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Social Insecurity

President Bush is stumping for his proposed Social Security reforms, his so-called Ownership Society, in much the same manner that he campaigned for re-election. You have to wonder if his words are just as hollow now and his promises as false as they were during his campaigns and first four years in the White House.

While the failures of the Bush Social Security plan seem pretty obvious in some circles, The Regime is pushing hard for its proposed changes despite mounting criticism. And they’re employing the same campaign tactics they always use, which generally means they lie to the public with grandiose, misleading descriptions of their proposals and use propaganda to convince the people.

The Republican ploy to develop an Ownership Society is a deception. Instead of making everybody rich, they are actually attempting to channel more government money into the insurance and investment industries. The primary promise is to make all tax payers self sufficient by allowing them to invest a portion of their Social Security taxes in government-sponsored investment accounts. Regime representatives infer this will make everybody rich enough to retire at some point in their lives. It’s a pipe dream. You gotta wonder what they’re smoking.

Many other countries, including Great Britain and Sweden (More Info), have already tried privatizing a portion of their national pension plans and failed. Thatcher tried this 25 years ago and it ended up costing more to divert the funds from Britain’s version of Social Security into private accounts than it cost the government to make the pension payments. The investment plans invited rampant corruption and workers ended up with smaller retirement benefits.

The private investment plan will actually cost more than the current system. A variety of estimates show that it will cost $1 to $3 trillion over 10 years just to shift money from Social Security payroll taxes to private accounts. This will result in less money for pension payments and the trust fund will be emptied 20 years sooner than if the system is simply left alone.

Most people will not make that fortune they’re hoping for and many of those that do manage to build solid nest eggs will lose them when their businesses or investments go bad, they get dragged through expensive divorces or the medical costs of a long-term illness eat them up. Anything can happen over a lifetime.

There is significant risk involved in the stock market and most people do not know how to invest or even how to pick a solid investment fund. The stock market is a gamble if you’re not an insider. That was aptly evident in the 90’s when the market went mad and everybody seemingly made fortunes. But corruption became rampant and that bubble burst, as all will eventually, with most people losing their profits. Even their 401(k)s lost money.

Fund management fees will be high and frequently wipe out any profits made from the investments. In the long run, the traditional US Social Security system is a more solid concept than the changes being pushed by the Bush Regime.

Bush is also promising to lower the costs of the Social Security program, but his plan to do so by tying payments to current prices instead of inflation is doomed to failure. Other countries have already tried it and failed. (Link: Britain) Bush is pushing for this because wages historically increase faster than inflation each year. The Regime knows, but is not telling the public, that this practice will reduce the value of guaranteed benefit payments to retirees by 50 percent in just 30 to 40 years.

The Administration is playing on the fears over Social Security, claiming the system is going broke and something needs to be done quickly, to push a personal agenda. While it is clear that we need to address these issues, what is required is a solid evaluation of the system and its needs before the development of a long-term plan to place the Social Security program on solid footing for future citizens. We do not need a hasty decision resulting from heavy-handed political pressure by the administration’s big guns. And you’ve gotta wonder why they’re doing this. (Link: Project for the New American Century)  (Link: Federalist Society)

At a time when the population is concerned over the loss of jobs, rising living costs and threats of terrorism, the Bush camp is hammering on their agenda. (More Info) They’ve already tried changing the Medicare system and it proved to be a smoke screen. While promising Americans cheaper prices on prescription drugs the Republicans pushed through a program that requires people to abandon Social Security and sign with an HMO in order to receive the lower prices. Medicare is actually banned from these lower prices and the plan includes restrictions on the sale of low-cost medicines from Canada. The entire scheme was designed to benefit the pharmaceutical industry, not American citizens who pay the highest prices for medications in the world.

Other Social Security plans include raising the retirement age from 65 to 70 at a time when the job market is shrinking, the country’s population is rapidly nearing 300 million, more young people are entering the work force and industry is turning a cold shoulder on the elderly. What jobs are people in their sixties going to be holding? And just how old does a person need to be before they retire? If they lose their jobs or their health fails before they reach the full retirement age they will be forced to accept lower benefit payments for the rest of their lives.

The Social Security Administration is already in the process of making this transition. They are gradually adding a few months to the age level at which people are able to receive Social Security payments. For example, a person turning 65 in 2004 did not qualify for Social Security benefits on his birthday, as used to be the case. The retiree had to wait an extra three months before receiving benefits. People retiring this year will have to wait longer --- and each year a few months will be added for future retirees until the level is raised to age 70.

Why is Bush is pushing so hard to revamp Social Security? Is he looking to establish his reputation for history, or is he merely responding to pressure from his buddies in the securities, insurance and pharmaceutical industries by opening yet another government trough?

Social Security involves everybody but the rich, and strikes much closer to home than the war and other problems facing the country. Raising the topic at this time could be a way of deflecting public interest from more important issues, including the misguided war on Iraq, the need for a government healthcare program and cheaper prescription drug costs, the administration’s inability to adequately address the threat of terrorism and its failure to fund its own education proposals as well as the continuing nosedive of our economy at a time when China and the European Union are making giant strides to overtake us in the world market.

There is also the concern over the country’s Welfare Program. Much attention has been paid to reducing the costs of Welfare, but decreasing Social Security benefits will increase the Welfare rolls. Higher Social Security benefits will keep people off Welfare and the Social Security program is cheaper to run.

Americans remain skeptical about private investment accounts despite George Bush’s persistent push to build support for his proposed changes to the Social Security system. We are suspicious --- and with good reason.

Despite all of Bush’s dire claims about the impending bankruptcy of the Social Security system, the truth is there is currently a huge $1.6 trillion trust fund reserve in the system, the largest in its history. The baby boomers, who are due to begin retiring soon, are the largest bunch of tax payers in US history and they have been paying far more in taxes than is required to fund the current benefits for retirees.

Most estimates show the system will support full benefit payments until 2042, without any changes to the program, although the trust fund will need to be tapped starting in 2028. Even then the system will still be capable of paying almost 75 percent of benefit amounts. The Congressional Budget Office predicts the system will be able to pay full benefits until 2052 and 80 percent after that. (More Info)

The basic problem with the Social Security program is that the government has misappropriated the $1.6 trillion in the trust fund. All that is necessary to fund the program through 2042 is for the government to repay the money is has taken out of the fund!  Apparently, our representatives in Washington have no plans to do so. All of the talk about Social Security going bankrupt is a matter of misdirection. Americans need to hold the Bush Administration and the members of Congress accountable.

About 82 percent of Americans don’t believe Social Security is in an immediate crisis. There is plenty of time to fix the system. Bush’s proposed changes will not improve the system --- they will actually cause the reduction of benefits in much less time. Again, you have to wonder what his real motives are.

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