Social Insecurity
“They said if George W. gets elected, our seniors aren’t going to get their checks. That’s what they said four years ago. Please tell your friends and neighbors, George W. did get elected, and our seniors did get their checks. Our seniors will continue to get their checks.”
-George W. Bush
Saginaw, Michigan, 10/28/04
Contrary to his stated position, the Bush administration is proposing to cut Social Security benefits.
These cuts are hidden in his plan for changing the way those benefits are calculated. Today, the size of your Social Security check adapts to inflation. The Social Security Administration uses a wage index to measure how fast worker wages are growing, and then applies a proportional increase to Social Security benefits. This wage index ensures that though the price milk and bread goes up, your Social Security check will still buy you about the same amount of groceries that it did five years ago. Bush wants to change the wage index to one that grows at a slower rate, which means all Social Security beneficiaries- now and into the future- will slowly fall farther and farther behind.
In addition to this sly reduction in benefits, the president also proposes to privatize the Social Security system.
This notion of “privatizing” Social Security really means that we’ll all have to (it will be mandatory) place a portion of our wages into the stock market, rather than paying them toward Social Security tax as we do now. Sure, it’s great for businesses to have all these guaranteed investors, pouring money into their stock each month, but what about the investors? What happens when companies like Enron go out of business, and their stock is suddenly worth zero dollars? Sorry Mr. John Q. Public, but your retirement fund just disappeared.
Conservatives are working hard to scare us all into accepting this plan to privatize and minimize Social Security by swearing that the program is about to run out of money. However, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds annual report states that Social Security will be safe until 2042.
We have had several such scares over the past 70 years, and have always been able to save Social Security without reducing benefits, or forcing private citizens to risk their savings in the stock market by “privatizing” it, so why republicans declaring a state of emergency right now?
Karl Rove’s deputy, Peter H. Wehner, provides some clues to the real motive behind the rhetoric:
For the first time in six decades, the Social Security battle is one we can win — and in doing so, we can help transform the political and philosophical landscape of the country.
What battle have republicans been fighting for six decades? Josh Marshall answers that much better than I can:
Clearly, this isn’t about ‘saving’ Social Security. It is a battle to end Social Security and replace with something that Wehner clearly understands is very different, indeed the antithesis of Social Security.
This entire debate is about ideology — between people who believe in the benefits Social Security has brought America in the last three-quarters of a century and those who think it was a bad idea from the start. There is an honest debate to have on this point, a values debate. Only, the White House understands that the belief that Social Security was always a bad program isn’t widely shared by Americans. So they have to wrap their effort in a package of lies, harnessing Americans’ desire to save Social Security in their own effort to destroy it.
We’ve got 37 good years left in the existing system. Let’s not allow these bullies and scare us and rush us into accepting this trojan horse of a plan.
Porkopolis said,
January 14, 2005 @ 11:00 pm
Opponents of Social Security reform should address the following illogic implied by their opposition:
As Social Security is currently structured, individuals must first be employed. Secondly, employee contributions are matched by the employer. These two things are prerequisites for the continual funding of the program. If I were a proponent of Social Security in its current format, I would be a strong proponent of a vibrant and growing economy that allows for the perpetual contributions; from employees and employers.
You can’t have Social Security without economic growth. No employers, means no employees, means no contributions, means no Social Security funds over the long-term. The Government just can’t tax non-existent assets and profits to meet its obligations. Assets and profits are a prerequisite of Social Security. With me so far?
Now, here’s the kicker. If you assume that the current system requires a growing economy to sustain itself, why would you not translate that same assumption to the Personal Account structure of retirement funding?
Admittedly, there are no guarantees either way. That’s the very definition of a risk; no guarantees. Both structures involve risk. And BOTH sides of the issue (pro/con reform) assume a long term growing economy with occasional set backs.
I planted several Silver Maples in my backyard 15 years ago. The trees were barely 3 feet tall when I planted them. I did my research on what trees would do best considering soil and weather conditions. I almost went with Weeping Willows, but was advised against them. They grow very quickly, but according to the garden store owner, are ‘stringy’ and disease prone. My Maples have survived severe winters, summer droughts and insect infestation. But through it all, most of them have managed to survive; over the long term. They’re now about 40 feet tall. Long-term investing involves a similar patience and risk taking.
Patti said,
January 15, 2005 @ 12:18 am
Of course you’re right about long term investing and weeping willows.
However, Social Security was never set up to be an investment account. It operates like insurance, where, as long as you pay your premiums you get your benefits if you need them.
This allows people like stay at home moms, or like my cousin who was disabled in high school to still collect benefits, even though their lot in life wasn’t to work for 30 years and save up money for long term investments.
This business about Social Security going bankrupt is bunk. As long as there are people with jobs, Social Security will have income. Even after the dreaded 2042 date, when the surplus is scheduled to run out, the fund will be able to pay 70% of the benefits it’s paying now to every retiree and disabled person. So all we need to do is cover that 30%.
Actuaries say that a mere 1.89 percent hike will do the trick. That’s 1 percent to wage earners, and .89 percent to employers.
ABC News