Bush Threatens Social Security
Regardless of what he says...
Bush claims he won't "privatize" Social Security, opting for the kinder, gentler term "modernize." Since we can't take Bush as his word, we have to judge him by his actions. When Bush took office he reversed the Clinton/Gore policies which were paying down our debt. Throwing away bipartisan consensus in favor of fiscal responsibility, Bush gave away our surplus - almost entirely to elite special interests which had backed his and his father's various candidacies. Rather than reserve at least some of the surplus to shoring up Social Security as he'd promised, Bush raided the Treasury and the Social Security Trust Fund. These are undisputed facts.
These are the promises Bush made to retired seniors and working Americans: "Modernization must not change Social Security benefits for retirees or near-retirees. The entire Social Security surplus must be dedicated only to Social Security. Social Security payroll taxes must not be increased. The government must not invest Social Security funds in the stock market. Modernization must preserve Social Security's disability and survivors insurance programs. Modernization must include individually controlled, voluntary personal retirement accounts, which will augment Social Security." (see the Orwellian-titled "President's Commission to Strengthen Social Security, http://www.csss.gov/)
Unfortunately, Bush could not keep these mutually contradictory promises even if he wanted to! Privatization, which the Bush Team euphemistically calls "modernization" would encourage people to divert payroll taxes from the Social Security system into "personal retirement accounts," but who will make up for the short-fall? Who will pay for the transition costs, administrative costs and oversight to prevent Social Security from turning into a massive Enron-style meltdown?
Bush's stacked commission, although recognizing that Social Security is not just an investment - it is also an insurance program and an annuity, and that the "economic expansion that began in March 1991 ended in March 2001 [was] a ten-year period of uninterrupted growth ... never before recorded," complained that the return on Social Security is too low, expected the unprecedented Clinton expansion would continue indefinitely, and ignored stock market failures under Bush's horrendous policies. (See "The Final Report of the President's Commission to Strengthen Social Security, http://www.csss.gov/reports/Final_report.pdf)
The Commission couldn't be sure stocks would flounder under Bush, but they should have known it was possible. Stocks have languished in the past and markets plummeted on Bush's watch. CBS.MarketWatch reports, "The stock market is down during Bush's term, with the Dow Jones Industrial Average off by more than 500 points, or 1.5 percent per year." (See: "Plenty of growth, but few jobs," CBS.MarketWatch.com, Oct. 29, 2004: http://cbs.marketwatch.com/news/story.asp?dist=¶m=archive&siteid=goo gle&guid=%7B78543745%2DC1F9%2D4EC7%2DBCC9%2D91A4C275E8D0%7D&garden=&mini site=)
Costly Transition, Dangerous Plans
The American Association of Retired Persons, (AARP) has warned of the dangers posed by Bush's privatization plans, explaining: "AARP believes the current Social Security system needs to be strengthened. The longer we wait to come to a national consensus on what the adjustments will be the more painful the changes we will have to make. [However] Social Security is in no immediate danger of going "broke." With the retirement of the boomers on the horizon, Social Security began to build a cushion to see us through their retirement years. Because of that planning, the Social Security Trust Funds hold over $1.5 trillion in U.S. Treasury bonds and earn interest every year. Without any changes, Social Security will be able to pay 100% of benefits well into the 2040's " (See: "Our Fight: Keeping Social Security Strong," AARP: http://www.aarp.org/socialsecurity-you/Articles/a2004-10-22-ss_strong.ht ml)
>From 2000 to date, Bush has kept pushing privatization which threatens to replace safe and steady income with "private accounts" that the AARP warns can "[L]ose money just as fast as they can make it. And, unlike Social Security, you run the risk of outliving your savings and you lose the protection against inflation." The association of retirees explains, "Further, private accounts are expensive. Most of us would have to pay twice to create this new system - first to keep our commitments to current retirees and again to pay into these private accounts." (See: "Our Fight: Keeping Social Security Strong").
Summarizing its opposition to Bush's recent promise to privatize Social Security, the AARP issued a statement explaining: "Social Security should be strengthened for the future so it can continue to play its important role in Americans' retirement. Changes to the current system are needed so that Americans can always depend on it. Private accounts are not the answer. AARP opposes creating private retirement accounts by diverting funds from Social Security."
This is painstaking obvious, but Bush seems in denial: "Shifting money from Social Security into private accounts jeopardizes the secure benefit people know today. According to some estimates, the government would have to borrow over $2 trillion in the next ten years to fund these carve-out proposals, creating a huge increase in U.S. debt. AARP will fight to protect and strengthen Social Security. While Social Security needs modest changes, the secure benefit it provides should not be put at risk." (See: "AARP Reacts to President Bush's Convention Remarks on Social Security," September 3, 2004: http://www.aarp.org/research/press/presscurrentnews/Articles/a2004-09-02 -statement.html)
The AARP is not the only organization condemning Bush's efforts to privatize Social Security. The United Steelworkers of America website quotes news stories: "At a campaign event in Virginia Aug. 9, President Bush once again proposed privatizing Social Security. 'I support the idea of creating a personal saving account for younger workers,' Bush said. 'It would be an account that's . their own, that they could then pass on to whomever they wanted to pass it on to,' [b]ut, in an era of record budget deficits, he has yet to explain how he would find enough money to pay the current generation of retirees if revenue from workers is diverted into the workers' own accounts." (See: "President Bush Talking About Privatizing Social Security Again" USWA website, http://www.uswa.org/uswa/program/content/1495.php).
Pro-Bush Special Interests Orchestrating $940 BILLION Windfall
What would Bush's plans cost seniors and others? A study of Bush's plan privatize Social Security shows financial institutions stand to gain from the Bush plan - at the expense of seniors and others: "President Bush's plan to privatize Social Security would provide a $940 billion windfall to some of his wealthiest backers and result in a 45 percent benefit reduction for the nation's seniors, a new study reveals. In his study, Chicago Business School Professor Austan Goolsbee said the financial industry would be the main beneficiaries of Social Security privatization, which the president lauded during his acceptance speech at the recent Republican National Convention."
"Goolsbee's study said the 45 million Americans who count on Social Security will see up to a 45 percent cut in their benefits, while Bush's biggest supporters - the financial services industry - will reap billions as part of the largest windfall in Social Security history. The financial services industry is actively supporting and mobilizing behind the president's re-election campaign. Nearly 100 individuals from the industry have signed up as Pioneers and Rangers for the Bush-Cheney campaign. The Bush campaign has received $8 million from the securities and investment industries this year. They have also bankrolled pro-privatization front groups to mobilize behind Bush's plan." (See: "Social Security Privatization Favored by Bush Would Benefit Financial Markets, Cut Benefits for Seniors": http://www.uswa.org/uswa/program/content/1618.php).
The USWA warns: "[T]he President and his sidekick, Fed chairman Alan Greenspan, have proposed reducing Social Security benefits and eliminating cost of living adjustments so that they can reduce the deficit that the payoff to the very wealthy among us has caused. They said so - publicly and unashamedly. Now as we near election time, Bush goes further. He wants to divert some, or perhaps eventually all of Social Security from a sound source of income for 40 million American oldsters to a private scheme to invest in Wall Street helped along by federal subsidies."
Remember the performance of the stock market under Bush? Seniors depending on that "income" would have negative cash flow, even before Bush's benefactors grabbed their cut. How is Bush escaping recriminations for this "scheme" to enrich his wealthy elite special interest friends at the expense and suffering of millions?
"Bush is depending on Americans not understanding Social Security. He is appealing to young people by claiming investing in Wall Street is better than Social Security [but that] Trust Fund has more than $1 1/2 trillion dollars. It is the nation's major weapon against old age poverty.... Social Security has never had scandal or any charge of inefficiency. In fact, its administration overhead equals about one-half of 1 percent of its income ... far lower than any public or private program in the nation [but] Bush is going even further than proposing cutting benefits and cost of living adjustments; he also wants to privatize some or all of the Social Security program. If Bush succeeds, retirees will be dependent on the stock market and on corporations keeping their promises to shareholders (which they have increasingly not done) ... exposing retirees to enormous and unaffordable risks [and] ignoring how Social Security works."
How does Bush defend these proposals? Tricks and Chicanery.
"He is borrowing his arithmetic from the Cato Institute, long the foe of Social Security. What they do is average potential market gains over long periods, thus burying the facts about tens of millions of retirees who are most dependent on Social Security. They also deliberately and knowingly ignore two major Social Security strengths when they compare private investment to Social Security. In determining the base from which benefits are calculated, Social Security adjusts upwards every year's earnings to reflect the national average of wage increases. This keeps the Social Security calculation wage up to date, which no private investment scheme can do [and] at age 61, everyone's Social Security base and benefit are adjusted to reflect increased cost of living. No private investment scheme can do this." (See: What's Happening To Our Retirement Security? http://www.uswa.org/uswa/program/content/1698.php).
Bush and his appointees advocate cutting Social Security benefits, raising the retirement age, and other radical attacks on entitlements. The Washington Post reported that "Federal Reserve Chairman Alan Greenspan on Friday urged Washington policymakers to consider reducing future Social Security and Medicare benefits, saying that the nation has probably promised more to upcoming retirees than the economy can realistically deliver. 'If we have promised more than our economy has the ability to deliver to retirees ... as I fear we may have, we must recalibrate our public programs....'" (See: "Greenspan Urges Look At Senior Benefit Costs- Adjust Programs Soon, Fed Chief Says," Washington Post: August 28, 2004, http://www.washingtonpost.com/wp-dyn/articles/A40077-2004Aug27.html).
The facts don't justify Bush's plans for draconian repudiation of our commitment to seniors and those near retirement age, so Bush twists the facts. This is nothing new. The Bush Administration was already using slick tricks and hypocritical chicanery in 2002! As Slate.com reported, "to heighten the impression that Social Security is running out of money (thereby strengthening the case for allowing workers to divert money from the system into private retirement accounts), the administration has predicted shortfalls far in the future by relying on preposterously long forecast periods."
Slate quotes "a superb analysis of the budget in the June Harper's, [in which] Thomas Frank noted that in 2002 the administration declared an $18 trillion shortfall in Social Security and Medicare - about five times the current national debt. Frank notes that in order to arrive at the $18 trillion figure - since Social Security is currently in surplus - the administration used a '/cumulative seventy-five-year estimate/ [Frank's itals] based on extreme long-term projections ... even as it relies on 75-year projections for Social Security, the same document replaces traditional 10-year budget projections with five-year ones, claiming the longer-term numbers were unreliable.'" (See: "Bush's Data Dump, The administration is hiding bad economic news," July 11, 2003, http://slate.msn.com/id/2085481/)
USWA realizes that "The reason the Republicans ignore and distort the facts can be easily traced to the financial industry (Wall Street) being the largest single source of contributions to the Republican campaign. Apparently money does talk when dished out so lavishly. Diverting any portion of Social Security to equity investments enriches those who trade in corporate stock issues. Thus there need be no mystery about motive." And, "Bush and his cronies are resorting to a common tactic - they propose to save Social Security by destroying its very purpose and role. Social Security needs to be preserved and strengthened, not undermined. Despite the warnings from the Bush administration's Social Security Trustees, even the government's own professional analysts project the system's health for the next 50 years. Any notion that mere humans can look even that far into the future is guesswork." (See: What's Happening To Our Retirement Security? http://www.uswa.org/uswa/program/content/1698.php).
Social Security is solvent for decades to come. The privatization plan Bush and his officials back is not necessary, but is more risky, more costly, doesn't adjust for rising costs, and imposes astronomical "transition costs" and overhead approaching 20% - as much as 2000% of current administration costs! Where will the money for "transition costs" come from? The Treasury is already $7 Trillion in the red, and Bush's policies keep driving us deeper into debt - another half trillion dollars just this past year.
Bush's Friends Win, You Lose. Under Bush's promised privatization, seniors will lose, younger workers will lose to the tune of nearly one TRILLION dollars at first, and then one out of every five dollars paid in. That's a thousand times a thousand times a million dollars plus! And the privatized accounts must return 20% just to keep pace. That's comically unrealistic, considering the real rates of return from growth stocks is not guaranteed to reach even a fraction of that.
The USWA's warnings may be even more dire - and more accurate - than the AARP's: "Young people are understandably not much interested in Social Security - it is too far off into the future for many of them to think about. Yet, they should be concerned about their economy, about a just society, about what impoverished oldsters would mean to the economy so dependent on their role as consumers. In the long run privatization will cause taxes to do what Social Security is now doing to alleviate the problems of the elderly." (See: What's Happening To Our Retirement Security?)
What will happen to you when you stop working and the money you paid into Social Security all your working life is gone, in the pockets of pro-Republican financial institutions? Unless you are among the select few befitting from this Robin Hood in reverse, your will spend your golden years in poverty and desperation. Any Senior who votes for Bush might as well count on smaller Social Security checks. Any worker who is approaching retirement age should understand voting for Bush means delayed retirement and diminished lifestyle. Any young person tantalized by Bush's empty promises should remember 20% off the top will go to Bush's rich friends long before you see a penny, and you might well die in one of Bush's needless wars before you get a chance to live.
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