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The
2002 election victory has emboldened Republicans to
revisit a number of issues they wisely shied away from
before Election Day, including the privatization of
Social Security. Without addressing the political ramifications
of the election, let’s make one thing crystal clear:
If they think the election was a mandate to destroy
Social Security, allegedly in the name of “saving
it,” Republicans and conservatives are about to
discover that their victory should not be construed
as carte blanche to run amok with their social agenda.
Social
Security isn’t “broke” and it’s
not “broken” either. In fact, if absolutely
no changes are made to the system, Social Security can
continue paying 100% of its promised benefits for the
next 39 years. Beyond that, current revenue projections
indicate that only about 72% of scheduled benefits can
be paid. So, while changes may be needed, they should
be carefully considered and implemented.
Some
background is in order. Established in 1935, Social
Security has lifted millions of Americans out of poverty.
Today, 45 million of us enjoy it’s benefits. It
is fair to say that Social Security has been the most
successful government program in American history. No
other program has ever done so much for so many people.
It helps retirees, with lifelong benefits. It helps
families and children, when the family breadwinner dies
or is injured. It has literally kept millions of Americans
from slipping into poverty. And it does it all very
efficiently, running the program on about 1% of the
revenues collected. Private industry with it’s
profit motive can’t match the efficiency of this
program.
Despite
its success, it is a government program which Republicans
have hated. They opposed it in the 1930’s and they
have opposed every improvement to the system along the
way. So, it is no surprise that they now seek to eviscerate
the program, by diverting funds from the system, through
“privatization,” under the guise of permitting
“choice” and “higher returns.” While
Republicans accuse Democrats of raiding the program,
they have themselves diverted trillions of dollars in
Social Security receipts to fund their tax cuts, favoring
wealthy individuals and corporations, instead of allowing
the surpluses to build to shore up the system, to protect
working Americans. By their actions, they have made
a mockery of the “lock box” concept of protecting
Social Security funds.
When
their polling data made clear that the American public
did not support “privatization,” and considered
it an unpopular word, the Republican leadership quickly
changed the label to “Personal retirement accounts.”
Don’t be fooled. It looks and smells like the same
rotten vegetable, whatever they call it.
The
latest Republican scheme is the product of a “commission”
appointed by the President to look into the future of
Social Security. There was just one problem with this
“commission.” Unlike past efforts to shore
up Social Security, which examined all options, this
“commission” was made up only of people who
support privatization. In typical conservative fashion,
they cannot wait to allow the “free markets”
to get their hands on Social Security funds. Their solution:
the establishment of “personal retirement accounts”
for younger workers. Allowing them to invest a portion
of what would have been Social Security receipts in
the stock market or other risky investments.
Let’s
set things straight. Social Security was never intended
to be an investment program. It is a safety net; not
a vehicle for speculation. It is what separates us from
less civilized societies where people die on the streets
in poverty. It is not about earning the highest return.
It is about guaranteed benefits. Nor does it preclude
anyone from setting up their own personal retirement
accounts.
In
case you haven’t noticed recently, open up one
of your stock or mutual fund statements and take a look
at how much money you have lost this year. Ever heard
of Enron or Worldcom? Remember the craze over Tech stocks?
Local favorite Lucent Technologies has gone from a high
of 55 to a current level of about 7, losing nearly 80%
of its value. I’ll bet those workers whose retirement
savings were wiped out by corporate scandals appreciate
the fact that Social Security will be there for them.
It may be all will have. Even the supposed “experts”
have not been immune. The professionally managed New
Jersey pension funds lost $8 billion last year, when
the market crashed. Social Security is not supposed
to be a gamble.
Investing
Social Security in the stock market would have been
disastrous. Worse yet, in order to pay for the diversion
of even a small amount of payroll receipts from the
system would require a cut in payments for today’s
recipients, because it would siphon off money needed
to pay current benefits. So, it would remove precious
resources from the system, while exposing a greater
share of retirement income to market risk.
There
are better ways to insure the solvency of the system.
For example, the retirement age can be re-examined,
as well as the $80,400 cap on payroll contributions
to the fund. At the time that cap was fixed, that was
a much higher salary in real terms than it is today.
Unpopular as the idea sounds, maybe the cap needs to
be re-examined. But, don’t mess with my Social
Security benefits in the name of privatization.
November
13, 2002
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