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Social Security Reform Hypocrisy
Guest Column | By Jerome Zeifman | January 11, 2009
Last week, the Associated Press, in a piece by Jennifer Loven, reported the following: “Pointing with concern to ‘red ink as far as the eye can see,’ President-elect Barack Obama pledged Wednesday to tackle out-of-control Social Security and Medicare spending and named a special watchdog to clamp down on other federal programs―even as he campaigned anew to spend the largest pile of taxpayer money in history to revive the sinking economy.”
The uncontestable truth is that During Al Gore’s 2000 presidential campaign his principle strategy was to continue the culture war previously incited by Hillary Clinton―who characterized certain conservatives as being part of a “Vast Right-wing conspiracy.”
From then until the 9/11 destruction of the World Trade Center by Islamic extremists, the major political attacks on President George W. Bush were obstructions to his efforts to win bipartisan support for legislation to save the Social Security system from financial disaster. The Democratic strategy was to demonize George Bush for trying to “privatize” our Social Security system by giving wage earners the option of investing a small percentage of their payroll taxes in selected stocks.
Ironically, President Bush’s Social Security proposal was an almost identical measure to one previously advocated by President Clinton. In his 1999 State of the Union address Clinton had received the acclaim of a large majority of our party for his proposal and the following statement:
“In 2013 payroll taxes will no longer be sufficient to cover monthly payments. I propose investing a small portion of benefits in the private sector just as any private or state government pension would do. This will produce a higher return and keep Social Security sound for 55 years … So let’s join together in saying to the American people: ‘We will save Social Security Now!
In opposing President Bush’s Social Security proposal the Democratic leadership obfuscated their prior support for President Clinton’s efforts to allow optional stock investment. They also ignored the fact that Bush’s reform proposals were modeled on the optional stock investments previously advocated in the late 1990s by Democratic Senators Daniel Patrick Moynihan of New York and Bob Kerry of Nebraska, both of whom were members of the Commission on Social Security appointed by President Clinton.
In fact, the voluntary optional private accounts advocated by Clinton, Moynihan, Kerry, and Bush were originally recommended by President Franklin D. Roosevelt, the founder of Social Security. In 1935, in a written statement to Congress, FDR recommended that the system should eventually include “voluntary contributory annuities, by which individual initiative can increase the annual amounts received in old age.”
In their efforts to demonize President Bush one of the major tactics of the Democrats was to accuse him of having an extreme right-wing ideology that caused Republicans to conspire to destroy the Social System. They also deceptively gave voters the false impression that Bush wanted to privatize the entire system. Yet the Bush plan called for the investment of no more than 4 percent of revenues. At the same time, such limited investments were optional with each beneficiary.
Other fabricated charges were that Bush’s proposal would hurt low income African-Americans in particular. In that regard, the most strident Democrats included Charlie Rangel (D-NY) and other members of the Congressional Black Caucus. As the then ranking Democrat on the House Ways and Means Committee, which has jurisdiction over Social Security, Rangel was in the front line of the campaign to demonize the Bush proposal.
Rangel repeatedly denounced President Bush as a “fraud.” He told a town hall meeting in Harlem that the Bush plan was “vicious and mean ...[and] we have to get rid of the bums who are trying to take our Social Security away from us.” He also compared opposition to the Republicans to “marching with Martin Luther King Jr. from Selma to Montgomery”―and advocated the impeachment of President Bush.
However, contrary to Rangel’s rantings, under Bush’s proposed system of optional private accounts, those African-Americans who exercised their options would benefit. On average they live shorter lives than Whites. Many die before deriving any benefit from their Social Security accounts―which, in effect, die with them. Under the Bush plan their heirs would inherit their stock accounts.
In addition, a single African-American male now in his mid-20s could expect to get back just 88 cents for every dollar he pays in Social Security taxes. If the same man were allowed to invest his Social Security taxes privately in safe U.S. treasury bills, he would make $79,846 in profit instead of suffering losses of $13,377.
Also, under our present system, a 21-year-old African-American woman can expect to receive only 1.2 percent return on her Social Security account by the time she retires. If the same woman were allowed to invest but four percent of her Social Security taxes in safe government bonds she could more than double her return.
The anti-Bush propagandists were so successful in generating public opposition to Social Security reform that for all practical purposes it died during Bush’s first term. During that period Senate Majority Leader Harry Reid―who in 1999 joined with Bill Clinton in saying ‘We will save Social Security Now!”―reversed himself, proclaiming, “The so-called Social Security crisis exists in only one place: the minds of Republicans.”
As a life-long left of center liberal Democrat who once successfully represented 38 AFL-CIO unions in litigation against the Carter administrations unlawful outsourcing of defense production to a number of foreign countries, I am now praying that God will once again save our country.
Finally, I am also dismayed that Time Magazine is also predicting that Israel will be defeated by Hamas. In that regard, I recall that in 1940 at the start of the Battle of Britain our Ambassador to Britain, Joseph Kennedy, publicly predicted that the Nazi would soon conquer the British Isles.
As a result FDR recalled him and told him to resign or be fired. Reportedly, as Kennedy left the oval office, FDR shouted to a Secret Service agent, “Don’t ever let that S.O.B in the White House again.”
Today the majority of the tenured Professors at the Kennedy School of Government and all of Harvard University are supporters of Barack Obama and continue to demonize President Bush.
Jerome Zeifman ((JavaScript must be enabled to view this email address)) was the Democratic chief counsel of the House Judiciary Committee during the Nixon impeachment proceedings.
Guest columns do not necessarily reflect the views of Accuracy in Media or its staff.
8 Comments | Post a Comment
I typed a long response and then guess i did not enter the code, so hopefully you still have it
Now that Congress is holding meetings and eyeing the 401Ks with the hope of nationalizing them - privatization of SS is a mute and forgotten point as we march forward to “Big Brother.”
Looks like Rahm Emanuel called the shots in his book, Big Plan for America.
Brian wrote:
“God helps those who help themselves. He also has given us free will. The American people were presented a Social Security privatization plan that Pres. Bush said would help them. They rejected the idea. By doing so, they exercised free will and helped themselves. Think about the disaster that would have resulted from the current financial collapse if it had taken private Social Security funds down with it.”
I totally agree!!! My daughter works for a University. Several of her coworkers who planned on retiring this year…have lost $10,000 - 30,000 because of the stock market situation. Their retirements have been put on hold….and they plan working another year (or more if the decline of the stock market continues).
It would seem to me that both social security retirement benefits and medicare benefits are going to have to become “means tested” - and the FICA/self-employment and medicare payroll taxes will have to be increased - like it or not!
I know many post-age-66 retirees who have personal incomes from various sources, earned and unearned (including very good traditional retirement plans), beyond $60,000-70,000-80,000 per year - yet - they still receive social security retirement and medicare benefits! I had an 80+ year-old relative with a $103,000 annual retirement income - who also received some level of social security and medicare benefits!
I’ve also lived in the town in America which, for many years now, has the largest number of “retired” millionaires - and before the advent of “direct deposit” and “online banking” - you couldn’t get into any local banks at certain times of the month because of the lines of millionaires depositing or cashing their social security checks!
Taxes are going to have to increase - or costs are going to have to be constrained - or benefits are going to have to be reduced - or all of the above.
(And I sure don’t agree with giving social security, medicare or medicaid benefits to illegal immigrants - or even to their “anchor babies”!)
How about reducing the 2 - 3 trillion we taxpayers have had to spend in Iraq and Afghanistan for the never ending wars. This amount I am sure does not include the cost of what inadequate care the government will provide for the US military injured and permanently disabled for the rest of their lives. There was a TV program last week which showed the injured at VA hospitals getting companion dogs to help with their rehabilitation. To see those very young men and women with no arms and no legs was enough to break anyone’s heart. I think we need to look to the trillions DoD spends maintaining 770 military bases around the world before we plan on cutting anyone’s social security. Maybe another good place to start cutting income is at the White House and in Congress (who had a rating lower than the outgoing President everyone seemed to love to hate). Want to be President? Chief of Staff? Secretary of State? Secretary of Defense? GOOD…then, you work for $!.00 a year!
Dear TK,
For the upteenth time you have demonstrated that you are an ignorant fool. You don’t seem to know how the Social Security system was voted into law. To satisfy a good number of Republicans and conservative Democrats, FDR agreed that the benefits would be given to all income levels, although adjusted according to life-long earnings.
The millionaires you cite who receive a good deal of other retirement money get it from sources which might disappear. What happened to the billions stolen by Madoff? Much of that money was meant for retirement. Now it’s gone. What about pension plans which have evaporated due to corporate collapses? What about retirement plans based on anticipated stock dividends after those stocks have lost 90% of their value and have stopped paying dividends? The point is that A) there are rather few millionaires in the US compared to the mass of the population and the amount of Social Security benefits they receive make up a very small fraction of total pay-outs; B) a person can be a millionaire one day and a pauper the next. Think about how many people have been financially ruined over the last six months.
For them, Social Security may be the only form of income they now have for retirement.
There’s no question that the entire US system of entitlements requires reform and re-adjustment. But “raising taxes” is too vague a term to accurately describe what might be done to pay for entitlement benefits, including medicare. The U.S. population, now 305 million, is estimated to reach 419 million by 2050, a 38% increase. At the same time, our GDP is projected to reach $35 trillion from $14 trillion, an increase of 254%. By 2080, a modest 2% annual GDP increase from 2050 would raise US GDP to about $65 trillion in current dollars, for a population of possibly 530 million. (For these figures see Jackson & Howe, The Graying of the Great Powers (Center for Strategic & International Studies, 2008) and The CIA World Fact Book) Thus, the $34 trillion of unfunded Medicare liabilities, spread out over 70-odd years - an annual average of roughly $2.4 trillion - hardly seems unsupportable. Over three-quarters of a century, the annual amount would be smaller at first, rising by the year but increasingly less as a percentage of the more rapidly increasing American GDP. BUT THE MAIN POINT IS THIS: FOR A PERSON EARNING $40,000 ANNUALLY, PAYING 20% IN TAXES COULD BE A SERIOUS BURDEN. FOR A PERSON EARNING $100,000 A YEAR, PAYING 30% IN TAXES WOULD BE FAR MORE SUPPORTABLE. RAISING TAXES WHILE NATIONAL INCOME RISES WILL SUSTAIN ENTITLEMENT PAY-OUTS WITHOUT CAUSING SERIOUS PAIN. THROUGHOUT AMERICAN HISTORY, INCOME GROWTH HAS FAR OUTSTRIPPED POPULATION GROWTH - SAVE UNDER THE DISASTROUS BUSH II ADMINISTRATIONS. ONCE WE RETURN OUR ECONOMY TO HEALTH, THAT TREND WILL UNDOUBTEDLY BE RESTORED. THUS, “RAISING TAXES” HARDLY EQUATES TO IMPOSING AN UNSUSTAINABLE BURDEN OVER THE NEXT CENTURY AND BEYOND.
As for this gem of wisdom: “(And I sure don’t agree with giving social security, medicare or medicaid benefits to illegal immigrants - or even to their “anchor babies”!)” I’d like to know how an illegal immigrant gets Social Security benefits. A) It’s virtually impossible to get into the program without proper documentation regardiong citizenship or legal residence. (Yes, Russian spies can do that. But your average poor and semi-literate illegal from Central America hardly enjoys the necessary resources and knowledge.) Furthermore, documentation to receive benefits requires more than a card and a number. It requires proof of deductions from pay checks. B) The overwhelming majority of illegal immigrants return home long before they ever could somehow be eligible for Social Security. C) What illegal immigrant employers deduct Social Security payments from their workers pay? Besides, they pay in cash, so there is no documentation. D) If a child is born in the US, the child automatically becomes an American citizen. If that offends you, it would take a Constitutional amendment to change the law.
Dog brain, how abount knowing something about a subject before writing about it?
Brian R. Sullivan
January 12 at 9:30 am | #1 | Link
Today, Social Security provides insurance coverage to almost 153 million workers and their families, and benefits to close to 46 million people of all ages. For a worker with average income, a spouse and two small children, Social Security’s survivor protection is equivalent to a life insurance policy with a face value of $374,000. For the same worker, Social Security’s disability benefits are worth more than a $234,000 disability policy. More than 3.8 million Social Security beneficiaries are children of deceased, retired, or disabled workers; 4.8 million are widow(er)s; and over 5 million are disabled workers. Just under 3 in 10 Social Security beneficiaries are under age 65. Seven percent are under age 18, 9 percent are 18 through 54, and 13 percent are 55 through 64.
SOCIAL SECURITY IS ONE OF THE FEW GOVERNMENT PROGRAMS THAT WORKS!!!!!
http://www.socsec.org/publications.asp?pubid=503
* Reason #1: Today’s insurance to protect workers and their families against death and disability would be threatened.
* Reason #2: Creating private accounts would make Social Security’s financing problem worse, not better.
* Reason #3: Creating private accounts could dampen economic growth, which would further weaken Social Security’s future finances.
* Reason #4: Privatization has been a disappointment elsewhere.
* Reason #5: The odds are against individuals investing successfully.
* Reason #6: What you get will depend on whether you retire when the market is up or down.
* Reason #7: Wall Street would reap windfalls from your taxes.
* Reason #8: Private accounts would require a new government bureaucracy.
* Reason #9: Young people would be worse off.
* Reason # 10: Women stand to lose the most.
* Reason #11: African Americans and Latin Americans also would become more vulnerable under privatization.
* Reason #12: Retirees will not be protected against inflation.