The Conservative Plan for Social Security Is “An Absolute Disgrace”
Last week, Sen. John McCain called the system for funding Social Security "an absolute disgrace." [YouTube] Apparently, McCain was completely unaware that the way Social Security is funded has remained the same for more than 65 years. Yet, there is an absolute disgrace in the debate over Social Security—it's the right-wing fear-mongering that Bush, McCain, and other conservatives have used to stir up support for privatization schemes.
Social Security is the cornerstone of retirement in America. More than 49 million Americans receive Social Security benefits, including more than 90 percent of the elderly. Social Security provides 73 percent of the typical retiree's income, compared to 17 percent from pensions and 10 percent from savings and other sources. [Economic Policy Institute] Without Social Security, more than 35 percent of Americans aged 65 and older would be living in poverty. [AARP]
The Social Security "crisis" is a right-wing myth. The nonpartisan Congressional Budget Office projects that the Social Security trust fund will run a surplus until 2019. The fund's assets, held in the form of U.S. Treasury securities, will last another 38 years. [Congressional Budget Office] Compared to our nation's trade imbalance; the price of oil; the lack of quality, affordable healthcare; and the war in Iraq, Social Security is hardly a crisis.
The right-wing "solution" of privatization does not even address the supposed problem. Privatization means diverting workers' Social Security deductions from the Social Security trust fund into private accounts. This would cause the trust fund's surplus to run out much sooner. Consequently, most privatization schemes would cripple the trust fund. [Century Foundation]
Privatization sacrifices security. The whole point of Social Security is to ensure a minimum income for retirees, not just to benefit individuals but also to protect society. Pushing millions of Americans into the stock market guarantees that the number of seniors living in poverty will multiply. Even in a bull market there are losers, and in a bear market almost everyone suffers. A Securities and Exchange Commission report found that the average current investor is extremely uninformed about stocks and bonds. [Century Foundation] Encouraging more, even less informed Americans to play the market will inevitably bring tragedy.
Every American deserves a secure retirement. Retirement security is an essential part of the American Dream. Today, less than half of workers participate in a retirement plan, and only a fraction of them have access to a traditional kind of pension that guarantees income in retirement. [EPI] So a strong Social Security system is now more important than ever.
Social Security needs an adjustment, not an overhaul. Contrary to John McCain's repeated claims, Social Security is not going bankrupt. There is no scenario in which Americans would stop receiving checks. Instead, it is projected that Social Security checks would have to be cut by 20 or 25 percent if nothing is done. Social Security has been adjusted many times over the years, and it simply needs another adjustment.
Privatization schemes are designed to enrich Wall Street at the expense of Main Street. Privatizing Social Security would deliver hundreds of billions of dollars to financial services corporations on Wall Street. They would, in turn, charge Americans billions of dollars in brokerage and management fees.
THE PROGRESSIVE SOLUTION
Social Security is financed by workers and employers, each paying a flat tax of 6.2 percent of a worker's salary. This payroll tax currently applies only to the first $102,000 a worker makes; any earnings above that are tax-free. The progressive solution is to apply the tax to some or all earnings above $102,000. Sen. Barack Obama has suggested that the payroll tax should apply to earnings above $250,000 per year, which would affect only the wealthiest 3 percent of Americans. [Boston Globe]
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To see the 2006 Senate vote on establishing private accounts, click here.