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White House Briefing: Dan Froomkin

Avoiding the Tough Questions

By Dan Froomkin
Special to washingtonpost.com
Friday, February 4, 2005; 12:57 PM

Good policy can withstand tough scrutiny. And a good politician can tolerate tough questioning.

President Bush is barnstorming through five states to try to drum up support for remaking Social Security, but instead of fleshing things out and confronting his critics, he is surrounding himself with hand-picked flatterers and adoring crowds.

It's quite the throwback to the fall campaign -- and of course that's not a coincidence. It worked last time.

But there are some serious and legitimate concerns that need to be addressed about Bush's Social Security proposals and how they are being characterized.

One overarching issue is that the White House is talking about Social Security as if it were one big underperforming 401(k) program. In other words, they're implying that workers right now get back what they put in plus interest -- and that the interest rate they're getting is not so hot.

But it's not that way, not by a long shot. Social Security is a complex social insurance program that uses payroll taxes from current workers to pay benefits to the elderly, the disabled and their families in a progressive manner that guarantees an income floor below which the least fortunate are not allowed to sink.

Where this becomes really important is in trying to make sense of the brief and somewhat enigmatic comments that a senior administration official made on Wednesday (here's the transcript) about how the government would reduce guaranteed benefits for the people who opt for personal accounts.

The official said, in essence, that Social Security would:

A) Calculate what the contributions to the private account would have earned if the money had been invested at 3 percent on top of inflation,

B) Estimate what that amount would provide monthly if annuitized, and then

C) Subtract that amount from what the monthly benefit they otherwise would have gotten.

Therefore, the official said, if your investment makes more than 3 percent after inflation (minus administrative fees) you'll come out ahead (not including whatever additional across-the-board benefit reductions are approved.)

That's pretty complicated.

But even worse, the formula is based on two very misleading premises.

One is that people's payroll taxes are now being invested at 3 percent. They aren't. Most of the money people pay in today is going right back out again. Only a small amount is, temporarily, being invested in federal bonds, and even that won't be the case in a little over a decade.

The other is that Social Security benefits are a direct function of how much people put in through their payroll taxes. The way Social Security is now set up, for instance, a single wealthy person gets a vastly lower "rate of return" upon retirement than a poor person with a stay-at-home spouse. Someone who lives to 100 gets a much better rate of return than someone who dies at 65. Those are just some of the progressive, insurance-like aspects of Social Security that are really at the program's heart -- and that are being downplayed in the current debate.

And I'm afraid that any hypothetical case that tries to simplify this should be considered highly suspect.

Another issue that Bush is not necessarily being up front about is the "nest egg" he says private accounts will provide. In a nutshell, that may only be the case for the rich. Many lower-income people would be forced by the government to purchase annuities with their accounts, to keep themselves out of destitution as long as they live.

But annuities expire upon death.

In fact, if survivor benefits -- which now are pegged to the worker's benefit amount -- are reduced because of the private accounts, survivors would be considerably worse off.

Furthermore, when Bush uses the much-admired Thrift Savings Plan as an example of how personal accounts would work, it is worth noting that the TSP is an "add-on" on top of Social Security for federal workers. It's not a replacement; it doesn't divert payroll taxes from Social Security.

And don't forget all the issues raised in yesterday's column.

The Road Show

Jim VandeHei and Mike Allen write in The Washington Post about Bush's first stop, in Fargo, N.D.: "At a town hall meeting here that often sounded as much like a late-night comedy show as a policy seminar, Bush repeatedly cracked jokes and teased attendees -- when he was not talking about esoteric topics such as compounding interest, phase-in schedules and solvency. . . .

"Bush told the mostly partisan crowd here that he would never 'play politics with the issue.' He is campaigning, election-style, for the new accounts this week in the back yards of three Senate Democrats the GOP is targeting for defeat in 2006: Kent Conrad in North Dakota, Ben Nelson in Nebraska and Bill Nelson in Florida. . . .

"What the president did not discuss was how the transition to the new system would add hundreds of billions of dollars to the budget deficit over the next two decades and expose Americans to the possibility of smaller retirement checks than those envisioned under the current program."

Bill Plante reports for CBS News this morning: "You know what? This looks a lot like the fall campaign. . . . And just like the town hall meetings of his campaign, the audience is already on his side."

Richard W. Stevenson writes in the New York Times: "Mr. Bush got a rapturous reception from a carefully screened crowd of ticket holders at his first stop of the day, in North Dakota, a state he won easily in November.

"Flanked by people selected by the White House to bolster his argument and charts illustrating Social Security's problems, Mr. Bush sought to reassure one powerful constituency -- the elderly and people approaching retirement -- that nothing would change for them and that they would get all the benefits promised to them.

"For everyone else, he extolled the benefits of individual accounts as a way to build wealth for retirement."

Rick Klein writes in the Boston Globe: "Bush is hoping that, by taking his case directly to the people of states that supported his candidacy, he can win the votes he needs from their senators. Organizers drew a large number of college students to yesterday's events, tapping an age group that is skeptical about whether they will ever get the Social Security taxes they'll pay over their lifetimes.

" 'These guys right here in the front -- yes, you guys -- not fine,' Bush said, gesturing to a group of college-aged attendees in the front section. 'You got a problem.' "

Janet Hook writes in the Los Angeles Times: "The White House and its allies have concluded that before the president wins more votes in Congress, he has to win the argument in the country that Social Security is in trouble and private accounts will help fix the program.

" 'It is going to be a tremendously difficult legislative effort,' said one administration official, who was not authorized to speak publicly and spoke on condition of anonymity. 'You can't do what it takes just inside the Beltway with retail politics. You have to do wholesale politics. You have to move the whole country.' "

Here are the transcripts from Fargo and Great Falls, Mont.

The Local Papers

Mary Jo Almquist writes in the Fargo Forum: "Backed by a gigantic Social Security card, President Bush charmed a Fargo audience of nearly 8,000 Thursday during a casual and rather jovial conversation about the future of America's retirees."

She also reported on the goings-on outside the event. "Knots of protesters gathered here and there, waving anti-Bush signs at the thousands waiting to hear him talk.

"One man, looking grandfatherly in a suit and black wool dress coat, dispelled that image when he suddenly waived his middle finger at one group and shouted, 'How do you like MY sign?' "

Dave Roepke writes in the Fargo Forum: "An 'overzealous volunteer' created a list of 42 people to bar from attending President Bush's speech in Fargo, White House and state party officials said Thursday. . . .

"No one on the list was denied a ticket or entrance to Thursday's speech. . . .

"Despite being included in the rolls of those who were not to be admitted, Fargo City Commissioner Linda Coates walked through security gates at the Bison Sports Arena without incident shortly after 11 a.m.

"With a crowd of protesters chanting 'Go, Linda, go,' Coates joked, 'I'm shaking,' as she neared the entrance."

Mike Dennison writes in the Great Falls Tribune: "President Bush on Thursday brought his Social Security road show to an appreciative Great Falls crowd, saying he'll listen to almost any idea from any quarter to shore up the public retirement system for the next generation.

"Yet he made it clear his first priority is selling his plan for 'personal accounts,' wherein workers could direct part of their Social Security taxes into private investments that they choose. . . .

"An obviously friendly crowd of more than 5,000 roared its welcome as the president arrived at 3:50 p.m., and frequently interrupted the hourlong presentation with applause, as Bush explained the Social Security plan and touched on other issues such as health care, energy and the war against terror. . . .

"He also engaged in a 'listening session,' sitting down on the stage to answer brief questions from four hand-picked Montanans who clearly supported the idea of having Social Security 'personal accounts.' . . .

"Neither Bush nor any audience member mentioned perhaps the hardest questions: How much would this new system cost, when workers start diverting money from the Social Security trust fund into personal accounts? And how would it be paid for?"

Sonja Lee writes for the Great Falls Tribune: "Great Falls residents Amy and Mike Borger, who had a chance to share the stage and even a few jokes with President Bush on Thursday, said they were humbled by the once-in-a-lifetime experience.

"Amy, 31, and her husband Mike, 30, were two of five people who sat with Bush and had an actual 'Conversation on Social Security Reform' in the Four Seasons Arena. . . .

"Former Gov. Marc Racicot, a family friend of the Borgers, recommended the couple share the stage with Bush, Amy Borger said."

They and the other special guests "were interviewed by White House staff in advance of the president's visit and joined a 'rehearsal' at 7 p.m. Wednesday."

Tough Crowd

Here's an example from the White House transcript of how tough the audience was in Fargo:

"AUDIENCE MEMBER: Mr. President, thank you for liberating Iraq!

"THE PRESIDENT: You're welcome.

"AUDIENCE MEMBER: You are right; they are wrong! We are -- all the way with you!"

And the hand-picked guests on stage didn't give Bush any trouble.

"THE PRESIDENT: Do you have any -- if you don't like them, go ahead and say it, but do you have any problems with the personal retirement accounts?

"DR. BROWN: Absolutely not. They offer --

"THE PRESIDENT: I was hoping that would be the answer. (Laughter and applause.)"

Here was the toughest question Bush faced all day:

"Q Can you quote Proverbs 17:17 for me?

"THE PRESIDENT: Do what?

"Q Can you quote Proverbs 17:17 for me?

"THE PRESIDENT: No. (Laughter.) That's an easy one. Can you? Quote it.

"Q 'A friend loves at all times, and a brother is born for adversity.'

"THE PRESIDENT: Thank you. (Applause.) Very good. I thought you were going to ask me if I knew how to get to Livingston. (Laughter.) It's like that guy, said, what color -- he said, to get to Livingston, you've got to go down the highway and you go through the cattle guard, and you -- (laughter) -- turn left, and go through another cattle guard. And a fellow comes back and says, hey, what color uniforms do those cattle guards have on? (Laughter and applause.) That never happens in Montana."

Here's a late update from AP's Deb Riechmann in Omaha, where Bush spoke this morning:

"During Bush's remarks, a heckler interrupted, saying 'Quit lying. You're full of . . . , you liar,' from high in the arena. As Bush supporters nearby yelled the protester down, the president made the rare move of publicly responding, saying 'We love free speech in America,' before moving on with his sales job."

Verbatim

Bush in Fargo: "Now, I've heard all of the complaints, and you'll hear a lot more -- how this is going to ruin Social Security. Forget it, it's going to make it stronger."

Some More Questions

Eileen Ambrose writes in her column in the Baltimore Sun:

"Here are some questions that people should be asking the president: . . .

"What if you don't earn 3 percent over inflation, which could be difficult if inflation roars back? . . .

"Even if you don't invest in a private account, your guaranteed benefits will likely be cut anyway, experts said. But how much? . . .

"What if a whole generation is stuck with a long period of underperformance in the market? Will the government bail out the people with private accounts or not?" . . .

"How will you pay for this?"

How Would It All Work?

Jonathan Weisman writes in The Washington Post: "The White House offered further explanation of President Bush's Social Security proposal yesterday, detailing how contributions to new personal investment accounts would be offset by dollar-for-dollar reductions in Social Security's guaranteed benefits. . . .

"Specifically, workers who opt for the accounts would lose a proportionate share of their guaranteed payment from Social Security, plus interest equal to the amount that money would have earned if the government had invested it in Treasury bonds. They would recoup those lost benefits through their accounts if their investments realized a return equal to or greater than the 3 percent earned by Treasury bonds currently held by the Social Security system.

"The Washington Post incorrectly reported Thursday that the balance of a worker's personal account would be reduced by the worker's total annual contributions plus 3 percent interest. In fact, the balance in the account would belong to the worker upon retirement, White House officials said."

Here's the Wall Street Journal's explanation of "how private accounts would work."

"1: Worker diverts up to 4% of wages into private account, with a $1,000 limit that rises each year.

"2: Worker puts money in stock or bond mutual funds.

"3: At retirement, government reduces traditional Social Security monthly benefit to reflect taxes diverted to private accounts. Here's how:

• "Add up contributions to private account and what they'd earn if invested at 3% on top of inflation

• "Estimate what that total would provide monthly if paid over retiree's life

• "Subtract that sum from monthly government benefit

"4: A retiree comes out ahead if personal account earns more than 3% on top of inflation. Retiree is worse off if returns are less than that.

"5: Worker can use private account at retirement to spend, save or bequeath.

"Note: Mr. Bush proposes additional across-the-board reductions in Social Security benefits from those promised in current law, but hasn't spelled out details."

William M. Welch writes in USA Today: "While Bush stumped for his proposal in the Midwest, his aides sought to address concerns over how it would work. Of particular concern: the proposed reduction of traditional benefits for those who invest in private accounts.

"The White House said the government would reduce the individual's traditional Social Security benefit to compensate for tax payments diverted to the accounts, plus interest. . . .

"Bush said Thursday that the private accounts could provide a nest egg that workers could pass to heirs after death. A look at the plan's details, however, made clear that many workers would have little or no money to pass along after retirement."

David E. Rosenbaum writes in the New York Times: "Morning-after scrutiny of the bold Social Security plan President Bush outlined in his State of the Union address on Wednesday night turned up details that were not immediately apparent."

Two Q&As

Glenn Kessler offers up a helpful Q&A in The Washington Post. For example: "What happens when I retire?

"Upon retirement, workers would be required to trade in their investment portfolios for an annuity so that a combination of traditional benefits and their annuity payments would meet the poverty level, which was about $11,400 for a couple older than 65 in 2004. But if that income stream is higher, under Bush's proposal, retirees could use the additional money in their accounts as they wished, such as continuing to invest, increasing the size of the annuity payment or taking a lump-sum payment."

Robert A. Rankin does the same for Knight Ridder Newspapers. For example: "Q: How much would this cost taxpayers?

"A: The Bush administration estimates it will cost $754 billion through 2015, but that's a period when it's phased in and includes only five years at full operation. Social Security actuaries estimated that such a plan would cost $2.2 trillion in the first decade of full operation and $4.5 trillion in the second. That would be added to the national debt."

Deep Pockets to the Rescue

Jeanne Cummings writes in the Wall Street Journal: "As President Bush barnstorms across the country promoting Social Security overhaul, the White House is quietly assembling a coalition of allies that will privately raise $35 million for an advertising and lobbying effort to push the politically risky measure through Congress. . . .

"The administration's careful planning of the pro-overhaul lobbying effort -- its messages and scope are being coordinated by White House political guru Karl Rove -- demonstrates the president's worry that jittery Republicans will back away from the proposal rather than risk stirring a backlash at the polls in 2006."

Rumsfeld Offered to Quit

Defense Secretary Donald H. Rumsfeld disclosed yesterday that he had offered President Bush his resignation twice during the height of the Abu Ghraib prisoner abuse scandal last year.

Here's the transcript of his interview on CNN with Larry King.

"KING: Was there ever a time during that period when people were raising, screaming about Donald Rumsfeld, that you thought, 'Maybe I ought to hang it up. Maybe I ought to -- the buck stops at the top'?

"RUMSFELD: You know, it does. If you're in charge of a large organization, and something like that occurs, and of course in an organization -- the problem is this kind of thing occurs in prisons across the country and across the world. And you have to know it's going to be a possibility. And therefore, the training and the discipline and the doctrine has to be such that you anticipate that risk. And clearly, that wasn't done to the extent it should. I mean, the fact is, Larry, I submitted my resignation to President Bush twice during that period and told him that I felt that he ought to make the decision as to whether or not I stayed on. And he made that decision and said he did want me to stay on."

The Death Sentences

Peter Baker writes in The Washington Post: "As governor of Texas, George W. Bush presided over 152 executions, more than any governor in any state in modern U.S. history. He commuted just one capital sentence and harbored no doubts in the system. 'I'm confident we have not put to death anyone who has been innocent,' he once said.

"So it came as a bit of a surprise to some Wednesday night when in his State of the Union address President Bush expressed concern about wrongful convictions, advocated the expanded use of DNA evidence to protect the innocent and offered new training for defense lawyers in capital cases to avert fatal mistakes."

Here's the transcript of a background briefing by a senior administration official on that and other aspects of the State of the Union address.

Maurice Possley and Flynn McRoberts write in the Chicago Tribune: "President Bush's call for a new $50 million initiative to improve the quality of legal work in death-penalty cases falls far short of a similar measure he signed last year. . . .

"[A]dvocates for such funding questioned Bush's commitment because his proposal -- which includes $20 million to train defense attorneys, prosecutors and judges next fiscal year -- was far less than the $75 million a year called for in the Justice For All Act that he signed Oct. 30."

Bush and God

Bill Sammon writes in the Washington Times: "President Bush yesterday said that affirming God's supremacy 'is particularly appropriate in the heart of a capital built upon the promise of self-government' and called for 'opening ourselves to God's priorities' at the National Prayer Breakfast.

Here's the text of his remarks.

First Lady Watch

William Douglas writes for Knight Ridder Newspapers: "In his State of the Union address, President Bush tapped his wife, a former librarian, to oversee a new $150 million, three-year program to assist at-risk youths ages 8 to 17 and help reduce gang violence and membership.

"The job is Laura Bush's first official policy role in her husband's administration, a recognition of her public popularity and a testament to her effectiveness as a campaigner for her husband and his causes. . . .

"She made her debut in the role Thursday in Philadelphia, where she visited the Germantown Boys and Girls Club. Invoking her experience as a former elementary school teacher and librarian, Bush emphasized that 'the first five years of life are critical' to nurturing good behavior in older children."

Here's the transcript of her talk, and her interview with NBC's Brian Williams.

Gannon Watch

Joe Strup writes for Editor&Publisher that Jeff Gannon, "the White House correspondent for Talon News, a pro-conservative Web site linked to GOPUSA.com, has drawn attention recently among those who cover the president for what many consider to be an especially partisan approach. He is known for inserting blatantly pro-Bush statements in his inquiries at televised press briefings.

" 'Would they let Joe Lockhart or someone who works for the DNC [Democratic National Committee] come in and do that? I don't think so,' Edwin Chen, who has covered the president for the Los Angeles Times, told E&P. 'They ought to get legitimate members of the fourth estate, not political hacks on either side.'

"White House reporters say Gannon has regularly attended daily press briefings for more than a year. Then, during President Bush's televised press conference on Jan. 26, the president called on him for a question, bypassing dozens of far more experienced reporters. . . .

"Gannon told E&P this afternoon that he had no political affiliation and had never contributed to a political campaign. 'Which is more than I can say for some of my colleagues,' he added. . . .

"Ron Hutcheson, president of the White House Correspondents Association, has covered the president for Knight Ridder since 2001. He also believes Gannon's actions are a concern. 'I see it as a problem,' he said. 'It wastes a lot of time, and it is an abuse of the forum.' . . .

"Hutcheson pointed to Helen Thomas, the former UPI White House correspondent who now writes a column for Hearst Newspapers and still attends press briefings as sometimes doing the same thing from the left. 'Her questions have changed since she switched from a reporter role to a columnist role,' he said. 'Often all she is trying to do is make a political point.' But Thomas works for a major news operation with a wide and diverse audience."

There Goes the Chef

Ann Gerhart reports in The Washington Post that Walter Scheib is out on his toque after 11 years as the executive chef at the White House, under somewhat mysterious circumstances -- part of stealthy East Wing shakeup.

"At the beginning of President Bush's second term, the West Wing has made headlines with Cabinet appointments, but just as surely the East Wing is quietly being reshaped. Mrs. Bush has indicated that she and her husband intend to do more formal entertaining during their second term. During their first four years they hosted only four state dinners, the same number President George H.W. Bush and Barbara Bush hosted in his first six months in office.

"Cathy Fenton, who resigned as social secretary, has been replaced by Lea Berman, who served in that capacity for Lynne Cheney before going to work for the Bush-Cheney campaign. Unlike previous social secretaries, Berman is a wealthy hostess herself."

Here is Scheib's White House bio.

Karl Rove Watch

Here's Judy Woodruff on CNN yesterday:

"WOODRUFF: Here's a teaser of a question: Is Karl Rove looking for a new job? The president's senior adviser ran into our John King today during Mr. Bush's Social Security event in Fargo, North Dakota.

"Look at what happened.

"(BEGIN VIDEO CLIP)

"KARL ROVE, BUSH SENIOR ADVISER: Step aside, I'll be happy to do it. The president is making an incredible presentation to the audience here in Fargo, North Dakota. The crowd has received an overwhelming -- his reform message of Social Security. The crowd broke into a strong applause when the president attacked the mainstream media. . . .

"KING: It's not bad, I'd keep your day job, but that's not bad.

"(END VIDEO CLIP)

"WOODRUFF: I'd say more than not bad. I think we're ready to hire Karl Rove right now. We'll start -- we'll make the phone call right after the show."


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