6-23-05, 10:48 am
Retirees groups, labor, and House Democrats yesterday criticized a new congressional Republican plan to privatize Social Security.
Worried about a sinking approval ratings and a stalled political agenda, the Republican leadership in the House offered a modified version of the privatization plan heavily promoted in past months by President Bush. The plan would use the large annual Social Security surpluses to create private accounts. Each year revenue generated by Social Security payroll taxes is more than the cost of benefits to nearly 48 million retirees, disabled workers, and their survivors.
Last year the surplus totaled nearly $140 billion and is projected to be $163 billion this year.
Instead of saving the money in a 'lockbox,' it has been the habit of the government to use the surplus to reduce growing annual deficits and pay for pet projects.
Social Security advocates argue that protecting this surplus would strengthen the long-term solvency of the Social Security program.
They don’t agree, however, that the House Republican plan accomplishes that task. In fact, the Republican sponsors of the bill agree that their plan won’t improve the future fiscal picture of the program.
The law would give Congress permission to 'raid Social Security' and is essentially the first step to privatization, a plan the vast majority of Americans simply oppose, says Barbara B. Kennelly, president of the National Committee to Preserve Social Security and Medicare.
George J. Kourpias, president of the Alliance for Retired Americans, an organization of retirees affiliated with the labor movement, says, 'Social Security’s surplus should be used for one purpose and one purpose only: to fund the guaranteed benefits Americans earned and deserve.'
'Perhaps those who plan to raid the surplus,' Kourpias added, 'should first check with President Bush, who has claimed Social Security’s surplus is nothing more than ‘meaningless I.O.U.s’ It’s time to kill the idea of private accounts and propose real solutions to strengthening Social Security.'
House Democrats support strengthening the existing Social Security program and argue that House Republicans have already raided the Social Security surplus the last four years by over $600 billion dollars in order to pay for huge tax cuts for the rich and large corporate donors to their campaigns.
This bill, they say, would simply enable that process, create serious financial problems for the program, and signals a last gasp at keeping their unpopular privatization plan on the table.
The bill, Democrats said, is a 'bait and switch' maneuver: the Republicans say the bill is about protecting the surplus, when it is really designed to sneak privatization in through the back door.
Opposition to the House leadership’s plan doesn’t even have full support among the Republicans.
A major overhaul of Social security is unnecessary and extreme, say Social Security advocates. Strengthening Social Security’s long-term financial picture may not require anything more than minor adjustments, says a Lawrence Mishel, president of the non-partisan Economic Policy Institute.
Lifting the 'cap' placed on income subject to Social Security’s payroll tax would eliminate nearly all of the program’s shortfall that has been predicted to occur in 75 years.
Currently, all earnings up to $90,000 are taxed to fund Social Security. Each dollar earned above this 'cap' is completely exempt from Social Security taxes. Removing the cap, according to analysis by the Economic Policy Institute, would eliminate 90% of the funding deficit predicted by the Social Security Administration.
Advocates of strengthening the existing program also say that policies that create higher paying jobs, promote wage increases, reduce unemployment, provide universal health care coverage, and stimulate the economy for lower- and middle-income working people would also boost the financial soundness of the program.
--Contact Leo Walsh at pa-letters@politicalaffairs.net.
