Here are some of the key facts we want you to know
about Bush's plan to privatize Social Security. These points are a great primer to use to talk about Social Security with
your friends, family and colleagues.
- George Bush's plan would make massive cuts in Social Security benefits
for future retirees in order to pay for private accounts. Social Security privatization requires diverting taxes used to pay
current benefits into private accounts. Without that money, Social Security benefits will inevitably be cut -- up to 46 percent
for future retirees. Even under rosy projections the private accounts don't make up the difference. The deepest benefit cuts
are for young people. Somebody in their twenties today would see benefit cuts as high as 30 percent. Should we really have
to pay for Bush's risky private accounts with our guaranteed benefits?
- Privatization means trillions of dollars of new national debt. Because
current Social Security taxes are used to pay for private accounts taking that money out means huge deficits -- as high as
$15 trillion over the next 40 years.
- Social Security is not going bankrupt, contrary to the president's claims.
That is a deception perpetrated in order to create the urgency for radical changes. Under conservative forecasts, the long-term
challenges in Social Security do not manifest themselves until 2042. Even then Social Security has 70 percent of needed funds.
George Bush's Social Security crisis-talk is an effort to create a specter of doom -- just like the weapons of mass destruction
claim in Iraq.
So who does benefit? George Bush's base. Giant financial
services firms have been salivating for decades over the prospect of taking over Social Security. They'd make billions in
new fees -- essentially a new tax -- off of our Social Security payments.
FISCAL OUTLOOK
CLAIM: "By the year 2042, the entire system would
be exhausted and bankrupt." [President Bush, 2/2/05]
FACT: In 2042, enough new money will be coming in
to pay between 73-80 percent of promised benefits. Even with this reduction, new retirees will still receive more money, in
inflation-adjusted dollars, than today's beneficiaries. [WP, 2/5/05]
CLAIM: "In the year 2018, for the first time ever,
Social Security will pay out more in benefits than the government collects in payroll taxes." [President Bush, 12/11/04]
FACT: "In 14 of the past 47 years, including 1975
to 1983, Social Security paid out more in benefits than the government collected in payroll." [MSNBC, 1/14/05]
FACT: Under Bush's plan, expenditures will begin
to exceed revenues even earlier, in 2012. [New
York Times, 2/4/05]
CLAIM: "Under the current system, today's 30-year
old worker will face a 27% benefit cut when he or she reaches normal retirement age." [GOP Guide to Social Security Reform,
1/27/05]
FACT: According to the Congressional Budget Office,
younger workers would receive better benefits from Social Security as it exists now, even if nothing changes, than from President
Bush's private accounts plan. [EPI, 2/05]
THE PRESIDENT'S PLAN / PRIVATE ACCOUNTS
CLAIM: "As we fix Social Security, we also have the
responsibility to make the system a better deal for younger workers. And the best way to reach that goal is through voluntary
personal retirement accounts." [President Bush, 2/2/05]
FACT: Analysis of the plan so far does not prove
the accounts would be a better deal for anyone not working on Wall Street. Workers who opt for the private accounts would
recover forfeited benefits through their accounts only "if their investments realized a return equal to or greater than the
3 percent earned by Treasury bonds currently held by the Social Security system." But CBO factors out stock market risks to
assume a 3.3 percent rate of return. With 0.3 percent subtracted for expected administrative costs on the account, "the full
amount in a worker's account would be reduced dollar for dollar from his Social Security checks, for a net gain of zero."
[WP, 2/4/05]
CLAIM: "You'll be able to pass along the money that
accumulates in your personal account, if you wish, to your children or grandchildren." [President Bush, 2/2/05]
FACT: Most lower-income workers will be required
to purchase government lifetime annuities, financial instruments that provide a guaranteed monthly payment for life but that
expire at death. Money in these annuities cannot be passed on to heirs. [NYT, 2/3/05]
CLAIM: "We must pass reforms that solve the financial
problems of Social Security once and for all." [President Bush, 2/2/05]
FACT: "A Bush aide, briefing reporters on the condition
of anonymity [said] that the individual accounts would do nothing to solve the system's long-term financial problems." The
long-term gap in revenue would "have to be closed through benefit cuts that have yet to be detailed." [LAT, 2/3/05; WP, 2/5/05]
CLAIM: "A personal account would be your account,
you would own it, and the government could never take it away." [President Bush, 2/8/05]
FACT: Bush's Social Security plan is a far cry from
the private ownership he's touting, however. For example, instead of private plans that let Americans control their own investments,
there are tight restrictions on which conservative stocks and bonds the public will be allowed to buy. And, as the New York
Times reports, "the more restrictions there are, the harder it would be for people to achieve the outsized returns the administration
has generally promoted to sell the public on private accounts." [NYT, 2/6/05]
CLAIM: "Best of all, the [private] accounts would
be replacing the empty promises of government with the real assets of ownership." [President Bush, 2/8/05]
FACT: Social Security trust funds "hold nothing but
U.S. Treasury securities," recognized as "the safest, most reliable investment worldwide." [Century Foundation, 1/26/05]
CLAIM: "The problem that we now face is not one that
we can tax our way out of, for a very simple reason: The costs and the current program are growing faster than the underlying
tax base. So if we were to raise taxes today to deal with it, and the costs of the program continued to grow faster than the
tax base, then in the future, future generations would simply have to come back and raise taxes again." [Senior White House
Official, Press Conference, 2/3/05]
FACT: An alternative proposal by Peter Diamond and
Peter Orszag would resolve Social Security's funding problems directly and permanently through modest tax increases. The Congressional
Budget Office states that, "under Diamond-Orszag, the trust fund balance would always be positive and scheduled benefits would
be fully financed." [CBO, 12/22/04]
HISTORY
CLAIM: "Social Security was a great moral success
of the 20th century, and we must honor its great purposes in this new century." [President Bush, 2/2/05]
FACT: Conservatives have been trying to gut Social
Security since its inception. Both Barry Goldwater and Ronald Reagan endorsed privatization in 1964. In 1983, the Cato Institute
laid out a privatization plan similar to President Bush's, stating, "We will meet the next financial crisis in Social Security
with a private alternative ready in the wings." [Miami Herald, 2/7/05]
RHETORIC
CLAIM: "I think it's important for people to be open
about the truth when it comes to Social Security." [President Bush, 2/4/05]
FACT: The Bush administration has lobbied hard for
privatization while being notably closemouthed about the details. [WP, 2/6/05]
FACT: The Wall Street Journal reports the White House
is quietly assembling a coalition of deep-pocketed allies "that will privately raise $35 million for an advertising and lobbying
effort to push the politically risky measure through Congress." [WSJ, 2/4/05]
CLAIM: "The role of a President is to confront problems
– not to pass them on to a future President, future Congress, or a future generation." [President Bush, 2/4/05]
FACT: Dick Cheney admits trillions of dollars in
future borrowing will be necessary to cover the cost of establishing private accounts. This deficit would have to be repaid
by today's younger workers. [NYT, 2/6/05]
