"FIXING" SOCIAL SECURITY
Thanks to amazingly successful propaganda about the state of the Social Security trust fund, members of the media, politicians and millions of Americans have become convinced that the fund is soon to go broke. According to the actuarial figures, this just isn't so--unless we have depression level economic growth in coming decades.
So you don't believe us? Okay, but will you take a former trustee of the fund and ex-labor secretary? In the American Prospect Robert Reich states flatly, "Social Security is not endangered." Says Reich, the actuarial prediction is "based on the wildly pessimistic assumption that the economy will grow only 1.8 % annually over the next three decades. Crank the economy up just a bit, to a more realistic 2.4% a year (what the actuary gloomily termed the "high option projection) and the fund is flush for the next 75 years."
Incidentally, 2.4% growth is exactly what the White House budget predicts for the next five years.
Here are some other healthy, handy things to do to take your mind off the Great Social Security Scam:
· Switch from a wage based tax to an income based tax. And make it progressive while you're at it. That way Tim Russert and Cokie Roberts and Pete Peterson will be contributing more to Social Security and talking less about it. Social Security was a radical idea in New Deal days and a regressive wage tax was one way to make it more palatable to the high rollers of the time.
·Hire the head of a health insurance company to run the Social Security program. The New York Times reports that health insurance companies are planning to increase premiums up to five times the rate of inflation. Maybe they could show the Social Security how to find a little more money as well.
·Put the defense budget in a trust fund and let the Pentagon go bust, too. No one but a bunch of politicians said you had to fund Social Security out of a trust fund. And you can tell them that they're wrong.
·Worry about things that we really can't replace--like oil--or that we can't abuse indefinitely-like the environment.
·Bear in mind, according to the GAO, even if you threw 70% of trust fund assets into the stock market, you'd only buy yourself another eleven years or so.
·In the end, whether there is enough money for Americans in their old age is a matter of political choice, not economic destiny. If we demand that the money be there (rather than spent on missiles or corporate welfare) it can be there; if we allow ourselves to be scared by those who want us to accept a lower standard of living, it won't be.
·Ask your favorite media why it never tells you things like this.
·And remember: The bottom twenty percent of American senior citizens get roughly 80% of their income from Social Security. Without Social Security, nearly 70% of black elderly and 60% of latino elderly households would be in poverty.
WHAT THE MEDIA WON'T TELL YOU ABOUT SOCIAL SECURITY
Excerpts from a statement by Jeff Faux of the Economic Policy Institute to the White House Conference on Social Security:
·The projection of bankruptcy is based on the assumption of recession-level growth rates--less than half the average for the past 75 years.
·If this projection is correct, calculates Doug Henwood of the Left Business Observer, and if the projection of privatized returns in the stock market is also correct, then stock P/Es in the year 2075 would be at least 178 as opposed to 26 today and half that in the past. In other words, the Social Security hustlers are predicting economic gloom for the trust fund but a boom for the market.
·The SS trustees have steadily lowered their projections of growth. Henwood points out that the trustee's most optimistic projection in 1998 matches their most pessimistic one in 1981. If you use the middle projection for 1986, for example, you actually end up with the trust fund being comfortably in the black.
·One way to shore up the trust fund is to raise the salary ceiling for SS taxes. One reason this is never mentioned: it would hit the pocketbooks of those who are having the most to say on the subject.
·Some of the fear concerning SS is based on the presumed burden of a growing older population. But the non-working population not only includes the old but children as well. When you look at the total projected dependent population, the burden becomes roughly equivalent to that of Kennedy's time.
·The SS trust fund is an accounting creation, the artificial nature of which contributes to the current hysteria. If SS were being funded out of general revenues (like the Pentagon or the war on drugs) you would not be hearing talk of it "going broke" but simply about how much more it was going to cost.
·If the system is privatized not only do you face the interesting problem (as James Glassman has pointed out) of the government being one of the owners of anti-trust target Microsoft, NBC, and Philip Morris, you also have the potential of the government using its stake to directly manipulate the markets. There are reports of this having already occurred, but the large sums of money available under privatization would make the temptation even more appealing.
·If you want an example of the hazards of government investment in the market you need look no further than WJ Clinton himself. As governor in the mid-80s, Clinton and his banker, Jackson Stephens, put a big chunk of the state pension fund into high risk investments. The brokerage firm involved suddenly went belly-up and the state pension fund dropped 15% overnight. Facing a $52 million loss, Clinton was saved by his ubiquitous buddy, Mochtar Riady, who stepped in and bought 40% of Stephens' Worthen Bank in the months immediately after the disaster. The national media never covered this revealing story.
LEFT BUSINESS OBSERVER: http://panix.com/~dhenwood/LBO_home.html
--Sam Smith is editor of The Progressive Review, 1739 Connecticut Ave NW Washington DC 20009, (202) 232-5544/(202) 234-6222 Fax ssmith@igc.org <http://prorev.com> For a free trial subscription to both bi-monthly hard copy and regular e-mail updates, send e-mail and terrestial address to ssmith@igc.org