18 December 2004

Social Security Sell-Out

For those who spend their days obsessed with worry - imagining a host of possible threats, both personal and global, from aneurysm to asteroid - the time has come to put away your fears of the unknown. Instead, letís take a few moments to confront the known.

Howís this for frightening? The manager of the debacle in Iraq is intent on using those same skills to "reform" Social Security.

This country is already facing record trade deficits and record budget deficits. As to the former, George W. Bush on Wednesday demonstrated his intricate grasp of global macroeconomics: "People can buy more United States products if theyíre worried about the trade deficit."

Mr. Bushís plans regarding the budget deficit are more complex.

In 2004, the federal deficit hit a record $412 billion; the Congressional Budget Office projects a total deficit amount of $3.2 trillion over the next decade. The causes here are almost entirely Mr. Bushís doing - his war in Iraq and his tax cuts are the primary culprits.

The cost of the Iraq war has now exceeded $100 billion, double the White Houseís "official" estimate prior to the invasion. If you combine the wars in Iraq and Afghanistan, youíre looking at another $100 billion in 2005.

As for the tax cuts, which were intended to expire over the next few years, Vice President Dick Cheney has made it clear: "We are committed to keeping the Bush tax cuts in place." Just to jog everyoneís memory, one third of those tax cuts went to the wealthiest 1% of Americans.

So, Bush & Co. plan to keep their wars humming along, and have no intention of placing any tax burden on their elite base. How, then, to deal with the burgeoning deficit?

"President Bush said that the administrationís efforts to support the dollar by reducing government borrowing levels would address the unfunded liabilities in the governmentís huge entitlement programs, Social Security and MedicareÖíSocial Security reform will be at the top of my agenda,í said Mr. Bush." (CBSNews.com, 12/16/04)

And what manner of "reform" does he propose? Mr. Bush would allow present employees to divert some of their Social Security withholding tax to invest in stock market funds. But, since todayís payroll taxes fund todayís Social Security recipients, thereís an obvious - and immense - cash shortfall.

Bush has pledged that his "privatization" program would not impact those who currently receive Social Security benefits, nor would there be an increase in payroll taxes to fund the shift toward "private accounts."

That leaves only borrowing. The cost? Between one and two trillion dollars, added to an already crippling federal deficit.

Look closely at Mr. Bushís plan: He says he will strengthen the dollar by reducing government borrowing, which he will accomplish through an unprecedented program of government borrowing. Unprecedented in the United States, that is; but it has been tried before.

"One major reason for Argentinaís rapid debt buildup in the 1990ís was a pension reform involving a switch to individual accounts - a switch that President Carlos Menem, like President Bush, decided to finance with borrowing rather than taxes. So Mr. Bush intends to emulate a plan that helped set the stage for Argentinaís economic crisis." (Paul Krugman, New York Times, 12/10/04).

The Bush administration has already geared up to sell their Social Security plan to the American public. Theyíll paint themselves as bold and innovative, trusting in the wisdom of the people and the solidity of the stock market. Opponents will be cast as cowardly naysayers, using "campaign scare tactics" to frighten present and future Social Security recipients.

But the bottom line is this: Mr. Bushís plan would not strengthen Social Security, nor would it strengthen the dollar. It would, however, pump vast sums into Wall Street, not only through the investments themselves, but also through fund management and transaction fees.

The Bush war in Iraq benefited corporations like Halliburton and Lockheed-Martin; the Bush tax plan benefited the ultra-wealthy; the Bush prescription drug program is designed to benefit the insurance and pharmaceutical industries.

Does it really require that much heavy-lifting to figure out who is intended to benefit from the Bush Social Security plan?

By Charles Cutter

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