(1) Freddie Giveth, and Freddie Taketh Away
Freddie has a Social Security Plan, and he’s simply bursting with pride over it. He’s been patting himself on the back something fierce. Apparently it doesn’t, or shouldn’t, matter how good the plan is. All that should matter is that a plan hath been given unto us. By the Right Honorable Freddie Thompson, praised be the Lord.

Like most things Freddie does, the plan is simple. The key elements are:
• The long-term solvency problem is fixed by reducing benefits.
• The how-the-heck-are-people-going-to-survive-on-the-reduced-benefits problem is solved by giving extra benefits via 401(k)-style retirement savings accounts. Benefits that will accrue largely — and this may come as a big surprise — to the more affluent.

In other words, it’s a classic conservative proposal, in what we can call the “new conservative” style (because I really don’t think conservatives were quite so heartless before the time of Bush; but then we had the great leap forward represented by the cruelly named “compassionate conservatism”; and the rest, as they say, is history). It’s a proposal that firmly and succinctly says “Fug you!” to all the people who really need help. And it provides rather generous assistance to those who don’t need it very much (see 3 below).

Over the next 50 years, benefits would grow much more slowly under Thompson’s proposal than in the current system.
[…]
Jason Furman, an economist at the Brookings Institution, called Thompson’s proposal a departure from the promises that were made to workers when the Social Security system was created. He said the change in calculating benefits, by indexing the system based on prices rather than wages, would dramatically reduce the payments that elderly citizens would be guaranteed.

“Price indexing would represent a historic shift in Social Security, transforming it from a retirement program to an increasingly paltry safety-net program,” Furman said. “Price indexing would break the historic pact with senior citizens.”

That’s what Freddie taketh away with one hand (from everyone). Here’s what Freddie giveth with the other (selectively, to the already well-off):

Under Thompson’s plan, Americans would be offered the option of contributing an extra 2 percent of their salaries to a retirement savings account. As with many corporate 401(k) plans, the government would contribute $2.50 for every dollar that an individual saved, up to a maximum of $12,000 per year.

If you’re barely scraping by, and can’t afford to put anything into this voluntary retirement savings account, the government has nothing for you to help offset your lower Social Security benefit payments. And you know what? Tough cheese! Because it’s your own damn choice not to put anything into your voluntary retirement savings account.

If you have a salary of $100,000 per year, presumably you can afford the $2,000 per year, which is the maximum the government will allow you to put into your voluntary retirement savings account. And the government then has $5,000 for your account today, to help offset your lower Social Security benefit payments tomorrow.

If you’re making $240,000 per year, you can salt away $4,800 per year of your money into your voluntary retirement savings account, and the government will find you worthy and deserving of $12,000 to offset your lower Social Security benefit payments.

If you’re an S-CHIP family of 4 making $50,000 per year, you may or may not be able to put up the $1,000 that Uncle Fred will match. But if you are, well then the government will peer at you over its Ben Franklin spectacles, go “Bless my soul!”, and chip in the $2,500 you have unexpectedly revealed yourself as richly deserving.

It’s just like they always told us, really. Takes some to get some. The more you got, the more you get. (At least for the vast majority of Americans, those earning less than $240,000 a year.)

(2) Freddie Tells A Lie, Q.E.D.

Thompson aides … (u)sing charts and graphs … insisted that typical workers would do better by using the savings accounts to create a nest egg and then slowly adding that money to the reduced Social Security benefit after they retire.

“They would have a chunk of money in the hundreds of thousands of dollars, for most people,” Thompson said.

It’s very simple, isn’t it Freddie? The representative worker can’t do better under your plan. Unless you took away more than you gave, you wouldn’t be fixing the long-term solvency problem. And if you took away more than you gave, workers as a whole — or your average, typical, representative workers — have to be worse off, have to have something taken away.

So which are you lying about? Fixing long-term solvency, or the typical worker doing better?

(3) Why is Natalie Laughing?
Here’s a little illustration of Freddie’s largesse to the well-heeled through the retirement savings account.

Let’s say M.B.A. Natalie starts her career at age 25 earning $100,000 per year. Her salary grows at 8% a year (after 5 years, this will have her making just under $147,000). At the end of each year she makes the maximum allowable contribution that will generate the 2.5 times government contribution. The return on her retirement account is a modest 5% a year. The maximum amount the government contributes increases at the rate of inflation, which is 2% a year.

When she turns 65, Natalie’s retirement savings account will have grown to $2,178,263. Of this, $622,361 comes from her own contributions, and $1,555,902 is her handout from Uncle Fred.

What a big heart Freddie has—for the Natalies of this world, at least. Wouldn’t you be chortling with glee, too? If you were lucky enough to be a Natalie?

“Indexing the system based on prices rather than wages” doesn’t sound like a big deal, on the face of it, does it? Back when you read that phrase, you may well have thought that it probably doesn’t translate into a very large reduction in benefits. So it’s helpful to recall that if this is not a thoroughly dishonest plan, what Freddie taketh away is more than what he giveth. And the moral of Natalie’s tale is that he giveth a heck of a fugging lot. So you might want to check out the fine print of Freddie’s proposal, and see exactly how much you stand to lose by way of benefits. And you might want to keep smelling salts handy, especially if you’re in the fifty or sixty thousand a year league.

You also might want to remember that fixing Social Security’s long-term insolvency doesn’t require such drastic cuts in benefits. If the cuts in your benefits were smelling-salts big, that’s only because Freddie is determined to drop that $1.5 million into Natalie’s piggy-bank. And dropping that $1.5 million into Natalie’s piggy-bank has absolutely nothing to do with fixing social security.

(4) Obama Speaks (and Misses)
Here’s Barack Obama’s take on Freddie’s plan:

Sen. Barack Obama (D-Ill.) issued a statement saying that Thompson’s plan “undermines” the promise that Social Security made to seniors and characterized it as an effort to privatize the government retirement system.

I’m trying very hard to put myself in the good senator’s shoes. He looks at Freddie’s plan. He digests what Freddie wants to do. And this is the most important thing he thinks needs to be said about the plan? That it privatizes the system? Not one single word about robbing poor Peter to pay rich Paul?

This is Barack “Plain Speaking” Obama? Barack “Outside-the-beltway-box” Obama? Casting Freddie’s plan in terms of the ideological hot-button cliché, when there’s so much more to denounce it for? Witnessing an act of buggery, he denounces only the privatization means and not the buggery end? Could it be that, hypnotized by the conventional-wisdom framing of the Social Security issue, Obama has thoroughly missed the point? That he doesn’t even see what the most unconscionable thing about Freddie’s plan is?

Should we be audacious and hope the senator can rediscover the art of plain speaking (which, of course, requires being able to see things plainly first)? Or should we cut our losses and write him off as one more deluded soul, who’s thoroughly lost his way somewhere between the promise and its realization?

(And, for the record, Senator, Social Security doesn’t make promises just to seniors. It makes promises to us all, which we get to redeem when we become seniors. Just because Social Security is a voting trigger primarily for seniors is no reason to think only of seniors every time the issue of Social Security comes up, is it? Not unless you’re seeing the issue only through vote-pandering glasses. And Obama doesn’t even own vote-pandering glasses, does he?)

(5) A Freddie-ism
Freddie, being Freddie, couldn’t help making at least one awfully Freddie-esque statement as he preened for the press (where Freddie-esque may be taken to mean lazy and stupid):

“There’s an awful lot of people out there who depend on Social Security for all or part of their income,” Thompson told reporters.

Yes, Freddie. That is an awful lot of people. What a coincidence that it’s exactly the same as the number of people drawing Social Security checks who depend on air for all or part of their breathing needs.

(6) Suggestion Box

“Nobody wants to talk about it, except to say it’s a big problem and then change the subject,” Thompson told reporters yesterday as he unveiled his plan. “If somebody’s got a better idea, put it on the table. …”

How about this, Freddie? Instead of cutting benefits by x, and then spending y on contributions to the retirement savings accounts, why not just cut benefits by x-y, and leave it at that?

That would have the virtue of following the spirit of the well-established conservative dictum that that government is best which governs least. The idea being that the less you tinker with this well-established government program, the better all round.

If the problem is long-term solvency, why not just fix that and drop the reverse Robin-Hood act? What does the reverse Robin-Hood act have to do with the long-term solvency problem, anyway? Why drag in this unnecessary tinkering?

That was the suggestion, Freddie. The box I’ll deliver personally if I ever see you face to face. When I’ll be happy to box your ears, you blathering excuse for a twit of the first water.