Creating a Crisis

Social Security is an incredibly important issue for Mainers. We have one of the highest percentages of our population over 65 in the country and about one in five people in this state receive SS benefits. In addition, our Senator Snowe is a member of the Finance Committee and has a direct voice on any changes in this program.

Weakening Social Security is the political Holy Grail for Republicans. If they can chip away at this popular institution they can set back Democratic progress in this country by 50 years.

The first step in this process is creating the perception that Social Security is in trouble and needs “reform”. To this end, conservative groups will soon begin spending $100 million in a nation-wide campaign and the administration will be using money from the very fund they claim is in danger of shrinking to push their arguments despite the objections of SSA employees.

However they try to spin it, there just isn’t a crisis. As Center for Economic and Policy Research Co-Director Dean Baker explains:

President Bush has been working hard to promote belief in a Social Security crisis. Unfortunately for him, the numbers refuse to cooperate. The latest numbers from the Social Security trustees show that the program can pay all scheduled benefits through the year 2042 with no changes whatsoever.

An independent assessment from the non-partisan Congressional Budget Office (CBO) shows that the program can pay all benefits through the year 2052.

Even after 2042 or 2052, the program won’t be in trouble, according to Laura D'Andrea Tyson, Dean of the London Business School:

According to the most recent report by the Trustees of Social Security, even under the cautious assumption that the U.S. economy grows at the anemic rate of 1.6% a year, the revenues into Social Security from the current level of payroll taxes will cover promised benefits for another 38 years and will be enough to finance about 70% of benefits through 2078.

Now, even if there were a crisis right now, (which there isn’t) creating private accounts would do nothing to solve it, and would in fact make the program worse-off. As Tyson says:

President Bush is using the specter of an impending crisis to justify allowing workers to divert up to 4% of their payroll taxes into private, individually controlled retirement accounts. This would reduce payroll tax revenues available to cover promised Social Security benefits by as much $2 trillion to $4 trillion, transforming an imaginary crisis into a real one.

In fact, just today, Rep. Jim McCrery, R-La, the Republican’s point-man on Social Security in the house confirmed that the new privatization bill might mean a raise in taxes.

So why would Republicans be pushing this non-solution to a nonexistent problem? This Time article sheds some light on that.

Those who believe in it most deeply say it could redefine politics itself, putting Republican principles in a position to dominate for the next half-century
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Republicans believe they can change how Americans see every question from free trade to capital gains-tax cuts. "If we succeed in reforming Social Security, it will rank as one of the most significant conservative governing achievements ever," Bush's strategic-initiatives director Peter Wehner wrote in a private memo to Republican allies two weeks ago.
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Democrats have darker views of Bush's motives, saying it has been a long-standing Republican goal to dismantle the vestiges of the New Deal and the basic contract it struck between the government and its citizens.

It’s a fight for the soul of our country and Mainers have a real stake in the outcome. Luckily, our two moderate Republican senators will have a real voice in this issue, and both are wary of privatization.

“I don't think there's any consensus on what the problem is or the extent of the problem,” said Sen. Olympia Snowe, R-Maine and a member of the Finance Committee that will debate the issue. “I have serious concerns about undermining the fundamental principles of the Social Security Trust Fund.”
…
Snowe focused on the risks of stock investment. In what she called “an inherent contradiction,” advocates on the one hand suggest investment is the way to win a better return, but on the other hand, consider it too risky for the government to pursue.

Feel free to let her know if you agree.

The PPH is right to compare the Bush administration’s claims about a social security crisis to their assurances about WMDs in Iraq. They are again manufacturing a false crisis and the cost to America will be high if they succeed.

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