President George W. Bush Social Security Reform Plan
President George W. Bush wanted to make some changes in the Social Security Administration with the intentions that it will “fix” the problem that Social Security will face in the near future. George W. Bush campaigned for president in 2000 on the idea of empowering workers and peoples’ rights to choose the best plan for Social Security. Bush’s plan was to create personal investment account where workers would be in control of the fund in their account.
The accounts would be voluntary. People wouldn’t be required by law to have one. Participants could also opt out of it at any time. The reform wouldn’t affect anyone age 55 and older. Current beneficiaries at the time of the reform, wouldn’t be affected in anyways. President Bush indicated that it was important for people to invest the payroll tax themselves into Social Security, which he thinks is better.
There is an age range in order to participate in the reform. To open an investment account, it is important to be mindful of the years following the reform and the time you were born. In 2009, the first year of the reform, any workers born from 1950 to 1965 would be eligible to open a private personal investment account . Workers born in 1950 to 1978 would be eligible to open an account on the second year of the reform. In the third year, anyone born after 1950 would be eligible to open an account if they desired.
President Bush wanted to give U.S. Citizens the ability to invest part of Social Security in private accounts. His targeted population was younger voters, whom he thought would benefit more from the reform. As he stated in his 2004 State of the Union address to congress: “Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people”. Participants would be allowed to invest up to 12.4 percent of their payroll tax and also their employers would be investing the same percentage. Currently workers and employers are investing 6.2 percent of their payroll tax into Social Security. Payroll taxes, however, are the fund that is in use to pay the current retirees benefits. This is one of the main issues with the plan. Despite the president and the white house stating that seniors will not be affected immediately, but by allowing workers to invest in a separate private pool, it is decreasing the amount of money that’s in the general pool, that is being used to pay current retirees.
Within this reform movement, there are various actors who are in favor of it by agreeing with Mr. Bush’s plan as the best way to save Social Security while there are others who sees it as the reason why Social Security will fail deeply. One of the firm backers of the reform proposal is the President himself. Any opportunity he had to promote his idea, whether it’d be at a rally, speeches and special events, the president would seek support for his proposal from both Democrat and Republican voters and other elected officials. The President worked tirelessly to get public support for his proposal, despite sharp criticism from Democrats, large unions and special interest groups.
In charge of building public support for the policy are Karl Rove and Ken Mehlman with the sole responsibility of creating outreach to the American people. They used various ways to promote the plan. The White House and its allies tried to use the outside-initiative model, where the public is involved in the decision making. The White house tried to reach out to the Republican side, while launching a massive initiative by middle January of 2005 to gather massive public support for the program . Republican Senators such as now defunct Representative E. Clay Shaw Jr. of Florida, Senator Lindsey Graham of South Carolina and John E. Sununu of New Hampshire and various republicans are backing the idea with the argument that “Workers could get higher rates of returns if some of their retirement saving were invested in private stocks and bonds instead of government security funds . It goes further with Mr. Shaw arguing that the only possible way to save Social Security and “ the only way we can take care of our kids in the future, when we will have more retirees and fewer workers” is by accepting President Bush’s private account plan. Disregarding the uncertainty of the market, many Republicans saw their dreams of privatizing Social Security just a few miles away, similar to the Bible’s Moses in the desert and Canaan.
It was not only elected officials who were backing the president and his plan. Various interests groups such as The Cato Institute, which is a think tank libertarian research center stated that “Individual accounts should be as large as feasible, ideally at least half of payroll taxes” .
However, President Bush wasn’t about to get an unchallenged proposal. Various groups, Senators, Representatives, decided to do all in their power to not support the proposed reform. The most active lobbyist against the bill was the AARP. This advocacy group had a powerhouse of 37.8 million members as of 2014 . As of 2005, the AARP had an estimated 35.6 million members. With such voting base, AARP can strongly influence policies in Washington since seniors are stronger voters than younger voters.
AARP’s agenda was to keep Social Security in its current state, while increasing benefits for seniors, something that the Bush Administration and Republicans was strongly against. AARP sees the Idea of having separate private accounts in Social Security as a threat to senior’s regiment fund. To make matters worse, the private account would’ve involved “stocks” and “bonds” and run on the market.
Knowing the tremendous risk of having individuals investing in the funds separately AARP decided to shake its base and started a movement to tell the White House “NO!”. AARP use the Mobilization model of the Process Perspective to help bringing Democrats and Republicans to the conclusion that if they were to vote in favor of the reform plan, than they wouldn’t receive seniors’ votes in the next election. Knowing that every elected official, until Bernie Sanders 2016 Primary campaign, relied heavily on seniors’ vote, AARP kept the phones of elected officials ringing, their mailbox full and their emails receiving hundreds of emails every day.
AARP knows how money can influence policies, so they created an extensive and expensive advertising program at a cost of $5 Million against the plan. AARP emerged as the loudest group against the reform by 2005. By heavily relying on this Mobilization method, the group was able to keep the idea in the Systemic Agenda. Democrat Senators, despite being minority, decided not to support any plans that would allow “workers to divert payroll taxes in private accounts” states Montana’s Max Baucus, the top Democrat on the Finance Committee . Few Republicans also sees the plan as an issue. An issue that can clearly cost them the majority in the Senate and house if they refused to side with AARP or at least find a common ground between the President and the groups. Influenced by AARP’s campaigned, Democrats argued that by privatizing part of Social Security, that would force the government to divert trillions of dollars from SS trust funds and also cutting heavily on benefits, which would impact current beneficiaries at the time .
Despite the majority of Republicans supporting the plan at first, over the days, weeks and month, many Republicans started to see issue with plan. Senator Lindsey Graham of South Carolina stated that “Republicans have problems with the idea as well, the meeting's Republican host, given the Bush administration's talk of covering the estimated $2 trillion in transition costs for the first 10 years with government borrowing”.
The president of AARP, Marie F. Smith, stated that “AARP adamantly opposes replacing any part of Social Security with individual accounts” . There was no possible way AARP saw a solution with any part of Social Security becoming private. The organization’s policy director at the time said that, AARP would favor “private accounts when they are in addition to Social Security” but not as a possibly replacement . The president of AARP, Ms. Smith stated that the group does support any incentives for people to establish personal retirement accounts in addition to Social Security but not separate private accounts .
AARP’s recommendations as to what a solution should look like were clear. After rolling out a survey to its members, AARP gives its recommendations to the White House and elected officials. Based on surveys seniors filled out, AARP wanted to invests “part of Social Security’s current surpluses in stocks and bonds to earn higher returns than treasury bonds offer, much as former President Clinton suggested”. AARP also recommended that “Requiring new workers for state and local governments to participate in Social Security” is necessary because it would bring in new funds that would accumulate the current Social Security funds . Also, AARP wanted to Gradually raising the ceiling on workers' annual wages subject to the 12.4% Social Security payroll taxes to about $140,000 from this year's $90,000.
As a younger person, President Bush’s plan does seem reasonable. However, I do not agree with it for various reasons. By having a private account and investing into bonds and trust funds, you’ve to take into account the market. There is a difference in how Bonds and stocks works and that small differences between the two, does decrease some risk. However, this reform does not mean that everyone will be a millionaire or have enough funds in this private account by the time of their retirement. It is also important to take into account the political climate of the country. Being mindful of the amount of time it would take seniors to keep track of their account is burdensome. This account would force seniors to not enjoy their vacation, retirement, due to extensive monitoring of the ups and down of the market.
The solution for Social Security does not need a major overhaul that would cost taxpayers billions of dollars. I do agree with the idea AARP proposed to the President, which asked for a private account to be added to Social Security as an extra branch of Social Security where people would be able to invest whatever they desire. It should also be managed by the feds and not by some private Wall Street entity. It shouldn’t be use or touch, under any circumstances, by the government. Also, the Federal Government should put in place experts that can help members managing their account.
I do not agree with the idea of raising taxes at all to pay for SS deficits. I do strongly agree and infavor of allowing people who are making up to $200,000 and more to invest in SS. It would be also
important to raise the retirement age, increase the amount of money people pay in their FICA, and
also make Social Security a need based program. This would add fresh fund to the current drying
pool of money for seniors. I criticize the President’s proposed plan; because it does not guarantee a
long term solution to the problem of Social Security and current and future members shouldn’t be
impacted in any shape or form by any changes to this Federal Program.
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