Friday, July 22, 2005

AFSC/Politics and Economics/Polarization/McNish, Mary Ellen

Troublemaking on Social Security

Topeka Capital Journal/Topeka/KS/USA/21-Jul-05

As if the country isn't already polarized enough, the Bush administration seems intent on driving yet another wedge between groups of Americans. In this case, the aim is to create and exploit a rift between the generations over the future of Social Security.

In his drive to privatize this 70-year-old legacy of the New Deal, the president has continually warned that younger workers will face dire consequences unless we move now to change the system drastically. The president told an audience in Milwaukee in May, "Now, if you're a senior you have nothing to worry about because it's got plenty of money for you. But if you're a young worker, a young entrepreneur, a young mom paying into the system, you're paying into a bankrupt system unless the United States Congress decides to act." The continual warnings of impending crisis are reminiscent of the diabolical drumbeat of doom that led up to the invasion of Iraq -- and the "age war" is equally ill advised. Social Security is both a compact between generations and arguably the most successful government program in U.S. history. The system provides nearly universal coverage to workers, their dependents and survivors in the event of retirement, disability, or death. It is portable as people change jobs in a dynamic economy. It is protected from inflation. It has very low administrative costs: around 1 percent, according to the OASI (Old-Age Survivors Insurance) Office.

Since its founding, it has reduced the poverty rate among the elderly from nearly 50 percent to just over 11 percent. Nearly half of older Americans and a majority of older women would be impoverished today without it. For two-thirds of the elderly it is a major source of income, while for nearly a third, it is virtually the only source of income. In a time when personal savings are low and pensions are in jeopardy across the board, this dependable source of retirement income is vital. But, contrary to the myth of the age war, the elderly are by no means the only beneficiaries. About one-third of benefit payments go to non-retirees -- younger workers and their families who are protected in the event of disability and death. In fact, the program supports more children than TANF (Temporary Assistance to Needy Families), the federal welfare program specifically designed for low-income children and parents. While Social Security will require some adjustments over the next 30 to 50 years to maintain solvency and keep its promise, the remedies prescribed by President Bush are worse than the condition he proposes to cure. Diverting money to private accounts would artificially create a crisis where now only a problem exists, in addition to costing trillions in transition costs and payments to private investment firms.

Similarly, the "progressive" price indexing supported by the administration would drastically cut benefits for middle-income families far into the future and threaten the long-term political viability of the program. "Fixing" Social Security can be done with modest steps such as raising the $90,000 cap on payroll taxes. Solutions should be pursued with deliberate speed rather than a rush to judgment. The stakes are far too high for engaging in rash action.

When signing Social Security into law in 1935, Franklin Roosevelt said "We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-stricken old age." As Roosevelt predicted, Social Security indeed has proven itself to be "a law that will take care of human need and at the same time provide the United States an economic structure of vastly greater soundness."

We don't need another war, especially one between generations. As the Book of Proverbs warns, "He that troubleth his own house shall inherit the wind."

Mary Ellen McNish is the general secretary of the American Friends Service Committee, a Quaker organization whose economic justice work is described at ...


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