Herger sells Social Security ‘snake oil’
Congressman Wally Herger (R-Chico) conducted a sometimes raucous two-hour town hall meeting at the CARD community center in Chico March 31 with some 100 attendees, most of them seniors impatient to let him know they wanted no change in the existing Social Security retirement program.
The meeting, one of eight conducted by Herger during a two-day swing through his district, sought instead to convince constituents they needed to “strengthen” the national retirement program by approving basic changes that would set up individual retirement accounts in stocks and bonds as proposed by President George Bush during his current national barnstorming tour.
The congressman used the first 15 minutes of the meeting to give a brief, general overview of the reasons for the desperate financial crisis he said Social Security faces. He pointed out that, when the program began in 1935, there were 43 workers supporting each beneficiary. Today only 3.3 workers pay for the benefits of each beneficiary. With fewer workers and ever more retirees straining the system, Herger said, “It will go into the red in just 13 short years from now.”
By “in the red” he meant more would be going out in benefits than would be coming in through payroll taxes. Adding urgency to the situation, Herger said, is a coming flood of baby boomer retirees, the first wave of which is scheduled to hit in 2008.
Herger referred frequently to a stage prop: a big, clear, water-cooler jug fitted with handcuffs and filled with paper slips marked “IOU” to represent the $1.8 trillion in “worthless” special-issue, unmarketable treasury bonds that comprise the so-called Social Security Trust Fund. Picking up the jug several times for emphasis, Herger explained that the government over the years has borrowed the money to spend on various programs and then replaced it with the bonds.
“There has never been a cash cow for the federal government like Social Security,” he said. “These IOUs are not real assets,” he said, adding, “The federal government must either borrow money or raise taxes to pay back the trust fund” when it’s forced to pick up beneficiary payments if the pay-as-you-go balance goes into the red.
When the congressman then tried to turn the meeting over to Jim Lockhart, identified by Herger as deputy commissioner of the Social Security system, several people shouted that Herger was supposed to be there to hear what they had to say and they resented being spoken to “like school children when we know very well what’s going on.” Another audience member said, “We’re not buying your snake oil!” Someone from the back of the room yelled, “Stop the lies!” Herger finally brought order by asking for basic courtesy and promising that people would be heard “after we get the facts out on the table.”
For the next 40 minutes Lockhart basically retraced Herger’s steps but in greater detail with a vast array of charts and graphs. When he launched into what he called a “policy simulator” on Power Point to illustrate how even small investment sums in privatized stock and bond accounts could grow much larger through compounding, the audience became increasingly restless.
Herger then called for a line to form on each side of the room so that audience members could express their opinions via microphones. One older man said Republicans had caused the problem, and things would never be right until the Democrats came back to power. A younger man later identified as Casey Aplanalp, chairman of Butte County’s Libertarian Party, said, “To me, it’s social insecurity, not social security, and it should be abolished.” He suggested the system is a pyramid scheme. Another speaker said the contributing worker base could be expanded if corporations brought back to America the vast number of jobs they have exported.
Gabriel Singh, chairperson for North County Political Action Committee, shouted remarks at Lockhart such as, “Which brokerage firm do you work for?” A little later he followed up with “Morgan Stanley? Charles Schwab?” Still later he yelled, “Resign now!”
As Herger tried to wrap things up, a woman who had earlier carried a sign reading “Don’t privatize Social Security” yelled to the audience to raise their hands if they were against privatizing Social Security. A large majority of those present did so.
Her question and the response to it left little doubt that Herger and Lockhart had changed very few minds during the meeting.