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<H2 style="MARGIN: 12pt 0in 3pt; TEXT-ALIGN: center" align=right><EM><FONT
size=4>Special to the Progressive Populist, December 15, 2002</FONT></EM></H2>
<H2 style="MARGIN: 12pt 0in 3pt; TEXT-ALIGN: center" align=center><EM>Social
Security Privatization: GOP Deceptions</EM></H2>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center"
align=center><FONT size=3><FONT face="Times New Roman">By Nathan
Newman<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office"
/><o:p></o:p></FONT></FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT size=3><FONT
face="Times New Roman">You go GOP social security privatizers! Please keep
pushing this issue. Throw us progressives in that briar patch.<SPAN
style="mso-spacerun: yes"> </SPAN></FONT></FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>Soon after the recent election, former GOP
Congressman and Gingrich lieutenant </FONT><A
title="'Third Rail' Grail: Political courage is a winning strategy."
href="http://www.freerepublic.com/focus/news/791074/posts"><SPAN
style="COLOR: windowtext; TEXT-DECORATION: none; text-underline: none"><FONT
face="Times New Roman" size=3>Vin Weber</FONT></SPAN></A><FONT
face="Times New Roman" size=3> took to the pages of the <I
style="mso-bidi-font-style: normal">Wall Street Journal</I> to crow about the
supposed victory of social security privatization in the last election. Because
some GOP Senate candidates supported private accounts in Social Security and
won, that shows, Weber argues, how much popular support there is for SS
privatization. But the key phrase in his article is this one: </FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>"They promised to preserve the benefits of all
current retirees and those nearing retirement." </FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>Which is a nice promise and when you bullshit the
public, you often can get short-term political gain. But read the sentence
again. What is says first is that there is no promise that most working people
paying into the social security system will get full benefits. </FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>Second, if you take a big chunk of social security
taxes and put them into private accounts, that means you have to use a chunk of
income taxes or other general revenue to pay for current retirees.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>So here is what social security privatization
means for younger workers:<BR>(1) Your guaranteed benefits will be slashed and
if your personal account goes south in an Enron-style mess, you will be eating
cat food in retirement.<BR>(2) While it sounds like free money, you will
actually be paying for those private accounts through increased income or other
taxes.<BR>(3) Therefore, the scam is that young workers get to pay double
taxation, for present retirees and again to cover the costs of their own
accounts.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>Cute bait and switch, huh? The GOP gets to sound
all progressive and pro-young worker, when they really are screwing them as
thoroughly as possible. Economist </FONT><A
href="http://www.ourfuture.org/readarticle.asp?id=1464"><SPAN
style="COLOR: windowtext; TEXT-DECORATION: none; text-underline: none"><FONT
face="Times New Roman" size=3>Paul Krugman </FONT></SPAN></A><FONT
face="Times New Roman" size=3>at the New York Times has long been skewering Bush
over the deceptive math involved in these proposals.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>The standard political story of social security
privatization is that seniors will hate it politically, but that young people
will be won over to the GOP on the issue. The actual politics is really the
reverse. Most present retirees won't feel a thing, but younger workers are the
ones who should be up in arms at the GOP playing these deceptive games with
their future.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>If you want the true story on Social Security
privatization, you should look at the only real bill ever developed on the
issue, the 1999 Archer-Shaw bill, a proposal so embarrassing in its results that
the GOP has refused to actually present a bill in Congress since. </FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>One gimmick of the Archer-Shaw bill was to
officially keep standard benefits for retirees constant, while slashing them
dollar for dollar for any stock market gains in the private accounts. As the
</FONT><A href="http://www.cbpp.org/4-28-99socsec.htm"><SPAN
style="COLOR: windowtext; TEXT-DECORATION: none; text-underline: none"><FONT
face="Times New Roman" size=3>Center on Budget and Policy Priorities
</FONT></SPAN></A><FONT face="Times New Roman" size=3>(CBPP) noted at the time:
</FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal
style="MARGIN: 0in 0.5in 0pt; mso-line-height-alt: 6.9pt"><FONT size=3><FONT
face="Times New Roman">[such an approach] is not likely to survive politically
over time. This aspect of the plan effectively imposes a 100 percent tax rate on
most accounts. After being told the individual accounts are their property,
American workers would see their accounts entirely taxed away when they
retired.<o:p></o:p></FONT></FONT></P>
<P class=MsoNormal
style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
size=3><FONT face="Times New Roman">Seems kind of a strange game, to take money
out of social security, put it into private accounts, then tax it away at
retirement. Oh, but there's a point to the game, as CBPP argues:
<o:p></o:p></FONT></FONT></P>
<P class=MsoNormal
style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal
style="MARGIN: 0in 0.5in 0pt; mso-line-height-alt: 6.9pt"><FONT size=3><FONT
face="Times New Roman">The only group of retirees who could receive an increase
in government-funded retirement benefits under the plan would be upper-income
workers. Yet a broad array of Americans, including many of average or modest
means, might have to absorb cuts in other benefits or services or tax increases
to help finance the individual accounts after 2012.<o:p></o:p></FONT></FONT></P>
<P class=MsoNormal
style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
size=3><FONT face="Times New Roman">Yep, that's the kicker. The deficit explodes
paying for the private accounts and the only benefits get diverted to
upper-income retirees who make so much that their stock market gains are larger
than their lost benefits. <o:p></o:p></FONT></FONT></P>
<P class=MsoNormal
style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>And the economic analysis of the Archer-Shaw bill
by the non-partisan </FONT><A
href="http://www.ebri.org/pdfs/0600notes.pdf"><SPAN
style="COLOR: windowtext; TEXT-DECORATION: none; text-underline: none"><FONT
face="Times New Roman" size=3>Employment Benefit Research
Institute</FONT></SPAN></A><FONT size=3><FONT face="Times New Roman"> said it
all about the likely budgetary results:<o:p></o:p></FONT></FONT></P>
<P class=MsoNormal
style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal
style="MARGIN: 0in 0.5in 0pt; mso-line-height-alt: 6.9pt"><FONT size=3><FONT
face="Times New Roman">[I]f the equity market does not fair as well, and the
costs of administering the accounts turn out to be larger than the proposal
predicts, the chance that the proposal will achieve a positive actuarial balance
is minimal.<o:p></o:p></FONT></FONT></P>
<P class=MsoNormal
style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
size=3><FONT face="Times New Roman">That's a nice way of saying that the numbers
don't even add up with the proposal. <o:p></o:p></FONT></FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT size=3><FONT
face="Times New Roman">There are other variations on social security
privatization, but they are all based on lies and financial manipulations-- the
end result being the same. The deficit increases, average folks lose out, and
rich retirees are the only ones who benefit. <o:p></o:p></FONT></FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT size=3><FONT
face="Times New Roman">And let me repeat, the Dems have to get the politics of
the issue straight. It's not old people who should be scared of the GOP plan.
It's the young workers who will be double taxed directly and indirectly to pay
for the damn thing, while risking having no retirement money.
<o:p></o:p></FONT></FONT></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></P>
<P style="MARGIN: 0in 0in 0pt; mso-line-height-alt: 6.9pt"><FONT
face="Times New Roman" size=3>The key here for progressives is to force the GOP
to put up or shut up. Don't let them just talk about the wonders of "private
accounts"-- make them present a real bill. These folks are getting cocky. We
need to give them enough rope to go hang themselves. And when the average
American voter sees who will foot the bill and who will benefit, folks like Vin
Weber will be running for the hills from the backlash.</FONT></P>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt"><I><o:p><FONT
face="Times New Roman" size=3> </FONT></o:p></I></P>
<P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT size=3><FONT
face="Times New Roman"><I>Nathan Newman is a union lawyer, longtime community
activist, a Vice President of the NYC National Lawyers Guild and author of the
just published book NET LOSS (</I><?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags"
/><st1:place><st1:PlaceName><I>Penn</I></st1:PlaceName><I>
</I><st1:PlaceType><I>State</I></st1:PlaceType></st1:place><I> Press) on
Internet policy and economic inequality. Email nathan@newman.org or see
http://www.nathannewman.org.<o:p></o:p></I></FONT></FONT></P></DIV></BODY></HTML></FONT></FONT>