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Social Security
The social security system works well, is not broken, and does not need major action to fix it. |
Social Security would never be imperiled at all if the well-being of older Americans were given the same priority as the military budget, or if the Social Security Trust Fund weren't looted to cover President Bush's tax breaks for the wealthy or the war on Iraq.
Howie Hawkins supports strengthening the social security program by removing the cap on the income taxed to support the system. This would provide for the long-term security of the program while enabling the tax rate for social security to be reduced. The social security or employment tax is a very regressive tax, hitting hardest on low and moderate income tax payers. Social security now only taxes the first $90,000 of wages.
Hawkins opposes the privatization of the social security system, primarily a plan designed to increase the profits of Wall Street brokers. Such a program would initially cost taxpayers trillions of dollars in up front transition costs while jeopardizing the retirement income of Americans.
Hawkins blames former President Clinton for parroting conservative claims of a crisis in the last year of his second term. These claims have allowed President Bush to get away with false statistics like a projected $10-11 trillion in "unfunded" Social Security liability. All of these doomsday projections are based on economic failure in the coming decades, but the absurdity of President's plan is that, if the economy really did fail, the last place you'd want your retirement money to be is Wall Street. The only people who'll benefit from Social Security privatization will be investment companies, people with large investments in investment companies, and Republican and Democratic politicians who take campaign contributions from investment companies.
Hawkins noted that the social security system is a New Deal welfare program for older Americans, not a “pension plan” and has been very effective in ending poverty among seniors. We were wrong to repeal the New Deal program for children – Aid to Dependent Children; we have to resist similar attacks to the main anti-poverty program for seniors.
President Bush is deceiving the American people to sell his Social Security privatization scheme. His lies include:
- Mr. Bush claims that, under his plan, younger Americans would be able to divert some of their Social Security payments into private accounts "so you can build a nest egg for your own future" -- but didn't mention that their Social Security benefit checks would thus be smaller.
- Mr. Bush claims that investments in privatized retirement accounts are guaranteed to increase, promising "Your money will grow, over time, at a greater rate than anything the current system can deliver." The stock market is a risk, and Wall Street investments are neither guaranteed to increase nor insured against losses.
- The Bush plan doesn't transfer 'ownership' from the U.S. government to private citizens, but to Wall Street -- i.e., to whichever brokerage the citizen is investing through, with all the related fees and risks.
- Mr. Bush is repeating his baseless claim that the current Social Security system will go broke by 2042. In fact, the Congressional Budget Office predicts that, unless the economy tanks, the current system will be able to pay 73% of benefits in 2042 and remain solvent until 2052. Social Security actuaries forecast that, without any changes, the system will remain in the black and providing full benefits through 2042. After 2042, its liabilities will amount to less than 1% of the national income.
Even small changes in the economy can produce many changes in the long-term health of the system. For instance, in 1999, the Social Security Trustees' assumption of a long-term economic growth rate of just 1.7%, which would project a Social Security system failure in 2029, turned out to be false. The projected failure date was later pushed back to 2042 in 2004 when the economic growth rate continued at 3%.
The Bush Administration's intention is neither to fix nor save Social Security but to destroy it. The plan is motivated by ideology and by the greed of Wall Street firms who will make billions off privatization of Social Security. These lobbies, allied with think tanks with enormous influence in the Bush White House, especially the Heritage Foundation, Cato Institute, and American Enterprise Institute, have made no secret of their desire to dismantle Social Security.
In 1983, Cato published an article ("Achieving a Leninist Strategy"), urging destruction of Social Security, but, since Social Security enjoyed both solvency and popularity, this would require telling the American people that the program would soon break down and that the only solution is privatization. The article emphasizes how this scheme will benefit financial corporations. (cato.org/pubs/journal/cj3n2/cj3n2-11.pdf#search='Achieving%20a%20Len\inist%20Strategy')
The same long-time goal was acknowledged in a January 5, 2005 memo from White House political aide Peter Wehner, who wrote, "For the first time in six decades, the social security battle is one we can win." The administration, said Wehner, must "establish an important premise: the current system is heading toward an iceberg. We need to establish in the public mind a key fiscal fact: right now we are on an unsustainable course." Wehner claimed that private accounts would act as a wedge for future benefit cuts. (http://www.guardian.co.uk/comment/story/0,3604,1394301,00.html)
President Bush is adhering to the Cato plan in order to promote his plan. His rhetoric about an 'ownership society' means ownership, control, and profits for corporations, and an assault on the security and democratic power of working people.
According to the GAO projections, American taxpayers face a financial deficit of close to $43 trillion over the next 75 years, including $3.7 trillion from Social Security and $27 trillion from Medicare. Instead of privatization, Hawkins supports considering a combination of possible solutions:
- lifting the current cap on Social Security, which right now only taxes the first $90,000 of wages.
- means testing, if needed, so those who have a retirement income above a certain level would not be eligible for Social Security. Lowering payments to the rich is consistent with Social Security's role as insurance for the elderly and other people in need.
- ending the federal government's removal of cash from the Social Security fund and replacing it with treasury notes, which will force the next generation to cover the cost when the notes become due. See "Show Me the Money" by Mark Weisbrot (AlterNet, February 19, 2005 http://www.alternet.org/story/21302/) on the fine-print expenses of President Bush's Social Security privatization plan.
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 *Website by David Doonan, Labor Donated to Hawkins for Senate Campaign* |
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