The Social Security scam
First off, it won’t “fix” Social Security—and could make it worse. The issue here is the solvency and sustainability of the Social Security fund, and private accounts simply do not address that, no matter what the president says. If anything, diverting money into private accounts—as much as $1,300 per worker annually, according to his proposal—could jeopardize the fund’s ability to meet its obligations.
Second, private accounts are risky. Think Enron and WorldCom. Think corporate bankruptcies and Wall Street scandals. These are the people who are going to save us? And the administrative cost of investing in stocks is expensive, as much as 15 percent, compared to Social Security’s .6 percent. Social Security is a safety net; it should be safe. Personal investing in the stock market is dandy, but only in addition to other, safer investments such as Social Security.
Third, the nation would need to borrow between $1 trillion and $2 trillion to cover the cost of shifting to private accounts. But we’re already so heavily in debt, thanks to tax cuts for the wealthy, the Iraq war and Bush’s borrow-and-spend policies, that taking on yet more debt could be disastrous, causing the dollar to fall still further on international currency markets.
Fourth, the claim that Social Security is on the brink of insolvency is simply not true. The president is just trying to scare us—again. In fact, the system is quite healthy. Social Security’s own trustees report that it can pay every penny of benefits through the year 2042, with no changes whatsoever, and well after that with minor changes.
In fact, there are far better ways to undergird Social Security than privatization. The first and best would be to increase the current cap on payroll-taxable earnings, set at $87,900 for the past decade. People making more than that are the ones who’ve benefited most from Bush’s tax cuts and can best afford to pay more into the system. By itself, that could be enough to make Social Security solvent for generations to come.