Sunday, November 06, 2005

WHAT DEMOCRATS SHOULD PROMISE IF RESTORED TO MAJORITY STATUS: MAKE SOCIAL SECURITY FAIR AND REDUCE TAX RATES

As Katrina victims died in New Orleans waiting for FEMA, President Bush was on the road in Phoenix touting his campaign to channel Social Security billions to his Wall Street friends

(This column will appear in The Albany Journal for 11-10-05)

"I want that dumb public money coming across my desk." Comment by stockbroker excited by President Bush's Social Security privatization plan.


Almost lost in the wake of the FEMA foulup following Katrina, the Scooter Libby perjury indictment, and the failed Supreme Court nomination of the spectacularly unqualified Harriet Miers, is the fact that on August 30, 2005, the day after Katrina devastated New Orleans, President Bush’s Social Security “reform” roadshow was still in full swing. Although it’s probably safe to say that the country is now safe from Mr. Bush’s nefarious attempts to gut the Social Security program and send billions of dollars in investment income to his Wall Street cronies, that doesn’t mean that reforming Social Security has to be a dead issue. If the Democratic Party has any sense (an improbable hope, since after numerous exploratory expeditions from the grassroots, there are still few signs of intelligent life among nationally prominent Democrats), it will embrace the opportunity for a national debate on Social Security reform and propose legislation that will maintain the integrity of the program, broaden the tax base to assure a continued flow of benefits as Baby Boomers ease into their golden years, and reduce overall tax rates, which will, not incidentally, provide a much needed boost to the nation’s economy.

The average person might believe President Bush when he says that the status of the Social Security Trust Fund is a present day "crisis" because, based on current projections, by the year 2042, the fund will be "bankrupt." What President Bush doesn't say, because it would defeat his proposal- the specifics of which are still a secret he won't share- is that in his dictionary, if the Trust Fund can only pay you 99 percent of what it owes you, then the system is "bankrupt." Of course, the "crisis" could easily be fixed simply by removing the current $87,000 cap on income taxed for Social Security and by requiring the superwealthy living off their interest and capital gains to pay their fair share of taxes. Currently, a billionaire who doesn't work a minute a year and who annually earns $100 million in interest or capital gains will not pay a penny in Social Security taxes. (As a sidenote, if President Bush gets his way, they also won't pay a penny in Federal income taxes.) In stark contrast, a manual laborer who works 50- 60 hours a week and earns $40,000 a year, will pay over $6,000 a year into Social Security. Should the laborer die unmarried and childless before his 65th birthday, he will never get back a dime of the tens of thousands of dollars he contributed to the system.

If you are wondering why the President thinks that Social Security is a "crisis" needing fixing because in 38 years it may not be able to pay back 100 cents on every dollar owed, but he has no plans to resolve either Medicaid or Medicare spending (Medicare's trust fund will really be broke in less than 15 years) and he completely ignores the current federal budget shortfall of over $400 billion every year, you only have to listen to investment bankers and CEO's who hold stock options from their publicly traded companies. Here are two quotes, courtesy of "The Cunning Realist" website (cunningrealist.blogspot.com), from President Bush's financial backers who are the real motivating factor behind his push for Social Security "reform:"

"I want that dumb public money coming across my desk."

"This executive sees one shining beacon in the fog of increasingly strict accounting standards and a difficult business environment: The prospect of Social Security reform. He told me that he and many of his colleagues at other companies favor the creation of private accounts, because a new source of demand for his stock will help compensate for the increasing unattractiveness of his company from an investment perspective."


Now, if you still think the President has your best interests at heart when he says diverting money to private accounts is the best solution to the "crisis," ask him where he plans on getting the money to make up the immediate shortfall in Social Security taxes if his privatization proposal (whatever it is) is put into effect? Answer: the government will have to borrow the hundreds of billions of dollars needed to pay its current obligations to Social Security recipients, increasing our dangerous budget deficit to even higher levels.

Democrats have the opportunity to tell Americans what they will do if they obtain a majority in either or both houses of Congress. My suggestion is that our country preserve benefits guaranteed by the current program, broaden tax bases by removing caps on earnings and by including interest and capital gains income to let the wealthy pay their fair share, and reduce overall rates to let those earning less than $87,000 a year have more disposable earnings. Cutting the tax rates will provide a stimulus to the economy, but raising the caps and expanding the base to the superwealthy will keep us from having to borrow to fund the tax rate cut.

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