Bush called out on Social Security “crisis”: Elders, youth and low-wage workers cool to efforts to divide them

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The first Social Security checks started arriving in February 1937, in the midst of the Great Depression. The purpose of the new benefit system wasn’t so much to rescue aging workers whose retirement savings had disappeared in the 1929 stock market crash as it was to get elders out of the workforce and create jobs for younger workers. It was supposed to be a temporary fix for mass unemployment and a hedge against social revolt.

In the last 70 years, however, the number of workers covered by private-sector lifetime benefit pensions has shrunk to just 16 percent. Social Security has come to provide tens of millions of retired and disabled workers and their families money essential for survival, most of it coming from their own paychecks. Social Security is the main source of income for nearly two-thirds of retirees; should it suddenly vanish at the whim of stock market speculators, the blow would be insupportable.

From the beginning, Wall Street’s army of CEOs, bankers, and stock and bond brokers have opposed Social Security and coveted the capital those billions of dollars could bring them. Bush II’s regime is dedicated to making this rulingclass dream come true — but it won’t be easy.

Boom or bust in 60 days. Flush with his Electoral College victory, Bush mounted a 60-day, 60-stop PR blitzkrieg. Its goal? To convince the public that Social Security is headed for bankruptcy and that the solution is to shift billions of dollars in payroll taxes out of its coffers and into privatized investment accounts. (Never mind the projected start-up cost of nearly $7 trillion.)

First Bush tried to assure older workers and retirees that nothing would change for them, apparently presuming that elders don’t give a damn about their juniors. He warned that tides of baby-boomers headed for retirement would cause an economic tsunami. In the wake of debacles like Enron, however, parents and grandparents of younger workers are not about to turn anyone’s old-age funds over to the stockbrokers.

Arguing that a higher proportion of Black workers die too early to get Social Security, Bush has also failed to score with African Americans. Black leaders lambasted Bush for ignoring the racist causes of African American life spans and for disregarding the disability and survivor benefits also threatened by privatizing Social Security.

Early polls indicated that younger workers might be attracted to having their own investment plans, but that is changing. Most are wary of both Bush and the careening stock market.

Divide and conquer? Bush is now trying to drive a wedge between higher-paid workers and the working poor. At his April 30 press conference, he unveiled a scheme that would supposedly take from the rich and give to the poor. But it would do no such thing.

Bush’s grand plan combines private accounts with “progressive indexing” of Social Security payments.

Low-wage retirees, those who average less than $20,000 a year, would get nothing more. Their payments would remain based on 49 percent of their pre-retirement wage; a lifetime of paltry wages will still add up to paltry retirement checks. For the millionaire not dependent on Social Security checks, Bush’s recalculation would cut an insignificant few percentage points.

For middle-income workers, the picture is very different. According to the Center on Budget and Policy Priorities in Washington, D.C., progressive indexing would mean that for a worker averaging $36,000 a year and retiring in 2055, guaranteed Social Security benefits would be reduced by 66 percent — from $22,100 a year to $7,510 (in 2005 dollars). With an average wage of $59,000 a year, a worker would see an 87 percent drop. The rest of these retirees’ income would come from a volatile stock market.

In essence, Bush’s proposal would take from middle-income workers and give to the wealthy, the primary beneficiaries of the stock market.

The phony crisis. Workers’ cool reception to Bush’s frantic scare campaign is well-grounded.

Social Security funds are not in crisis. Claims that they are rely on unrealistic predictions about future economic conditions. Social Security trustees say that annual Gross Domestic Product growth will average only 1.8 percent for the next 75 years; currently, it is 3 percent. “In no 20-year period, even including the Great Depression, has the U.S. economy grown that slowly,” writes economics professor Doug Orr in Dollars and Sense (Nov.-Dec. 2004).

More important, if Social Security were to fall short, money could be taken out of general tax revenue, just as is done in any other advanced industrial country. After all, why should working people’s taxes support the murderous Pentagon but not their own retirements?

To tell your Congress members to defend Social Security, go to www.unionvoice.org/campaign/ProtectSocialSecurity.

Some real alternatives. Logical ways to maintain and expand Social Security abound. For example: Collect Social Security taxes on the full income of the rich — remove the $90,000 salary lid. Rescind the tax cuts and subsidies to major corporations and the wealthy while raising taxes on their incomes, including investment revenue.

These are realistic propositions. But behind Bush’s battery of take-backs lies something profound — not a crisis of Social Security, but a crisis of the whole system. In a lurching, recession-prone economy, Bush’s job is to make sure that capitalism continues to successfully extract profits from the labor of workers through wage reductions, speedup, and benefit cuts.

What’s the solution? Revolution! A socialist global economy, designed for the fulfillment of human need and environmental sanity, will provide the best social security imaginable.

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