Social Insecurity

Remember the fear campaign with which President Bush and his neoconservative cadre scared us into supporting his invasion of Iraq? All those tales of horrible (nonexistent) weapons which could turn Main Street, USA into a smoking hole in the ground? Well, he's at it again, and this time his target is much closer to home. Mistaking his close election win for an actual mandate, Bush has set his "shock and awe" sights on Social Security.

Yes, that Social Security; the program which has provided America's senior citizens, disabled workers and the children of workers who die young with a financial safety cushion for well over half a century. According to Bush, the system is in active crisis because while Social Security currently takes in $1.25 for each dollar paid out and is thus very much in the black, it will be paying out more than it takes in by 2018. The Social Security Administration, the group that actually runs the program, begs to differ, saying that given current economic trends this won't happen until 2042; the Congressional Budget Office says 2052. (The same CBO report says that that extending Social Security's solvency by another century while maintaining benefits would require additional revenues equal to less than three percent of federal spending. This happens to be less than that we're currently spending in Iraq.) Even given the fickleness of the economy, this is hardly an active crisis.

Bush claims it is, however, and his solution is...partial privatization! Yes, his answer to a fiscal problem which may occur a few decades down the road is to allow individuals to some of their payroll taxes into the stock market right now, the theory being that people will make more than enough money from their investments to offset smaller Social Security benefits. It's really just a variation on the old the-market-knows-everything mantra that gave us the Great Depression, the S&L scandal, Enron, etc. This solution has three tiny little problems.

First, every penny taken out of the system has to be made up in order for current benefits to be paid and the trust fund maintained. And Bush is determined to get the money by borrowing it, with total ten-year estimates as high as $2 trillion added to our already $7.5 trillion national debt. This may well make foreign and domestic investors wary about continuing to finance our exploding debt when the Bush Administration itself clearly doesn't care. This makes the dollar and stock market fall, interest rates and unemployment rise, and so on.

Second, privatizing Social Security would be putting the program in the hands of the ilk who gave us such financial triumphs as the seemingly endless stock-market and mutual-fund scandals, not to mention the up-and-down vagaries of the market as is. Who will have to explain the magic of the markets to angry seniors whose entire retirement benefits were stolen by the likes of Ken Lay or went down the drain with a company's bankruptcy?

And third, administrative overhead costs, which currently take up less than one percent of the annual Social Security budget, would multiply more than ten-fold under a privatized system. That's as much as $75 billion a year gone from retirement benefits to line the pockets of Wall Street. Not surprisingly, Wall Street is the one sector of the American economy actively pushing for such "reform." And also not surprisingly, the financial industry gave big bucks to Bush, more than $30 million in the 2004 campaign alone.

That works out to a 250,000% return on their investment. Not too shabby. Better than the S&P 500 and loads better than Hillary Clinton did with her much-maligned cattle futures.

The eventual fiscal problem with Social Security can be almost or entirely solved with one single change. As it stands now, only the first $87,900 of a person's income is subject to Social Security payroll taxes. Meaning that someone earning a bit under ninety grand pays exactly the same amount into Social Security as someone like Bill Gates. Or Tom Cruise. Or, for that matter, George W. Bush. Raising or removing the cap would do away with this inequity and maintain the system's integrity for decades to come.

Of course, the whole notion of Social Security's guaranteed benefits is heresy to Bush's well-heeled friends, who have never hid their desire to blow up the "socialist" system and replace it with a super-capitalist free-for-all in which individuals sink or swim. If you invest in the right stocks, you get to live in a nice comfy house and have all your needs met. If you don't, or if your stock turns out to be run by crooks -- well, those are the breaks, kid. Hope that refrigerator box is warm in winter.

Dismantling Social Security and endangering the livelihood of senior citizens just to satisfy the ideological fantasies of government-hating Republicans and to further enrich the financial industry is a terrible idea. Congress should block it at the first opportunity.