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8/09/2004

Not Ownership, Abdication

Bush is rolling out his "ownership" agenda, which is a euphemism for privatization of most of good government programs. The idea for "private savings accounts" attached to social security is particularly odious:

"THE PRESIDENT: See, what you're hearing is -- that's a very interesting -- (applause.) See, what -- what Chris just said is part of an attitudinal shift towards Social Security that is taking place in the country. When I was coming up, it was pretty well assumed that Social Security would be all right -- until people began to calculate the fact that there's a lot of baby boomers who are going to be on the system relative to the number of payers into the system, like Chris. And the fundamental question is, can we change the system by strengthening it, so that Chris can realize there's something available for him after he pays for me? That's really what we're talking about, isn't it?

And what he just said was, he said, look, if you look at the rates of return on the money in the Social Security trust fund, they are so abysmally low, that it is impossible -- virtually impossible from a fiscal perspective, to make the system work without raising taxes on him and his family, to the point where it chokes productivity and progress.

And then what he said was, he said, well, would government please consider putting aside some of my own money -- at his choice -- in a personal account, an account that he could manage under obviously strict guidelines, but could get a better rate of return for his money than that which we're now getting inside the Social Security trust. And by the way, it would be an account that is his own -- or their own, that they could then pass on to whomever they wanted to pass it on to. I support the idea of creating a personal saving account for younger workers in order to make sure the system is solvent. (Applause.)"
Why is it so bad? First, because it is founded on an absolute fabrication: Social Security has a remarkably healthy balance sheet. There is no risk of default until after I'm retired, which is a long way off. Second, there are already plenty of tax exempt savings options. IRAs and 401ks provide exactly what Bush is endorsing, except that they are not mandatory. Third, Bush has never come to grips with the idea of transition costs, how allowing people to divert a portion of their payroll taxes won't produce a shortfall in Social Security obligations. Either people will pay higher taxes elsewhere, or people will have reduced retirement benefits. Fourth, and most important, Social Security is a covenant between the government and the people. If we take care of the elderly today, there will be a safety net there for us when we retire. Bush's understanding of social security - it's a savings program on which someone should expect a return - is a horrible distortion of the historical record. It is not a savings program - it is help for the elderly and the retired. It is a right of citizenship, a sign of our civilization. George Bush's silence signifies his desire to abdicate this collective responsibility.

 

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