blogenlust
1.04.2005

Social Security


The fact that the privatization of Social Security seems to be the Bush Administration's pet project for 2005 is a bit of a mixed blessing for me. On the one hand, I barely have a grasp on the basics of the issue, so recent discussions of SS have been over my head (thus the lack of posts on the subject). On the other hand, it forces me to learn more about a topic that will be very important, not only this year, but also in the future. So all in all, I guess I should be thankful that Bush is trying to destroy Social Security. I think those who have compared the Administration's marketing of the war and tax cuts to their Social Security project are correct. Bush's M.O. has always been to confuse an issue with smoke and mirrors so that people really don't understand why something is necessary or how it will affect them. Often this is done by obsessively accentuating the positive and eliminating the negative (Don't mess with Mister In-Between!!). Thankfully, there are people I trust like Paul Krugman who can sort through the fact from fiction on the issue of Social Security:
Here's the truth: by law, Social Security has a budget independent of the rest of the U.S. government. That budget is currently running a surplus, thanks to an increase in the payroll tax two decades ago. As a result, Social Security has a large and growing trust fund. When benefit payments start to exceed payroll tax revenues, Social Security will be able to draw on that trust fund. And the trust fund will last for a long time: until 2042, says the Social Security Administration; until 2052, says the Congressional Budget Office; quite possibly forever, say many economists, who point out that these projections assume that the economy will grow much more slowly in the future than it has in the past. So where's the imminent crisis? Privatizers say the trust fund doesn't count because it's invested in U.S. government bonds, which are "meaningless i.o.u.'s." Readers who want a long-form debunking of this sophistry can read my recent article in the online journal The Economists' Voice (www.bepress.com/ev). [...] In fact, the Bush administration's scaremongering over Social Security is in large part an effort to distract the public from the real fiscal danger.[...]As a budget concern, Social Security isn't remotely in the same league. The long-term cost of the Bush tax cuts is five times the budget office's estimate of Social Security's deficit over the next 75 years. The botched prescription drug bill passed in 2003 does more, all by itself, to increase the long-run budget deficit than the projected rise in Social Security expenses. That doesn't mean nothing should be done to improve Social Security's finances. But privatization is a fake solution to a fake crisis. In future articles on this subject I'll explain why, and also outline a real plan to strengthen Social Security.
The problem is that SS probably does need some reform, but the Bush Administration's notion of reform is far too extreme for what the reality of the problem requires. Of course, this is consistent with other "problems" Bush has sought to "fix." Frankly, I don't need to know anything about Social Security to know that when Bush is trying to fix something there is usually an underlying motivation that has nothing to do with helping regular Americans and everything to do with helping his "base." In this case, it will be the Wall St. brokers who stand to make a killing on privatized Social Security.