by Michael Schreiber – February, 2005
Since the inauguration of his second term, President Bush has redoubled his efforts to convince Congress and citizens to support his plans to “fix” Social
Security by means of benefit cuts and the privatization of individual accounts.
The administration’s impending Social Security reform is part of a package of cutbacks that would weigh hard against working people and the poor. White House budget proposals for 2006 would scale back or eliminate some 150 programs, including those for public housing, food stamps, home-heating aid for the poor, student loans, veterans’ medical services, and environmental protection. Meanwhile, the military has been promised a $19 billion increase in funding, not including additional money for the Iraq war.
The essence of the Bush Social Security plan (details appear to be some weeks off) is to cut future benefits by up to 40 percent. Then, beginning in 2009, young workers will be induced to try to regain the benefits they will lose by gambling a portion of their savings in the stock market. Those who choose to open stock-market accounts would have to pay a portion of their stock earnings after they retire to reimburse the government for investment costs, with added interest.
Just as when he lied about “weapons of mass destruction” to justify going to war in Iraq, Bush seems intent on manufacturing a crisis over Social Security. He claimed in his State of the Union address that “by the year 2042, the entire system would be exhausted and bankrupt.”
However, even the Congressional Budget Office estimates that the system will be able to pay at least 81 percent of projected benefits until 2052—and
perhaps more if the U.S. economy grows sufficiently. The Social Security trust fund has been growing by about $150 billion every year since 1984, when payroll taxes on working people were increased.
A large proportion of the fund ($1.5 trillion) is invested in U.S. Treasury bills, which the government pays off either through tax revenues or through
borrowing, mainly from large financial institutions. The fund would not become “bankrupt,” let alone “exhausted,” any more than the federal government as a
whole would go broke.
It is true that the ballooning federal debt could have dire consequences for U.S. capitalism. But the main cause of the debt increase is military spending and
corporate welfare—not Social Security.
Social Security is more a source of revenue for the government than a drain. For decades, the government has “borrowed” from the trust fund for debt payments.
Bush’s Social Security reforms, by his own admission, would do nothing to reduce the federal debt. The administration states that setting up private accounts will cost about $754 billion during the first decade, and trillions more in later decades. To pay this, the government will have to borrow even more money.
The White House needs the votes of Democrats as well as Republicans to pass a Social Security reform bill in Congress. While some top Democrats have come out swinging against the Bush plan, they indicate that they would be amenable, as always, to “compromise.”
Democrats have suggested their own measures, such as raising the minimum age before working people can retire—and thus cutting benefits.
Social Security has become the major source of income for retirees. This is more and more true since corporations have been dismantling their pension-payment systems. Today, only 16 percent of workers in the private sector will receive pensions.
Unfortunately, many working people who have retired or are on disability receive little or nothing from Social Security. These people include those who in the past were low wage-earners, often unemployed, part-timers, or housewives—and thus paid relatively little into their account.
While we must mobilize to defend Social Security from the current attack, it is also important to demand that the system be extended in order to provide for
the needs of all people who, for one reason or another, are no longer in the active workforce.
And cash payments are not enough. Complete medical care and medicines, hospitalization or home nursing, adequate shelter and heating, and transportation should be provided free of charge to our nation’s elderly population and to those who are disabled and unable to work.
These benefits can be paid for, at the very least, by removing the cap that enables wealthy people to avoid paying Social Security taxes on income over $90,000.
The unions, women’s organizations, community and veterans’ groups—even student and youth groups—must all get behind this struggle to protect our future.