Social Security is the most successful program that tangibly delivers on the core philosophy of the Democratic Party -- namely, that ordinary people depend on government for economic security that markets can't provide. Unlike recent token programs, Social Security delivers serious money, to the middle class and the working poor alike. Without Social Security, a third of America's seniors would be destitute.
Despite its broad popularity, however, Social Security could succumb to a Republican privatization scheme as early as April. Yet this could also be the comeback battle in which Democrats recover both their souls and their political energy. They could hand George W. Bush a rare, humiliating defeat that breaks his winning streak and exposes Republican divisions.
Bush wants to divert part of the Social Security payroll tax to a new system of private retirement accounts. Privatization would be partial and optional. Individuals could still stick with traditional Social Security for all or part of their retirement. The Republicans hope to scramble two entirely distinct issues: how to deal with a quite modest shortfall in the present Social Security system and whether substituting individual accounts is a good idea at all, shortfall or no.
The Bush scheme has huge defects. The basic Social Security benefit would have to drop by 25 percent to 50 percent after a transitional period, because payroll-tax receipts now pledged to Social Security payouts would shift to funding the new private accounts. Even people who did not choose private accounts would end up with far lower benefits than under present law.
With private accounts, you're in big trouble if you happen to reach retirement age when the market is down, or make bad investments, or live too long. Also, the current system is redistributive: Low-income workers get a higher percentage of their lifetime earnings when they retire than affluent retirees do. But with individual accounts, there's little redistribution except for a very meager minimum benefit, and hence more poverty in old age. Last, this shift would increase the public debt by about $2 trillion -- on top of deficits that every reputable economist considers already dangerously high.
So how can such a bad idea possibly win enactment?
The administration relies on a now-familiar formula for dubious legislation. For starters, grossly misrepresent the real effects. Then make sure the negative consequences don't kick in for years, preferably decades. Finally, torture parliamentary procedure and press skeptical Republicans to the wall. (See the three Bush tax cuts, the escalating deficit budget, and the bogus Medicare drug program.)
Privatization is advertised as allowing people to achieve better
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