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The Right Stuff: The fine print on that Social Security ‘guarantee’

Tom Jackson’s conservative opinion column is published each Sunday. The Right Stuff blog is updated throughout the week at tbo.com/tomjackson/

Ads promoting the candidacy of Democrat Alex Sink, the former Bank of America executive and state chief financial officer, continue to misconstrue — employing the politest possible term — Republican David Jolly’s position and statements regarding Social Security, making it sound like he’s all for handing the whole business over to Jordan Belfort or Bernie Madoff.

Instead, what Jolly said is Social Security payments are not guaranteed. They are not, as The Right Stuff noted more than a couple of weeks ago. On the remote chance that readers do not believe everything they read here, TRS is happy to note the findings of an unaffiliated researcher who arrived at precisely the same conclusion.

The researcher is Joshua Gillin of PolitiFact Florida, and here is the essence of his report:

“[B]eneficiaries could be denied benefits for any reason if Congress passed a law making it so, as long as the change wasn’t arbitrary. The court said Congress had the power to modify the rules, which it has done several times — such as gradually raising the full retirement age over time.

“Political debates over Social Security payouts have been fueled by budget projections illustrating the widening chasm of the program paying out more than it is taking in. A 2005 Congressional Research Service report on Social Security reform pointed out that beneficiaries were not guaranteed ‘full benefits in the case of a shortfall, unless Congress amends applicable laws.’

“As for Jolly’s statement that the Supreme Court ruled ‘Social Security is not guaranteed,’ the 1960 Flemming vs. Nestor case he cited indeed said that citizens don’t have a right to Social Security benefits, no matter how long they paid into the system. Congress can change the rules how it sees fit, as long as it follows due process.

“We rate the statement True.” They also should rate it scary.

Now, whether it would be foolish for Congress to break its pledge to America’s seniors is another argument entirely, but it’s a debate we cannot decently tackle until we get past the notion that retirees are guaranteed anything. Under the present arrangement, they are not, which is why, faced with one or another government shutdown or a collision with the debt ceiling, less-than-scrupulous presidents can threaten to hold Social Security checks hostage.

Individual accounts that individuals manage and individuals own — phased in over time with current recipients and those within 10 years of retirement exempted — is one important way to disarm lawmakers quick to play the politics of scare-mongering. Jolly says individual accounts should be on the table. He was right about the guarantee. He’s right about this, too

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Warren Buffett’s word is liberal gospel when he talks about the inequities of the tax code. But there was considerably less rushing to his side when, Monday, the guy who says he shouldn’t pay a lower tax rate than his secretary (nobody’s stopping him) sounded off on the looming disaster posed by public pensions.

According to Bloomberg News: “Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made,” Buffett wrote in his annual report to shareholders of Berkshire Hathaway Inc. released on March 1. “During the next decade, you will read a lot of news — bad news — about public pension plans.”

It is precisely this sort of trouble Republican leaders in the Legislature are attempting to head off in this year’s session, which opened Tuesday. Speaker of the House Will Weatherford of Wesley Chapel is again championing a switch to a defined-contribution program, much like a private-sector 401(k) plan, for new employees. Sen. Wilton Simpson of Trilby has a similar proposal, but adds the option of a “cash-balance plan” that would shield workers from stock market losses in exchange for slightly limiting overall gains, and leaves out first responders (police, firefighters).

The goal of each is to slowly ease the state’s unfunded pension liability, which stands at $21.6 billion. The Legislature spends $500 million each year to meet its obligation, money better spent on other state priorities, or returned to taxpayers.

It’s looking like another uphill battle, however; some more moderate Republicans, such as Pinellas Sen. Jack Latvala, remain resistant to change.

Buffett, again: “Local and state financial problems are accelerating, in large part because public entities promised pensions they couldn’t afford. Unfortunately, pension mathematics today remain a mystery to most Americans.”

Most Americans includes some key lawmakers, it seems

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