Wednesday, March 30, 2005

Major flaws in Social Security reform plan

Commentary by Bethine Church


By BETHINE CHURCH
Bethine Church, of Boise, was married to the late Sen. Frank Church, D—Idaho.

This seems the perfect time to express a constituent's view on Social Security. The Congress is on home leave, and one of the avowed efforts being made is to assess how the general public feels about the President's plan.

There is much being said and written about the Social Security system. For the general public, sorting out the conflicting figures and facts from propaganda on the issue is very hard. The White House has an incredible word machine selling the President's plan. Note that discussion of "privatization" has been changed to "personal accounts"—same plan by a different name. According to TV reporting, some of the polling shows little support for the first, and some qualified acceptance of the second, so expect to hear more about the latter.

I have watched the word machine at work. The selling of the prescription drug bill is a prime example. There were warnings about the cost being greater than advertised. Now there are considerably more than the first overrun warnings—an estimated cost of $720 billion in the long run and many fewer enrolled in the various complicated plans than first expected.

However, the greatest deception sold the press and the American people was on weapons of mass destruction, with Condoleeza Rice speaking of the invasion of Iraq as "stopping the mushroom cloud." And connection between Iraq and 9/11 implied over and over again, the last of which built the momentum for invasion, though proven as untrue.

My father, former Governor of Idaho and Federal District Judge Chase Clark, would have used an old Western phrase to say that we'd been sold "a pig in a poke" or a bad deal without having seen it first.

My husband Frank Church, as one of the youngest Senators elected at that time, was the first Chairman of the permanent Select Committee on Aging. His belief was that Roosevelt, with Social Security during the Depression, saved the elderly with assured retirement security. It was not a handout nor was it meant to fulfill entire retirement needs.

Anyone who suffered personal losses in the stock market knows the risk of investment in the stock market. This, of course, is added to a trillion dollars in the first decade to set up these accounts and the more than 3.5 trillion dollars in the second decade financing the Bush plan with debt. There is a good deal of reputable financial information on how little these accounts might bring to the individual. For example, if an account made only 3.3 percent, with the cost of financing the account and other variables, you might be left with nothing but the guaranteed benefit, then diminished by inflation indexing.

The Bush plan has another major flaw. A third of the beneficiaries are made up of 6 million disabled and 4 million children, all sharing a common trait: They don't work. That's put them beyond prioritizing or so-called personal accounts. Economist Peter Orszag of the Brookings Institute said, "Washing our hands on disability and survivor benefits is really failing to address the harshest questions that arise." It doesn't even take into account the young workers who start an account and are then disabled.

What people don't realize is that, in the past times of high employment, the system took in more than the cash on hand needed to fund the current programs, so the government offset budget deficits or paid other debts. Now there is a large debt owed to the security trust fund by a government that is out of money. It's been like "taking money from Peter to pay Paul," an old but true saying. It's time we give thought to how to reform Social Security rather than destroy it, for example, things that could be considered, discussed, and debated: what if we paid for Social Security reform by keeping a readjusted inheritance tax? Only undoing Bush's tax cuts for the wealthiest Americans strikes me as a good use for the money, while paying for it with debt would not secure our children's future, but mortgage it.

I've never been good with figures, especially when there are so many conflicting ones. In fact, my husband Frank said, "don't' talk about figures but talk about issues." The issue seems very clear: Social Security is one of the most successful social programs ever enacted. (President Bush once said that this program is "one of the greatest achievements of the American government." Now we are being threatened with immediate Social Security destruction, perhaps a reality if the president's plan goes into effect.

So if it needs adjusting to fix it, ways must be debated and considered. It's a fact that today, without Social Security, almost half of our elderly would be living in poverty. As Paul Krugman said recently in an Op-Ed in The New York Times, "the plan calls for the 'borrow, speculate and hope' strategy ... not just for the system as a whole, but for each individual."

Federal Reserve Board Chairman Alan Greenspan seemed to support the plan and then recently wrote at length warning of the deficit and other variables. The AARP, which supported the drug prescription plan and lived to regret it, now is opposed to the president's plan for Social Security. They, like we, have been fooled before. Now it's time to take off the blinders and say never again.

Thomas E. Friedman, also of The New York Times, often a supporter of Bush's Iraq policy, writes fervently about Bush's need to cut U.S. dependence on oil. He complains that "President Bush has a better project: borrowing another trillion dollars, which makes us that much more dependent on countries like China and Saudi Arabia that hold our debt, so that you might, if you do everything right and live long enough, get a few more bucks out of your Social Security account." He finishes in a way that even I can't, feeling as strongly against Bush's Social Security plan as I do; he contends that "the president's priorities are totally nuts." I try to state it more gracefully, but I agree.




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