Coalition urges halt to Bush’s Social Security reform plan

A group of people have formed a grassroots coalition to prevent the privatization of Social Security, the federal government’s guaranteed retirement security program or safety net inaugurated by Franklin Delano Roosevelt in 1935, during the depths of the Great Depression.
The opponents met for 1-1/2 hours last week at the Harrison County Justice Center to criticize President Bush’s proposal to divert up to two-thirds of payroll tax money to private investment accounts and to map out a strategy to get the attention of Congressmen, U.S. Senators and the public.
The Citizens Against Privatized Social Security meeting was called by Marvin and Dorothy Capehart of Georgetown, retired Louisville teachers Debbie Stinson and Charles Allen of Corydon, and Carol Smith, a long-time Lyndon LaRouche supporter. Indiana AARP spokesperson Bob White was the guest speaker. Several union officials from Louisville and others spoke, too.
They encouraged the 30 or 40 people present to get organized, call or e-mail their Congressmen and Senators, speak up at meetings and before organizations. Harrison County Democrat Central Committee Chair Steve Haggard challenged them to meet again soon, with everyone bringing two more people with them.
Harrison County Court House worker Judy Ackerman encouraged people to join the National Committee to Preserve Social Security and Medicare. AFL-CIO retirees president Thomas L. Houchin said his union has a matching fund available for people who want to fight the Bush reform plan. Another labor leader, Scott Pulliam, of the International Brotherhood of Electrical Workers in Louisville, said it’s a matter of activating the 49 percent of the electorate who voted against Bush in November.
Last week in his State of the Union message, President Bush said the nation’s costliest social program, on its current path, is ‘headed for bankruptcy’ unless it’s changed. Bush Administration officials will soon fan out throughout the country to spread their message.
TIME magazine said in its Jan. 24 edition that Bush told some teenagers during an unscripted moment: ‘The system will be bankrupt by the year 2040.’
TIME added, ‘That sounds pretty scary ‘ except that it’s not true.’
In 2018, money paid out in benefits will begin to exceed the amount collected in taxes, the magazine said. ‘And since Social Security will run a surplus until then, it has billions available that it can tap to fill the gap … Even under conservative estimates, the system as it stands will have enough money to pay all its promised benefits until 2042 and most of its obligations for decades after.’
The Associated Press said last week that Bush’s plan would cut guaranteed retirement benefits for younger Americans but would not affect checks for people 55 or older. Contributions would be capped at $1,000 per year, rising each year by $100. Guaranteed benefits would be reduced to make up for the billions that would be needed to cover the private accounts at first.
Bush and other administration point people have said they are willing to consider every and all proposals ‘ except raising Social Security taxes.
The people who met last week at the Justice Center say Bush’s program to invest part of the individual’s income taxes is unnecessary, risky for the average worker, and would likely, according to historic actuarial tables, not generate any more income, for the investor or the government, than it does now. White said only privatization would produce a crisis.
Social Security was created in 1935 to prevent people from suffering through a financially disastrous old age. It is now a $400 billion program that Democrats have been proud of for generations and Republicans would love to dismantle as an expensive and burdensome program.
In a letter to Debbie Stinson, Congressman Ron Lewis, a Republican representing Kentucky’s Second District, said each month Social Security ‘directly impacts nearly every American either through payroll taxes collected or benefits paid to our nation’s disabled or retired. Social Security provides essential income security for over 45 million Americans of all ages. Without it, many people would live in poverty.’
He said Social Security is now financially sound because the entitlement program is taking in more from taxes collected than it pays out in benefits. ‘However,’ the Congressman wrote, ‘the nonpartisan Social Security and Medicare Board of Trustees warns that in the year 2019, cash flow deficits start, and in 2042 the trust funds are projected to be completely exhausted (at this point, the system will only be able to pay 73 percent of promised Social Security benefits). The trustees urge reform.’
Charles Allen of Corydon, a retired schoolteacher in Louisville, and others disagree. He said in a ‘talking point fact sheet, ‘There is NO CRISIS in Social Security funding. Its projected shortfall has been known for some time, and to carry it, as is, into the 22nd Century would require revenues equal to only 0.545 percent of the GDP (Gross Domestic Product) ‘ less than three percent of federal spending, less than we’re currently spending in Iraq, and only one-quarter of the revenue lost each year to Bush’s tax cuts for the wealthiest.
‘Social Security is on a sounder footing now than it has been for most of its 70-year history. It has been adjusted before, and its current projected shortfall can be fixed again through some combination of payroll tax increases, benefit adjustments, taxing incomes above $90,000, expanded coverage by including newly-hired state and local government workers, and keeping the inheritance tax and devoting it to Social Security.’
In his letter to Stinson, Congressman Lewis said: ‘The reason for this funding shortfall is because of the upcoming baby-boomer retirement and the demographic changes facing our country. Because of increasing life expectancies and declining birth rate, the ratio of workers to retirees will continue to fall. In 1945, there were over 40 workers for every retiree; in 1960, there were five workers, and within a generation, there will be only two retirees for every worker.’
Lewis said proponents of privatization believe that personal accounts would yield higher returns, increase national savings and promote economic growth. President Bush calls it part of a new ‘ownership society.’
He said in his speech last Wednesday night: ‘I know that none of these reforms would be easy. But we have to move ahead with courage and honesty because our children’s retirement security is more important than partisan politics.’
Allen says, ‘Investing carries risks, and the market does not always go up. Ask Enron employees. Investing takes time, study and luck; broker and administrative fees can be as high as 30 percent, drastically reducing benefits, as evidenced by privatized systems in England, Chile and Argentina.’ Opponents regard those experiments as failures.
Sen. Evan Bayh of Indiana said last week: ‘Any plan that increases our debt, diverts Social Security money into private accounts, or changes the very nature of Social Security isn’t a solution … Ownership and insurance have to go hand in hand. Social Security is the insurance that senior citizens in our country can always rely on to make sure they’re not desperately poor in their old age.’
Bush said in his speech, ‘We will make sure the money can only go into a conservative mix of bonds and stock funds. We will make sure that your earnings are not eaten up by hidden Wall Street fees. We will make sure there are good options to protect your investments from … swings on the eve of your retirement.’
In its story, TIME said, if workers start investing payroll taxes in individual accounts, ‘the government will need another source to cover benefits for retirees ‘ as much as $2 trillion by some estimates. The options are grim ‘ borrowing heavily, cutting benefits, or both.’
White said that with some small changes in Social Security, it could last 100 more years. Eighty percent of retirees, he said, now rely on SS checks, and 25 percent of retirees rely solely on their checks.
‘Please help AARP stop them from stealing money from Social Security to make Wall Street rich,’ White told the group at the Justice Center.
In a story in the Jan. 18 New York Times Sunday Magazine, Roger Lowenstein said, ‘ … no other conservative has ever come as close to transforming the program as George W. Bush. He is making Social Security reform, including a partial privatization, a centerpiece of his second term. If the most ardent ideologues have their way, such a reform would be a first step toward a wholly new approach to retirement security ‘ one that would set aside the notion of collective insurance and guaranteed minimums for that of personal investing and responsibility.
‘This could do more to reverse the New Deal, and even the Great Society, than Goldwater, (David) Stockman and Reagan ever dreamed of.’
Stephen Moore, author of ‘Bullish on Bush: How George W. Bush’s Ownership Society Will Make America Stronger,’ said it will be ‘a fundamental shift from an entitlement society to an ownership society.’
Retired New Albany High School art teacher David Runge said, ‘It is so important that we get the word out about what is actually happening. It’s transparent … If Bush were seriously looking at privatization, it should be guaranteed pension plans and Medicare. Those things are exploding right now. If he really had a legitimate concern, it wouldn’t be Social Security. He just wants to be on Mount Rushmore.’