Social Security & Medicare Notes

Social Security reform - stalled but not dead. A Republican dilemma.

The Presidents' Social Security phase out campaign has gone aground in rough waters, and the Republican congressional leadership is looking for a way out of the whole thing.

This from today's Washington Post.

"Democrats are united in their opposition, and the Finance Committee does not have the Republican votes to approve a Social Security plan that would divert some payroll taxes to private investment accounts. But the committee, which has jurisdiction over the issue, also does not have the votes to pass a plan that would preserve Social Security's solvency without the personal accounts because too many GOP conservatives want them.

"President Bush has responded by dispensing his cautious calls for bipartisanship in favor of far tougher rhetoric that blames the Democrats for the stalemate. "On issue after issue, they stand for nothing except obstruction," Bush said at a GOP fundraiser Tuesday night. "And this is not leadership. It is the philosophy of the stop sign, the agenda of the roadblock."

But the united opposition of the Democrats is only the beginning of Bush's problems. The Republicans in the House and Senate cannot come to a unified position, either.

"Finance Committee Chairman Charles E. Grassley (R-Iowa) has held 14 meetings with the panel's 11 Republicans to reach a consensus just on achieving solvency, he said, but they have yet to produce a deal. He has not even broached the idea of personal accounts, which he acknowledged to be the harder piece of the puzzle.

Sen. Olympia J. Snowe (R-Maine) has been unwavering in her opposition, and at least three other Republicans have questioned the wisdom of moving forward. "We are stuck," Sen. Lindsey O. Graham (R-S.C.) said.

House Republican leaders believe House Ways and Means Committee Chairman Bill Thomas (R-Calif.) could put together broad retirement legislation that could clear his committee with private accounts. But aides and GOP lawmakers say House Speaker J. Dennis Hastert (R-Ill.) has told his members he remains averse to a floor vote on such a plan if the Senate cannot act.

"There is absolutely no way is he is going to put his members on a roll call where they fall on their sword on a bill with no chance of going anywhere," said one Republican House member, who spoke on the condition of anonymity for fear of crossing White House political officials."

"They're frustrated, they're disappointed, and they're getting the feedback from up here that, on the one hand, we can't get Democrats' support unless we exclude personal accounts, but on the other hand, if we exclude personal accounts, we can't get Republican support," said the senior GOP aide in the Senate."

So as of right now, Bush's Social Security initiative is stalled. Stalled, but not dead. Any opportunity, any Democratic weakness, and the Republicans are poised to jump and take advantage, but unless something changes, this is where it will remain until next years' elections. The controversial Social Security Reform initiative is another problem they will have to deal with along with the unresolved war in Iraq and the ethical problems of Tom DeLay and other members of Congress as they go into the 2006 elections. A lot of Republicans in Congress don't want the Social Security reform package unresolved that long.

The source of their dilemma lies in the ideological and political roots of the Social Security reform initiative. The fiscal conservative Republicans have wanted to kill Social Security since it was first initiated. They have never accepted that providing economic security for retirees is a legitimate function of government. With control of both houses of Congress and Bush's reelection as President they felt that for the first time in six decades they were in a position to kill the program. This is an ideological effort first and foremost, brought to the front of the agenda because of an unusual opportunity to wield power.

It was Bush's reelection as President and the Republican control of the Congress that caused Bush to announce his plan to reform Social Security immediately after he was reelected. Any projected problems in the system are fodder for the political effort already decided on to phase out Social Security. They are to be used as political tools to stampede the Congress into inacting his proposed privatization plan.

Data suggesting problems in Social Security is no more Bush's motivating force than was weapons of mass destruction the reason Bush invaded Iraq. Bush wanted to get rid of Saddam before he became President in 2000. The as the Downing Street Memos have shown, the sketchy evidence that Iraq might possess WMDs was merely a pretext for Bush to push his desired invasion through Congress. The projections of problems with the Social Security System are similar political tools for him to take actions based entirely on conservative ideology.

The Bush administration has cherry-picked through the projections for the future of Social Security and pulled out all the uncertainties and possible failures they can find. They have then woven those tentative uncertainties into a public relations campaign consisting of predictions of doom and bankruptcy for Social Security unless Congress and America buy into his privatization scheme. Used car and door-to-door salesmen across the nation will be proud of the masterful use of underhanded and dishonest sales tricks, and political wonks will discuss his methods for years to come with a mixture of disgust and admiration.

The privatization plan to replace the currently well run and highly efficient program will cost trillions of dollars up front - money which will have to be borrowed up-front, in addition to the already massive increases in federal debt Bush is presiding over. Then, as even Bush himself has acknowledged, privatization does not address the various problems that he (falsely) claims are going to "bankrupt" the current Social Security System.

The real "solution" Bush has offered to the various possible problems in the distant future is to cut benefits and turn Social Security into a welfare system for the poorest workers, while removing the elements of security that middle and upper income workers currently get from the system. As FDR recognized in the beginning, such a welfare system is not politically sustainable over the long term. Bush and the rest of the conservative Republican ideologues know this. So their proposed "solution" to the vague distant problems in Social Security is to set it up for easier political elimination in the future.

But there has to be some solution to the twin problems facing Social Security. It is clear that the best projections show that within two decades Social Security will have to start drawing back the money the trust fund has loaned the federal government and in four decades, even the trust fund may run out. Right?

The Social Security actuaries and trustees will always point out that what is being presented is "projections", not "predictions". A projection is a model of the possible future based on a set of assumptions of things like inflation, productivity, birth rates, immigration, and a number of other things. Conservative estimates for the assumptions are the safest, as they provide the earliest warning of possible problems in the future.

The projections then are presented as most pessimistic, most likely, and most optimistic based on those conservative assumptions. Remember that all of those projections are based on conservative projections of the assumptions. If the estimates for the improvement in American economic productivity and immigration were increased to numbers that have been normal over the last fifty years, the projections of a shortfall of revenue with which to pay benefits in four decades completely disappear.

The problem of the revenue dropping below that required to pay benefits, forcing Social Security to start cashing in the bonds in the trust fund is a little different. That is not a problem with Social Security! That is a problem of a financially mismanaged federal government. In essence the federal government under the Republicans has gone on a massive credit card financed spending spree. They are borrowing money from China, Japan, South Korea and the Social Security system while spending money as fast as they can and still cutting taxes for the most wealthy. But if they can "reform" social security, maybe they can push back the date that the credit card bills have to be repaid by cutting benefits on retirees.

The Republicans running the federal government are abusing their credit privileges and want the the lenders to just give them to money. They want the Social Security System to accept the equivalent of a declaration of bankruptcy.

This is what the American credit card issuers claimed credit card users were doing, so they had the Bankruptcy laws revised to prevent deadbeat creditors from running up big bills and walking away without paying them off. It is strange that Bush and the conservative Republicans want the federal government to do what they have just declared individual credit card abusers will not be allowed to do.

The solution for the repayment of the Social Security trust fund is for the Federal government to get its' financial house in order and quit handing out its revenue as political payoffs to the wealthy and pay for what it is spending. This is not a problem for Social Security taxpayers and beneficiaries to solve. They have already done what was required. If Bush and the Republicans intend to bankrupt the federal government, that is a separate issue from the relatively minor possible projected problems in Social Security.

The solution to the possible problems if the trust funds run out are already set into the Social Security Law. Any year that revenues fall below those required to pay full benefits, the benefits paid will be reduced to a level that the revenues can support. We don't need to massively cut benefits now to solve a problem that may or may not come to pass in four decades. That does nothing except lower benefits while loaning the spend-thrift federal government more trust fund money to waste.

So for now we have the Democrats holding firm against private accounts, the congressional Republicans split between ideologues who demand private accounts or nothing and the realistic Republicans who don't want to vote for a plan the ideologues push through and then find themselves threatened for reelection over a failed plan, and Bush who is accusing the Democrats of being nothing but "negative objectionists" because they won't lay down and die in front of his poorly thought out conservative idiocy.

Poor Republicans. They WON the Congressional and Presidential elections in 2004. It was supposed to be so easy to rape American after that. So why are so many of the losers being so negative?

posted by Richard @ 7:30 AM