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News :: Civil & Human Rights : Elections & Legislation : Labor : Political-Economy |
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Social Security's "Crisis": The Myth That Won't Die |
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by CHN
(No verified email address) |
14 Jun 2005
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On his ongoing Social Security privatization tour, President Bush has continued to tell Americans that something is gravely wrong with Social Security as it is currently structured. "...the people of this country are going to say to Republicans and Democrats alike: Why aren't you doing something about the problem?" he told an audience Wednesday. What exactly is the problem and why do we need benefit cuts for middle-income people and risky private accounts to solve it? |
On his ongoing Social Security privatization tour, President Bush has continued to tell Americans that something is gravely wrong with Social Security as it is currently structured. "...the people of this country are going to say to Republicans and Democrats alike: Why aren't you doing something about the problem?" he told an audience Wednesday. What exactly is the problem and why do we need benefit cuts for middle-income people and risky private accounts to solve it?
MYTH: We cannot afford to pay the benefits promised under Social Security.
FACT: Filling Social Security's solvency gap (as it is measured by the Social Security actuaries and the Congressional Budget Office) would cost only a fraction as much as President Bush's tax cuts.
This is a persistent myth. On Monday, May 30, 2005, the Washington Post editorial page praised the President's partial indexing proposal, saying that current benefit levels are not "sensible, given other pressing needs." But making permanent the tax cuts passed during the Bush Administration, as the President currently proposes, will cost at least three times as much as would be needed to close the Social Security shortfall, according to the Center on Budget and Policy Priorities (http://www.cbpp.org/1-4-05socsec.htm). In fact, even repealing tax cuts for just the wealthiest one percent would produce enough revenue to close most of the Social Security funding gap. Giving tax breaks to the richest one percent of Americans should not qualify as a "pressing need" that requires us to squeeze out Social Security.
MYTH: Social Security benefits are rising at a rate that is unreasonable.
FACT: The initial benefit received by an individual is linked to wages -- which rise faster than inflation -- because the entire point of the system is that it replaces a reasonable fraction of your wages.
This wage-indexing of benefits in the current system also ensures that today's beneficiaries enjoy today's living standards (http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=8998) rather than the living standards of, say, the 1940s; the President's proposal would cut back on the program's ability to accomplish this.
MYTH: Social Security benefits are so high that they're causing the system to go broke.
FACT: Social Security can afford to pay the benefits scheduled under its existing rules until 2041 (or 2052, according to the Congressional Budget Office) at which time it will still pay higher benefits than are received today, even accounting for inflation.
The Social Security trustees have projected a shortfall that will result in the program being able to pay only 74 percent of scheduled benefits in 2041 (the shortfall will occur in 2052 according to the Congressional Budget Office). Because of the scheduled increases (known as wage-indexing, as explained above) even these reduced benefits (http://www.tcf.org/Publications/RetirementSecurity/cepr_ss_byte_2005.pdf) will be greater than what people receive today if no changes are made. President Bush wants to rely on benefit cuts alone to close the projected shortfall. This is entirely unnecessary. Social Security faced a genuine, tangible crisis in the 1980s, and the 1983 Social Security reforms led by Alan Greenspan improved the program's solvency without relying on massive cuts for middle-income Americans.
MYTH: Americans, particularly the young, don't see the need for Social Security.
FACT: Poll after poll shows that Americans want to preserve Social Security as it currently exists, and people all over the country, young and old, are demanding that their members of Congress take a stand to protect Social Security from privatization.
The Washington Post released a poll yesterday (http://www.washingtonpost.com/wp-dyn/content/article/2005/06/08/AR2005060801975.html) showing that 62 percent of Americans disapprove the President's handling of Social Security and 63 percent believe that his plan will not improve the program's solvency. Meanwhile, people all over the country have joined a "Take a Stand Campaign" to urge their members of Congress to pledge to oppose the President's partial privatization plan. To find out how to help, visit Americans United to Protect Social Security at www.americansforsocialsecurity.com.
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Visit the CHN Social Security page at http://www.chn.org/issues/socialsecurity/. |
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