Dark Bilious Vapors

Aside from the complete sham of using politically motivated operatives as his "citizen testimonials" during his "Tour America" peddling-snake-oil-show about the benefits for his Social Security proposed "Private Accounts" Plan, the Administration has failed to put forth any concrete details of the cost versus benefits of this "agressive, bold agenda" by our Fearless Leader.

The following is a statement by Barbara B. Kennelly, president and CEO, National Committee to Preserve Social Security and Medicare, on President Bush's plan on privatizing Social Security:

"As the President travels around the country talking up his plan to privatize Social Security, he remains noticeably silent on the two issues that matter most to people: how deeply will private accounts require benefits to be cut, and where will the money to privatize come from?

The proposals of his hand-picked privatization Commission, which he says he's using as his model, give us a glimpse of some answers.

The first point that becomes glaringly clear is that privatization isn't a plan to save Social Security at all; it's a plan to dismantle Social Security. That's because private accounts, by themselves, do nothing to address Social Security's solvency, a point which the White House has reluctantly acknowledged. In fact, because private accounts are financed by taking money out of Social Security, privatization actually increases the program's funding gap and causes an almost immediate cash-flow problem.

In addition, privatization results in huge cuts in Social Security benefits with no guarantee that private investment can replace those lost benefits. In the future, both workers who decide to take the investment gamble and those who decide against risking their retirement in the stock market will see their guaranteed Social Security benefit reduced over time by nearly 50 percent. Those who opt for a private account will have their guaranteed benefit reduced even further. This already reduced Social Security benefit will be cut by one dollar for every dollar that they have put into their private accounts, plus about 3 percent interest.

Non-partisan organizations such as the Center on Budget and Policy Priorities have calculated that, in future years, for the average worker the combination of private account balances and what little is left of the traditional Social Security benefit will be about one-half of today's promised benefit, and about one-third below what retirees would receive even if Congress never again made any changes to strengthen Social Security.

Those who support privatizing Social Security have planted the seeds of uncertainty about the system's long-term solvency for over a decade, and the President feeds that misimpression by claiming the program will be 'bust' or 'flat broke' by the time the younger generation is ready to retire. The words he uses have been carefully selected to imply the retirement of the baby boomers will drain Social Security of all its resources. Yet projections show Social Security will be able to pay full benefits for decades (until 2042 by its own Trustees, 2052 by the non-partisan Congressional Budget Office) and between 70 and 80 percent of benefits thereafter, even if Congress never again makes any changes to the program.

Because so many young people have bought into the argument that Social Security won't be there for them when they retire, they may not be as troubled by privatization as they should be. What they don't realize is the extra burden the creation of private accounts will place on them. Young workers will not only be pre-funding their own retirement, but they'll also be paying for the costs of benefits already promised to those aged 55 and older. These are known as the costs of the "transition" to a new system and will be multi-trillions of dollars in new debt.

The Administration has attempted to mask the cost of privatization, but the staggering debt burden of privatization will be all too real to our children and grandchildren. The President argues we should tackle Social Security now because it's not right to pass the problem along to future generations. But borrowing trillions of dollars, to be paid off by future generations, is the ultimate in irresponsible buck-passing.

Seniors worry about the unprecedented borrowing that will be required to convert from a guaranteed benefit to private accounts. They are leery of Administration promises to protect future benefits that may become unsustainable in the face of massive new debt, and they shudder at the heavy burden it will impose on their children and grandchildren. Having lived through both good times and bad, seniors understand the value of Social Security's safety net, and are loathe to trade a program that has successfully lifted so many of them out of poverty for the unpredictable fortunes of the stock market.

Those who support privatization would have us believe we live in an idealized world where markets never go down, workers never die or become disabled, the safety net has become superfluous, and Wall Street's financial advisors manage billions of taxpayer's dollars with nothing but their best interests at heart. Those of us who live in the real world know better, and would rather see Congress strengthen the existing program than gamble with our children's future."

Karen on 03.14.05 @ 06:25 AM CST