Friday, April 15, 2005


PD let's Bush off easy with pre-visit story

The Plain Dealer's Susan Jaffe may be well-intentioned, but she needs to spend some time studying an issue before she tackles it.

First, given that neither audience members nor reporters will be allowed to ask questions, we'd think most editors and publishers would be in more of a mind to wipe their ass with the White House's press releases than take them seriously.

But to make matters worse, Jaffe, in a nutshell, let's Bush and his entourage play the old mixing apples and oranges game in their pre-Bamboozlepalooza hype. You know, there really is no excuse for this since it's been well established that the private accounts do nothing to "fix" Social Security.

Ms. Jaffe: The private accounts Bush touting can only be one of two things. Either they might be an addition to Social Security if it involves new money, or, they might be a further detriment to Social Security if it involves individuals diverting money to the accounts. Either way, private accounts do nothing to address what can be best described as a possible future shortfall. As we have noted before, even Bush admits that much.

And she is apparently on even less familiar ground when she writes about the PERS individual accounts. We need to set up our point with a few snippets from her story:
[Bush] will take a seat at a table with members of the Ohio Public Employees Retirement System to highlight a program that resembles what he's proposing for Social Security.

"He is going to be hearing about a program in Ohio that has been successful that shares some of the same principles he is proposing for Social Security," said White House spokesman Allen Abney.

[. . . ]

Abney said PERS has a personal account option that Bush will use to make the point that Americans should be able to divert a portion of their Social Security taxes into private investments accounts.

[. . .]

[PERS spokesman Rich] Baker also pointed out that only about 10,000 of nearly 147,000 PERS retirees have signed up for what's called the "member-directed plan," featuring a choice of nine mutual funds.
That would suggest that about 7 percent of the eligible public workers signed up, but Jaffe is clearly confused and wrong here. It's true, as far as we know, that 10,000 have signed up for the "defined contribution" plan instead of the "defined benefit" plan. And it's true that PERS has about 147,000 retirees (we think the number is actually somewhat fewer). But retirees CAN'T participate even if they wanted to because they are, well, retired. They aren't paying in anymore.

In fact, there are well over 650,000 public workers who pay into PERS. Not all of these are eligible for a variety of reasons, but we'd guess that number of eligible public workers is about half that amount, making the participation rate more like 3 percent.

That 3 percent pretty well suggests that in the "market place of ideas" private accounts have lost badly with Ohio. Why? Because the traditional PERS plan has done well using professional investment staff. The 3 percent also doesn't measure how many beat the pros. We're guessing that number drops the total down to about 1 or 2 percent. Big whup.


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