"Social Security wars: there's more to come"
by the Hosea Hudson club, CPUSA
In 1936, Republican presidential candidate, Alf Landon, blasted Social Security - the nation's universal pension and family insurance system - as a "cruel hoax."
Today, in large part due to Social Security, nealy 90% of all elderly Americans have incomes above the poverty line. It is the only pension for six out of 10 workers in private industry, and provides benefits, each month, to 44 million people of all ages, including five million widows, three and a half million children, and four million workers who have become disabled.
The cruel hoax is the scam that Social Security is "in crisis" - that the system is going broke and there willl be insufficient funds to pay full benefits for the first wave of baby boomers. Let's look at the math.
By 2008, when the baby boomers begin to retire, Social Security will be running an even bigger annual surplus than the $88.6 billion it had in 1997 - provided we leave it alone. It will have an accumulated surplus of more than $1.5 trillion, which will keep growing until 2021.
The 1998 Report of the Social Security Trustees confirms that the program is financialy solvent for the next 34 years. Where's the crisis ? Revenues from payroll taxes currently exceed benefits, and the surplus will allow benefits to be paid in full through 2032. There is, however, a long-term shortfall - the amount by which trust fund income and revenues over the next 75 (!) years will fall short of what is needed to pay full benefits .
Moreover, the trustee's report calculates its figures aat a 1.4% growth rate over the next 75 years, when the growth rate over the last 75 years has been twice that.
Despite all the evidence that Social Security is not "going broke", the critics of the program - led by Wall Street and the insurance industry - continue to fuel the misinformation campagin. Why ? Because they hated Social Security in 1935 and they hate it in 1998.
According to then-Bidget Director David Stockman, a major goal of the Reagan administration was to use the massive public debt to panic the public so that it would eventually dismantle Social Security and Medicare. Proponents of Social Security privatization claim that the road to a "golden retirement" for all Baby Boomers and Gen-Xers is to take the funds now earmarked to the Social Security system and invest them in the stock market.
All privatization plans assume that stock prices will rise more quickly than they have in the past. Anyone checked the financial pages lately ? . Stocks don't necessarily "bounce back." Stocks didn't regain their 1929 highs until 1954.
. Stocks are very unlikely to earn even near the high rates of return being touted by privateers. . Privatization carries with it the prospect of a lot of folks who don't know stocks from Shinola sitting down to nightly meals of Tender Vittles.
The real reason Wall Street money managers and their Republican allies support privatization
of Social Security is because of the fees investors would pay.
According to economists Hank Aaron and Robert Reischauer, "brokerage fees for buying and selling stocks and bonds and for sales and management fees ... are likely to take one to two percent out of the accounts' balances every year. such charges would reduce by 20 to 40 %, the amounts the workers would ultimately accumulate in their accounts."
Social Security is a particularly important program for women who live longer, earn less, change jobs more often, work fewer years in paid positions and tend to work more jobs that have no pension plans. Republican plans for privatizing it would be disastrous for women.
Because women earn less, thy will have less to invest in retirement accounts. and because they live longer, women with the same earnings and investments as men will likely end up with lower monthly incomes, or simply outlive their gains.
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CB