Social Security - Part 16: The Debate Continues

EDITOR'S NOTE: There is a nice little mention about Time Goes By in the Wall Street Journal today. It's in the free section.

The great Social Security privatization debate of 2005 lumbers on. The Democrats continue to stand firmly against it as the president, vice president and Republican senators visit several states each week continuing to misrepresent what looks increasingly like a dead horse. The majority of Americans opposing privatization grows every week.

Waning Support For Privatization
In a CNN poll released on Tuesday, 22 March, only 45 percent of respondents supported private accounts and that number fell to 33 percent when told that private accounts would reduce guaranteed benefits.

Most interesting to Crabby Old Lady, who has been annoyed that the president, in tone and attitude, seems to believe that the issue is too complex for ordinary people, was the response to a question about how well those surveyed understand the issue: 81 percent say they grasp it “somewhat” or “very well.” Only 18 percent said they do not have a good understanding of the issue.

Don’t Blame the Baby Boomers
The president and his supporters have blamed the large size of the baby boomer generation for causing the future shortfall in Social Security. Economist Allen W. Smith notes that boomers have not only paid the Social Security costs of the previous generation’s benefits, they have prepaid their own retirement benefits:

“The higher taxes that were part of the 1983 ‘solution’ to the baby boomer problem have generated the annual Social Security surpluses anticipated so far,” says Smith, “and they will continue to do so until 2018…

“Our government should be thanking the baby boomers for their extra sacrifice and special contributions. But instead, President Bush is trying to use them as scapegoats for the government’s failure to save and invest the Social Security surplus.”

Yahoo! Finance, 22 March 2005

The Trust Fund is There
Privatization partisans continue to argue that the Social Security Trust Fund - the excess payroll taxes not used to pay current benefits - is empty. You betcha it is because President Bush spends every extra penny on the Iraq war, tax cuts for the wealthy and other government programs. To be fair, President Clinton did this too, as did Mr. Bush’s father when he was president, but nowhere near the degree that Mr. Bush does.

When that money is used for other expenditures, special issue treasury notes – the government’s promise to repay the Trust Fund – are placed in the Trust Fund in exchange for the looted money. And it will be repaid. As Richard C. Leone and Greg Anrig, Jr. explain:

“…future Congresses will be bound to pay the interest and principal on those securities before authorizing payments "on any other government expense." U.S. Treasury obligations are viewed worldwide to be the safest possible investment - the federal government throughout its long history, including deep recessions and times of war, has always paid interest and principal on its debt.

Presumably, members of Congress could not ignore the enormous political and economic implications of a bond default to the trust fund. Indeed, it would take an economic calamity of unthinkable magnitude for the federal government to default on any of its obligations, in which case Social Security's future would be among the least of our worries.”

The Century Foundation, 9 March 2005

Bush Threatens Democrats
On Tuesday in Albuquerque, the president issued a warning to Democrat opponents:

“I believe,” he said, “there will be bad political consequences for people who are unwilling to to sit down and talk about the issue.”

Washington Post, 23 March 2005

Crabby Old Lady doesn't believe public debate should be conducted by threat, particularly coming from a president who has refused to enlighten the citizenry about the details of his plan. As Winston Smith, who left this comment on Social Security – Part 15, points out:

“Crabby, I think Democrats HAVE a Social Security proposal of our own. It passed both houses of Congress in 1935 and FDR signed it into law.

“I don't have a problem with calls for Democrats to address possible funding shortfalls thirty years down the road. But I don't think we're obliged to present a proposal to someone who won't put his own specific plan on the table, dismisses the most reasonable fixes out of hand, insists any fix must include a device that precipitates a crisis sooner rather than later, and - oh, dismantles the most popular and successful government program in human history. Am I being too crabby?”

...to be continued...

Social Security Privatization Series Index

Comments

[Sharyn]

Crabby,
You have written down everything I have been thinking about this! As a self employed baby boomer I and my husband have been paying 12.4 percent of our income for at least 25 years. And I resent the implication that we are now a problem. I also deeply resent the looting of our trust fund and then being told there is none.

[Always Question]

I pretty much go along with Winston Smith at this point. Bush seems to be demanding that the Democrats come up with a "cure" for the program that includes his private accounts, and that just should not happen.
The Democrats aren't in the White House and don't control either House or the Senate. If the Republicans want to propose legislation then let's see it.

[Cowtown Pattie]

I so very proud to be among your readers. Good stuff, Miss Crabby.

[Juanita Uthe]

"If it ain't broke, don't fix it!" I think that all the politicos that have dipped their grubby little paws into the Social Security Fund in the past to "make the budget look better/balance" or to cover some short-fall somewhere should have to "pay it back out of some of their favorite 'pork packages'"! THEN there would be absolutely NO problem anywhere! Except maybe in their "pork packages" or whatever they have been using SS for in the past that has made it "look in need of 'FIXING'" now!
Bush and his Fat Cat Cronies in government and business are the biggest threats to the United States in history! No need for terrorists--- Georgie W. will take very good care of destroying the US and our economy all by his little self!