Muddling the thrift savings plan

Bush is travelling the land making the claim that his "privatization/personal accounts/rent your retirement" accounts are not a new idea. In fact, he says,

Now, there's some rules, and it's important for you to know the rules. One, you can't take your money that you set aside in the personal account and go to the race track. (Applause.) Or take it to the lottery. You can't do that. There will be a prescribed mix of conservative stocks and bonds into which you can invest, similar to the employee thrift plan at the federal government level. See, this already exists, by the way. I haven't invented this. Federal employees now get to do that. They get to take a portion of their money and put it in a conservative mix of stocks and bonds, five different programs they get to choose from, so they get a better rate and more money.

Yes, that is true. But, as far as I can tell, entirely -- and knowingly -- misleading. The Thrift Plan for federal employees is in addition to the FICA tax they pay and SS benefits they receive upon retirement, disability, or death. I'm not a tax professional, but it sure sounds a lot like a 401k plan.

Once again, and slowly. Social Security has, since the 1980s when it was last reformed, been intended as one of the three legs of the retirement stool. One leg are things like personal savings, investments and IRAs and 401ks; the second leg was expected to be the pension from your company (if you're so lucky); and the third was social security. Social Security is insurance, not your only nest egg, unless you're in poverty, in which case it's a lifeline that shouldn't be screwed with.

But let's let the presnit explain the details, as only he can.

THE PRESIDENT: Because the -- all which is on the table begins to address the big cost drivers. For example, how benefits are calculate, for example, is on the table; whether or not benefits rise based upon wage increases or price increases. There's a series of parts of the formula that are being considered. And when you couple that, those different cost drivers, affecting those -- changing those with personal accounts, the idea is to get what has been promised more likely to be -- or closer delivered to what has been promised.

Does that make any sense to you? It's kind of muddled. Look, there's a series of things that cause the -- like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate -- the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those -- if that growth is affected, it will help on the red.

Okay, better? I'll keep working on it. (Laughter.)

Via Atrios, Digby, the multitudes.