Social Security-The Truth is Out There

The truth continues to trickle out about President Bush's Social Security scheme, with reports now indicating the president is "seriously mulling" cutting future promised retirement benefits for millions of young workers by as much as 6 percent, even after potential gains from private accounts are included. Attempting to sell Americans on the idea of increased personal risk and diminished rewards, President Bush reiterated over the weekend the myth that Social Security is "in crisis" and that risky personal savings accounts are the only way to save the system. Newsday reports that by reflexively rejecting a wide range of "minor tweaks" that could help save the program, "Bush has painted himself, and the nation, into a corner." Furthermore, the president rejected raising payroll taxes or reducing benefits for current retirees, ensuring he intends to "finance the estimated $2 trillion cost of overhauling" with "enormous new government borrowing." One GOP lawmaker called that plan "irresponsible" at a time of runaway debt and increased spending.
GRAHAM CALLS BORROWING "IRRESPONSIBLE": A Congressional Republican proponent of Social Security reform, Sen. Lindsay Graham (R-SC), warned President Bush on Sunday against borrowing that could balloon the deficit to more than $700 billion. Graham said a reliance on borrowing would be "irresponsible and could undermine Bush's tax- and deficit-cutting goals." He urged the president to "be flexible." In the 2000 debates, President Bush said he would pay the cost of overhauling Social Security by using "one-half of the surplus" created during the Clinton years. Of course, the president's tax cuts for the wealthy have turned that surplus into a massive deficit.
DIMINISHING RETURNS: The president had promised his proposed privatized accounts would give workers a "better rate of return," but David John, "an analyst at the conservative Heritage Foundation who has met frequently with White House officials as they prepare their proposal, said he has 'absolutely no doubt' that Bush will have to reduce the planned growth of benefits." Last week, top White House economic adviser Greg Mankiw admitted the Social Security overhaul would "include major cuts in guaranteed benefits for future retirees."
THE CRISIS MYTH: President Bush continued pushing the idea that there is a "crisis in Social Security" – a misconception repeated uncritically by major news stations. But a 2004 report prepared by several Bush appointees said that while "the financial difficulties facing Social Security" should be addressed "in a timely manner," the program's assets are in little danger of running out before 2042. To "build public support and circumvent critics in Congress and the media," the president is planning to dust off the strategy he used "to sell his Iraq and terrorism policies during the first term." That means narrowing the circle of influence, whipping up a frenzy about the "disastrous consequences of inaction," enlisting the help of "well-funded conservative groups" and leaving the details for later.
WALL STREET WINDFALL: So who wins from Social Security privatization? Bush administration allies on Wall Street are trying to discredit the idea that investment firms will benefit from Bush's plan, citing a new study which says firms stand to make "as little as $39 billion for investment firms over the next 75 years and no more than $279 billion." But that decidedly ambiguous estimate comes from a study sponsored by the Securities Industry Association, which stands to benefit from privatization, has campaigned for it in the past and lists an agenda almost identical to President Bush's. A study published in September by University of Chicago business school professor Austan Goolsbee "predicted Wall Street could collect $940 billion or more over 75 years, an amount he called the largest windfall in American financial history."