To: "homestead AT lists.ibiblio.org" <homestead AT lists.ibiblio.org>
Subject: [Homestead] Social Security: Claims and Facts
Date: Mon, 14 Feb 2005 08:42:35 -0700
The White House and their deep-pocketed allies have launched a $35 million
public relations effort to spread misinformation about President Bushs
Social Security privatization scheme. This fact sheet will arm you with all
the facts youll need to take them on.
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 todays
beneficiaries. [The Washington Post, 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 Bushs plan, expenditures will begin to exceed revenues even
earlier, in 2012. [The New York Times, 2/4/05]
Claim: Under the current system, todays 30-year old worker will face a 27
percent 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 Bushs private accounts plan.
[Economic Policy Institute, 2/05]
The PresidentS 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 workers account would be
reduced dollar for dollar from his Social Security checks, for a net gain
of zero. [The Washington Post, 2/4/05]
Claim: Youll 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. [The New York Times, 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 systems
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;
The Washington Post, 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: Bushs Social Security plan is a far cry from the private ownership
hes 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. [The New
York Times, 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 Securitys 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 Bushs, 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 its 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. [The Washington Post, 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. [Wall Street Journal, 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 todays younger workers. [The New York Times,
2/6/05]