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Look out, here they come again. The folks who want to turn what is arguably the most successful government program in U.S. history into more profits for Wall Street and more risk for average citizens are back with a new call for privatization.
As expressed by President Bush at the Republican convention, the plan is as vague as it is deceitful. "We must strengthen Social Security by allowing younger workers to save some of their taxes in a personal account-a nest egg you can call your own," Bush proclaimed. Sounds good, until you do some thinking and reach two unavoidable conclusions: 1) it would weaken, not strengthen, Social Security and, 2) this is exactly what it's supposed to do.
Since 1939 Social Security has helped millions of senior citizens avoid poverty. Often misunderstood, it is not an investment program where you put in dollars today while you're working and get them back with interest when you retire. It is, rather, insurance. It guarantees a certain level of income after retirement and it does so through the beauty of a contract between generations. Today's workers fund today's retirees. Tomorrow's workers fund tomorrow's retirees, and so on. It doesn't make anyone rich nor is it supposed to. It's a plan built on faith, trust and a spirit of sharing that's all too lacking in today's society.
But that's not good enough for Wall Street. It sees billions of dollars sitting in the Social Security Trust Fund as a lost opportunity. Think of what those bucks could generate in brokers' fees and commissions! So, over the years, investment firms created think tanks, institutes and PR campaigns to front their attempts to cash in. The movement lost some steam when the stock market went south and the safety of Social Security seemed like a better deal to folks.
Now, however, with the Congressional Budget Office and Social Security Trustees projecting a long-term shortfall in the Trust Fund, Bush and other would-be dismantlers of government have a new pitch. They avoid words like "privatization;" too scary. The new phrase is "ownership society." The gist of it is: you could take some of the money you now pay in Social Security taxes and invest it yourself.
It might make you rich-if you happen to retire when the market is hot. Of course, if you were relying an that account between 2001 and 2003 when the NASDAQ lost 75 percent of its value, all you really owned was an empty portfolio.
But the risk that this plan would substitute for guaranteed benefits is not its worst feature. By definition, it would put less money into the Social Security Trust Fund every year. So, Social Security would grow weaker as time went on. Benefits might have to drop and since the people relying on them most would be the least affluent-who haven't been able to set aside as much in their personal retirement accounts-Social Security would stop looking like a "we're all in this together" benefit program. It would look more like welfare: a way to help "those people" at "our" expense. Then it will just get easier to kill or shrink Social Security. A safe, sound program will have given way to the risks of the market, and this country will have taken one more step away from the ideals that made it great.
It doesn't have to happen. The truth is that modest changes in taxes and benefits, phased in over years, will keep Social Security solvent. Indeed, as a percentage of GDP, Social Security's shortfall is tiny compared to that created by Bush's tax cuts. Just the shortfall from tax cuts to the richest one percent of Americans-those making over $1 million a year-surpasses the total projected Social Security gap.
As a percentage of income, Social Security taxes already are a much lower burden on the richest people than the poorest. So, you in the first category already have the resources to invest in your retirement. No way do you need to reduce the Social Security Trust Fund for the people who need it most. Grow your portfolios. Make Wall Street richer. Knock yourselves out. Just leave Social Security alone. It works.
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