Monday, January 10, 2005

For the Record on Social Security

Since GWBush has made the end of February the deadline for privitizing social security, in the next coming weeks there are going to be a lot of articles about the move.

Here's another one that came out today.

NYTimes Opinion: For the Record on Social Security

And, as usual, some quotes:

Late February is now the time frame mentioned by the White
House for unveiling President Bush's plan to privatize
Social Security. The timing is no accident. By waiting
until then, the president will conveniently avoid having to
include the cost of privatization - as much as $2 trillion
in new government borrowing over the next 10 years - in his
2006 budget, expected in early February.

Worse are the true dimensions of
the administration's proposed ploy, which were made
painfully clear in a memo that was leaked to the press last
week. Written in early January by Peter Wehner, the
president's director of strategic initiatives and a top
aide to Karl Rove, the president's political strategist,
the memo states unequivocally that under a privatized
system, only drastic benefit cuts - not borrowing - would
relieve Social Security's financial problem. "If we borrow
$1-2 trillion to cover transition costs for personal
savings accounts" without making benefit cuts, Mr. Wehner
wrote, "we will have borrowed trillions and will still
confront more than $10 trillion in unfunded liabilities.
This could easily cause an economic chain reaction: the
markets go south, interest rates go up, and the economy
stalls out."

At a recent press conference, Mr. Bush exaggerated the
timing of the system's shortfall by saying that Social
Security would cross the "line into red" in 2018. According
to Congress's budget agency, the system comes up short in
2052; according to the system's trustees, the date is 2042.
The year 2018 is when the system's trustees expect they
will have to begin dipping into the Social Security trust
fund to pay full benefits. If you had a trust fund to pay
your bills when your income fell short, would you consider
yourself insolvent?

In suggesting that 2018 is doomsyear, the president is
reinforcing a false impression that the trust fund is a
worthless pile of I.O.U.'s - as detractors of Social
Security so often claim. . . .
. . . If the trust fund's Treasury securities are
worthless, someone better tell investors throughout the
world, who currently hold $4.3 trillion in Treasury debt
that carries the exact same government obligation to pay as
the trust fund securities. The president is irresponsible
to even imply that the United States might not honor its
debt obligations.

Over the next 75
years, the mismatch between revenues and Medicare benefits
for doctors' care and prescription drugs is 3.5 to 6 times
as much as the shortfall in Social Security, according to
the Center on Budget and Policy Priorities. The Medicare
hospital trust fund mismatch is two to three times as big.

It appears that the president and his aides are trying to
sow ignorance to gain support for their flawed
privatization agenda. Lawmakers, policy makers and the
American people have to let the administration know that
they know better.

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