President Bush isn't trying to reform Social Security. He isn't even
trying to "partially privatize" it. His plan is, in essence, to
dismantle the program, replacing it with a system that may be social but
doesn't provide security. And the goal, as with his tax cuts, is to
undermine the legacy of Franklin Roosevelt.
Why do I say that the Bush plan would dismantle Social Security? Because
for Americans who entered the work force after the plan went into effect
and who chose to open private accounts, guaranteed benefits - income you
receive after retirement even if everything else goes wrong - would be
nearly eliminated.
Here's how it would work. First, workers with private accounts would be
subject to a "clawback": in effect, they would have to mortgage their
future benefits in order to put money into their accounts.
Second, since private accounts would do nothing to improve Social
Security's finances - something the administration has finally admitted
- there would be large benefit cuts in addition to the clawback.
Jason Furman of the Center on Budget and Policy Priorities estimates
that the guaranteed benefits left to an average worker born in 1990,
after the clawback and the additional cuts, would be only 8 percent of
that worker's prior earnings, compared with 35 percent today. This means
that under Mr. Bush's plan, workers with private accounts that fared
poorly would find themselves destitute.
Why expose workers to that much risk? Ideology. "Social Security is the
soft underbelly of the welfare state," declares Stephen Moore of the
Club for Growth and the Cato Institute. "If you can jab your spear
through that, you can undermine the whole welfare state."
By the welfare state, Mr. Moore means Social Security, Medicare and
Medicaid - social insurance programs whose purpose, above all, is to
protect Americans against the extreme economic insecurity that prevailed
before the New Deal. The hard right has never forgiven F.D.R. (and later
L.B.J.) for his efforts to reduce that insecurity, and now that the
right is running Washington, it's trying to turn the clock back to 1932.
Medicaid is also in the cross hairs. And if Mr. Bush can take down
Social Security, Medicare will be next.
The attempt to "jab a spear" through Social Security complements the
strategy of "starve the beast," long advocated by right-wing
intellectuals: cut taxes, then use the resulting deficits as an excuse
for cuts in social spending. The spearing doesn't seem to be going too
well at the moment, but the starving was on full display in the budget
released yesterday.
To put that budget into perspective, let's look at the causes of the
federal budget deficit. In spite of the expense of the Iraq war, federal
spending as a share of G.D.P. isn't high by historical standards - in
fact, it's slightly below its average over the past 20 years. But
federal revenue as a share of G.D.P. has plunged to levels not seen
since the 1950's.
Almost all of this plunge came from a sharp decline in receipts from the
personal income tax and the corporate profits tax. These are the taxes
that fall primarily on people with high incomes - and in 2003 and 2004,
their combined take as a share of G.D.P. was at its lowest level since
1942. On the other hand, the payroll tax, which is the main federal tax
paid by middle-class and working-class Americans, remains at near-record
levels.
You might think, given these facts, that a plan to reduce the deficit
would include major efforts to increase revenue, starting with a
rollback of recent huge tax cuts for the wealthy. In fact, the budget
contains new upper-income tax breaks.
Any deficit reduction will come from spending cuts. Many of those cuts
won't make it through Congress, but Mr. Bush may well succeed in
imposing cuts in child care assistance and food stamps for low-income
workers. He may also succeed in severely squeezing Medicaid - the only
one of the three great social insurance programs specifically intended
for the poor and near-poor, and therefore the most politically vulnerable.
All of this explains why it's foolish to imagine some sort of widely
acceptable compromise with Mr. Bush about Social Security. Moderates and
liberals want to preserve the America F.D.R. built. Mr. Bush and the
ideological movement he leads, although they may use F.D.R.'s image in
ads, want to destroy it.