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National NOW Times >> Winter 2004/2005 >> Article

Viewpoint: Don't Worry About Your Golden Years, Wall Street's Got Just the Plan for You

The President and Congress, intent on running up the largest budget deficit in the history of the planet, are telling the public that Social Security is broken and they have a swell plan to "fix" it. What they won't tell you is that their mismanagement of our taxpayer dollars, combined with an ill-advised tax giveaway to millionaires, depleted the reserves for human needs programs. Now they want to use creative accounting tactics (can you say Enron?) to hide TWO TRILLION DOLLARS off the budget books so they can fund this "fix."

The real problem is the Bush administration using dismal economic projections to calculate that Social Security will be in trouble by the year 2042, in order to frighten the public into agreeing to a privatization proposal—in which they assume rosy economic growth for the "private accounts." They can't have it both ways—they know that, but most of the public doesn't. Bush's dad might have called it "voodoo economics."

Their "chicken little" predictions are designed to convince workers that we should deplete our nation's premiere guaranteed federal insurance program to funnel benefit reserves into so-called private accounts, a windfall for the administration's buddies in the financial services industry.

Their claims are "mostly bad math, faulty logic and deception," wrote Dean Baker of the Center for Economic and Policy Research.

Their "ownership society" sounds good, but it's little more than a good public relations phrase to cover up their scheme to redirect our money away from the public trust fund and into the greedy hands of their Wall Street cronies - not to mention dramatically increasing the national deficit in order to pay the costs of transitioning to such a system.

Asian countries are buying most of that debt, and Bill Spriggs of the Economic Policy Institute quipped that at this rate the Board of Directors of the Ownership Society will have to meet in Beijing Workers, especially women and low- and middle-income families, must "do the math." The cost for financial advisers to manage these private accounts will erode most, if not all, of the profits from investing in the market. And depending on the economy, the returns could be less than a passbook savings account. And what if you're unfortunate enough to retire when the market is at a low point?

Social Security is our only guaranteed family safety and retirement insurance, intended to assure workers and their families economic protection from the unexpected tragedy of death or disability in their working years and from poverty in their golden years.

Almost 150 million workers participate in the system through a regular payroll deduction. Another 45 million people are current beneficiaries, including retired workers, surviving children and spouses, and disabled workers and dependents. However, George W. Bush wants you to forego a significant portion of this guaranteed, reliable payment.

To its credit, the Social Security system has not missed a single payday since it was started in the first part of the last century.

And it's hardly ever mentioned that many kinds of "private accounts" already exist. Tax-sheltered ones include IRAs, 401(k) plans, 403(b) plans and other "salary reduction" benefits that clever investors can build into a healthy nest egg.

If we really want to help workers and their families have some control over investing their retirement money, we should raise the amounts that can be invested in these accounts tax-free. That way, Social Security trust funds can be secure throughout this century with only small and incremental adjustments.

Young workers especially should be alarmed about this new proposal. They will be stuck with the bill for Bush's trillion-dollar deficit and can count on receiving smaller Social Security benefits.

The right-wing made young workers the target audience for scare tactics that claim the system is broke and won't be available for them.

If they succeed in their plan, future generations will have a sad awakening when they themselves or a family member turns to the system for their guaranteed benefits, only to find they no longer exist or are too small to live on.

The administration is counting on the fact that most young people aren't yet thinking about their retirement. They're concerned with paying off education loans, getting health insurance or just trying to make ends meet with an entry level job.

Women of all ages must be especially skeptical of the "privatization" con. Social Security is the foundation of women's economic security in retirement and serves as the main income source in retirement for almost one-half of unmarried women-widows, divorced and never-married.

Without Social Security, more than half of elderly women would be living in poverty. Women's wages are notoriously low, leading to lesser retirement benefits.

Privatization would reduce their future benefits, while yielding minimal returns in their "personal accounts." Wealthy workers might opt out of the scheme entirely, putting an even greater burden on low and middle income workers to keep the trust fund healthy.

Since Latinas and African-American women have higher rates of premature disability and death, these insurance benefits are especially important to their families.

One in five African-American and Latino Social Security beneficiaries is under age 55, compared to one in 10 white beneficiaries.

Privatization, because it will draw from guaranteed benefits, also negatively impacts children. More children receive income support from Social Security than from Temporary Assistance to Needy Families.

If you have a child with a disability, your Social Security benefits will provide that child with lifetime income support, even after your own death. And if you die leaving children under age 18, they will receive income benefits to age 18 on your Social Security account.

No private account can begin to provide this level of family security insurance, and most families could not begin to afford life insurance or disability insurance at that level.

The idea for Social Security privatization started in the late 1990s when the economy was recovering, the budget was balanced and the stock market was flying high on dot-coms and high-tech firms.

As all financial advisors will tell you, the market is cyclical and what goes up will always come back down. How many wise and capable people lost their jobs, savings or pensions when companies and investments went bust a few years ago?

If we put at risk our guaranteed retirement insurance, not to mention life and disability insurance, who is going to save us when the market crashes again? Who indeed.

Surely not budget surpluses—the Bush administration gave those away.

So when we're left with no money to feed ourselves or pay for our health care, it isn't likely that Wall Street will come to our rescue with refund checks.

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