washingtonpost.com: Welcome to Viewpoint! Today our guests are Marie Smith, President of AARP, and Hans Riemer, Washington Director for Rock the Vote, to discuss social security. Let's get started!

Marie Smith and Hans Riemer: On behalf of Rock the Vote, I'm excited to have this great opportunity to chat with thousands of people from across the country today. My name is Hans Riemer and I am the Washington Director for Rock the Vote.

Rock the Vote has over one million members and supporters and protecting Social Security is a big priority for us this year. We are happy to work with the AARP on this campaign: generations working together is the key to making sure that Social Security will be sound for the future.

Hi, this is Marie Smith. I'm excited to be here today with Hans and I am looking forward to a great forum. Thank you for all your great questions in advance.

_______________________

Coral Springs, Fla.: Social Security is not going to be solvent in a few years. We know you are opposed to private accounts. What specifically do you suggest for social security reform?

Marie Smith and Hans Riemer: Marie: First, its important to be clear that private accounts are not a solvency option. Taking money out of Social Security only worsens its long-term financing.

A reasonable solvency proposal should be balanced and fair. Changes should be implemented gradually to give people who will be affected time to prepare.

Some things AARP supports are gradually raising the amount of wages subject to the payroll tax from $90,000 to about $145,000; adding newly hired state and local workers to Social Security and investing a portion of Social Security reserves like pension funds are invested. This would enable the trust funds to earn a higher return without subjecting individuals to market risks.

_______________________

Los Angeles, Calif.: I've heard that this would actually help me make MORE money over the long run. Why don't you think so?

Marie Smith and Hans Riemer: Hans: Thanks for your question. Proponents of private accounts funded with Social Security dollars often sell them as a way to help working Americans build wealth and fix Social Security. The reality, however, is that such accounts would saddle younger generations with trillions of dollars of new debt and weaken their retirement security. Market returns are not guaranteed and many workers would not accumulate enough money to replace the Social Security benefits they would give up so they lose money in the end.

_______________________

Richmond, Va.: Hans, I got an email passed on to me about Rock the Vote's Rally on June 8? Where is it going to be? And is the focus Social Security?

Marie Smith and Hans Riemer: Hans: Glad you asked. In fact, on June 8 is the ROCK THE VOTE AWARDS. Its our first time holding this fanstastic event in Washington. We're honoring President Clinton, Senator Obama, Senator McCain, and the Black Eyed Peas. We're also honoring Sarah Saheb, one of our most rockin' street team leaders.

There's an awards dinner and an afterparty....please come! Check out more at http://www.rockthevote.com

_______________________

Pasadena, Tex.: Those 55 and over do have a right and an obligation to express their views on the privitazation of Social Security for three reasons:

1. This has been proven that it will cause a larger deficit.
2. This is obviously the start to phase out Social Security as the government has spent the money set aside for it and now can not pay it back.
3. Young people in truth really don't think they will get old until they are in their mid to late thirties and therefore think this plan looks good as in their minds they won't be paying for benefits for anyone else.
Most will not bother investing.

Marie Smith and Hans Riemer: Marie: I agree with you that Americans of all ages need to be involved in the current debate over Social Security’s future. Even if benefits aren’t reduced for people over 55, we have children and grandchildren and we care about their future economic security.

You are also correct that private accounts funded with Social Security dollars create trillions of dollars of new government debt and weaken retirement security.

Thanks for sharing your thoughts!

_______________________

Carlisle, Pa.: I am a 57 year old, Agent Orange 100% disabled Vet. I understand your comments on President Bush's views about privitizing SS, however, the younger generation should have the right to cntrol their future more by investing for their own future. We would not be involved with the new program, but the young generation is smarter than you think and can do better. Thanks

Marie Smith and Hans Riemer: Marie: AARP strongly supports—and encourages—saving and investing for retirement through the use of personal accounts. But those accounts should be in addition to Social Security’s guaranteed, life-long, inflation protected benefits, not in place of them.

Workers of all ages have the opportunity to control their money through the use of savings vehicles such as IRAs, 401(k)s, and other accounts.

_______________________

Shreveport, La.: As a homemaker, my wife would be totally dependent on my social security survivors benefits if I died first. What will happen to survivor benefits under private accounts? Will a husband be required to leave his private account to his wife and children?

Alfred G.

Marie Smith and Hans Riemer: Marie: What a great question. It is not clear from the information provided so far what happens to the Survivors and Disability Programs under a revsed social security program. We also do not know if a husband will be required to leave his private account to his wife and children.

_______________________

St. Louis, Mo.: For more than 20 years I paid into an IRA. Upon retiring it was invested in Mutual Funds. Shortly after retirement, the market collapsed, I lost over $35,000. Question: what makes Bush think this will not happen again to the so called personal accounts?

Marie Smith and Hans Riemer: Marie: I am sorry to hear about your loss and know that others have had similar problems. Social Security is the base of your retirement and something you can rely on no matter what else happens to you. AARP encourages people to invest, be aware of the risk this entails, but these investments should supplement, not replace, any portion of Social Security's benefit guarantee.

_______________________

Kalamazoo, Mich.: I am concerned that young people might be convinced that sustaining Social Security is something they have no control over, that it will magically disappear. Do they feel that if they communicate that they want Social Security (as is) to be there, they can make that happen?

Marie Smith and Hans Riemer: Hans: I couldn't agree more. A lot of people think Social Security is like some ATM that's going to stop working just when they get to the front of the line. It doesn't work that way.

Social Security benefits are paid from working Americans' contributions. Despite what ya heard, there are more than enough workers in the future to support future benefits. Not 100%, but more like 70-80%, even with no changes at all.

But what you should really know is that even if we do nothing, benefits at 70-80% will be larger than people receive today.

That's what really gets me. So many young people think the system is going to disappear, when in fact, even if we do nothing, benefits will be bigger for future retirees than they are today.

The word "bankruptcy" is just so wrong. While advocates of privatization want people to think they'll get nothing out of the system in the hope that they'll support privatization as an alternative, the truth is that it makes people think they have no reason to care about the issue at all.

_______________________

Denville, N.J.: How different is Mr.Bush's private account from the existing IRA and 401K plans? Why not beef up these plans instead of replacing IRA? Is it possible to invest about 50% of the (how many trillions?) cost of conversion to beefup the existing IRA program which is good till 2042? Is this an attempt to releive the employers from contributiong into social security fund?
Rao Kattoju

Marie Smith and Hans Riemer: Marie: The proposals for private accounts created with money taken from Social Security funds are very different from IRAs and 401(k)s. Those are retirement accounts in addition to Social Security and they are funded with money contributed by workers and their employers outside of Social Security. The plans to create private accounts in Social Security would require people to give up a portion of their Social Security benefits. AARP supports making IRAs and 401(k)s more accessible to people so they can save for retirement in addition to their Social Security benefits.

Although there are few details about private account plans, they do not seem to contemplate reducing the amounts that employers pay into Social Security.

_______________________

New London, Conn.: Please explain the effect private accounts will have on the "stay at home mom" who presently collects social security via her husband's account. Women who have been married for 10 years or more and have little or no social security of their own collect up to 50% of their husband's benefit. Even if they are subsequently divorced! If you remove this private account money from the social security system, wouldn't it also be removed from "mom's" potential account and consequently reduce her benefit? I have seen nothing about this issue with "private accounts."

Marie Smith and Hans Riemer: Marie: This is an excellent question! Social Security is really a program based on family values and benefits spouses who stay at home to care for young children or even older family members. Spousal benefits are available to “stay at home” moms and dads and Social Security’s progressive benefit formula provides some measure of protection to those who have low lifetime earnings or years away from the paid workforce.

Under a system of private accounts, these moms would likely have lower benefits, and the family’s total benefits would be lower, as a result. It is unclear how the account would be treated if a couple divorced and/or whether the working spouse would have to purchase an annuity that would continue on for his spouse’s lifetime.

_______________________

Annapolis, Md. : Hi. I guess that the logical solution (and one not ever seriously considered) is to move the retirement age back. It seems that we're living much longer than we did in the 30s, but the retirement age hasn't moved back much.

Marie Smith and Hans Riemer: Marie: You are correct, we are living longer on average than in the past, which is something to celebrate. And because we are living longer, many of us are spending more years in retirement and collecting Social Security benefits for longer periods of time.

While some have suggested raising the retirement age to account for these demographic changes, AARP does not support increasing the retirement age.

The normal retirement age is already gradually rising from 65 to 67 as a result of changes enacted in 1983. Until we see what the effects of this increase are, it would be imprudent to increase it further.

Age discrimination is still a major problem and many service industry workers and blue collar workers would have a difficult time working longer.

_______________________

Camarillo, Calif.: I recently learned that official documents from Social Security Administration show that social security is rock solid until at least 2041 without any changes. So why is President Bush making this an issue that needs to be decided upon now?

Thank you.

Marie Smith and Hans Riemer: What you say is true! The Social Security Administration puts out official projections every year for the future of Social Security. According to the current projections, which I should note are only "best guesses" about what the world will look like in 50 years, Social Security can pay 100% of benefits for the next 41 years. After that, the "trust fund" will be gone, leaving only the income from the tax.

But the income from the tax provides a lot more benefits than people realize. Even with all the stuff about changing ratios of workers to retirees, borrowing from the fund, all of that, 70-80% of benefits can be paid forever and those benefits, at that level, would be larer than people recieve today. This is because benefits increase every year for every "new graduating class" of retirees.

_______________________

Hartsdale, N.Y.: President Bush said in his news conference that the amount of social security paid in right now has a surplus that is being used to pay for other programs. Why can't that "extra" money be invested so that if there actually is a shortfall in benefits, that money will be available to pay for decent benefits.

Marie Smith and Hans Riemer: Marie: Social Security is now running large surpluses each year so that it can build up reserves to help pay for future benefits. By law, all surpluses must by invested in U.S. Treasury bonds. Currently, there is $1.7 trillion in the trust fund that is earning a market rate of interst. The trust fund will enable Social Security to pay 100% of promied benefits through at least 2041.

_______________________

Lansdale, Pa.: Like several in my generation (I am 72 years of age), I lost my entire IRA portfolio to the stock market debacle of 2001. If it were not for Social Security as signed into law by FDR and a modest pension, I would now be totally destitute. So much for the wisdom of investing your savings in the stock market. When I was young and complaining that Social Security seemed to be a Ponzi scheme, my mother said that it would be there when I needed it most. Like mothers everywhere, she was right. Why haven't organizations such as AARP and Rock the Vote done more to warn younger Americans that such privatized investments may carry the promise of higher returns now; but more importantly they carry severe risks from which one may not be able to recover when one reaches advanced years and may be no longer employable?

Marie Smith and Hans Riemer: Hans:
Lots of my contemporarires have the doubts you expressed, and it is great to hear from someone who has been through it. I think mom's all over the country would love to have a I Luv Social Security bracelet for mother's day. Go to our website at Rockthe vote.com to order one. You can email me directly and I will send you one for sharing your experience.

_______________________

Boston, Mass.: I am strongly opposed to President Bush's proposal to allow participants in the Social Security System to use their contributions to enhance their income while doing nothing for the Systems viability. On the other hand, the System itself could use a small part of its tax income to improve its trust fund. The California Retirement System and Harvard University both do it. Why shouldn't the System hire its own investment counselors to improve the return on its tax income for the benefit of all participants. My question is, what is the position of AARP on this method of enabling all participants to benefit from the market (to the extent there is a benefit)?

Marie Smith and Hans Riemer: Marie: We have had many comments on diversifying the Social Security trust funds to improve the returns to the fund. AARP feels that this could be a viable solvency solution if the proper checks and balances are employed.

_______________________

Laurel, Md.: Isn't it true that the Trust Fund balance of $1 to 2 trillion has recently accrued interest at only 1.5%, and that the balance would be significantly higher if some of it had been invested in blue-chip stocks?

Marie Smith and Hans Riemer: Marie: I'm glad that you asked about this because this is a common misunderstanding about the intersst earned by the Treasury bonds in the trust fund. Last year, the $1.7 trillion in the trust fund earned an average interst rate of about 5.8% and the new bonds going into the trust fund paid interest of 4.0%.

AARP supports diversifying the investments held by the trust fund so that it can get a higher rate of return.

_______________________

Seattle, Wash.: What is your proposal to deal with the projected shortfall in Social Security?

Can we keep Social Security as an inter-generational commitment to our elders, or does it need to become a private affair, with some winning through larger returns, and some losing?

Sarah van Gelder
Editor, YES! magazine

Marie Smith and Hans Riemer: My first suggestion would be to restore some fairness to the Social Security tax. The original tax was set so that it covered a higher share of people's income than is covered today. If we were to just switch back to the original design, the tax would stop at about $150,000.

I'd get back to that original level, although I would proceed slowly over decades, nothign overnight. That would solve a lot of the problem. In fact, if Congress did nothing more than that this year, I think that would be reasonable progress!

The current tax is basically a loophole so big Bill Gate's entire income can pass through.

But more can be done. Another idea I favor is having the Trust Fund invested more like a public pension, where a portion of it goes into stocks and bonds. That's a lot different from private accounts, though, because Social Security benefits are still guaranteed by the government.

A lot of young people I talk to would also be willing to pay more into the system if it meant they would get full benefits. It doesn't take much, maybe $50-100 a year for an average worker, to have a huge impact.

All of these are much better alternatives to increasing the debt by $5 trillion to fund privatization, cutting the guarantee in half, leaving the middle class without a real safety net. That's what private accounts ripped out of Social Security would do.

_______________________

Sulphur, La.: Since AARP opposes the presidents Social Securiy proposals, what, if any, alternatives do you (AARP) have? We know it is a given SS is going to go bankrupt is something is not done. You can argue all you want about urgentcy or not but it is again a given that every day Congress delays and currently with AARP's backing it cost the Citizens millions. NO ONE, not even congress, will argue that fact. So Question number 2, why don't you spend you time and money working with congress and the President to come up with something that will work and not break the taxpayer?
Question #3 what is AARP doing to get the income tax on SS Benefits repealed.

Marie Smith and Hans Riemer: Marie: Social Security faces a long-term challenge that is maageable. The solution shouldn't be worse than the problem. Taking money out of Social Security to finance private accounts would worsen the problem and leave our children and grandchildren with a legacy of debt.

There are lots of reasonable options and we need to educate the American people about them. The April edition of AARP's Bulletin devotes several pages to these options and presents the pros and cons. You can read it online at www.AARP.org

_______________________

Lillian, Ala.: Why is the AARP not for giving the young people a choice on investments of their own money?

Marie Smith and Hans Riemer: Marie: AARP, contrary to the inference from your question, does feel that young people should have choice in investments and they actually do have. What AARP does not support is taking money out of Social Security to set up private accounts. Taking money out of the current system would not strengthen its solvency problem. AARP feels that we all need to save more and there are many vehicles to do this such as IRAs and 401K.

_______________________

San Mateo, Calif.: If the new system is enacted, what happens to the guy that can only work until he is 25 and then is unable to work? Suppose he has a family. Seems to me he would be left out in the cold. If 5 or 6 hundred thousand people experience this, how will that be taken care of?

Marie Smith and Hans Riemer: Marie: Social Security has disability benefits that are the only long-term disability insurance that most Americans have today. Recently, the Social Security Administration estimated that this disability protection is equal to a $400,000 private insurance policy.

There are few details about how disability benefits would be changed under a system of private accounts. So the short answer is that we just don't know at this point. But it is an important issue when you are talking about making changes to Social Security, and AARP will take a very close look at any proposals to make sure that disability benefits for younger workers and their families are protected.

_______________________

Largo, Fla.: How many young people do you know who are systematically saving now? Most that I know are just struggling to either obtain a full time job or working two jobs to make ends meet. Social Security has been the ONE government program that has been very successful for many, many years and why doesn't Mr. Bush put the $3 trillion it is reputed to be needed to set up the private accounts into Social Security to shore it up?

Marie Smith and Hans Riemer: Hans: I couldn't agree more. Saving rates for young people are definitely low, and diverting Social Security funds into private accounts would take away one of their few guaranteed sources of future income. If President Bush were to take the start-up costs for private accounts (estimated at $5 trillion over 20 years), and instead invest it into repairing Social Security, it would have a very positive effect on Social Security's long-term health. If the administration really wanted to save Social Security, that's probably what they should do!

_______________________

Chicago, Ill.: Has AARP entered into any negotiations with House or Senate members to broker a deal on SS that would include so called "carve out" accounts?
I oppose any such deal.

Marie Smith and Hans Riemer: Marie: AARP has not entered into any negotiations with House or Senate members to broker a deal on SS that would include so called "Carve out" accounts. AARP however is talking to both houses of congress and both sides of the aisle to encourage them to look at the solvency issue. We will continue to talk to all groups but we are firm that we will not support any proposal that takes money out of Social Security to establish private accounts.

_______________________

Laguna Niguel, Calif.: What are your choices of solutions to continue securing S.S. as a safety net for everyone?

Making "permanent" decisions based on what is projected to occur 30-75 years from now seems to me to be a risky thing based on our government's track record on anticipated budget surpluses/deficits,etc. (i.e. demographics could change some). Why not go slowly into a chosen solution and re-address the status of the shortage every few years?

Thanks,

Jacques

Marie Smith and Hans Riemer: Marie:
AARP would support increasing, but not eliminating, the amount of earnings on which workers and employers pay FICA. This is a progressive approach that asks people who can afford a bit more to be part of the solution. We also support letting Social Security hire professional money managers to invest a portion of the trust funds in the market. This spreads the investment risk without exposing individuals to the ups and downs of the market.

You raise an interesting point about how far out we should look when evaluating Social Security's health. Seventy five years out is far enough and it is presumptious to assume that we could create a permanent fix.

_______________________

Ypsilanti, Mich.: How are middle class families impacted by the "sliding scale" plan Bush talked about during 'Survivor' on Thursday night?

Marie Smith and Hans Riemer: Hans: The benefit cut that the President has proposed would be a huge hit on the middle class.

Bottom line: The president's proposal seeks to save money in Social Security by cutting benefits. Since the middle class receives most of the benefits, the only way to save a lot of money in the program through benefit cuts is to take it from the middle class. Its pretty simple!

Some people think you can just take benefits from the rich and solve Social Security's problems. That's not really true. If you want to save money by cutting benefits you have to cut into the middle class.

I've also noticed a few media outlets reporting the proposal as "protecting the poor and hurting the rich." Not really. The plan doesn't do anything for the poor that Socail Security isn't already doing. And it doesn't take that much from the rich.

I would prefer an approach that did not rely so much on cutting benefits, particularly for young people and the middle class.

_______________________

Westland, Mich.: If people are allowed to put 4% of their income in private accounts, will they be reimbursed by the government for losses they may incur with the volatility of the stock market?

Marie Smith and Hans Riemer: Marie: This is an important question because the stock market has been so volatile recently. Remember that Social Security guarantees that you will get your full, inflation-adjusted benefits for your whole life, no matter what happens in the stock market. Some proposals for private accounts claim to guarantee people against losses, but in the long run these plans are much more expensive than strengthening the system and paying current benefits.

_______________________

Woodbridge Township, N.J.: Is writing my congressman or senator the best way to express my opinion concerning the fact I do not want Social Security to be
privatized?

Marie Smith and Hans Riemer: Marie: Communicating your opinions regarding private accounts in Social Security is essential whether you do that through letters, phone calls, e-mails or participating in your legislators' townhall meetings.

Your Senators and Representatives need to hear from you -- you can easily send an email to your legislators through the AARP website www.aarp.org/socialsecurity.

_______________________

Washington, D.C.: I understand that there is a misinformation campaign being wages out there on both sides. I thank you for clearing up that there is no "immediate crisis."

However, our elected officials usually wait until a problem has existed for years or even decades before actually taking action. Shouldn't we be commending our elected officials for actually looking into the future and realizing that something needs to change down the road?

Isn't this a good time to get that conversation started so we can get 100% or 150% of the current benefits vs. settling for 70-80%?

Marie Smith and Hans Riemer: Marie:
Thanks for sharing your views. Absolutely, we shoud commend our elected officials for looking at the issue. The sooner we put in changes, the more reasonable the solution. But, the solution shouldn't be worse than the problem.

_______________________

Richmond, Va.: AARP exists to serve the interests of those aged 50 and above. None of President Bush's proposals to save Social Security will affect anyone over the age of 50. Why is AARP spending my membership fees to fight President Bush on this issue?

Marie Smith and Hans Riemer: Marie: AARP is involved in the national debate on Social Security because it impacts most of our members. Private accounts will not help the solvency issue at all, in fact they will actually hurt the current system.

_______________________

Oakland, Calif.: Why shouldn't we make the Social Security benefit a welfare benefit so that we don't have to spend money giving it to those who do not need it?

Dave, in Oakland

Marie Smith and Hans Riemer: Marie: Social Security is based on the principle that benefits are earned and are paid based on the contributions that you make during your working years. It was not designed to be a mean tested welfare program and it is not one now. That is one reason that public support for it is so strong -- everyone has a stake in it. AARP believes that any changes to the program should maintain the link between benefits and contributions.

_______________________

Denver, Colo.: I've heard that once younger people learn more about SS and privatization that they become more interested and care more.

BUT - what are a few reasons that you think the MAJORITY of younger people seem apathetic, and DON'T believe it will be there - or just don't think of this as an issue they need to be concerned about.

Marie Smith and Hans Riemer: Hans: You know, if you are young today, you've been told all your life that Social Security ain't going to be there for you. So why should you care about it?

Its really a wonder than young people aren't actually opposed to Social Security since they expect to pay in and get little out. Its a testament to their deeper sense of community responsibility, it my view.

Young people are also too often unaware of the immediate impact of Social Security on their day-to-day lives.

Here's an example: every young person knows a kid down the street whose dad or mom died. Or a classmate. Its a big part of growing up.

But do they know that these families collect Social Security? For many, Social Security is a lifeline during an incredibly difficult time, allowing them to plan with at least some income security for college and other future expenses.

I know my own Dad grew up on Social Security. His father (for whom I am named, by the way) died at 35, leaving him and his brother and sister along with their mom without much security.

My wife, also, has the same situation: her mom's mom died young.

So we're a Social Security family.

_______________________

Green Bay, Wis.: Why should we leave the problems and the future of S.S. up to a few people in Wash. (who really want to get rid of S.S.). When can we do as President Reagen did and appoint an independent commission to study and come up with a real and fair solution?
My only concern with that is whether Bush and Rowe would appoint a real independent Commission.

Marie Smith and Hans Riemer: Hans: Thanks for the question. You make a great point about trying to get more people involved. As far as an independent commission - they have worked in the past, and could work in the future. But the main point I would stress here is that we need MORE people, especially young people, to get involved in the discussion on the future of Social Security. Check out www.rockthevote.com to find out more...

_______________________

Davenport, Iowa: If private accounts are allowed what if anything in the future will prevent lawmakers to allow these accounts to be tapped to pay for college, medical, etc, expenses. Don't say they can't do this. Just look at IRAs as an example. Ultimately when this is allowed (and it will be) when these people that tap these accounts early will not have enough income to retire on they will come to the legislatures crying their eyes out!

Marie Smith and Hans Riemer: Marie:
I understand your concern. When someone sees an account with his or her name on it as has been the case with IRAs, it is easy to insist on usinge it for other purposes than retirement. That would mean at retirement, individuals would have less money.

_______________________

Melbourne, Fla.: As someone in his early twenties, I feel like I'm expected not to care about Social Security since I'm told that I'm probably not going to receive any benefits from the program anyway. Is that true? Could Social Security go bankrupt before I retire?

Marie Smith and Hans Riemer: Hans: Social Security is not like a company that is going to go bankrupt and close its doors. It doesn't work that way.

The word "bankruptcy" is totally misleading and its a shame that the press uses it so much since it is so widely open to varying intepretations---most of which are utterly misleading.

Here's the good news: Social Security benefits are 100% paid for the next 40-50 years. After that, the "trust fund" runs out leaving only the tax. But the tax, with no changes, is enough to pay 70-80% of benefits forever... and this accounts for those benefits increasing every year for every single "graduating class" of retirees.

So, you should care, because you have a lot to lose.

And if you think you'll get nothing out of Social Security, you'll fall for anything!

_______________________

Washington, DC: Will the proposed private accounts encompass existing retirement plans (401k, 403b, etc.), or will they be governed by a new tax law?

Marie Smith and Hans Riemer: Marie
That is a good question and it has not been addressed as yet. It is reasonable to assume that people with existing IRAs and 401(k)s might save less and thus put their retirement security at jeopardy. Remember that less than half the population is covered by a pension. We need to find ways to encourage people to save more, not to substitute for existing savings.

_______________________

Madison, Wis.: To Marie Smith: Why has AARP continually and uniformly provided its members and the public such a one-sided, unobjective, and biased summary of President Bush's Social Security proposals?

Marie Smith and Hans Riemer: Marie: AARP was happy with the President's decision to raise Social Security to a national debate. AARP has had Social Security solvency as an issue for over a decade. WE studied with care the reports of President Bush's Soc Sec Commissions and our comments are based on those proposals. We know, after careful analysis, that the proposals would not strengthen the program for our children and our grandchildren but rather weaken it.

_______________________

Jersey City, N.J.:: The current administrative costs of social security are at 1%? Aren’t brokerage fees and going to drive up the costs of private accounts?

Marie Smith and Hans Riemer: Marie: The low administrative costs of Social Security show that it is a very efficiently run federal program. However, if private accounts are created to replace part of Social Security's guaranteed benefits, it is possible that the administrative fees and other costs could be much higher. This would take money out of the accounts that people had expected would eventually be available for their retirement. That happened in both Chile and the United Kingdom when they created a system of private accounts. We should not allow this kind of thing to happen to workers in the United States. The best way to maintain the retirement security provided by Social Security is to stregnthen it, not experiment with private accounts.

_______________________

Edwardsville, Kan.: How much interest does the federal government pay on the funds "borrowed" from the "Social Security Trust Fund," and how much cash would be generated by increasing the interest, if any, by 2% or 3%?

Also, has anyone told President Bush that people can invest their retirement funds in the stock market right now? Pehaps he is not aware that here are things called IRAs, Sep-IRAs, Roth IRAs, etc.

Marie Smith and Hans Riemer: Marie:
The government pays around 6% interest on the bonds in the trust funds and there is no reason to believe the government will not honor its current commitment to Social Security. Thank you for adding another idea about how to improve Social Security's future. AARP believes there are many reasonable options to strengthen Social Security that are not worse than the problem. In the April edition of AARP's Bulletin, which can be viewed on our website, www.AARP.org, you can learn more about other ideas.

_______________________

Hudson, Mass.: Hi, my first question is concerning how the present administration plans to pay for all this new program. Where are we borrowing the money from and do we have a plan to pay it back?

My second question is who decides what broker firm all these accounts are handled by and what types of fees they will be charging?

Marie Smith and Hans Riemer: Hans: Ah, good question.

The proposal seeks to "permanently fix" Social Security by "front-ending" Social Security's future cost and then cutting benefits on the "back end".

The front-end borrowing cost is at least $5 trillion over the next 20 years, and more after that. Its a huge, huge amount of money---with a questionable objective. I mean, think about it---why the heck should young people today pay so much money to get rid of Social Security costs in the year 2130? Thanks, but I've got other plans for my money.

Our plan to pay it back is....taxing future generations. I noticed that the adminsitration has been warning that if we don't do anything to Social Security, taxes might have to increase. They aren't saying about who is going to pay for the debt they want to float.

Right now, something like 80% of all the new government debt we are issuing is being snapped up by investors and governments in Asia, particularly China and Japan. So, they'll presumably buy most of the Social Security privatization bonds. Then they'll make all that money on the interest that we have to pay for the rest of our lives.

_______________________

Wausau, Wis.: My husband and I are both 72 years old. Will the proposed Social Security Reform, promoted by President Bush and many Republicans, cause our present or future Social Secrity benefits to drop, because of the money being used to finance said reforms? Thank you

Marie Smith and Hans Riemer: Marie: Thanks for the question. Many people who are retired and receiving Social Security are questioning whether they should be concerned about the debate regarding private accounts. We should all be concerned because it is not known what will happen to present or future benefits. In spite of the statements made that those 55 and older will not be impacted, we can not be sure of that. It will cost up to 4 trillion dollars to finance a private system which will surely tax the finances of the country. We all need to follow this debate closely and weigh in to our congressional representatives.

_______________________

Rutland, Vt.: Isn't it true that the basis used by the Administration is unrealistically conservative? And, the calculations are also based on the baby boom generation living forever rather than as a transient spike? The GDP has never only risen 1.8% per year. It seems to me that if the calculations of future benefits are based on reasonable assumptions, SS will be secure for 75 years out.

Marie Smith and Hans Riemer: Hans: The retirement of the baby boomers is one cause of the long-term financial pressures facing Social Security. The fact that people are living longer now and that life spans are expected to be longer when younger people are ready to retire has to be factored in to the projections of the funding that Social Security will need in the future. While we can argue about the exact economic assumptions that should be used to project Social Security's future benefit costs, most economists think that the assumptions used by the Social Security Trustees present a reasonable view of the very uncertain outlook that far into the future.

_______________________

Anonymous: What are some of the best ways to get younger people interested in and more aware of the conversations on Social Security. It seems there is A LOT of talking from the White House.

Marie Smith and Hans Riemer: Hans: First, please check out our website: Rock the Vote baby

We have young people all across the country getting engaged in this fight.

One of the best ways I have found to get young people interested is to explain to them that they have been lied to their entire lives about the future of Social Security. When people find out that Social Security isn't going to "disappear" but in fact it is in relatively good shape---just needs a few pratical adjustments---they start looking for the dude who tricked them.

Politicians trying to rip you off is always the most engaging thing in politics. ;-)

_______________________

Easton, Pa.: Bush is pushing privatization but the British tried the same plan 25 years ago and it has failed. Seniors over there are living at the poverty level and the government is now thinking of going to a plan like out social security. If it failed there what makes Bush and his crowd think it will work any better here. If you want to check this out go to DeHaviland Information Services on the UK web for all the pro's and con's. There are better ways to solve the S S problem and a start would be to have no limit as to income and that way the rich will have to give back some of the gift Bush has given them.

Marie Smith and Hans Riemer: Marie:
Thanks for sharing the benefits of your research on Great Britain. Their private accounts scheme was oversold to the people in Britain and the marketers had to give back some of the money. They also instituted price indexing.

AARP believes that we should explore a range of options that would strengthen Social Security rather than taking money out to finance private accounts. For example, wWe support raising the amount of wages on which FICA taxes are collected as a fair way of helping strengthen Social Security for our children and grandchildren.

_______________________

Aumsville, Ore.: Why is there so little support for completely removing the cap on earnings subject to SS taxes when such a move would add billions to the fund?

Marie Smith and Hans Riemer: Marie: There is some support for partial removal of the cap on earnings subject to FICA tax, $140,000 has been most often mentioned and will help the solvency problem about 46%. If we raised the cap completely we would also have to raise the benefits for those higher earners.

_______________________

Constantine, Mich.: Keep Social Security strong to provide a basic standard of living. Make it easier to save more in IRAs. Encourage people to save and diversify in a variety of investments.

Marie Smith and Hans Riemer: Marie: I couldn't agree more. AARP has always believed that workers should have opportunities and incentives to invest for their retirement (IRAs, diversified investments) in addition to Social Security. However, these personal investments should not replace some or all of the guaranteed benefits provided by Social Security. Like you said, Social Security provides a basic standard of living so that we can retire and age with dignity.
I encourage you to visit AARP's Financial Planning and Retirement website to learn more - be sure to click on the "Investing and Saving" link on the left-hand side.

_______________________

Sarasota, Fla.: Several comments that I wish to pass on to the speakers--SS is an entitlement for Americans, not a benefit to be tinkered with, according to the political climate of the moment. I am against "means testing". Rich or poor are entitled to SS benefits. Without this protection, it can become a political football. The system needs very wise, and thoughtful adjustment so that future generations can enjoy the benefits that my wife and I are now enjoying. Possibly raise the age limit, and also raise the $90,000 maximum limit, at which SS can be taxed. There are other considerations for keeping the system solid. I dis-approve of private accounts. I believe that they could end up to be "a crap shoot" for younger Americans. Thanks for you for your time and interest. Sincerely, Phil Milan

Marie Smith and Hans Riemer: Hans: Thanks, Phil. I like what you're saying. We do need "wise and thoughtful adjustments" and we should hold out for them.

I should really say, this entire national debate is not really about "fixing" Social Security. Its about whether we should have Social Security in the first place.

_______________________

Kailua, Hawaii: Comment--

As an older recipient of Social Security(my own earnings) and a longtime Consumer Issues Advocate(prior AARP Leg. Comm. Chair Hawaii one example) and as a parent and grandmother, I don't believe that younger people fully understand the Social Security Program. They look at it as a "retirement package only", which this administration only talks of the retirement benefit, and do not understand the large percentage and number of people who collect social security benefits who are NOT retirees per se, but are recipients as disabled(and many at a very young age) as well as surviving widows and children! It is not ONLY a retirement benefit! Please enumerate these many benefits other than retirement! They also do not fully comprehend the safety of their money in the social security trust fund compared to their inexperience with in- vestment markets and the perils they face of the economic disasters that can befall them in handling their "own money" over the years!
There is too much misinformamtion being thrust upon this younger generation, who have no past background to recognise that the information they are getting is not true in all respects and that makes a fair assessment for them impossible!
aloha nui loa and mahalo, Ruth Dias Willenborg

Marie Smith and Hans Riemer: Marie: Aloha Ruth. You make a great statement about the fact that Social Security is a family program. In addition to retirement benefits there are survivor and disability benefits. It is important that we not lose sight of these benefits.

_______________________

Orinda, CA: If Congress raises the earnings cutoff point a few thousand dollars, there will be adequate funds in Social Security for the long term with no other changes required.

Marie Smith and Hans Riemer: Marie: AARP supports raising the current wage cap of $90,000 so that the historic share of total wages is taxable for Social Security. This would increase the wage cap to about $140,000 over a period of about six to eight years. Benefits would also be paid based on the additional taxes paid in. This would provide enough additional funds to close about 43% of the 75-year funding shortfall that is now projected. So other changes would also have to be made, but they would be smaller than if a system of private accounts in Social Security was created.

_______________________

Coronado, Calif: Why is the Social Security Money going into the general fund? I think it should be in a separate fund only for social security needs. It should be invested for the receipents only.

Marie Smith and Hans Riemer: Marie:
Social Security is a separate account. Most of the money currently coming into Social Security is used to pay benefits and the rest is invested in government securities. These bonds are similar to those that individuals, foreign governments and pension funds purchase. The money used to purchase bonds, whether by Social Security or others, is used by the government. When these bonds come due, the government will honor its commitments to every investor.

AARP supports letting Social Security hire professional money manages to diversify trust fund investment on behalf of all participants.

_______________________

Lancaster, Pa.: I support AARP, fix social security without private accounts.

Marie Smith and Hans Riemer: Marie:
Thanks for your support. We know our members are behind us.

_______________________

Iowa City, Ia: Where can I go or what can I do to support Rock the Votes efforts to oppose the private accounts? I am 30 y.o and both of my parents are approaching retirement age, and I am concerned about the stability of the system and a guarenteed benefit for both my parents and myself?

Marie Smith and Hans Riemer: Hans: You ROCK.

You can be a Rock the Vote rep in your own community---sign up as a volunteer on our website.

You can also sign up to be an online activist if that is more your speed.

Buy some I LOVE SOCIAL SECURITY wristbands or t-shirts on our website and wear them---its a great way to make a positive statement.

The most important thing you can do is be an opinion leader among your peers. If you are here on this website today then I am sure your friends look to you for thoughtful opinions and information on the issues.

Give it to 'em!

_______________________

Marie Smith and Hans Riemer: Hans: Well, that was rockin'. Thank you so much everyone. Its great to see so many people engaged in this debate---please, don't leave it to the politicians. Its too important for that.

Check out http://www.rockthevote.com for more...

Rock the Vote: Political Power for Young People

_______________________

Marie Smith and Hans Riemer: Marie: What a great session! We really appreciate your visiting our site and participating in the Social Security Debate. We encourage you to contact your congressional representatives and let them know how you feel about Social Security. Simply visit www.aarp.org/socialsecurity. Again, thanks for your participation.

_______________________

washingtonpost.com: Our hour is up. Special thanks to Marie Smith and Hans Riemer for joining us!

_______________________