About that Social Security plan

President Bush has embarked on a bold course of action to help define his second term in office—namely that of “transforming” Social Security.

As a rule, politicians take on difficult issues only out of necessity. Nonetheless, the president’s decision, while desirable, is completely optional. Depending on whose predictions you follow, Social Security isn’t expected to run out of money until at least 2018 and possibly not until 2042—perhaps longer.

Perhaps this is why the Democrats’ resistance to any Social Security reform stems from their denial that the system faces any serious “crisis.” They could be right, but they can’t possibly know since Social Security’s solvency is quite unknown. Predictions, after all, rely on a series of assumptions that must factually materialize before their accuracy can be checked. For example, the Social Security trustees assume that in approximately 10 years the United States’ economic growth will slow to 1.8 percent and will remain there until 2080.

Question: How do they know this?

Answer: They don’t.

Shortly after being anointed Senate minority leader, our own Sen. Harry Reid wasted no time in making rounds on the Sunday-morning talk-show circuit. On NBC’s Meet the Press with Tim Russert, Harry pontificated about the president’s possible privatization of the program. He said, “The most successful social program in the history of the world is being hijacked by Wall Street.”

The most successful social program in history? Really?

Of course, in any Ponzi scheme, those who got into the system early are rewarded. Ida Mae Fuller received the very first Social Security check in 1940. By the time of her death in 1975, she had received a lifetime total of almost $21,000—after contributing only $44 into the system.

According to the Social Security Administration:

• Social Security checks are currently the major source of income for most of the elderly.

• Nine out of 10 individuals age 65 and older receive Social Security benefits.

• About two-thirds of Social Security beneficiaries receive 50 percent or more of their income from Social Security.

• Social Security is the only source of income for approximately 20 percent of the elderly.

• As of June, 2004, 29.7 million people had received $27.5 billion—for an average monthly benefit of $926.

It seems that AARP lobbyists, extortionist unions and Democratic politicians are the only groups whining about the right-wing meanies who want to throw the geezers off the public dole and toss their $926 monthly checks to the Wall Street brokers.

Of course, privatization successes are the dirty secrets that the entitlements people would like to keep hidden.

Take notice of the Nevada Retirement Act of 1947 (at www.nvpers.org), which created the Public Employees’ Retirement System, or PERS. All 17 Nevada school districts participate in PERS, as does virtually every city, county, utility, irrigation and sanitation district in the state.

Today, the Nevada PERS has 87,500 members and more than 27,000 beneficiaries who receive an average monthly benefit of $1,800 (double Social Security). The program also has more than $14 billion in real assets, unlike the Social Security fund, which is nothing more than money the federal government owes itself.

On one hand, the fact that such a program is widely available to Nevada’s public employees and unavailable to private-sector workers is patently unfair. On the other hand, PERS is in-your-face proof that fear-mongering arguments against Social Security privatization require a second look.