Maine Politics

From the Piscataqua to the St. John

Friday, July 08, 2005

Dismantling Social Security

Clyde MacDonald, mentioned here previously, has an op-ed in the BDN today. One point he stresses is the well-known fact that many Republicans wish to eliminate Social Security entirely and see private accounts as the first step in phasing out the program.
Since 1983, anti-SS Republicans have relied on the rightist Cato Institute for their ideas. Most recently, Cato published Karl Borden's "Dismantling the Pyramid: The Why and How of Dismantling Social Security." Cato advocates private accounts (PA's) as the first step toward ending SS. They stress to the young that SS will not be there for them when they retire. President Bush's words almost exactly match Cato's. Cato has convinced many Republicans that private accounts should appeal to younger workers; if so, they would offset the votes of seniors who have been punishing SS's enemies at the polls.

President Bush began his anti-SS campaign by proclaiming the trust fund was collapsing and that he had a plan to "save it," by allowing workers to divert one third of their SS tax into private accounts. But it is logically impossible to increase the trust fund by cutting its income by 15 to 30 percent, depending upon how many young workers choose that option. The president's chief of staff, Andrew Card, last month in Bangor twice denied that they would be cutting the fund's income, but finally admitted the Bush plan was not to shore up the trust fund but to "save retirement."

Michaud also has a column on Social Security today and examines the effects of privatization on Maine as well as Bush's idea for so-called "progressive price indexing".
The negative effects on future Social Security recipients are substantial. Maine workers currently between the ages of 35 and 55 would suffer an average benefit cut of $1,225 per year, while workers younger than 35 would lose an average of $2,770 annually. Of the 171,000 workers in the Second District who would see benefit cuts, 85,000 would lose more than 10% of their benefit and an additional 24,000 people would lose more than 20%.

In total, Maine workers can expect to lose $10.3 billion in retirement benefits under the Administration's privatization plan.

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