PITTSBURGH — Alarms are going off in union halls, churches and senior citizen residences across the country as the Bush administration kicks into gear its campaign to privatize Social Security.
On Dec. 15, President Bush convened an economic summit, at which the first speaker was Richard Parsons, co-chairman of Social Security commission and chief executive of Time Warner. The commission, established in 2001, is calling for the privatization of Social Security under the cover of “private retirement accounts.”
At an Economic Policy Institute (EPI) press conference Dec. 14, Aaron Henry, a senior fellow at the Brookings Institute and chairman of the National Academy of Social Insurance Board of Directors, damned the proposals before the summit.
“At a time when [the U.S. is] borrowing $100 million an hour from abroad, the $5 trillion deficit is accelerating, medical costs hammer wages and profits … and the income inequity is skyrocketing, for an economic summit to discuss diverting revenue from Social Security is the most perverse agenda this administration has come up with to date.”
Kenneth Apfel of the Lyndon Johnson School of Public Affairs and a former Social Security commissioner, said the debate has been solely around right-wing privatization schemes, benefit reductions, a retirement age increase and a change in the way benefits are calculated.
All this comes at a time when Social Security revenues are in good shape. According to the numbers used by everyone, including the President’s commission, Social Security can pay all promised benefits for the next 38 years without any changes at all. The nonpartisan Congressional Budget Office (CBO) just upped that estimate to 48 years, the Institute for Public Accuracy said Dec. 14.
“By either measure, the ‘long-term problem’ faced by Social Security over the whole next 75 years is actually less than it faced in each of the decades of the 1950s, ’60s, ’70s, and ’80s,” the IPA said.
Social Security is more financially sound than it has been throughout most of its 69-year history. Even with CBO projections that the Social Security Trust Fund will run out in 2052, it still will not be “bankrupt”; revenues will cover 81 percent of promised benefits.
“To extend the trust fund into the 22nd century with no change in benefits,” Paul Krugman wrote in the Dec. 7 New York Times, “would require additional revenues equal to only 0.54 percent of the gross domestic product” — roughly the portion of Bush’s tax cuts going to people with annual incomes over $500,000.
As of December 2001, 45.9 million people, one in every six Americans, depended on their monthly Social Security check to pay their bills. About 3 million of those receiving Social Security checks are under 18, surviving family members of deceased workers. It also provides income to disabled workers.
Recently a young worker, upon getting his first paycheck, asked, “Who is FICA?” FICA taxes are Social Security taxes. Workers pay 6.2 percent on income capped at $84,900, and the employer pays 6.2 percent.
Since 1983, Social Security has generated more revenue than it has paid out in benefits. That surplus is kept in the trust fund, earning 6.6 percent in interest per year. In 2001, the trust fund took in $72.9 billion in interest. Social Security is a defined-benefit insurance program independent of the ups and downs of the stock market, with built-in safeguards to protect workers’ investment.
The Bush administration’s proposed reforms, charged Apfel, would manufacture an immediate crisis in Social Security because it would take money out and cost at least $2 trillion to implement.
EPI economists believe that job creation, raising the $84,900 cap, rescinding the tax cuts for millionaires, establishing incentives to increase personal savings and controlling health care costs would address the expected Social Security shortfall in 2044.
Henry Aaron, who has tracked the Bush administration over the past four years, is convinced that the attempt to privatize Social Security will be rammed through Congress in the first six months of 2005. The softening up campaign has already begun with press reports of a $20 billion fraud in Medicare, and attempts to manufacture a Social Security crisis are in place.
“Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people’s lives better and more secure,” Krugman wrote. “And that’s why the right wants to destroy it.”
The Alliance of Retired Americans (ARA), a union-based senior organization with 3 million members, and the 35-million-member American Association of Retired Persons are calling for lobbying over the holidays to save Social Security.
Leaders of the AFL-CIO, NAACP, National Organization for Women (NOW), and others scheduled a Washington press conference Dec. 16 to announce “an aggressive campaign to stop President Bush’s plan to dismantle Social Security.” Speakers were to include AFL-CIO President John Sweeney, NAACP Chairman Julian Bond, NOW President Kim Gandy, Roger Hickey, co-director of the Campaign for America’s Future, ARA President George Kourpias, and Marty Ford of the Consortium for Citizens with Disabilities.
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