Friday, February 4, 2005

Social Security, Politics, and Idiots

In his first term, President Bush applied himself to the task of sticking his clueless hands into the middle of U.S. foreign policy. And he’s not done yet… He’s got Condy Rice traveling all over the world spewing Bush "tough-talk" about Iran. One can only wonder—and fear—where this is going. Now that he’s made a complete mess of foreign relations, he’s determined to blunder headlong into domestic policy in his second term. Fixing things that aren’t broken (Social Security) and ignoring things that are (our public school system, prescription drug prices, energy price gouging.)

Why, oh why, has he chosen Social Security as his domestic chew-toy? All reliable estimates see the system, left in its current condition, able to pay out full benefits through the year 2042. There is no emergency here, as much as Mr. Bush has already stocked the Misinformation Pipeline with his own gloom and doom version of the future of Social Security.

Here is a man who is never in his wildest dreams going to have to depend upon Social Security as an integral part of his retirement income. Backed by the tremendous fortunes of other powerful men in that same economic stratum. How many Bush generations would we have to go back to find someone who wasn’t rich as Croesus? People tend to forget when they see our "plain-spoken" president on television fumbling with words like "nucular" and "taihr-ists," that he comes from a fortune every bit as impressive as the one they thought made John Kerry elitist. Why is he insisting upon dismantling the retirement fund that I have been paying into all my working life? What’s in it for him? Not much…but we must understand that George W. Bush is simply a mouthpiece for the Republican machine. Ever seen a train going backward on the commuter line? This is the picture I get of the Bush presidency. He leads, but all the power is in the engines pushing from behind.

So, what beef does the Republican party have with Social Security? First and foremost, it was a program introduced by arguably the most successful president of the twentieth century—FDR. A man who dealt with two huge obstacles during his administration, and whom Americans came to depend upon so heavily that, if he hadn’t died in his fourth term, he would probably have been re-elected as many times as he chose to run. A DEMOCRAT. How much does this rankle the Republican elite? So much so that, seventy years later, they are still trying to find a way to discredit Roosevelt and dismantle his ground-breaking policies? Seems an awfully petty reason to be messing with a program that has been a financially sound lifeline for so many millions of hard-working folks over the years. But they do say an elephant never forgets…

For me, there are two major problems with Bush’s plan. First of all, he asserts that anyone born in 1949 or earlier will be guaranteed the benefits they enjoy today. And the new "private investment" phase will not be operational until 2009. Where exactly, does that leave me, and the huge majority of Baby Boomers born in the fifties and sixties? We’ll have some kind of reduced benefits coming from Social Security (they’re not telling us the actual numbers) and we’ll get maybe ten years to try to invest enough money privately to make up for what the system, which we will have been paying into for more than forty years at that point, can no longer promise us. On his Misinformation Tour today, Mr. Bush pointed to a 60-year-old lady in the audience and said, "She’s fine." And then he looked out onto the sea of carefully chosen twenty- and thirty- somethings and said, "But you guys are in trouble." Would that he had then been struck by some alien truth ray, thrown his arm around a fifty-year-old and said, "But my new plan will completely screw you!"

The second major problem? Private investment is WAY too risky. Here’s a little parable. There once was a woman who retired from a major American corporation, where she had been working over forty years. White collar job. Rose from the ranks of the office pool to be a major department head. Made a decent living, put up with a lot of bull during her later years, but hung on in order to achieve that retirement holy grail. During the nineties, when the stock market was riding high, she was convinced to pull most of her money out of the slow-growing retirement fund administered by the company, and invest in the stock market. She paid a financial advisor to set up a program that would take advantage of the economic times and translate her thirty years of retirement savings into a nest egg that would keep her comfortable for the rest of her life. And the money did grow. As retirement day approached, her assets topped the million dollar mark. Pretty impressive to a sixty-something middle class lady. How exciting it was to think that not only would her retirement be secure, but she might have more extra money than she had ever dreamed of having. Travel! Toys! Maybe a vacation home! She retired with a huge smile on her face, and a light heart.

Then September 11th happened, and the stock market tanked. Within two years, her stock portfolio lost two thirds of its value. There was nothing she could do but watch the numbers plunge, and hope the free-fall would stop before her money completely disappeared. There was no point in pulling the money out of the market…anywhere else she put it, there would be no hope of recovery at all. Thank God she can still depend on Social Security. She knows she’ll never be totally destitute. True story. This woman is my cousin. I saw all this transpire with my very own eyes.

What kind of future is Mr. Bush proposing for us? Imagine being retired, and having your life ruled by the tick of the Dow Jones. His big business backers cannot guarantee that there will not be another September 11th, or some kind of unforeseeable disaster that would make our privately invested retirement funds swirl down the toilet of a market reversal. It is the history of the market…there is boom, and there is bust. There is very little of smooth, secure sailing. And I don’t want to have to be worrying about that in my golden years.

Social Security is not an entitlement. It is not a hand-out. It is a government-administrated investment fund. You pay in. You draw out. Social Security will not be giving me anything I haven’t paid for. The way to ward off a possible short-fall in funds when it comes the Baby Boomers’ time to collect is NOT to reduce the amount of money coming in. Even an idiot can understand that. But, oh, that’s right… We’re dealing with politicians here. Worse, and potentially more dangerous, than idiots.

I have just one thing to say. Keep your hands off my Social Security, Mr. Bush.


  1. OK, Lisa, I didn't know you were back writing in this journal and just happened to click on and see that you are.   Thoughtful entry.  I'm glad that you don't resort to name calling and that you don't assume that because I might be from a red state and that I voted for Bush that I cannot think for myself.  You have many valid points here.  Perhaps to get people reading since the alerts aren't working, you could send out an email with your link inside.  That's what I would do.

  2. It's interesting that in 1999 Clinton made an almost identical speech about the future of social security, quoting dates and anticipated bankruptcy of the social security cash flow.  Not one Democrat even raised an eyebrow.  Not even when he made some general remarks about privatization of a portion of an individual's withholding.  What has changed in the subsequent years, except the party of the sitting president?  Seems like Clinton had the same "gloom and doom version of the future of Social Security".

  3. <It's interesting that in 1999 Clinton made an almost identical speech about the future of social security, quoting dates and anticipated bankruptcy of the social security cash flow.>

    Funny that you should bring this up, Pudge450.  Perhaps in preparation for pinning THIS on Mr. Clinton, if it does turn out to be the debacle it promises to be?  Politicians have become extremely adept at that practice:  If it's good, I did it.  If it's bad, it's his fault.  I can hear it now:  "We were just continuing policy laid down by the previous administration."  What?  Oh, yeah, I HAVE heard that already....   :-P  

  4. Lisa,

    Excellent entry.  I agree with much of what you say.  The gloom and doom hysteria around Social Security looks a lot like the evil spectre of Iraq and their arsenal of WMDs--lots of smoke and mirrors; lots of fear to keep everyone scared.  And the idea has the benefit of some nice sounding phrases, like 'ownership' which people seem to love.  

    Just a general point of disagreement.  I don't think this president is blundering at all.  Iraq was not a mistake.  And no matter how devestating to the American people it might be, destroying social security is not a mistake.  I think this is the tact many of us on the Left take and I think it's wrong.  We assume that when the  nation heads off into some horrendous war for no apparent reason that it's a mistake.  But there are reasons, and the elite in this country happen to think they are great reasons: protecting the dollar, maintaining access to the largest oil reserves in the world, maintaining American millitary and economic might.

    The reasons for undermining social security seem pretty clear to me, though I could be wrong on this.  The dollar is heading south in a bad way; the Euro is kicking its ass.  And I'm sure the elite in this country are itching to get their money out of our sorry stock market (Google is worth how much?); but in order to do that and maintain some sort of stability in the market, there needs to be a new infusion of cash.  That's where our Social Security money comes in.


  5. Oh, Lisa, this is excellent.

  6. I think the saddest part of this is that half of this country voted for this moron...oh well they will regret it eventually.  Good entry.


  7. There have been several articles in the local papers about the "privatization" in other countries like Britain, Chili, Swedan......The "recipiants" have been less than enthusiastic. It hurt to find out that a major part of their accounts went for "administrative costs."


  8. The thing about SS is that it's not really a government-administered investment fund into which you pay in and from which you draw out.  It's really one of the closest programs we have to communism -- "from each according to her ability; to each according to her need."  You put in according to a government-mandated idea of your ability -- 14+% of your income until your income reaches a certain point (with your employer usually putting in 1/2 of that although, having been self-employed, I've felt that 14+% pinch, as I'm sure you do).  You get out according to your need -- 6 months if you live 6 months past your retirement age, 34 years if you make it to my grandmother's.  One of the things people complain about is what seems like the inherent unfairness in that discrepancy.

    Am I complaining?   No way.  When people say they might not "get out" of it what they put in, they are overlooking the intangibles.  What we "get out" of it is the knowledge that our family, friends and neighbors have some security that doesn't depend on our personal intervention.  If a parent lives to old age, he can often retain some measure of independence thanks to the small benefits provided by SS and MC.  As a nation, we have made life much easier for retireees and their children by acting in unity to supply a financial foundation for vulnerable people, people who have limited capacity for work and the potential for many health problems.

    There are many ways to tweak the system.  One report I read a couple of days ago said that if we simply raise the income threshold for SS contributions from $90,000 to $120,000, the problem is solved.  The problem will NOT be solved by asking people of modest means and financial acumen to manage the investment required for perhaps decades of retirement.  

  9. Part II:

    In the end, it's a philosophical issue.  Do we want to promote almsot complete independence from government control and management (which philosophically can sound like a worthy objective) or do we want to ensure that people at their most vulnerable are cared for (which may require more governmental engagment that Mr. Bush finds palatable)?

    Well, that's the second time recently that I've posted a comment where perhaps I should have taken up the space in my own journal!

    (Sorry about the 2 parts -- AOL has its limits.)

  10. Everyone laughed at poor Al Gore, but what wouldn't we give for that "Lockbox" now?

    Nice entry.  Now, if the Dems could just grow a backbone...

  11. Actually I believe that it's 6. something percent from the employee and a matching 6.something from the employer. We could probably go a long way to balancing things if we made those huge compensation packages for CEO's subject to social security withholding. I'm sure these folks don't hesitate to claim their share of the bounty even though they've barely paid into it.

  12. You're right, strictly speaking.  From the SSA webpage:

    <<The OASDI tax rate for wages paid in 2005 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $90,000 would contribute $5,580.00 to the OASDI program in 2005, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2005 is 12.4 percent. (Tax rates of 1.45 percent for employees and employers, each, and 2.90 percent for self-employed persons, are applied to all earnings—without a taxable maximum—under Medicare's Hospital Insurance program.)>>

    I guess from being self employed at one time I was used to thinking in terms of 14+ %, but that's SS plus MC.

  13. Robin, Jackie, Dave, and all---Thanks so much for your research and informative comments.  Robin--I am not self-employed, I own my own business....since I neither pay myself a salary nor have employees, I don't deal with SS issues.   Jackie--thank you for the reminder about the employer contribution.  I knew that once...but I had forgotten.  Dave--your theory about the tanking dollar and big business wanting to get out of the stock market makes suspicious sense.  A little paranoid perhaps, but I don't discount anything  There IS a hidden agenda behind all this...and we don't know what it is.

    Regardless of who pays what, my point was that SS is not a government entitlement program.  I'm sure the part that sticks in the Republican party's craw is that employers have to pay anything at all.  They are, after all, on the payroll of big business.  If business did not have to fork over big bucks to the right to pay for favorable legislation, maybe SS would not be such a burden...  Lisa  :-]  

  14. Lisa-
    I really have to completely agree with you on this one. I want him and his idiot administration to keep their dam, rich paws off of my social security too. I paid into that, not them. I have worked like everyone else all of my life for it, why screw it all up. If ain't broke, don't fix it. Will he every get a clue? Probably not! I just hope that we continue to have DEMOCRATS in office that continue to fight for SS benefits to be let alone.

    Well said Lisa......again.


  15. Wonderfully written Lisa!!! We have an horrendous amount of homeless people on our streets because of the actions of a previous Republican president. I would hate to see our rate of homelessness in twenty years, if Bush has his way with Social Security.

    I forget where I read it and can't be sure of the validity (too lazy and rushed) but my understanding is that in past years the surplus from social security has been used to pay off other government debts. They considered it surplus because what was paid in was more than what they were paying out in benefits. Had they kept their mitts off of it, the system wouldn't be so precarious now.

    What are the long term consequences of privatizing SS? Propping up the stock market is not likely to occur. As a large segment of the population edges towards retirement, they will pull their investments into something more secure like bonds. Then, what happens to the stock market. It will plunge. People will be studying the census to decide on their investment strategies. Will there be limitations on the amount you can shift out of one market into another? Who will take care of those who aren't financially capable of managing their money and lose it all due to poor investment strategies. It seems to me it's yet another "steal from Paul to pay Peter" strategy.

    I've been paying into SS for twenty years. What happens to my benefits? Do they just disappear? There's a lot of unanswered questions. I sure hope that the general citizendry is smart enough to start requiring some answers before putting their blind faith and wallets into the hands of those who don't have to be concerned about the potential of eating dog food in their golden years.

    :-) ---Robbie