Decisions, decisions, decisions; who’s got the time?


As President Bush hits the road this week to sell his ideas on Social Security to the masses, his proposed 2006 budget, released Monday, tightens the screws on lower-income folks who rely on food stamps and Medicaid. Well, what the heck, those poor people don’t contribute to Republican campaigns. Lots of them don’t even vote, having pretty much given up on the whole process.

The idea is that Bush will push his plan to save Social Security from impending “bankruptcy” (Has kind of a WMD ring, doesn’t it?) to constituents of Congress members, who will ultimately give it a hit or a miss. Right now it seems destined for the gong because the president has hooked it to private savings accounts. If workers already have IRAs and 401Ks, why would they choose another investment option, which will greatly hasten the program’s slide into insolvency? Calling it a crisis sounds like a self-fulfilling prophecy.

Even conservative estimates show that no disparity between the amount paid into the system and the amount paid out to beneficiaries will occur before 2042, at which time there will still be enough money coming in (absent schemes like private accounts) to fund at least 75 percent of promised benefits. Not making permanent Bush’s generous tax cuts for those earning, say, $300,000 a year or more, would take care of that.

The problem with trying to sell this to the people or their elected representatives is that it’s not yet a fully realized plan because there are no specifics. I asked some questions last week of people who should know these things and they all shrug and say they, and possibly the president, are clueless. For instance: if a worker earns enough money to have the $1,000 limit withheld, and that worker chooses to take his $1,000 and invest it in a private account, does the employer still pay its portion into the Social Security system, or is the employer off the hook? I’m assuming this $1,000 is sheltered from income tax now, but is that income, and whatever interest it may have earned, taxed when the worker retires? And what agency (perhaps the IRS) will police the worker’s investment to make sure it qualifies and ensures at least 3 percent earnings? Are we looking at creating another federal bureaucracy to handle this (growing instead of shrinking government), and would that be paid for out of the Social Security Trust Fund (further depleting its resources) or by general taxpayers?

Does the average worker want to gamble with a guaranteed pension benefit on the chance of earning a higher rate of interest? Is the government going into the business of approving or recommending certain securities as “conservative” enough for safety? Or will the government outsource this to certain financial institutions, which we all know are above suspicion of charging exorbitant transaction fees? Right. I’d feel better if we put Eliot Spitzer in charge of the whole thing.

The president is going to great lengths to reassure seniors, actually everyone older than 55, he says, that their benefits will not change. He’s doing this because older people do vote and react badly to change of most any kind. And if you make things complicated enough, the average senior will just not take the trouble to sort it out. Hence the collective refusal of millions of seniors to choose a plan for Medicare’s mind-numbingly convoluted prescription drug benefit.

Fearing the political embarrassment of having sponsored a colossal flop, the government has launched a $300-million campaign to educate retirees about their options under the benefit plan, supported by the AARP and touted ad nauseam in Bush’s reelection rhetoric.

Unlike regular Medicare benefits, which come to those in HMOs as a deduction from monthly Social Security checks, the majority of retirees will have to figure out a whole series of decisions, like whether to even bother to sign up. The benefit will not come from the government; it will come from private providers that set their own limits on coverage, co-payments and which drugs are covered.

For instance, I have never taken prescription drugs, but after my hip fracture, was prescribed Fosamax to increase bone density. Currently, neither Kaiser nor Medicare pays any part of the $164.73 for a three-month supply of the weekly dose. I probably could find out which temporary plan (for the remainder of this year) or permanent plan would cover the cost and if that would be more or less than what I would have to pay to sign up. But what about the 42 million retirees who need multiple prescriptions, one or two of which may or may not be covered by the same plan? Even Medicare experts agree it’s so difficult most seniors can’t make an informed choice. So confusing, in fact, that the $600 annual subsidy offered to seven million low-income seniors last year, was only claimed by 1.7 million.

If this is any indication of American workers’ enthusiasm for the president’s “ownership society,” getting them to swap private investment accounts for ensured pensions will be a tough sell.