Vows to revive privatization
Angry retirees descended on Social Security Administration offices in downtown Phoenix Mar. 7 holding placards that read, “Tell McCain ‘hands off Social Security.’”
They were protesting Republican Sen. John McCain’s recent statements that he would revive President Bush’s scheme to privatize Social Security. The plan was rejected by an overwhelming majority of the people when Bush attempted to push it through in his first term.
Doug Hart, president of the Arizona Alliance of Retired Americans, told the crowd that his group interviewed McCain before he announced his presidential candidacy. Hart said, “At that time, McCain said he opposed privatizing Social Security and said the idea was ‘dead in the water.’ Now, McCain has changed his position to cater to Wall Street investment firms who would stand to gain from the proposal.”
Hart added, “It’s no wonder George W. Bush endorsed John McCain … Under the Bush-McCain scheme, our Social Security benefits would be thrown to the whims of the stock market. We get all the risk but Wall Street gets all the reward.”
The crowd booed loudly.
Hart told the World in a phone interview, “McCain changed his position to increase campaign contributions from wealthy people. We were quite dismayed by his switch. He calls his campaign bus ‘The Straight Talk Express.’ His flip on Social Security hardly qualifies as straight talk.”
Under the Bush scheme to shift to private retirement accounts, Hart added, retirees would lose their guaranteed monthly Social Security pension in exchange for private accounts that fluctuate with the stock market.
“People would be forced to figure out how to invest their money themselves,” Hart said. “We pay hundreds of thousands of dollars each year to ‘experts’ to figure out how to invest our IRA accounts.” And even these experts are watching helplessly these days as their clients’ Individual Retirement Accounts lose, collectively, billions of dollars in the plunging market.
McCain’s flip-flop touched off a chorus of denunciations in Washington. Rep. Sander Levin (D-Mich.), a Social Security expert on the House Ways and Means Committee, said, “It is highly unfortunate that Sen. McCain is advocating President Bush’s disastrous approach to Social Security built on private accounts instead of the guaranteed benefits of Social Security. Privatization would not strengthen Social Security. Quite the contrary, it would lead to its destruction.”
Rep. Jan Schakowsky (D-Ill.), House chief deputy whip, pointed out that Bush’s own Social Security Commission “found that privatization would reduce benefits and cost at least $1 trillion, money that would either have to be taken from the Social Security Trust Fund or added to the national debt.”
Two-thirds of retirees rely on Social Security’s guaranteed, inflation- adjusted monthly benefits for half or more of their income, she continued. For one in five recipients, a Social Security check is their sole income.
Schakowsky said, “Imagine what it would mean for older Americans — many of them women — to know that their financial security would be tied to the stock market. To know that if the market drops — as it has for the last four months — their ability to pay for housing, and food and health care decreases as well.”
McCain revealed his support for privatizing Social Security in a wide-ranging interview in the March 4 edition of The Wall Street Journal. He disowned statements on his campaign web site in which he claimed to oppose Social Security privatization. He told the interviewer he would correct the web site.
“I’m totally in favor of personal savings accounts,” McCain told the Journal. “As part of Social Security reform, I believe that private savings accounts are part of it — along the lines that President Bush proposed.”
McCain’s chief economic adviser, Douglas Holtz-Eakin, told the Journal McCain switched his position because a 2000 budget surplus vanished in a recession, and because Bush tax cuts and the “cost of responding to Sept. 11” ate up revenues needed to bolster Social Security.
Among options McCain supports are “extending the retirement age to 68” and “reducing cost-of-living adjustments,” the aide said. “You can’t keep promises made to retirees,” he concluded.
The Democratic presidential candidates differ in their approaches.
Illinois Sen. Barack Obama has been an outspoken opponent of privatizing Social Security. He has proposed raising the cap on income subject to the Social Security tax to erase any long-term shortfall in its trust fund, a measure long advocated by organized labor and others.
New York Sen. Hillary Clinton proposes personal investment accounts on top of existing Social Security.
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