In My Opinion: No Need to Destroy Social Security to "Save" It

"Maybe, maybe not.”

That actually was Texas Gov. George W. Bush’s response to a Dallas Morning News reporter who asked him if his proposal to privatize Social Security would provide future recipients with benefits equal to the present system.

At least it was an honest answer, considering that the Bush-GOP plan would have future generations putting a sizeable portion of their retirement stake at risk in the stock market.

While it is true that historically the market, over the long term, has produced an average return on investment of nearly 7 percent, history also shows that the market goes down as well as up — sometimes for lengthy periods.

For instance, the market plummeted by about 45 percent (in real terms) between 1968 and 1978. People who sold stock to finance their retirement toward the end of that period took quite a loss on their investments.

The purpose of Social Security has been to give Americans some shelter from those ups and downs of fortune. Ours is an often harsh economic system of winners and losers, but Social Security is the safety net that guarantees a measure of protection for the unluckiest, poorest and most vulnerable in their later years.

Privatization proposals are nothing new. Elements of the political right wing have long objected to both Social Security and Medicare on ideological grounds and they would like to shift both programs from the government to the marketplace.

Until now, Social Security has been considered the political “third rail,” meaning that most politicians have avoided proposing radical changes in the program because it has been so successful and popular.

The GOP and its presumptive presidential candidate seem to be betting that this year they can convince the public that Social Security is in extreme “crisis,” requiring extreme measures to fix it. Nothing could be further from the truth.

Because of the booming economy, the Social Security trustees recently pushed out their forecast from 2034 to 2037 as the date when they say the program would not be able to cover 100 percent of projected benefit costs because of the growth of Baby Boom recipients and longer life expectancies.

Even that date is questionable since the fund’s trustees use the most conservative worst-case economic scenarios to make their projections.

Last year the Social Security Trust Fund rang up a net “profit” of $102 billion, making the total surplus in the Trust Fund $756 billion, and growing. Even with the trustees’ pessimistic assumptions, experts agree that money coming in will exceed benefits being paid until at least 2020, and even then there will be a surplus of more than $2 trillion in the Social Security Trust Fund to keep the program solvent for many years.

That is hardly the profile of a “bankrupt” program. Steps do need to be taken to shore up Social Security, but there is no need to destroy the system in order to save it. Using the growing federal surpluses to pay down the national debt in future years and applying the interest savings to the Trust Fund, as Vice President Al Gore has proposed, could go a long way toward extending the solvency of the system.

Moreover, even if nothing else were done to tweak the system, raising the FICA payroll tax by less than 1 percent is all that is needed to keep the present system going for at least the next 75 years, according to experts — a fairly negligible increase compared with projected wage and salary increases in coming years.

The Bush-GOP plan would actually hasten the point at which benefit levels would exceed income, to 2005 instead of 2020, because it would divert part of the Social Security contributions by younger workers into individual retirement accounts instead of the Trust Fund. Experts say that diverting as little as 2 percent of payroll tax revenue into private accounts would cost the Trust Fund about $1.3 trillion over the next 10 years.

How does taking money out of the program fix the future solvency question without the need for measures such as raising the eligibility age or cutting benefits that our elderly or disabled family members count on? So far Gov. Bush isn’t commenting. In fact, he says he may not divulge the details of his privatization plan until after the election, in effect saying, “trust me.”

In the meantime, workers who would have their future security tied to the vagaries of the stock market should contemplate the fact that Bush’s chief economic advisor has taken all of his own investments out of the market. Yes, Lawrence Lindsey, who is helping the governor devise the privatization scheme, revealed on CNN’s “Moneyline” that the market is too risky for him. “I like to sleep at night,” he said.

The rest of us will sleep a lot better, too, if we keep Mr. Lindsey and Gov. Bush out of the White House.

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