Bush fails to disclose details of Social Security plan

Posted: Thursday, February 10, 2005

President Bush hides the cost of his secret privatization plan. Bush's privatization scheme will require the American people to borrow $2 trillion (that's two trillion — 12 zeros) in the 10 years following its implementation, $6 trillion over the next 20 years, and $15 trillion over the next 40 years. Young people will have to pay that debt, through both higher taxes and less effective government.

The Congressional Budget Office has stated that Social Security is in surplus, and will have enough money for nearly another 50 years. And ever after that, the tax dollars from workers cover about 80 percent of the cost of the benefits retirees were promised. The GOP plan to fix the "crisis"

would guarantee a 46 percent cut in benefits! The cure is worse than the disease.

Bush refuses to tell the American people the details of his privatization plan. Bush admirably endorsed "reforms that solve the financial problems of Social Security once and for all."

Unfortunately, he won't talk with the American people about what reforms he thinks are worthwhile, other than privatization, which hurts the system's finances. By not coming out in favor of real solutions, he and his Congressional allies wants to both avoid accountability and limit public debate. An honest debate, not vague allusions: that's real leadership.

Bush wants to break the promise of the Social Security Trust Fund. Bush did not once mention "trust fund."

For 22 years, the government has vowed to keep the promise Alan Greenspan and Ronald Reagan made to the American people, that if we paid more into the Social Security system than was needed, the surplus and its interest would be used to pay benefits when baby boomers retire. President Bush and the Republicans do not think that promise needs to be kept.

The fact is that Bush's privatization plan makes the solvency problems of Social Security worse. It will cost $2 trillion over just the next 10 years just to establish the accounts and hasten the insolvency by 21 years.

Any earnings on private accounts will be swallowed up by the increased taxes that the American people will have to pay to cover the cost of borrowing the $2 trillion the Bush administration will need to establish these accounts. Under the Republican plan, the way benefits are calculated will mean dramatic cuts; younger workers will be left with a Social Security benefit that is more than 40 percent lower than what they were promised — amounting to a $152,000 cut for younger workers.

The payroll taxes paid by workers today are being used to pay the Social Security benefits going to today's retirees. If today's workers start putting their payroll taxes in private accounts, someone still has to pay the current benefits — the $2 trillion and more in "transition costs" that the Republicans acknowledge a privatized system will cost. But once you count the cost of paying for the transition, the rate of return on these accounts is no better than Social Security. Any additional benefit that American workers might see from a private account will be swallowed up by the increased taxes they will have to pay to cover the cost of borrowing the $2 trillion the Bush administration will need to establish these accounts. And they'll be left with a Social Security benefit that is 40 percent lower than what they were promised.

Dennis Gann, Homer



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