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Myth: Jonathan Weisman's Washington Post Story today (p A13), includes the headline that "Participants would Forfeit Part of Accounts' Profits," which is flat wrong. The article says workers who opt for personal accounts "would ultimately get to keep only the investment returns that exceed the rate of return that the money would have accrued in the traditional system." This statement, unfortunately, is also flat wrong. Both the headline and this assertion are completely inaccurate. The White House is seeking a correction from the Washington Post.
Reality: Under President Bush's plan, participants would get EVERY SINGLE PENNY OF THEIR RETIREMENT ACCOUNTS -- BOTH the PRINCIPAL AND INTEREST.
Myth: The WP story suggests that President Bush's proposed personal retirement accounts actually benefits the Federal Government more than the account holder, by providing a "claw back." A "claw back" is typically a feature of a plan where the government guarantees a certain combined benefit from the traditional system and the personal account. Under such a plan, the better your account does, the less you get from the government. Therefore, the gains in the accounts are "clawed back."
This is just ridiculous. The Post is exactly right -- the briefer stated clearly how this works. Your guaranteed benefits are reduced one for one for every dollar you put away, compounded at 3% per year until you retire. They didn't claim what the Whiners pretend they claim in the last paragraph. The more you divert to your private account, the more your guaranteed benefits are reduced. That's a fact. The Post was very clear that the better your account does, the more money you would have.
Whaa whaa White House Whiners. What a bunch of liars.
And this is just bullshit:
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A personal retirement account would belong entirely to the worker. If the account earns a 3% real rate of return - the worker would be right back where he started - at $15,000 of combined benefits per year.
Ø A worker could earn a higher return through his personal account investments. The Social Security Actuary assumes he will invest in a conservative mix of stocks, corporate bonds, and government securities that would result in a 4.6% real rate of return. In this case, the account would be large enough to provide about $7,000 per year of benefits, so he would have a combined future benefit of $17,000. His combined benefit would be $2,000 per year higher than had he not chosen the account.
That $15,000 number is putting into place BUSH'S PLANNED CUTS TO THE SOCIAL SECURITY SYSTEM. So, if we cut your benefits, and then you invest in stocks and do well, then you'll do better than you would have without investing, but worse than you would do under current federal law.
The press had better start figuring this stuff out.
