Not content to wait until his inauguration, President George W. Bush and his administration have already launched an all-out offensive to “reform” the Social Security system. Bush, the Republican Party and their Wall Street cronies are now desperately trying to convince the American public that the nation’s old age and disability pension system is in crisis and that privatization is necessary to save it. Nothing could be further from the truth. The only crisis facing Social Security is a ravenous reactionary government determined to rob millions of their right to retirement in order to swell the coffers of the world’s largest financial banks.
Although the Bush Administration has had its eye on Social Security since the creation of a bi-partisan commission to explore ways to privatize the system in 2001, only now with incumbency and a Republican controlled Congress do Bush and co. feel secure enough to act. This first commission, chaired by the late “arch-liberal” Democratic Senator Daniel Patrick Moynihan and the chief executive of AOL – Time Warner, drafted the basic privatization plan now being pursued by the Republican White House and allies of both parties in Congress. The commission’s ‘findings’ mirror those of the Cato Institute, a Wall Street think tank financed by AIG, the worlds largest financial firm as well as American Express and the brokerage house of Alex Brown & Brothers.
The first phase of the administration’s plan calls for the creation of “individual retirement accounts,” deducted directly from workers paychecks as Social Security does now. The major difference is that this deducted money will placed on the stock market instead of a secure government fund. President Bush would like to slash Social Security and instead give the working class a 401k! The Enron scandal and the Wall Street stock market crash of 2001 have already illustrated the grave dangers working people face when wagering their future on the market.
At present every worker in the U.S. has 6.4 percent deducted from his or her wages to fund their Social Security pension, with the employer paying a matching amount. Under Bush’s privatization plan, at first 2 percent of this money would be given over to private investment banks instead. Young workers would be given the “option” of investing all of their Social Security deduction to the private fund, and later on all workers will have 100 percent of this money going to private banks. Annual contributions to this 401K fund would be limited to $1,000 per person. What is more, the administration’s plan would abolish the current scale used to calculate benefits. Currently the amount of pension payments is decided by wage growth rates over the 35 highest paid years of a workers’ lifetime. Mr.. Bush’s Social Security ‘reforms’ would calculate payments using “price indexing” instead, that is, using inflation as the scale. Wage growth almost always increases at a faster rate than inflation, so “price indexing” despite its name means that retirees benefits will not keep up with inflation. This scheme also means that retirees will receive smaller pensions even if inflation is not taken into account!
“Price indexing” alone would represent a cut of over a third in benefits. This is even admitted to by Bush and his cabinet. According to the Social Security Administration’s chief actuary, if Bush has his way with the system, a worker retiring in 2022 would get a 10 percent cut in benefits. By 2042, the cut would total 25 percent, and 54 percent by 2075. Also included in Bush’s Social Security plan is a “two-year review.” Under this section, disabled recipients would be required to undergo a re-examination of their eligibility and ability to work every two years. This is yet another of the bosses’ tricks to deny the disabled their rightful benefits and throw them into the workforce, where they will be among the last hired and the first fired - or simply languish in unemployment.
It is plain to see that if put into effect, the Bush administration’s privatization “reforms” will be disastrous for the millions of working in the U.S. who will depend on Social Security in their old age. At a time when under the current pensions system the majority of those on Social Security are just barely getting by or not at all, privatization represents an assault on our living conditions that will only become worse in the future. The “Baby Boom” generation retiring in the near future will see significant cuts in the benefits promised to them just years ago. For younger workers, privatization will make it effectively impossible retire.
Working people have absolutely nothing to gain and everything to lose if Bush and Congress are allowed to “reform” Social Security. That is why the Bush team will strain every nerve in its attempt to convince us the system is in crisis, and that there is no other option short of privatization. Just as this imperialist gang went blue in the face spouting a whole collection of lies in order to build support for the war in Iraq, they are now preparing a similar campaign of lies and distortion to attack Social Security.
Is There a Crisis?
For more than a decade the idea of a “terminal” crisis in the Social Security Administration has been put forth widely in the media. Not surprisingly, those who originated this idea are not the government officials who administer Social Security and keep its accounting books, but the very financial institutions and their hired hacks who would stand to make a killing from privatization! G.W. bases his call for privatization on the prognostications of Federal Reserve Bank chairman, Alan Greenspan, a former Wall Street banker himself. Since 1996 Mr. Greenspan has been issuing dire warnings about the state of Social Security, calling on the government to take “prompt action to rescue the financially threatened Social Security Administration.” Greenspan has stated 2018 as they year the system will “collapse.” But this appraisal has more to do with Nostradamus than with economics!
Despite the self-interested concerns of Bush, Greenspan and the Wall Street investment banks about the fate of Social Security, the system is far from running out of money – by a long shot! In 2002 alone, in the midst of the stagnant economy and the massive federal budget deficit, the system brought in a $120 billion surplus. The Social Security Administration’s accountants have projected that the pension’s annual budget should continue making a surplus until at least 2020. After 2020, the SSA reserve fund, which totals more than $3 trillion would completely cover any shortfall. They estimate that by 2070 the system would again return to making a surplus.
However George W. Bush believes that this money is needed more by the billionaire American capitalists than by millions of retired workers who have spent their lives producing this wealth in the first place! Under Bush’s privatization “reforms” the management fees collected by Wall Street alone would total over $940 billion over 75 years. Transaction fees charged for making investments with a worker’s pension have not yet even been calculated into the projected costs of a privatized system. While the total profits to be made by the big financial institutions under privatization are not yet known (or publicly disclosed!) the effects of privatization on the already bloated Federal deficit are.
Privatization of Social Security would create a $2 trillion shortfall in the first year alone. The Bush tax cuts for the wealthiest 1 percent have already cut off $1.9 trillion in revenue. The Federal budget is estimated to have a deficit of over $400 billion in 2005 due to the $1 billion-plus per week war in Iraq and Bush’s tax cuts - without even considering privatization! Citizens For Tax Justice, a citizen’s advocacy group, using Congressional Budget Office data has estimated that by 2013, before privatization is taken into account, the annual Federal debt will total $1.1 trillion. The greatest share of this debt will be put on the shoulders of the working class through higher taxes and cuts in services – we pay the vast majority of the taxes, after all!
Hands Off Social Security!
Having been temporarily defeated in their attempt to “reform” the 1938 Fair Labor Standards Act which guarantees overtime wages, Bush percent co. are now attempting to destroy another hard-fought gain won in the mass struggles of the 1930s. The class struggle waged in the thirties not only resulted in creating the multi-million member CIO trade union federation among the formerly unorganized industrial workers, but won tremendous gains including the 40-hour work week, the right to join a union, and the entitlement to old age retirement under Social Security.
The bourgeois history books will tell us that these New Deal programs and laws were drafted by Franklin D. Roosevelt out of “sympathy and wisdom” to answer the plight of the millions of workers ruined by the Great Depression. But that is not the real reason behind the New Deal. Roosevelt, after all, was the same President who ordered the attack against the Bonus Army encamped on the Washington Mall – with Major Douglas MacArthur and Captains Eisenhower and Patton leading the assault on the unarmed war veterans and their families*. The real reason the American capitalists and their representative Roosevelt instituted these reforms was to try to keep events in the U.S.A. from heading towards revolution.
It was not Roosevelt’s “bleeding heart” but the hard-fought struggles of the American working class that we have to thank for these rights we enjoy today. We have Social Security today because of the men and women who sacrificed and struggled in the mine workers strikes, the Flint sit-down strikes, the Minneapolis Teamsters strike and countless other struggles of the 1930s. We have these rights because our class fought for them – and only by taking up the fight again can our class defend and increase them.
Unlike the period of the post-war economic boom from 1945-1975, the American capitalists are no longer willing or able to give the working class meaningful reforms. Gone are the days of the “New Deal” and the “Great Society”. Instead, the capitalists offer us the likes of Bush and “compassionate conservatism” – or rather war, crisis and privatization served up with G.W.’s affable smirk! In a disclosed White House email to “opinion shapers” in the media, Presidential aide Peter Wehner wrote that the privatization of Social Security is “one of the most important conservative undertakings of modern time, the Social Security battle is one we can win.” The American capitalists are mobilizing to attack one of the working class’ most important rights. It is now up to our class, led by the trade unions to organize in kind and to rediscover the traditions and methods of struggle with which these rights were won in the first place.
- Hands Off Social Security!
- Only the Working Class Can Defeat Bush!
*Correction: It was Herbert Hoover who ordered the attack on the Bonus Army, not Roosevelt. - The Editors