David Kennell follows up on his April 2-8 article on Social Security:
In my recent People Before Profits article, I predicted that the hidden “time bomb” in the Bush Commission’s assault on Social Security was a plan to reduce starting benefits progressively under the benign-sounding “price indexing.” Probably the original and ultimate scheme, it would do more than weaken Social Security (as would private accounts); it would destroy it. A short month later, Bush unveiled the price-indexing scheme.
The plan is being peddled as a “progressive price indexing” that will only reduce benefits for the “most affluent Americans.” However, all workers at wage levels above $20,000 would have reduced benefits.
Analyses by the Center on Budget and Policy Priorities (cbpp.org) show that when combined with private accounts, a worker making the “median” wage of $37,000 in 2005 would retire when 65 in 2055 with 65 percent lower defined benefits.
Social Security benefits have always been progressive with higher percent replacement incomes for lower wage earners. The Social Security payroll taxes of workers are accumulated over their working years in Treasury bonds. But under the “progressive price indexing” scheme, the accumulated payroll taxes of 70 percent of workers would not be paid back. It would be a simple step in the future to cut off the lowest paid.
However, the major goal of price indexing is the long-term cumulative decrease in starting benefits, which is predicted to cause a decline of about 1.1 percent per year. This would ensure that Social Security would “wither away” with time.
The Social Security trust fund has never been stronger financially. It currently has a $1.7 trillion surplus, which increased $170 billion last year with only 3.3 workers per retiree. The non-partisan Congressional Budget Office calculates 100 percent benefits to 2052 and 80 percent after that. The 80 percent could be raised to 100 percent by a modest increase either in the $90,000 “cap” or in the payroll tax rate.
The real crisis is the towering U.S. debt generated by a ballooning military budget coupled with enormous tax cuts to corporations and the wealthy. To meet this debt to banks, mutual funds, governments, and wealthy individuals holding Treasury bonds, the Bush plan would not pay back its full debt to only one of its creditors: the American working people.
Art Perlo adds the following comments on “price indexing”:
Bush is claiming he is increasing benefits for low-income earners, and not cutting benefits for anyone. This is a lie, by any objective reading. He is keeping income for low-earners exactly as they are presently scheduled (while almost guaranteeing they will be cut in the future). He is cutting benefits for everyone else, both from what they are currently scheduled to be, and as a fraction of their earnings.
Wadi’h Halabi writes about world oil supplies:
A recent People Before Profits by a guest columnist (“The urgent case for nationalizing the oil industry,” May 7) correctly made the call to socialize energy production and move to renewable energy while protecting oil workers. But the column also propagated the belief that world oil production is close to declining, possibly as early as 2006 (“Hubbert’s Peak,” named after an oil company geologist). Most scientists do not agree.
For more than a century, Wall Street has been promoting the idea that the world is close to running out of oil to justify outrageous prices. Exxon’s 2005 exploration budget is actually down from last year’s. Wall Street and Washington will even use sanctions and wars to hold production down. Iraq and Iran are cases in point.
Socializing ownership of energy production is indeed an urgent need.