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Charles Cutter

Social Security Sell-Out
By Charles Cutter (
Dec 17, 2004 - 6:45:00 AM

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For those who spend their days obsessed with worry - imagining a host of possible threats, both personal and global, from aneurysm to asteroid - the time has come to put away your fears of the unknown. Instead, let’s take a few moments to confront the known.

How’s this for frightening? The manager of the debacle in Iraq is intent on using those same skills to "reform" Social Security.

This country is already facing record trade deficits and record budget deficits. As to the former, George W. Bush on Wednesday demonstrated his intricate grasp of global macroeconomics: "People can buy more United States products if they’re worried about the trade deficit."

Mr. Bush’s plans regarding the budget deficit are more complex.

In 2004, the federal deficit hit a record $412 billion; the Congressional Budget Office projects a total deficit amount of $3.2 trillion over the next decade. The causes here are almost entirely Mr. Bush’s doing - his war in Iraq and his tax cuts are the primary culprits.

The cost of the Iraq war has now exceeded $100 billion, double the White House’s "official" estimate prior to the invasion. If you combine the wars in Iraq and Afghanistan, you’re looking at another $100 billion in 2005.

As for the tax cuts, which were intended to expire over the next few years, Vice President Dick Cheney has made it clear: "We are committed to keeping the Bush tax cuts in place." Just to jog everyone’s memory, one third of those tax cuts went to the wealthiest 1% of Americans.

So, Bush & Co. plan to keep their wars humming along, and have no intention of placing any tax burden on their elite base. How, then, to deal with the burgeoning deficit?

"President Bush said that the administration’s efforts to support the dollar by reducing government borrowing levels would address the unfunded liabilities in the government’s huge entitlement programs, Social Security and Medicare…’Social Security reform will be at the top of my agenda,’ said Mr. Bush." (, 12/16/04)

And what manner of "reform" does he propose? Mr. Bush would allow present employees to divert some of their Social Security withholding tax to invest in stock market funds. But, since today’s payroll taxes fund today’s Social Security recipients, there’s an obvious - and immense - cash shortfall.

Bush has pledged that his "privatization" program would not impact those who currently receive Social Security benefits, nor would there be an increase in payroll taxes to fund the shift toward "private accounts."

That leaves only borrowing. The cost? Between one and two trillion dollars, added to an already crippling federal deficit.

Look closely at Mr. Bush’s plan: He says he will strengthen the dollar by reducing government borrowing, which he will accomplish through an unprecedented program of government borrowing. Unprecedented in the United States, that is; but it has been tried before.

"One major reason for Argentina’s rapid debt buildup in the 1990’s was a pension reform involving a switch to individual accounts - a switch that President Carlos Menem, like President Bush, decided to finance with borrowing rather than taxes. So Mr. Bush intends to emulate a plan that helped set the stage for Argentina’s economic crisis." (Paul Krugman, New York Times, 12/10/04).

The Bush administration has already geared up to sell their Social Security plan to the American public. They’ll paint themselves as bold and innovative, trusting in the wisdom of the people and the solidity of the stock market. Opponents will be cast as cowardly naysayers, using "campaign scare tactics" to frighten present and future Social Security recipients.

But the bottom line is this: Mr. Bush’s plan would not strengthen Social Security, nor would it strengthen the dollar. It would, however, pump vast sums into Wall Street, not only through the investments themselves, but also through fund management and transaction fees.

The Bush war in Iraq benefited corporations like Halliburton and Lockheed-Martin; the Bush tax plan benefited the ultra-wealthy; the Bush prescription drug program is designed to benefit the insurance and pharmaceutical industries.

Does it really require that much heavy-lifting to figure out who is intended to benefit from the Bush Social Security plan?

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