Joel Mowbray

Notes one insider with knowledge on the ongoing deliberations, ?When this thing comes out, free market conservatives are going to bitch and hate it.?

White House spokesman Trent Duffy claims that forced annuitization is necessary to make the plan palatable to the public.  His argument is that the proposal will never pass Congress unless there are guarantees that every senior?no matter how wealthy in terms of net assets?has an annual income at least at the poverty line.

Every sane person acknowledges that if you have personal retirement accounts, guaranteed benefits must be cut accordingly.  It?s the method that matters.

Though not yet set in stone, it appears the White House plans to propose creating a dummy account for each person.  The dummy account would receive the same contributions as the real account, growing at 3% interest.  The final difference between the real and the fake account?which could be as big as, say, $50,000, or as small as, say, $10,000?would belong to the person.  The rest is forcibly annuitized.  (What do we call that?  Maybe quasi-privatization?)

Two problems, though, with the dummy accounts: 1) they?re mind-numbingly complex, and 2) they could easily create the very misguided perception that returns on Social Security are anywhere near 3%.  The latter point is of particular importance when the White House is making the correct case that Social Security is a bum deal for younger workers.

Then there?s the freedom thing.  If someone chooses to retire, sell his house, and move in with his children and grandchildren, why should he be forced to convert his nest egg?which he?d like to pass on in full?into a supplemental monthly payment he doesn?t need or want?  Safeguards against blowing the whole account are one thing; playing nanny to a senior citizen is another.

President Bush is definitely bold just in being the first chief executive to propose not just personal accounts, but meaningful Social Security reform.  And a happy ending is not out of the question.

Bush?s self-negotiated proposal with forced annuitization could attract enough Democrats to ensure quick Senate passage.  Knowing the House, the lower chamber would likely respond by passing a real, free-market reform package?potentially leading to a compromise worthy of the president?s stated vision.

But those are a lot of ifs.  Another is that the White House might change its mind and marry personal accounts with freedom.  But if the White House sticks with forced annuitization and the House can?t undo it, will people really support a plan so far divorced from the president?s powerful and appealing rhetoric?

Joel Mowbray

Joel Mowbray, who got his start with, is an award-winning investigative journalist, nationally-syndicated columnist and author of Dangerous Diplomacy: How the State Department Threatens America's Security.

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