Monday, March 14, 2005

On Bush's Social Security Initiative

The odd thing about President Bush's initiative to reform Social Security is his concern that, in 13 years, Social Security will be funded partly from general government revenues. For some reason, this seems to bother Bush to extreme. It bothers him enough to want to change the most successful government program in history, to transform it from being solvent for 13 more years to being trillions of dollars in debt almost immediately.

Right now, Social Security taxes are being used to fund the general government operations. Social Security is running a surplus. Funds from the surplus taxes are being transferred to pay for the rest of government.

Why doesn't this bother Bush? This is a guy who is creating the biggest budget deficit in history. He thinks it is critically important to cut income taxes, as well as taxes on dividends and capital gains, which are benefits to wealthy individuals. But when a regressive tax like the Social Security tax is being used to fund the government, that doesn't bother him.

This is a clear indication of Bush's priorities, and it indicates his motivation for changing Social Security. He isn't concerned with the lower and middle income people who disproportionately pay for and benefit from Social Security now. He is concerned that income taxes on wealthy people may someday be necessary to fund the benefits.

Could it be that he is also concerned about stock brokers, who will be able to charge fees when they trade the vast amount of money from the Social Security fund? Could he be interested in the rise in stock prices that will occur when all the money is used to buy stocks, which will benefit people who already own stocks more than those who will get "personal accounts"?

Maybe someone should ask Bush what he really wants to accomplish, and who he really wants to benefit, before this program is driven into debt.

1 comment:

Steven F. Goldberg said...

The motivations for privatizing social security and diverting its funds to the equity markets are probably manifold, but it seems likely that at least part is, as you say, to maintain upward pressure on the stock market. When baby boomers shift from accumulating wealth to spending it, the continual increase in market inflows might slow or reverse; this plan will replace that funding with billions of dollars from lower- and middle-income workers.

Missing from most of the dialogue on the issue of social security is an honest consideration of its purpose - to ensure a minimal level of financial stability during retirement for those unable to provide for it otherwise. Thus, it is designed not so much as a retirement savings plan as a type of insurance. It only makes sense to retain the progressive nature of this plan by increasing the income caps.

It is sad, indeed, that we are more willing to raise the retirement age ever higher and reduce benefits to those who need them most than to use our unprecedented prosperity and technological advancement to improve the lives of all Americans.