by Matt Singer, University of Montana
You’ve probably heard the politicians warn you: By the time you retire, Social Security won’t exist. Of course, only a fool blindly believes what politicians say. And in this case, the rumors of Social Security’s impending doom are exaggerated, to say the least.
The simple truth is that Congressional Budget Office numbers say the program is solvent until 2052, when I’ll be turning a ripe 69 years of age. Even at that point, with no reforms, Social Security will meet 81 percent of its obligations. If this is a crisis, the paper cut I just received is a medical emergency.
The Bush administration, facing this paper cut, is proposing a full-course triage and amputation solution. George W. Bush calls his plan “personal accounts” because privatization doesn’t sound quite as safe. And he proposes allowing young private citizens like ourselves to divert money from Social Security and earn higher returns on it.
There’s a big problem with this, and it’s called the national debt. By now, we’d think George Junior would be familiar with it, since it is the defining feature of his administration. We’d be wrong. George is pretending the whole thing doesn’t exist.
His plan would cost about $2 trillion, money that hasn’t been budgeted anywhere. That money would come from loans that, in turn, would be forced upon all of us to pay off at some point in the future through higher tax rates and, in the meantime, higher interest rates on those pesky credit cards and student loans.
But even this misses the real threat of privatizing Social Security. The Bush administration is presenting America’s greatest social insurance program as a giant, government-funded retirement account.
As we all know, private retirement accounts are 100-percent stable. Just ask the employees of Enron or Montana Power Co.
For 70 years, Social Security has been the bottom-line commitment to America’s retired generations, to our great-grandparents, grandparents, and parents: We will not let forces beyond your control force you into poverty. Eighty-year-olds should not be forced into backbreaking labor to bring home enough money to eat. This is an enduring social principle.
Proponents of privatization pay lip service to the common ethics of our society, pledging that all will be protected and that our grandparents will even get a higher rate of return. It is true that private investment will virtually always outperform the return of Social Security.
But Social Security isn’t a promise of lavish riches upon retirement. It is not a promise that early retirement be universal. It is a promise that none of our elderly be denied the dignity they deserve after a lifetime of labor.
Surely some will protest: but there’s still a paper cut, we need to fix the problem. At this point, though, we should remember that even the paper cut is a prophecy foreseeing the future from 50 years away. Some respected observers of America’s entitlement systems predict that Social Security will suffer from absolutely no shortfall at any point in the foreseeable future.
Even if Social Security does fall short, a handful of reform solutions can solve the problem without upending the American social contract. Politicians could easily raise the cap on payroll taxes (while most of us, like most Americans, pay those FICA taxes on all our wages, income over $90,000 is not taxed). Similarly, we could lower or eliminate benefits for those retirees whose lifestyles are comfortable without government assistance.
Either solution would solve the problem without risking revolution. But if we learned one lesson from the Iraq War (a war I initially supported), it is that this administration will play fast and loose with facts and figures to achieve the goals it deems worthwhile. This administration played those games with our generation once and ended up with a war and a potential draft.
They are playing the same games again. This time the threat affects our grandparents, our parents and ourselves. We would be wise to take the administration’s words with a grain of salt, adopt meaningful and prudent reform, and protect the dignity of our elderly.
Matt Singer grew up in Montana and studies Economics at The University of Montana. He rants, spews, cusses, and occasionally muses on the state of affairs at leftinthewest.com.