In My Opinion: Parting the Curtain: The Elites Behind Private Accounts

As brain-numbingly complex as the Social Security debate sometimes seems, a few points are quite clear.

• Social Security does face a funding shortfall several years down the road that must be addressed. But there is no immediate crisis, and Congress has time to look at various options and find the right solution to preserving one of our most vital social programs.
  
  The president's partial privatization plan does absolutely nothing to solve the funding problem, as even he has now acknowledged. It actually would compound our fiscal dilemma by requiring the U.S. to borrow trillions of dollars from countries like China and Japan to set up private accounts.
  
  
• The administration's solution to the funding problem lies not in the private accounts, but instead in its proposal to cut future benefits for everyone in the system-whether they opt for private accounts or not-by 30 to 50 percent below today's benefit levels.

"The personal account doesn't fix the system," President Bush admitted under questioning in mid-February. Then why is the administration and the business community pushing this concept so fervently?

The answer has partly to do with far-right ideology, by one set of proponents, and by another, with protecting and boosting corporate profits.

Among the ideologues, the privatization idea has been nurtured for about 25 years chiefly by a right-wing think tank, the Cato Institute, whose stated mission is "limited government"-basically throwing out every vestige of President Franklin Roosevelt's New Deal. A top Cato official has said, "Social Security is the linchpin of the welfare state." Cato's founder is Edward Crane, formerly a leader of the Libertarian Party.

President Bush became enthused about Social Security privatization, according to the Washington Post, in 1997, while still governor of Texas, when "he met over dinner with (Edward) Crane and Jose Pinera, Chile's former labor minister, who was helping Cato spread the gospel of private accounts."

Penera's claim to fame was his role in imposing the privatization of Chile's social security and health care system when he served under the notorious dictator Augusto Pinochet. That supposed reform, by the way, turned out to be a dismal failure that has ruined the retirement security of millions of Chilean workers.

As for big business' support of the Bush plan, it's just a matter of following the money. And to give you an idea of how much money is at stake, the business lobby is reported to have amassed $200 million or more to lobby for its top two goals this year of enacting the Bush Social Security plan and limiting class-action awards for citizens who sue corporations.

One group lobbying for private accounts, which includes 40 major corporations as well as the U.S. Chamber of Commerce, the Business Roundtable and National Association of Manufacturers, chose the charmingly misleading name, Alliance for Worker Retirement. The head of the group was candid, however, about its motives when he told the Houston Chronicle that companies want to see a plan focused on cutting benefits, such as Bush's proposal, because "the alternative is raising the payroll tax, which would add to their costs."

And the Wall Street securities firms have plenty of their own reasons for joining the lobbying effort-nearly 1 trillion of them. A respected University of Chicago economist, Austan Goolsbee, estimates that brokerages would collect at least $940 billion in fees through the conversion to private accounts.

It is important that we strengthen Social Security for the long term. If anything, the system is more important than ever as a safety net for seniors and disabled workers.

The percentage of workers with any kind of pension has dropped over the years, and fewer today are covered by guaranteed annuity pensions as more employers shift to 401(k)-type plans, where the worker makes some or all of the contributions and investments are subject to the ups and downs of financial markets. Even politicians are pushing the trend, such as California Gov. Arnold Schwartzenegger, who wants to freeze the state's defined benefit pension plan and shift tens of thousands of workers to a 401(k) savings program.

There are many proposals by clear-eyed experts and responsible members of Congress for bolstering Social Security through gradual changes in the system's financing and the formula for benefit growth. These ideas actually address the roots of the funding dilemma-unlike the private account scheme.

But before we can get to a reasoned discussion of these ideas and reach a consensus solution, it is imperative that we expose and reject the distraction of the private account fraud-a political Trojan horse built by elite interests who would rather kill Social Security than fix it.