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What column on Social Security failed to say

Alan Stewart’s article in the March 23 Corydon Democrat (‘the President states his case’) called opponents of Social Security privatization ‘fear mongers’ and proceeded to tell us the ‘facts’ and ‘truth’ about Social Security and President Bush’s privatization designs on it. Sound like the way we were duped into the war in Iraq? Bush has a talent for infecting his converts with a cocksure, absolutist virus.
One of the few facts or truths in Stewart’s article is that in about 14 years Social Security will begin to run a deficit ‘ if by deficit he means Social Security will begin to tap into its trust fund. What he fails to mention is that the trust fund is so large that Social Security will be able to pay full benefits until 2042, or even 2052, by Congressional Budget Office estimates.
After that, if projections that far ahead mean anything, it will be able to pay some 70 to 80 percent of benefits until 2072 ‘ all of which means that, at most, the system needs only some adjustments like the ones made several times over its 70-year history. The only thing likely to put it in crisis is Bush’s privatization scheme.
Stewart cites the fact that the stock market goes up over the long haul, but he ignores completely how the timing of a person’s retirement can result in devastation. A person retiring in March, 2000, with stocks valued at $100,000 would find those same stocks worth only $60,000 if he retired in October, 2002. Ask Enron employees about timing.
To illustrate the great rewards privatizers will reap, Stewart uses the example of a $7-an-hour Joe, who, after 42 years of 10.99 percent annual returns, has a monthly retirement draw of $3,860.49. These figures are suspect, to say the least.
First, Bush as yet has no plan with any specifics ‘ this conveniently leaves him room to flip-flop whenever he needs to. Stewart apparently assumed or invented the specifics of his example. He asks us to think of a retirement plan as a ‘crockpot, not a microwave,’ metaphors which clarify nothing for me, although in the case of his 10.99 percent annual return, they do suggest a crock.
Any privatized plan will require Joe to repay the Social Security trust fund three percent per annum ‘ the amount his privatized money would have made had it been left in the trust fund. Joe will also have to pay fees for the handling of his privatized account. Additionally, he will have his traditional Social Security benefits cut ‘ by what amount is hard to say, because Bush has no detailed plan. However, no one is talking the kind of money Stewart shows in his example. The Social Security Administration’s projections for earnings assume a 4.6-percent return above inflation. The Congressional Budget Office assumes 3.3.
For Joe to leave a retirement nest egg of over half a million dollars, as Stewart claims, sounds a bit like Arthur Anderson accounting ‘ fantasy, not fact. What does Joe live on in his retirement? Or does he die as soon as he retires? Anyway, there will be conditions on what happens with his money ‘ if he has earned any. Bush’s plan, remember, has no details ‘ about this and all kinds of other things, like what happens if a privatizer becomes disabled or loses money with his privatized funds. If Joe is a low-wage worker, as he surely is at $7 an hour, he most likely will have to buy an annuity that expires upon his death.
Stewart, like all Social Security critics, can’t resist trotting out the old saw that Social Security is in obvious trouble simply because the boomers’ retirements mean there will be fewer workers per retiree. Again, what he does not mention is that when those boomers were children, they were also dependent on workers. Few wives and/or mothers were working then. We were building schools as fast as we could. We were fighting a cold war, we were financing the Marshall plan to help rebuild Europe, we were building the interstate highway system, and we were financing the effort to put a person on the moon. And, all the while, our standard of living was rising as it never had before or has since. We did all that with only 1.05 workers per dependent. In 2030, we will have 1.27 workers per dependent. And this is to say nothing about productivity, which doubles every 35 to 40 years, or that wages, as in the past, will continue to rise ‘ long-term, if not on Bush’s watch ‘ which puts money into the Social Security trust fund at a very favorable rate, because wages rise faster than benefits.
The most significant truth Stewart overlooks in his set of ‘facts’ about Social Security is that it is an insurance system, not an investment scheme for those who have the time, money and expertise to become rich ‘ maybe. Social Security pays guaranteed benefits for the life of the retiree, leaving him worry-free that his money may run out before he dies, it covers him and his dependents in case of his disability, and it pays benefits to his dependent survivors if he dies before retirement.
The fight to save Social Security from Bush’s assault is a fight less about a government program than a fight about what kind of a society we want to be: one in which we are all in something together, pooling our resources, sharing risks, and honoring our obligations and commitments to each other by taking care of the biblically unfortunate, the widow and the orphan, or a society which is a jungle where every person , fortunate or unfortunate, scrambles only for himself ‘ all so a few of us will be theoretically free to become obscenely and unsustainably rich.
If the latter is what we want, there is no sense in which we can call ourselves a religious nation. In fact, such a society gives us no reason even to call ourselves a nation.
Charles Allen of Corydon, a retired teacher, is a frequent contributor to this page.