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Bush’s Strategy to Privatize Social Security

by DAVE LINDORFF

 

You wouldn’t know it from reading or watching the mainstream media, but the campaign to destroy Social Security is been begun.

President Bush, in his second inauguration speech Thursday, will lay out what he is calling a “reform” of the system, designed to “rescue it” from “bankruptcy.” This man, who himself will be collecting a cool guaranteed $200,000 a year for life (plus gold-plated health benefits) after just eight years of work in the White House, will soothingly describe his “reform” as leaving retirees and those nearing retirement with the same system they are used to, while giving young workers the chance to “own” some of their retirement tax contributions.

The corporate media–no friend of a system that currently requires them to pay 6.2 percent of their payroll into the Social Security system themselves, which for some is the only tax they have to pay anymore, thanks to Bush corporate tax giveaways–has latched uncritically onto the Bush vocabulary of “ownership society” and “reform.”

Don’t believe a word of it. This isn’t reform. It is a classic divide-and-conquer scheme by the Right designed to destroy Social Security while it still has a chance to do it. (Once the Baby Boom generation begins retiring in 2011, they will be far too powerful a political force in defense of adequate retirement funding for any Congress to weaken the system.)

If Bush can convince a Congress dominated by Republicans and their timid “moderate” Democrat allies to approve his devious scheme, those under 50, or perhaps 55, will be given the option of taking some $1-2000 of their Social Security tax each year and placing it in an investment account. That money, Bush and his backers claim, would grow faster than the money in the Social Security Trust Fund. Of course, there’s no promise of this happening. Nor does he talk about the fact that these private investment funds, like 401K funds, will be handled by Wall Street brokerage houses, which will be charging huge fees to churn those investments. In England, where the same idea was tried, retirees are now discovering that all the brokerage fees ended up eating up their profits, leaving them worse off than if they’d stuck with the old system.

Meanwhile, the older folks, who remain in the current system, will find that their benefit payments, which for decades have been funded by current workers’ contributions, are under mounting pressure to be cut. Why? Because all those hundreds of billions of dollars that younger workers take out of the tax stream to invest in their private accounts, which would have been supporting current and future retirees, will have been removed, leaving the trust fund as much as two trillion dollars in the hole by 2020.

At that point, Congress will have a much easier time cutting benefits to seniors because it will only be a portion of the elderly who will be seeing their monthly checks reduced, not everyone. Those who are in the private plan–which over the years will no doubt have been expanded to allow even larger shares of the Social Security tax to be diverted–will not be impacted.

Later, when those with the private plans start to retire, and discover that their “ownership society” nest eggs are not going to hatch, it will be their turn to suffer. There will be no mass support for their crisis, since older retirees, who normally could be expected to rally to support the retirement system in a crisis, will not be affected by the private funds shortfall.

It’s all part of a massive, wide-front assault on workers, who are also seeing their pensions terminated by artificial bankruptcies, such as those now being filed by the airlines. Managements are discovering that they can go into the increasingly right wing and sympathetic federal courts and win judgments abrogating their union agreements and terminating their pensions. In non-union companies, pensions are being downgraded or simply eliminated, all in the name of global competitiveness.

President Bush and his gang of neo-con wreckers already lied the country into an endless war with no point and no exit in Iraq, pretending the country was threatened by “weapons of mass destruction” that were a fiction. Now they are trying to destroy our old-age security by lying that the Social Security system is facing insolvency. It’s not, any more than Iraq under Saddam Hussein was a threat to American security.

If Americans don’t wake up soon, we’ll be right back to 1930, when reaching retirement for most people meant sinking into a life of Dickensian poverty and despair, or going hat-in-hand to already financially strapped children for help.

DAVE LINDORFF is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. His new book of CounterPunch columns titled “This Can’t be Happening!” is published by Common Courage Press. Information about both books and other work by Lindorff can be found at www.thiscantbehappening.net.

He can be reached at: dlindorff@yahoo.com

 

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Dave Lindorff is a founding member of ThisCantBeHappening!, an online newspaper collective, and is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

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