Social Security vs. Social Insecurity
Both Mark Hyman and President Bush say Social Security is going broke. Both are lying.
At worst, Social Security will cover 75% of its intended benefits in four decades. That’s with a very conservative estimate of the growth of the economy, and assuming we do nothing to prevent this from happening (such as undoing the Bush tax cuts for the wealthiest Americans, which would by itself keep Social Security fine and dandy for the foreseeable future).
But President Bush and Mark Hyman say that privatizing Social Security is the only answer. In fact, there are only two things wrong with privatization: it won’t work and it’s immoral.
First of all, it’s inefficient. The overhead costs for managing the funding for Social Security are less than 1% of total benefits. Privatized funds would end up costing 12-14% of the total funds just to pay for red tape and paper shuffling. This translates into up to a 20-30% reduction in benefits as compared with what Social Security can do on its own. That’s not a deal; it’s a ripoff.
Hyman suggests that lots of retirement and pension funds involve private investing. That’s exactly the point. Plenty of retirement and pension funds have gone bankrupt or ended up paying far less in benefits than what was promised. (How would you like to be an Enron employee nearing retirement right now without the promise of Social Security?) The whole purpose of Social Security is to provide an insurance plan that all retirees will know is there for them, no matter what the market does or whether the folks managing their funds do their job properly.
Hymn also claims privatizing Social Security would end up creating some sort of economic boom. But right now, Social Security funds are invested in bonds, which in turn play a pivotal part in the economy, precisely because they are secure. Privatizing Social Security doesn’t suddenly add money to the economy; it takes money that’s already supporting the economy and puts it at needless risk.
Moreover, it’s not likely that private accounts would return more than Social Security now does. In fact, over the long haul, Social Security is today providing retirees with as much or more money than they would have received through investing in stock portfolios. In fact, other countries have tried privatizing their versions of Social Security, and the result has been an increase in poverty among the elderly that will end up costing far more than simply leaving things alone would have.
Most importantly, privatizing Social Security fundamentally changes the nature of the program. Social Security has been the most successful insurance program in the history of the nation, keeping millions of elderly Americans out of poverty. Privatizing it changes Social Security from an insurance plan to an investment scheme which will certainly have winners and losers. Are we as a nation comfortable with the idea of a large increase in elderly men and women living in poverty? That’s a certain result of any privatization scheme.
So why do conservatives want to privatize Social Security anyway? If this is all so obvious (and it is), why are they pushing for it?
Because they don’t believe in the basic principle behind it: that Americans owe it to each other to make sure no elderly person faces the end of their life in debilitating poverty. Not in the richest country in the world. Conservatives don’t simply want to partially privatize Social Security. They want to do away with it and let the invisible hand of the free market take over. They want to scare Americans into handing over their guarantee of a modest but respectable old age so that these funds can be put in the hands of Wall Street profiteers who’ll make a killing on commissions while putting the futures of millions of Americans on a giant craps table and rolling the dice.
In the conservative’s mind, that’s just fine: whatever puts money in the hands who will risk it in the name of the free market is good for the whole country. After all, we don’t really owe anything to each other anyway, right? It’s everyone for themselves in this world.
There’s only one thing wrong with this position.
It’s a lie.
And that’s The Counterpoint.