Thursday, February 03, 2005

The Scheduling of Change (And the "Raw Deal")

I have previously observed the tendency of the Bush II Administration (which is far from unique in this respect) to put off major policy initiatives until "after the next election". Be that putting off the Medicare Prescription Plan until 2005, with parts not to be implemented until 2010, or his promises of a Palestinian state by 2005. Putting things off into the future provides the dual benefit that the President doesn't have to accept any responsibility for the pain caused by his policies, particularly when they turn out to be bad, and if he (or his party) walks away from the policy... well, memories are short, right?

So it should come as no surprise that, even if Bush's plans for the privateering of Social Security are passed,
In a nod to lawmakers worried about the budget deficit, the White House will also hold down the initial cost of the Social Security plan by phasing it in over three years, beginning in 2009. The administration official said funding the individual accounts would cost $754 billion through 2015. But because of the phase-in, the personal-accounts system would not be fully effective until 2011.
There's nothing like a crisis of such urgency that... any policy change can be put off until after the next Presidential election. (Bush may not be running in 2008, but his party obviously doesn't want this dog nipping his successor candidate's heels.)

Oh - and your privateered Social Security Account? You would not be able to invest "your money" in the manner of your choosing - "The federal government would administer accounts." You know, because Bush "trusts you" with everything (except the facts and your money). And his promise that the privateering would enable you to leave "your money" to your children was also, apparently, false, given that "Participants would be required to buy annuities to ensure steady payments out of the accounts over a lifetime." (If you are paid out "over a lifetime", whatever that lifetime is, any ostensibly residual value of an annuity is typically lost at the end of that "lifetime", be it thirty years or thirty days.) Oh yes - and even with those qualifications it isn't really "your money" after all - because the government will loot "your account" to subsidize the Social Security program as a whole.
If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.
If implementing Social Security was part of "The New Deal", perhaps this should be dubbed (dubyad?) "The Raw Deal".

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