The Republicans would like to boil down the Social Security argument to a matter of public versus private. However, private accounts are a deliberate distraction from what the Republican Party really wants to do with Social Security: Cut the benefits.
Private accounts are not inherently unfair, particularly if there was no crisis with Social Security. Certainly there are some downsides to privatization. Not everyone in America is investment savvy, and the volatility of the market can lead risk-takers to rejoin the ranks of the poverty-stricken upon their retirement if their investments fail to pan out. However, the real issue is that private accounts won't do a thing to solve the Social Security crises, and may actually make it worse.
Perplexed by the numbers?
There is a mirage of confusing statistics out there, some claiming that cuts will not be needed for 30 or 40 years, while figures for those cuts range anywhere from 20% to 40%.
While all these statistics are nice to consider, they merely confuse people as to the severity of the problem. Economic projections as far out as 30 or 40 years aren't really reliable. Consider that when Bush entered office, projected budget surpluses were supposed to last far beyond 2005, but we are now saddled with more than a $500 billion budget deficit! With continued fiscal irresponsibility, and facing a large increase in Social Security beneficiaries, the program could actually be endangered much sooner.
Listen to Alan Greenspan
In February of 2005, Fed Chairman Alan Greenspan painted a much clearer picture of what to expect than any of the scrupulous number crunchers. He noted that current budget deficits make Social Security projections bleaker, and that future retirees need to start planning their budgets accordingly in case they receive fewer benefits. The retirement age may soon to rise from 65 to 67, and Social Security taxes may go up so that the system can remain solvent.
During his testimony to Congress, Greenspan agreed that private accounts leave national savings unchanged and that setting up private accounts doesn't alleviate the current problem. He simply urged Congressmen and the American people to accept that Social Security could not remain the once great program it has always been.
The stakes are high
As the Baby Boomers retire, the enormous strain on Social Security could be fatal without changing the way we currently manage the program, but Democrats do not believe that simply cutting benefits for everyone is the answer. After all, Social Security has been an imperative program for seven decades. It has sustained more than three generations of Americans who paid into the system during their working lives, and unlike pensions of the past, were guaranteed their Social Security check when they retired.
In fact Social Security has been a facilitator of our economic strength. FDR created Social Security during the grimmest of economic times, and as our economy grew through the 1950's, the program was continually expanded. Social Security helped develop a strong middle class, and made less people permanently reliant on government welfare because they could invest their extra money to boost the economy, while parents could continue to take care of their kids, rather than forcing their kids to have to take care of them. And because millions of Americans have benefited from Social Security, it is not surprising that poll after poll shows a lack of support for Bush's Social Security Plan. Even people who are staunch conservatives don't want to give up the money they worked hard to earn their entire lives - and why should they - There are certainly alternatives and solutions to consider before we cut another social program to pay for global wars and corporate tax cuts.
So what are the solutions?
First of all, we need to put Social Security funds in a lockbox and if we have to take money out of the Social Security Trust Fund, we need to put some other money back in, like with a pay-as-you-go system. With large deficits, we have occasionally needed to borrow from the Trust Fund and the more likely the President is to create large budget deficits, the more likely they will raid the Trust Fund. If I can think of any Presidents prone to creating large deficits, I will let you know.
One way to recoup some of the money is to put some of the burden on high wage earners. According to the current policy, Donald Trump pays as much on Social Security taxes as an average high school principal in Northern Virginia! The cap for graduated Social Security tax is $90,000, and this cap just doesn't work, because it completely puts the burden of Social Security on the middle class.
Even if we considered donut holes, with a cap at $90,000 and then a graduated tax for people making over $200,000, we would make up serious ground without really hurting anyone. While penalizing success may seem unfair, there would only be a minimal effect on wealthy Americans with small rise in taxes or small reduction in benefits, but an enormous effect on millions more Americans if we cut their benefits. Now what is unfair about that?
Another possibility is to roll back tax cuts for the top 1% of the population. Remember that over the past few years the Bush Administration has put off benefits for high priority issues such as education, health care, and the environment, so why should a majority of Americans be upset over a low priority issue like tax-cuts for the wealthiest Americans?
While the Democratic Party isn't necessarily promoting these solutions at this time, they are at least open to them as alternatives to cuts. The Republicans, on the other hand, won't even consider these alternatives even if it means cutting benefits for the neediest recipients!
What's the lesson we can take from the Social Security debate?
The common thread to all of these policy options is fiscal responsibility. When President Clinton left office, he had made a balanced budget a priority, and created budget surpluses. These surpluses were intended to deal with budgetary shortfalls for future programs, and help future generations innovate and retain a healthy economy. Unfortunately after 4 years of Bushonomics, these surpluses are gone, further escalating issues with Social Security. So when the Republicans try and give you fancy calculations to explain why Democrats are blowing things way out of proportion, ask them why we should trust their projections and their policies when they were the ones who squandered trillions of dollars in just a few years.
What we need to do is expose the Bush plan for what it is. It is not a way to give Americans more freedom. Really what privatization does is create less freedom by forcing the option to accept private accounts or face the inevitable cuts. In fact, the Bush plan limits privatization to just a small portion of the benefit, and even limits the type of investments people can make.
The truth is that the Bush Administration is committed to changing the way Social Security benefits are calculated, so they can play up the numbers game to confuse the voters just enough to get reelected. The Democratic Party doesn't want to confuse the American people; they want to protect them from poverty. They know that Social Security is facing hard times, but want to consider alternatives to cutting it for the neediest recipients. Let's keep up the pressure on this issue. With the impending Virginia Governors race and key Congressional battles in 2006, let's join the American people to elect someone who will protect Social Security for young people and their children.