January 11, 2005

Bush's awful plan to privatize social security

Two-term Republican president Dwight D. Eisenhower once wrote, "Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party againÂ…There is a tiny splinter group, of course, that believes you can do these things. Their number is negligible and they are stupid." Sadly, their number is no longer negligible, but they are certainly still stupid.

The President's proposal to privatize social security is despicable and its consequences will be cataclysmic. Here are four simple facts about Bush's plan to privatize and eventually dismantle social security.

First, Wall Street will be the only winner. Investigative reporters have found that investment companies are giving millions to political organizations and policy groups that advocate the privatization of social security. And why wouldn't they? These companies could win $75 billion a year if Bush gets his way. A few million now for several billions every year is a mind-blowing return, even for the fat cats on Wall Street. Bush's policy would urge ordinary Americans to invest their money in the stock market. We all know how that turned out in 1929. It is revolting that in a democracy, millionaires could take from the hard-earned incomes of ordinary citizens, and with Bush's plan, that is precisely what will happen.

Second, Bush's proposal will not increase national savings. Instead of gaining money from an initial investment, Americans would simply be transferring their taxes from the social security fund to an individual account, which would have no effect on aggregate savings. The plan will not generate more money; it will simply move the existing money around.

Third, Bush will pay for the transition costs of switching to privatization by systematically cutting benefits. This point is the dishonest element of the President's plan. In the Orwellian method that has characterized his administration, Bush is saying he is saving social security, when he is in fact destroying it. The way he will do this is by making benefits respond to inflation rather than wages. Currently, workers' benefits rise according to the rise in the national average wage, thus insuring that retirees today are getting the same real income that retirees got in the past. By indexing the benefits to correspond to the rate of inflation, the Bush plan covertly slows the pace of the benefits' increase to the much slower rate of inflation, the effect of which will be that by 2065, social security benefits will almost be cut in half. Now, benefits pay about 40 percent of wages for the average worker; by 2065, they will only pay 22 percent. The "beauty" of this disreputable change is that the process will happen slowly enough so that people will not notice, but fast enough effectively to annihilate social security within 60 years.

Finally, social security is not only for retirees. Most of us think that social security is simply a program that Americans pay into as workers and then collect as retirees. Yet social security also plays a crucial role in supporting citizens whose career and income have been cut short by unforeseen disabilities. Social security helps support the disabled as well as spouses and children of hard working men and women who have passed on prematurely. Now, for many upper-middle class kids like myself, if a parent were to pass away, we would have savings and life insurance to keep us from falling into poverty until we could support ourselves. Yet other members of the middle-class and nearly everyone below them do not have those vital nest eggs. A minority of those Americans has life insurance, and even fewer people have savings that their children would need. As was mentioned above, the Bush plan will replace correlating benefits to wages by correlating benefits to inflation, which could lead to nearly 20 percent cuts for the disabled, the widowed, and the orphaned, not to mention the benefits that would be lost if the deceased spouse or parent picked the wrong stocks. In effect, we would be condemning five million American children to poverty.

And remember, no social security taxes are paid on income earned above $87,900. So the same corporate thugs that will win the windfall of Bush's proposal are the same American citizens who are not paying their part in saving social security. Bush is telling us he is saving social security, when in fact, he is simply defunding it and using the funds to stuff the already overflowing pockets of his corporate cronies. This is no way to save a crucial government program. This is a way to continue the neoconservative assault on the progress of the New Deal. The Bush plan cannot pass. If it does, Americans all over the country will suffer and the Bush administration will prove once again that they are not leading a government of the people, by the people, and for people.