Don't Use the Sept. 11 Tragedy to Loot Social Security
A story that is buried in the financial pages should have every working family up in arms. The Bush administration, with the willing collaboration of leading figures in the Democratic Party, is using the tragedy of Sept. 11 to try to rob working people of trillions of dollars in Social Security.
The Wall Street Journal, in an editorial dated Sept. 19, was among the first to call on Bush to hurry up and take advantage of the "unique political climate" created by the Sept. 11 events to "assert his leadership not just on security and foreign policy but across the board."
Specifically, the Wall Street Journal summoned the president to move ahead on faster tax-rate cuts, expanded oil drilling in Alaska, fast-track authority for trade negotiations -- and, yes, dipping into the Social Security surplus to fund some of his new military expenditures.
A few weeks later, a leading figure in the Clinton administration joined the chorus. In an op-ed article published in the Oct. 8 New York Times, Laura Tyson -- former chief economic adviser to Bill Clinton and current dean of the Haas School of Business at the University of California at Berkeley -- argues that the only way the United States can fund its protracted, multifaceted war on terrorism is to use "funds pledged to Medicare and Social Security." She calls this a "temporary raid on the Medicare and Social Security surpluses."
But just how temporary? "The costs of the war are likely to last for years," Tyson continues, "and they will be high." In a word, this "justifiable" raid could go on for many years.
All will not be rosy, Tyson acknowledges, as the government may not have the money down the road to pay recipients the Social Security checks they are entitled to. "Slicing into the Medicare and Social Security surpluses now will only make the day of reckoning, when the baby boomers begin to retire, more painful, Tyson states. "The government will then be forced to choose between higher payroll taxes, reduced retirement benefits and escalating budget deficits."
The meaning is clear: That portion of every working person's paycheck that was deducted month after month to help pay for retirement may not be there after all when the time to retire comes. The "day of reckoning" may be painful -- meaning that retirement benefits may be reduced, or the retirement age may be increased (another form of theft), or the funds simply may have disappeared into all sorts of speculative ventures. Whatever the form, it's highway robbery, pure and simple.
Aren't these funds off limits?
Many working people have a hard time believing that the government has the right to tamper with funds set aside explicitly to pay retirees their Social Security benefits. How did this come to pass?
It didn't all begin with Sept. 11. A number of laws passed since the early 1980s have paved the way.
First came a law that took Social Security funds, which had been held separate from general revenues in their own trust account, and folded them into the government's accounting system. This gave the government direct access to these funds.
Then came a law demanding a balanced budget, forcing the government to cut spending if tax revenues drop. This was followed by the huge tax cut for the rich, sugar-coated with insignificant tax rebate checks for the nation's working families. All this created what the government calls a "cash flow squeeze" and set the stage for doing something a majority in Congress vowed not to do before Sept. 11 -- and that is, dip into the Social Security surplus to pay for tax cuts or government spending.
A perfect pretext
The call from corporate America to "overhaul" Social Security did not originate with the Sept. 11 tragedy. In fact, during his first months in office, Bush handpicked a group of businessmen to propose the revamping of the entire Social Security system. This included plans to dip into the Social Security surplus while also raising the retirement age and reducing both the retirement benefit and cost-of-living adjustments.
But how to carry out this looting of the Social Security fund in the face of major opposition in the Congress? The Sept. 11 events have provided Bush and his corporate buddies with the perfect pretext. Democrats -- all-too-eager to jump on the bandwagon of "national unity to fight terrorism" -- have dropped their oppositionist stance, embracing this corporate raid of workers' hard-earned money.
Admittedly, the Social Security checks paid out every month to retirees are limited. But for many older people, they are the difference between eating and starving, between having a roof over one's head and living on the street. With the stocks-based retirement plans rapidly losing value, moreover, it is evident that no 401(K) plan and no investment scheme can take the place of a government-guaranteed retirement fund.
More than ever it is necessary to demand: Bush and the Congress, Hands Off Social Security!
This article originally appeared in the September-October 2001 issue of The Organizer newspaper.