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9/09/2004

Social Security is essential

Social Security at Risk in a Bush Second Term

As President George W. Bush renewed his call to privatize Social Security, working family advocates are exposing the ways his plan would cut benefits, subject workers to the whims of the stock market and enrich Wall Street at the expense of current and future retirees.

In accepting his party’s nomination at the Republican National Convention Sept. 2, Bush revived his appeal to privatize one of America’s most comprehensive family protection programs, promoting his plan as a way to create an “ownership society.”

But under a privatized Social Security system, millions of tomorrow’s retirees would be at risk of falling into poverty, say Social Security supporters. By replacing Social Security’s guaranteed benefits with private accounts subject to the ups and downs of the stock market, “what individuals really own is the risk,” says Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare.

Privatizing Social Security would enrich banks, insurance companies and investment firms, which would reap millions—even billions—of dollars in fees for administering private accounts. “When it comes to Social Security reform, it’s clear [Bush] has chosen Wall Street investors over American workers and retirees,” says Edward Coyle, executive director of the Alliance for Retired Americans, a nationwide grassroots advocacy organization for seniors.

In contrast, Democratic presidential nominee Sen. John Kerry (Mass.) supports strengthening protections for workers’ retirement security, including traditional defined-benefit pensions, 401(k) plans and Social Security, and has pledged not to privatize Social Security.

Medicare: A Preview of Privatized Social Security?
Just as Bush’s drive to privatize Social Security would weaken the safety net that protects older Americans, Bush’s changes to Medicare already are endangering health security for the elderly and people with disabilities, say senior advocates. In November, Congress passed a Medicare prescription drug bill that threatens the health benefits for Medicare’s 35 million seniors and people with disabilities, does nothing to control prescription drug prices and was written to benefit big drug companies, not consumers.

On Sept. 3, Bush’s Department of Health and Human Services announced nearly 39 million Medicare beneficiaries will have to pay 17 percent more for the premiums covering the part of Medicare that pays for doctor visits and outpatient hospital services—the largest increase in the program’s history. Fully 15 percent of the increase will go directly to private HMOs. Congress promised additional payments to insurers in the Medicare bill.

Meanwhile, advocates for union members and seniors are trying to make sure that employers don’t drop prescription drug coverage for retirees. Proposed regulations could allow employers to get a government subsidy encouraging them to retain coverage while still shifting costs to retirees.

Trillions in U.S. Treasury Needed to Fund Privatization Scheme
Bush has pressed for privatizing Social Security for more than four years, both during his last presidential campaign and throughout his administration. Three years ago, he handpicked a panel of privatization advocates to draw up plans to gut Social Security.

Meeting in private sessions, the President’s Commission to Strengthen Social Security outlined several schemes that would privatize Social Security at a cost of up to $2.8 trillion. Even at that price, the privatized plan relied on deep cuts in benefits for disabled workers and the surviving children of workers who die young. In addition, privatizing Social Security would require cuts to guaranteed benefits, raising the retirement age or both.

Those plans would significantly worsen Social Security’s finances by subsidizing private accounts and require trillions of dollars from the federal treasury to finance the private accounts, according to an analysis by The Century Foundation and the Center on Budget and Policy Priorities.

In the years since his handpicked panel issued its recommendations, Bush funded two huge tax cuts for the nation’s wealthiest individuals with money that could have been used to strengthen Social Security and that instead, caused the federal budget deficit to balloon, according to the Center on Budget and Policy Priorities. “The facts speak for themselves: The tax cuts that the administration has proposed would cost more than three times as much over the next 75 years as the entire 75-year Social Security shortfall,” the center notes. “In fact, the cost of the tax cuts (including making the 2001 tax cut permanent and adding expensive new tax cuts on top of it) would be greater over the next 75 years than the combined deficits in Social Security and the Medicare Hospital Insurance program.”

By pressing to privatize Social Security, “President Bush proved once again that he is out of touch with the concerns of average Americans,” says George Kourpias, president of the Alliance for Retired Americans.

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