February 17, 2011
By Staff Reporter
The new Social Security, if it would even be called that, would be the centerpiece of the president’s plan to turn America into what is being widely touted as an “ownership society.”
In order to sell his idea, the president has reverted to what for him is a tried and true formula: create a crisis where there isn’t one. He did it in Iraq with his WMD scare. He’s doing it again now, this time claiming that the retirement system is facing an imminent fiscal calamity. He cites 2018, when baby boomers retire en masse, as the year when benefit payments are expected exceed payroll tax revenues. What he doesn’t mention is that once that happens, Social Security — whose budget, which is independent of the federal budget, is currently running a hefty surplus — has a large and growing trust fund from which to draw. The fund, say both the Social Security Administration and the Congressional Budget Office, will last at least until 2042. Some economists think it is virtually inexhaustible.
This is not to say that some tweaking of the current system is not in order. Several options, including a combination of phased-in hikes in payroll taxes and cuts to benefits, have been suggested as ways to ensure its long-term viability. But virtually no expert believes that the matter needs urgent attention. The people who are making that argument, rather, can be found almost exclusively in the Bush inner circle and in conservative think tanks. Their intent, going back to the days of Barry Goldwater, has been nothing less than the dismantling of the program. The move toward privatizing part of the system now is but a step toward that goal.
The details of the president’s plan have not been revealed, but enough information has been leaked to paint a pretty clear picture. In essence, the administration proposes to reduce substantially the guaranteed government retirement benefit by changing the way it is calculated from one based on the wages Americans earned during a lifetime of work to one determined by how much the cost of living went up during that time. It would also give Americans an opportunity to invest a portion of their wages — from 4 to 6.2 percent of their payroll taxes — in private accounts.
The opportunity to have full control of their retirement benefits is undeniably attractive to many Americans. But with investment there is risk. Social Security today, on the other hand, is guaranteed. The bonds in its trust fund are obligations of the federal government’s general fund, which legally must pay the interest and principal on those bonds.
Social Security was a New Deal program to help people, in the words of Franklin D. Roosevelt, “build their own security.” It has been a resounding success. For many it is the one thing standing between them and penury in their old age. It should not be substituted for a gamble in the stock market. Fix what needs fixing, but don’t overhaul an otherwise effective — and cherished — program simply because it conflicts with the current administration’s privatization-driven ideology. Leave Social Security alone.