The August 2005 Edition of Street Spirit

A publication of the American Friends Service Committee

 
 

National AFSC AFSC Economic Justice BOSS Website

 

 

In this issue:

Psychiatric Drugs: Assault on the Human Condition

Review of Mad In America

An Interview with Author of Mad In America

Homelessness and Psychiatric Abuse

Electroshock Must Be Banned

Zyprexa: A Prescription for Disease & Death

The Dangers of Antidepressants

Mental Health Policy: Humane or Reactionary?

Ghosts of the Albany Landfill

Berkeley Haven for Homeless Families

Franciscans for Peace and Justice

Ten Flaws of Social Security Privatization

CAFTA and Colonization

Spirit of St. Mary's Center

Life Stories of Homeless Seniors

Disabled Bus Rider's Hardships

Union Debates Sleeping Ban in Santa Cruz


ARCHIVES

July 2005

June 2005

May 2005

April 2005

March 2005

February 2005


Street Spirit is published by American Friends Service Committee.

All works are copyrighted by the authors.

The views expressed in Street Spirit are those of the individual authors alone, and not necessarily that of the American Friends Service Committee.

The Top Ten Flaws of Social Security Privatization

by Betsy Leondar-Wright

Thanks to Social Security, only one in ten seniors are poor, but without Social Security benefits, over half would be poor.

For a sheer, shameless rip-off, Social Security privatization takes the cake. Why would the Bush Administration run around the country crying, "The sky is falling," when in fact the Social Security system is more solvent now than it was from the 1940s through the 1970s, and certainly more solvent than the rest of the federal government?

Might the explanation be campaign contributions from Wall Street firms, who would make a killing on fees for managing private accounts? Or perhaps it's that such a successful, popular social insurance program contradicts the view that "big government" is the root of all our problems?

As far back as 1978, George W. Bush was warning that the Social Security system would go broke within ten years, and only privatization would fix it. Privatization has lost popularity recently, but the idea is not dead yet, and it's up to all of us to help kill it. Many of us encounter friends and family who think "personal accounts" are a nice idea, a way for the government to help ordinary people get in on the next stock market boom.

Next time this happens to you, here are ten reasons you can give them to oppose privatizing Social Security.

1. We'd all get less.
The Bush privatization plan lowers future guaranteed benefits for everyone now under age 55 -- not just for those who choose a private account. People now 15 years old would retire with benefits 40 percent lower than today's retirees.

2. It would be less fair.
Social Security now gives a higher percentage of former pay to people who need it more. Private accounts would give less to people who earned less.

3. It hasn't worked elsewhere.
In other countries that privatized their social retirement systems, such as Britain and Chile, the private accounts paid lower benefits than the completely public system had paid.

4. It's riskier.
The Social Security Trust Fund is invested in US Treasury notes, historically a much more stable investment than the stock market, which could be crashing just at the moment you retire.

5. If it ain't broke...
No dramatic fix is needed, just a modest adjustment after 2051. To keep the current Social Security system running in the black forever, just raise the cap on taxed income from $90,000 to $175,000 -- or eliminate it entirely.

6. Insurance only works when risk is pooled.
You can't save enough to protect yourself against all life's vicissitudes. To replace all Social Security's guaranteed benefits with private finances, you would have to buy disability insurance, life insurance, and an annuity with a guaranteed income for life. Social Security is a better deal.

7. Old folks shouldn't fear poverty.
Why mess with success? Thanks to Social Security, only one in ten seniors are poor, but without Social Security benefits, over half would be poor. The program is especially important to African American and Latino families, who depend more heavily on it.

8. It's full of fuzzy math.
The president's rosy forecasts for a privatized system include very high economic growth when predicting how much would be in the private accounts, and very low economic growth when predicting how much will flow into the Trust Fund from FICA taxes. You can't have it both ways!

9. It requires huge debts.
Who would pay back the $2 trillion federal debt that would be run up in the first decade to create the private accounts? Wouldn't that liability set our children and grandchildren back more than they'd ever gain even if their private account lucked out from another stock market boom?

10. We all have a stake in the current system.
Social Security has been "the third rail of American politics," untouched while other government programs get cut, in part because everyone benefits from it. If voters are divided into smaller groups, such as those with and without private accounts, each program will have fewer to defend it.

Let's make sure that the voltage in that third rail surges stronger than ever. If we want Social Security to be there for the next generations as it has been there for the last 65 years, we need to make sure that this and every privatization scheme gets zapped.

Get updated analysis on the Social Security debate on the web at http://www.faireconomy.org/research/SocialSecurity.html
Learn more about Social Security and people of color on the web at http://www.faireconomy.org/research/socialsecurity_40605.html
Betsy Leondar-Wright is the communications director at United for a Fair Economy and the author of Class Matters: Cross-Class Alliance Building for Middle-Class Activists (www.ClassMatters.org.) Visit the UFE website at www.FairEconomy.org


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