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The Scheme to Privatize Social Security

by Lynda Carson

Photo by Bill Carpenter of San Francisco protest of Bush's plan to privatize Social Security.

Standard text version


On January 11, the Bush administration held a large conference in Washington, D.C., to dupe the public into believing that Social Security is in a crisis and that only privatization of the program can solve this phony, manufactured crisis.

Before the glaring lights of the mainstream media, Bush declared, "As a matter of fact, by the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt. So if you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now."

Legislated by many acts of Congress, the fact remains that the Social Security system will not go "bankrupt" because it has no creditors. Legislated by law, the Social Security trustees are required to pay reduced benefits even if the trust fund becomes exhausted. The payroll taxes will continue to come in and the benefits shall continue to be paid to all recipients.

On January 13, Vice President Dick Cheney joined the chorus of liars when he claimed, "The system is on a course to eventual bankruptcy."

The dirty scheme to privatize Social Security is based on a pile of lies and deception, and everyone knows that this may end up being one of the worst scandals of the Republican Party. Handing Social Security over to corporate control will allow the profiteers of Wall Street an opportunity to fleece trillions of dollars from working-class Americans.

A memo spelling out the Bush strategy to privatize Social Security, written by Peter Wehner who works under Karl Rove in the White House, was leaked in early January 2005. Wehner wrote, "I don't need to tell you that this will be one of the most important conservative undertakings of modern times. If we succeed in reforming Social Security, it will rank as one of the most significant conservative governing achievements ever. The scope and scale of this endeavor are hard to overestimate.

"Let me tell you first what our plans are in terms of sequencing and political strategy. We will focus on Social Security immediately in this new year. Our strategy will probably include speeches early this month to establish an important premise: the current system is heading for an iceberg. The notion that younger workers will receive anything like the benefits they have been promised is fiction, unless significant reforms are undertaken. We need to establish in the public mind a key fiscal fact: right now we are on an unsustainable course. That reality needs to be seared into the public consciousness; it is the pre-condition to authentic reform."

In the leaked memo, Wehner goes on to state that, "For the first time in six decades, the Social Security battle is one we can win - and in doing so, we can help transform the political and philosophical landscape of the country."

In response to the Bush administration's phony Social Security crisis, Rep. Charles Rangel said, "But the facts prove that there is no imminent crisis with Social Security. The nonpartisan Congressional Budget Office says Social Security can pay full benefits for nearly 50 years. So, there is no crisis. But there is a challenge, because people are living longer. Unfortunately, the President's proposal for privatized accounts makes Social Security weaker, not stronger. It drains $2 trillion from the trust fund, leading to drastic cuts in benefits of more than 40 percent."

Opposition to Bush plan

Opposition is mounting to the efforts by Wall Street and the Bush administration to privatize Social Security. Major groups opposing the Bush plan are springing up all across the nation, including AARP, NAACP, National Organization for Women, major unions such as the AFL/CIO, Cal PERS (pension plan) of California, and the Gray Panthers.

The Bush administration has embarked upon a propaganda blitz to convince the American public that Social Security is heading for an iceberg, and needs to be privatized. Expected costs to privatize Social Security are around $2 trillion.

Yet there is no immediate crisis in the Social Security program. According to the Congressional Budget Office, if Social Security is left as is without any changes, it will be able to pay full benefits to all recipients until 2052, and about 80 percent of promised benefits beyond that.

By 2018, Social Security will begin paying out more each year than it receives in taxes annually, but this does not mean the program will collapse when this occurs. It must also be noted that by 2018 the Social Security Trust Fund should hold at least $5.3 trillion in U.S. Treasury Bills, which will allow the Trust Fund to grow by another 25 percent during the next decade due to the interest it earns on the Treasury Bills.

Social Security is a retirement program that started 70 years ago, in 1935. It was created as a direct result of the 1929 stock market crash and Great Depression that left millions of the elderly stranded in abject poverty. Social Security assists the elderly and disabled population with a meager benefits package that helps to overcome poverty, and the program also offers assistance to widows and children.

In an effort to convince the public that Social Security must be privatized, the White House and its wealthy corporate allies are using scare tactics to convince people that Social Security will collapse when the baby boomers retire.

The big lie is meant to dupe the younger generation into believing that Social Security cannot keep its promise to them, and that they would be better off by gambling away their Social Security funds with the profiteers on Wall Street.

The Bush scheme offers no guarantees to the younger generation beyond what is already being offered to them in the current system. The Bush administration is already demanding benefit cuts to all future recipients, and is trying to convince them that the stock market will make up the difference in lost benefits.

On January 16, the New York Times reported that the Bush administration directed the Social Security Administration (SSA) to gear up for a campaign to convince the public that a crisis exists with Social Security.

The Bush campaign created a rebellion within the ranks of SSA employees, who denounced the scheme for its planned use of huge amounts of Social Security Trust Fund dollars to promote a hoax on the American public. Within a day, the Bush administration declared that no one in the SSA would be forced to go along with their political agenda to sway public opinion into privatizing Social Security.

The Bush administration appears to be looking for a way to avoid paying back the $5.3 trillion that will be owed to the Social Security Trust Fund by 2018. Privatizing Social Security may be the ticket to avoid rolling back the multitrillion-dollar tax cuts for the wealthy that are actually needed to cover huge budget deficits. There is no crisis in Social Security. The crisis is in the federal government, and unless tax cuts for the rich are rolled back, the federal government lacks the revenues needed to cover its national debt.

Protest in San Francisco

About 200 protesters hit the streets of San Francisco on January 18 to protest the Wall Street/Bush scheme to privatize Social Security. The demonstration began near the Pacific Coast Stock Exchange. The action was planned by members of five Bay Area Gray Panther chapters, Senior Action Network, Health Care for All, California Alliance for Retired Americans, S.F. Older Women's League, ANSWER, and the Million Worker March, and it was endorsed by the San Francisco Labor Council.

Michael Lyon of the S.F. Gray Panthers, one of the organizers, described the protest in an interview. He said, "About 200 people from around the Bay Area marched through San Francisco's Financial District on January 18, demanding that the government back off on its plans to (1) impose huge Social Security benefit cuts on future retirees; (2) divert trillions of dollars from Social Security into individual Wall Street accounts; and (3) not repay trillions of dollars of loans from the Social Security Trust Fund, using the money instead to replace money lost through tax cuts to the rich and war."

Angry chants echoed off the buildings of the Financial District: "No Privatization! No Gift to Wall Street!" "No benefit cuts, now or in the future! We won't sell out our kids!" "Hands off Social Security! It's ours, not Wall Street's!" "Stop the Lies! Social Security is NOT broken!"

A young man on a skateboard said he had not heard about the march, but he heard the marchers' chants from several blocks away. A lady with a walker had a sign reading "CRISIS, MY ASS!" Marchers moved from location to location, chanting loudly.

Lyon said, "Decades of massive layoffs, wage reductions, speed-up, canceling pensions and health plans, safety violations, and evisceration of public services by legalized tax evasion are not enough. Now they want to take the money we put into the Social Security Trust Fund for our future, and use to solve the very problems they created: A huge budget deficit because of war and refusal of the rich to pay taxes, a huge trade deficit because they moved manufacturing abroad to pay low wages, and a falling dollar because foreign investors are losing confidence that the U.S. can continue to expand and are less willing to bankroll the U.S. Speakers declared that it was the biggest transfer of wealth from poor to rich in U.S. history."

The demonstrators' second stop was at the S.F. Chamber of Commerce. Lyon said, "The U.S. Chamber of Commerce is a major contributor to a corporate war chest to spread the lies that Social Security is bankrupt, and young workers must abandon Social Security to try to make their fortunes in the stock market. We demanded corporations and government stop the campaign of lies and intimidation to try to stampede us into abandoning Social Security, which has kept millions of seniors, disabled, and children of dead workers from poverty."

The marchers' last stop was in front of the offices of Sen. Dianne Feinstein, who was not able to greet them, since she was in Washington urging confirmation of Condoleezza Rice as Secretary of State. Lyon said, "Though Sen. Feinstein says she is against privatization, no one trusts her because of her belief in means-testing, which would convert Social Security into an underfunded poverty program. Her support of the Medicare Prescription Privatization law was bad for seniors, because the benefits to the drug companies are far more expensive than keeping retirees and disabled out of poverty."

Social Security Now!, a local opposition group with members across the nation, has a Rolling Letter Campaign to send letters to editors of newspapers across the country. These letters of opposition to the efforts of Wall Street and the Bush administration to hand Social Security over to corporate control, have been published in USA Today, Willets News, Independent Journal of Marin, the Berkeley Daily Planet, Anderson Valley Advertiser and other media outlets.

Opposition member Jean Pauline said, "Dire predictions regarding future solvency of Social Security are based on inordinately pessimistic estimates of economic growth. Does it make any sense to try to prevent insolvency by retarding economic growth? Bush's proposed privatization will do just that by further increasing the deficit or raising taxes to pay the very high cost of any transition to this Wall Street scam."

Charles Kalish from San Francisco said, "Instead of the guaranteed security of the present safety net, Bush and Wall Street have created a phony crisis that will place low-income people at the mercy of the gambling den of the stock market. Chance will replace security and many, many seniors will be left destitute as a result."

Berkeley resident Frances Hailman said, "Bush rushed us into war without envisioning where it would lead us. We are now stuck in a situation that is draining our country's common wealth. Now he would have us agree to a hurried change in Social Security, with no clear examination of long-term consequences. Let's not be fooled again!"

Activist Marta Russell said, "What is to stop the conservatives from delivering a blow to the Disability Insurance Trust Fund (a separate account in the U.S. Treasury) as they plan for the retirement fund? If the Bushites succeed in their privatization scheme and funds are diverted from the Trust Fund into stock market accounts, the pool of monies available to pay out on current retirees will shrink to an estimated $2 trillion shortfall. That will unravel the fund, shrink the common pool of funds and jeopardize SSDI. How can the disability insurance system stay intact while the retirement system is destroyed?"

The struggle to save Social Security from Wall Street will continue as groups across the nation form in opposition to the scheme to privatize Social Security.

Anyone can join the Rolling Letter Campaign with Social Security Now!, by sending an e-mail to socialsecuritynow-subscribe@yahoogroups.com




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