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Antwort in : /alt/activism/d Absender : meisenscher@igc.apc.org (Michael Eisenscher) Betreff : ITT: Social Security vs. Securities Datum : Sa 25.07.98, 19:18 (erhalten: 16.08.98) Groesse : 4916 Bytes ---------------------------------------------------------------------- ## Ursprung : /misc/activism/progressive
Social Security vs. Securities
By James Weinstein
House Speaker Newt Gingrich wants to use most of this year's $39 million budget surplus to reduce income taxes on the wealthy. President Clinton, however, insists that the social security system is in crisis, and that no part of the surplus should be spent on reducing taxes or on new social programs until the solvency of the social security is ensured. But Clinton, cleverly, is using a false issue in order to avoid making hard decisions about how to spend the surplus.
As we've pointed out before, the so-called crisis of the Social
Security system is illusory. The Social security Administration
(SSA) keeps pushing back the fateful date on which it says the
Social Security fund will go dry. Last year, SSA's estimated
that the system would run out money in 2020. But this
prediction had no sound basis. Just last month, because of
strong economic growth. SSA changed doomsday to 2032.
SSA's projections sound so dire because they are based on
an estimated annual GDP growth of only 1.49 percent, even
though GDP has grown at an annual average of 3.5 percent for
the past 75 years. If future growth is anywhere near the
average for the 20th century, Social security will remain solvent
indefinitely, without tax increases or benefit cuts.
Make no mistake: The so-called Social security "reformers"
are out to undermine the system, not to save it. That is clear
from two major proposals made last month by the National
Commission on retirement Policy, a private group of lawmakers,
economists, pension-system experts and businessmen- many
of them friends of Bill- who want to overhaul Social security.
First, the commission called for raising the qualifying retirement
age to 70. Second, it proposed that individual retirees invest
some of their benefits in the stock market.
The first proposal would impose great hardships on older
Americans, especially African-American men, whose life
expectancy only recently reached 65, the current qualification
age. Congress has already mandated a rise to 67; raising the
bar another three years means that the majority of
African-American men, after paying a lifetime of Social Security
taxes, will die without ever receiving a penny of the system's
benefits.
The second proposal is equally harmful. Under it, millions of
investment portfolios would have to be created and workers
would make their own decisions about what stocks to buy. The
theory here is that the stock market will rise at a greater rate
than the interest paid on the special bonds in which the surplus
is now supposed to be invested, and will therefore keep the
system solvent. But the idea of leaving investment decisions to
millions of amateur investors is an invitation to multiple
disasters. The main beneficiaries of this system would be the
stockbrokers, who, of course, would charge for managing each
account and for every individual transaction. Wall Street would
make a killing under such reform, while the average working
person would be at the mercy of a market that will not keep
rising forever.
Furthermore, this arrangement would destroy the extreme
efficiency of the current system, under which administrative
costs are less than 1 percent of benefits. The government
would have to raise taxes in order to cover the costs of
managing the millions of portfolios. Ironically, a small tax
increase, all by itself, would keep the current system solvent
forever.
Instead of messing up the most successful of all our
government programs, we should be improving it. We should
keep the retirement age at 65, or even lower it, and increase
survivor benefits. We should increase payments under
Medicare, increase disability payments and cut the disability
waiting period from six months to two. And we should cut the
Social security tax rate for those who earn less than $25,000 a
year, and raise the cap on contributions to the Social security
fund from the present limit of $68,400 to $200,000.
If Clinton means that the budget surplus should be used to
strengthen and improve the Social security system in any of
these ways, we would cheer him on. Unfortunately, neither his
record nor the declared intentions of his allies point in that
direction. His talk about guaranteeing the solvency of the
system is disingenuous. By perpetuating a myth of crisis, he is
unnecessarily putting ah old on new spending for the many
social programs that desperately need expansion, and
preparing the way for further cuts in benefits.
An editorial piece reprinted from the June 28, 1998 issue of the bi-weekly news magazine In These Times
Index of Welfare-Workfare-State Archives
Last Modified: October 1998