After reading a column in her local paper, the Albuquerque Journal, calling Bush’s Social Security privatization plan “a step in the right direction,” PWW reader Rose Shaw didn’t just get mad – she wrote a response! It was published on the Journal’s op ed page Jan. 5. Her piece is reprinted below. We hope other readers will follow her lead.
Ruben Navarette Jr.’s column — “Boomers in Social Security Denial” — is just another example of the barrage of assaults on every worker-friendly measure enacted since the New Deal, including the right to organize, overtime pay, Medicare, and especially Social Security, the most successful program of all. Since its creation in 1935, the first prediction of a Social Security crisis was published in 1936!
How long will the system really last?
The President’s Commission to “Strengthen” Social Security was established in 2001, stacked with people who favor privatization, including its co-chair, Richard Parsons, who is chief executive of Time Warner. Yet according to the numbers used even by them, Social Security is capable of paying full benefits for another 38 years without any changes. And the nonpartisan Congressional Budget Office just upped that estimate to 48 years. By either measure, Social Security is in better financial shape than it has been for most of its 69-year history.
Navarette does have a point that the trust fund has been raided and the system works on a “pay as you go” basis. (Incidentally, $600 billion of this raiding occurred under George W. Bush’s first term, to help cover an accumulated general budget deficit of more than $1 trillion through fiscal year 2004).
Even using this system, the Social Security trust fund will generate a $1.1 trillion surplus between now and 2018, according to “Stealing Social Security Past, Present & Future,” by Jack Rasmus, Z Magazine, December 2004. This is the money that Wall Street has its eye on and hopes to grab through hefty commissions generated through individual social security retirement accounts.
What’s really in it for young workers?
First, they would be paying a commission fee for the privatized account established from a portion of their Social Security taxes. If they don’t pay that fee, it will fall on taxpayers to cover it. Secondly, according to the commission’s Reform Plan 2, which Bush seems to favor, they would lose benefits under their remaining portion of the traditional trust fund. Because of the tremendous drain of funds taken out of the trust to build individual accounts, benefits under the traditional fund would have to be cut. A 20-year-old just entering the labor force would lose 34 percent of his or her expected benefits under this plan. This would amount to almost $134,000 over a lifetime of retirement, according to Mark Weisbrot, Center for Economic & Policy Research.
Can we really trust private investment bankers?
Of course, the theory is that they would gain this money back and make more through their individual accounts. But how likely is that? Think of not only Enron, but all of the companies who have stolen pension money from their workers over the years, and the workers are now stranded without retirement money. The stock market is unpredictable at best. Stocks go down and companies go bankrupt. The whole idea of Social Security is in the word “security.” In all its 69 years, the system has never failed to deliver payments to its beneficiaries.
Many questions remain. It is said it will cost $2 trillion to implement the changeover. This would create an immediate crisis. Where will this money come from? Bush and the commission do not tell us.
What happens to the benefits of the 7.8 million disabled and the 6.8 million survivors of retirees who also receive Social Security payments? With the trust fund drained as it will be, will their benefits also be cut? These people are not even mentioned or considered by the planners of these “reforms.”
One solution: Raise the cap!
To cover an expected shortfall after 38 years, why can’t we raise the cap for those who make over $90,000? Why shouldn’t everyone pay Social Security taxes on his full income — Bill Gates as well as the guy who makes $20,000? Wouldn’t this be fairer? After all, Bill Gates can afford the taxes better.
In an editorial Sunday, Dec. 19, the Albuquerque Journal argued against a crisis mentality, and raised many of the above questions
I couldn’t agree more, and hope that you will create a level field for this important debate.
Rose Shaw, a retired teacher in Albuquerque, N.M., is on the executive boards of the Gray Panthers of Greater Albuquerque and the New Mexico Alliance of Retired Americans, and is on the executive committee of New Mexico Educators Retirees (AFT-AFL-CIO), the retiree arm of the American Federation of Teachers.