Ripping Up the Third Rail

Sabotaging Social Security

The same gang that planned the oh-so-successful Iraq war and occupation wants to plan the future of Social Security. The Bush administration, which ran a one-dimensional re-election campaign based on combating terrorism, suddenly claims to have an electoral mandate for domestic "reform." Although there is evidently no Republican blueprint for extricating the country from what satirist Jon Stewart calls "Mess-o-potamia," there clearly is one for rewarding the economic and ideological special interests that supported the president and his party, including a radical fix of Social Security.

The venerable social insurance system, which has guaranteed a decent minimal level of disability and retirement protection for three generations of Americans, is on its last legs, if critics are to be believed. And who are the critics? For the most part, they are members of the right wing of the Republican party, the GOP's allies in the broadcast media, the kept intellectuals of conservative think tanks and Wall Street's ever-hungry financial services industry. What they all have in common is a devotion to the propaganda concept of the big lie, a large untruth being easier to sell than a small one, as the fascists of the last century taught us.

The big lie about Social Security is that it is in financial crisis and will shortly be unable to meet its obligations without a conversion to privatization, specifically the establishment of individual investment accounts. The supposed need for so-called reform -- all changes, even bad ones, are now called reforms -- is based on projections that, if left alone, the government program will become insolvent by mid-century; that is, it will eventually be taking in less money than it is paying out because the number of recipient retirees will catch up to the number of contributing workers. That's true as far as it goes; Congressional Budget Office estimates place the insolvency date at 2052, a half-century from now.

The key phrase is "if left alone." Put aside the fact that no one can precisely predict what the world will look like some 50 years hence. Birth and death rates, levels of immigration, the state of the economy and government revenue levels are all unknowable. Assume, for the sake of argument, that the doomsday year of 2052 (a date that seems to change every few months) is accurate. Does anyone really suppose any president and Congress desiring reelection will allow Social Security to expire? Not a chance; the money will be found, one way or another.

Additionally, the 2052 deadline gives office-holders decades to plan a rational response to Social Security's eventual actuarial imperatives. So, why the rush? Why do the self-appointed reformers insist we have to act now to avoid disaster? Quite simply, because they don't like the prominent position in American life of a purely governmental program, particularly a "socialistic" one making retirement security a matter of cooperative public insurance rather than private investment; and because, with conservatives controlling all branches of the federal government, now is their best chance to structurally alter the system.

Although they always deny it at election time, Republicans have never warmed to Social Security and have long dreamed of a time when it wouldn't exist or would be a creature of the marketplace. It's worth remembering that when the program's enabling legislation was introduced in 1935, all GOP members of the House but one voted to indefinitely tie it up in committee. The more things change, the more they remain the same.

A hint of enduring conservative attitudes toward Social Security surfaced during the December meetings of the partisan Bush economic summit. Economist Brian Wesbury, an outspoken member of the president's task force, advanced the proposition that the federal retirement guarantee is problematic because lax Americans, knowing it is there, save less for their own retirements during their working lifetimes. Reduce the safety net or add personal risk to it through privatization, Wesbury implied, and the irresponsible multitudes would be forced to properly fend for themselves.

Around the same time, a CBS News report displayed another of the disparaging attitudes toward Social Security. A profiled 28-year-old backer of privatization, a member of the age demographic the administration is counting on for support of its changes, allowed as how he "knew" the existing federal program would not be there for him. Presumably, he knew this because conservative commentators and Republican politicians have been telling him so since he was a teenager. Against all recent evidence of the stock market's chronic gyrations, this young white-collar worker was convinced a conversion to privatization would deliver him a rich retirement as a stockholder in the president's "ownership society." Avarice and ignorance masquerading as hardboiled realism, it seems, is a prime motivation for market-oriented reform.

The truth is Social Security was never intended to be an investment vehicle. Even so, as former Labor Secretary Robert Reich has pointed out, average workers covered by the federal system realize four times in retirement benefits what they contribute in taxes. Still, that's not enough to satisfy the greedy forces anxious to use the trust fund as a gambling stake in the Wall Street casino. They claim the Bush investment plan would be voluntary, permitting noninvesting wage earners to remain in traditional Social Security and continue sending their payroll withdrawals to Washington. But if a large enough segment of starry-eyed younger workers opted for private accounts and redirected a third of their FICA taxes -- the putative upper limit -- to market equities, massive government borrowing or future benefit cuts of up to 25 or 30 percent would become inevitable to balance the books. On top of that, brokerage fees would eat up a large part of any returns on worker investments.

There is another way to fortify Social Security and preserve it as a true insurance system: simply add federal tax dollars to cover anticipated shortfalls. That could take the form of eliminating the unconscionable payroll exemption for salary incomes over $87,900 (the infamous "cap"). But there's an even more obvious source of funds. Merely not making the Bush tax cuts of 2001-04 permanent or, alternatively, canceling those for the top 1% of earners would provide sufficient revenue. Of course, the president will propose none of these things. For him, it's not about fiscal integrity; it's about political ideology. And there's the rub.

Wayne O'Leary is a writer in Orono, Maine.

Note: this article was updated after publication.

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