that still work.  Bush may not get his reform, but there is no way to tell if the Democrat Party can turn one legislative victory into political capital.

If Republicans sense they can’t muster the votes for cloture they may force the Democrats to filibuster everything; something the Democrats will do if they can defeat cloture.
 
Written By: Brennan Stout
URL: http://hkb.blogspot.com

It is convenient to say that President Bush’s plan is failing because people don’t like Bush himself. But his plan is poor: it exacerbates the solvency problem and opens people up to the risk of the market, as well as its benefits. Everyone remembers the "returns" (negative returns) of the years 2000-2001. If you retired then, and were relying on your private account, you’d be in trouble.

PEOPLE WANT TO KEEP THE GUARANTEED BENEFIT.  Poll after poll shows that people across the political spectrum are  willing to raise the cap from $90,000 to fund Social Security. If personal accounts are added on top of Social Security, as federal employees have, then there’s no problem. But Bush is determined to fund these accounts by contributions that will decrease  Social Security, and which require  borrowing trillions of dollars. He will lose, I hope, on both counts, and not just because Democrats will oppose him. Sensible Republicans will, too.

 
Written By: Wendy
URL: http://www.wendytech.com
i don’t think Congress realizes how important this is for the future of our country. i wish the GOP would stop acting like a bunch of pussies.
 
Written By: pissant
URL: http://www.qando.net
Aren’t there two aspects about the fix for social security though? How are we going to keep it solvent at its current funding levels, and whether or not to include private accounts?
 
Written By: IronYuppie
URL: http://www.ironyuppie.com
PEOPLE WANT TO KEEP THE GUARANTEED BENEFIT.
And what guaranteed benefit would that be?  No means testing?  No change in retirement age?  D’ya think that Congress can’t change any or all of it from underneath you?
 
Written By: Mark
URL: http://
"Everyone remembers the "returns" (negative returns) of the years 2000-2001. If you retired then, and were relying on your private account, you’d be in trouble."

I’m getting tired of reading this.  Either the people who say it are financially ignorant or disingenuous.  No sane person, a few years from retirement, would be heavily invested in equities, especially volitile equities.  This one needs to end.

"But Bush is determined to fund these accounts by contributions that will decrease  Social Security, and which require  borrowing trillions of dollars"

So Wendy, tell me the cost of doing nothing (hint: you’ll need to use the word trillions)?  People opposed to private accounts of some kind must believe that there is some plan which magically has no costs.  It’s not about trillions vs. nothing, it’s about how many trillions and when. 
 
Written By: David Andersen
URL: http://
But his plan is poor: it exacerbates the solvency problem

His plan may or may not be poor, but it does not exacerbate the solvency problem.  The transitional costs are merely cost-shifts.  They are not additional costs.  

Everyone remembers the "returns" (negative returns) of the years 2000-2001. If you retired then, and were relying on your private account, you’d be in trouble.
Well, that’d be the case if the SS funds are invested in tech stocks, penny stocks, and junk bonds.   While the overall market dropped ~40%, 401ks and mutual funds only dropped about 10%.  So, even a moderate amount of care prevents that kind of drop.

PEOPLE WANT TO KEEP THE GUARANTEED BENEFIT.
Fortunately, in an optional program, they’ll be allowed to not participate.  That is, they can keep the guaranteed benefit.

Aren’t there two aspects about the fix for social security though? How are we going to keep it solvent at its current funding levels, and whether or not to include private accounts?
There’s only one part that’s actually been proposed.   The rest is talk, though very likely to be a part of the eventual plan.   It’s speculated that the plan—if he ever puts it out—will involve price indexing, which will go a long way towards solving the problem. 

 
Written By: Jon Henke
URL: http://www.QandO.net
Let me explain guy: It’s pretty simple.  Americans love cake.  Americans love eating cake.  But they are opposed to having their cake and eating it too.  That is Bush’s plan, jackass.
 
Written By: Anonymous
URL: http://www.qando.net
The proposal for individual accounts is interesting, but I wish it had been presented with more of a plan. I know a lot of people are interested in investing in the stock market. I think more people should look at making investments in the penny stock market. If you do it right you can make a lot of money in a short period of time. A site that can help people that are interested in penny stocks is http://www.pennystocks.com It offers a free guide on making good investment choices. The government would need to set-up this type of a site to help people make good investment choices if they go the route of individual accounts.
 
Written By: kim
URL: http://www.pennystocks.com
Forget the plan. Just more government agencies piling on.
 
Written By: George
URL: http://www.pennystock.com

 
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