Home  |  Out & About  |  Dining  |  Events  |  Singles  |  Classifieds  |  Archive  |  Advertising

The War on Social Security:

Reprising Voodoo Economics in a Fundamental Clash of Values

By Robert E. Martin

Social Security is the crown jewel of the progressive government - a singular achievement that has reshaped what used to be penniless old age.

Now George Bush and Republican leaders have made phasing out Social Security as we know it through privatization and massive benefit cuts their top priority for 2005.

Even House Republicans are skeptical about the scheme. According to a recent Washington Post article, as many as 40 Republican members are considering voting against it. So the final vote is likely to be extremely close, and Bush and the Wall Street firms that stand to make billions are pulling out all the stops. According to some reports, they're raising up to $100 million for advertising to apply pressure.

In pushing this issue, Bush is working out of the same playbook that he used for the war in Iraq.
First, he's manufacturing a crisis, by grossly distorting the scale of the threat. Then, when Americans are convinced that the problem is clear and imminent, he'll propose a reckless solution - privatization - that just happens to help a lot of his corporate friends.

And of course, the gap between Bush's rhetoric and the truth is enormous. Social Security is a complicated issue, but the basics are really pretty simple:

President Bush would have us believe that Social Security is running out of money and about to go bankrupt unless something drastic is done. In fact, this year the Social Security system - the payroll tax, which brings money in, and the pension program, which sends money out - will bring in about $180 billion more than it sends out.

It will go on bringing in more then it sends out until 2028, at which point it will begin to draw on the $3.5 trillion surplus it will by then have accumulated. The surplus runs out in 2042, right around the time George W. Bush turns 96. After that, even if nothing has changed, the system's income will continue to cover 73 percent of its outgo. This is using the Social Security Administration's economic & demographic assumptions, which are habitually pessimistic. Using the assumptions of the nonpartisan Congressional Budget Office, the surplus runs out in 2052.

Social Security provides monthly benefits to some 44 million Americans who are retired, disabled or the survivor of a deceased parent. It provides most of the income for older Americans -- some 64 percent of their support. It has lifted generations of seniors out of poverty.

Social Security is not in crisis. That is an outright lie perpetrated in order to create the urgency for radical changes. Under conservative forecasts, the long-term challenges in Social Security do not manifest themselves until 2042. Even then Social Security has 70 percent of needed funds. That shortfall is smaller than the amount needed in 1983, the last time we overhauled Social Security. George Bush's Social Security crisis-talk is an effort to create a specter of doom - just like the weapons of mass destruction claim in Iraq, and the wolves waiting outside your house to eat you alive.

 

At some point over the next couple of decades, some adjustments will have to be made, however these consist of more reasonable alternatives than the radical measures proposed by Bush that will add another $100 trillion to our national debt (a figure he conveniently omitted from this year's federal budget).
    

It might involve a modest rise in the retirement age, to reflect increases in health & longevity, a rise in the cap on wages subject to the payroll tax, which now cuts out at ninety thousand dollars a year; adding a bit to the progressivity of the benefits.

Phasing out Social Security and replacing it with privatized accounts means one thing: massive cuts in monthly benefits for everybody. Social Security privatization requires diverting taxes used to pay current benefits into privatized accounts invested in risky stocks. Without that money, Social Security benefits will inevitably be cut -- some proposals even cut benefits of current retirees. These benefit cuts are inevitable, since diverting Social Security money into privatized accounts means less money to pay current and future benefits.

Every serious privatization proposal raises the Social Security retirement age to 70. That might be fine if you're a Washington special interest lobbyist, or a government employee retiring at the age of 50 with a $60,000 pension, but it is incredibly unfair to blue-collar Americans with tough, physical jobs, or for African Americans and Latinos with lower life expectancies.

Privatization means gambling with your retirement security. There is probably an appropriate place for a little stock market risk in retirement planning, but it isn't Social Security. Privatization exposes your entire retirement portfolio to stock market risks  - and the risk that you'll outlive any of your savings at retirement. You can't outlive your Social Security benefit.

So who does benefit? Wall Street. Giant financial services firms have been salivating for decades over the prospect of taking over Social Security. Wall Street would make billions of dollars in profit by managing the privatized accounts  - money that would come directly from your benefits.

   In summation, the true explanation for this 'crisis' is like the War in Iraq and ideological one. And as Hendrik Hertzberg recently noted in The New Yorker, "one person's ideology is another person's values".
       

While it is good to save and be self-reliant and plan ahead, we must also embrace the very significant American notion that solidarity is also an important value. Making a firm social decision to banish indigence among the old is a measure of how much respect we have for the aged & infirm that have built our society.
 

Individual choice is important, but it should not force the old to become dependent on the luck or skill of their stock picks or mutual-fund choices.
  

The beauty of the idea behind Social Security is that none of us should be obliged to live in a society where minimal dignity and the minimal decencies are denied to any of our fellow citizens at the end of life.
                                           
Research for this story is derived from work by Tom Matzzie and Eli Pariser

home  |  out/about  |  events  |   personal  |  store  |  classified  |  real estate  |   forums  |  archives  |  contact
© 2009 Review Magazine.  All rights reserved.