The Bush Administration, as usual, is not talking about Social Security (hereafter SS) because they are concerned about what will happen 40 years from now. Gosh, it would be nice if they were. Name one other initiative of the Bushies that is concerned with the state of the country 40 years from now. There are none. There should be — namely, global climate change, but alas they conveniently ignore the growing body of science on that one. No, they are concerned about SS because their power base is as strong as ever and they wanna push through every possible ideological initiative while they can. What is the ideological motive here: they hate SS. Yuck, it even has the word “social” in it, as in socialism. This is an ideological attack on socialism. It is an entitlement and they hate entitlements on philosophical grounds. No matter that SS is one of the most successful programs the government has ever done, that it keeps people from eating cat food in their old age, assists people who are injured and can no longer work,etc. That is all beside the point to them. They hate social programs and they are attempting to use their power to eliminate this one.
First a little background on the problem: if we did nothing to SS in 40 years or so we would need to cut benefits by 30% or so. That is the worst case scenario right now if we do nothing. So when Bush says it will be “broke” in 40 years what he means is that the existing payroll taxes 40 years from now will only pay for 70% of the current benefits. That ain’t bankrupt, folks. Raise your hand if you’d rather get $0.70 than $0.00.
A very important point about SS is that it is not a charity program. Everyone gets it regardless of need and that is a Good Thing. This means the Right can’t prattle on about how it is wealth distribution. It is not. In fact, rich people pay a much smaller percent of their income into SS than non-rich people because you only pay in on something like the first $80k you make. So if you make $250k/yr you are paying very, very little into SS. So please, Rush, don’t give us this shit about this is some wealth redistribution scheme ’cause it ain’t.
In terms of the privatization scheme, there are a few problems with it. It’s not that it is an entirely insane idea, but there are problems. Problem one is, it is much more expensive. Administration of the SS system is very cheap compared to the average cost of managing, for example, a mutual fund or a stock portfolio. That’s because Wall Street manages the latter and everyone knows that the 11th Commandment is that Wall Street people must be rich. Financial managers are in the business of their own enrichment. Your average government worker is not.
Second, the financial markets are risky. Yes, you can get a higher return but it is at the cost of higher risk. When the dot com bubble burst some of my mutual funds went back to balances I had 10 years earlier. I lost 10 years of growth in some of these funds. What do we do with retirees whose nest egg evaporates a few months before they retire? Cat food? That defeats the whole point of SS. If we need a safety net to catch people who can’t live on their privatized SS income, we have gained nothing.
Privatization is a major change in philosophy. Instead of existing young workers helping to support the elders of our community, you have to save enough money to take care of yourself. While this doesn’t sound so bad the implication is clear: in the first case we take care of our old folks no matter what and in the latter case if they fail to take care of themselves, they eat cat food in their latter years.
I should probably write a separate post about it, but the problem with ideological initiatives is that they are not necessarily based on reality. Either privatization of SS will or will not improve our care of retirees. Whether it does or not is something that can be proven one way or the other. Ideologues base their solutions on a philosophy that is based on their abstract ideas of what is good and what is bad — it doesn’t take the proof into account. That is why the “cutting taxes solves all problems” philosophy of the Right is so annoying. This shit is measurable and whether you like it or not, the USA needs tax revenue. The no taxes ever approach is completely wrong but you’d never know it talking to one of these ideologues.
So, in summary, Bush is lying again. It’s not about avoiding an impending crisis it’s about eliminating an entitlement that has been very successful. I also think it is ideologically sound — I’ll take care of you when you are old and I am young and when I am old the young people will take care of me. Makes perfect sense to me.
Don’t be fooled, Bush is hurting America again.