"Fear does work, yes. You can make people do anything if they're afraid."
Some of you may remember this line of mine from Fahrenheit 9/11. Some of you also know me as the most liberal member of the House, or the perennial champion of single-payer health care, or -- in the footsteps of Eleanor Roosevelt, John Kenneth Galbraith and Walter Reuther -- as President of Americans for Democratic Action.
Today I'd like to share my thoughts as a very senior Democrat on Ways and Means (the committee of jurisdiction on Social Security) ... and as the world's least senior blogger.
You can take the President at his word when he says "I want you to think about a Social Security system that will be flat bust, bankrupt". Of course he does. Remember when all he wanted you to think about was nerve gas, smallpox and mushroom clouds?
Iraq didn't have Weapons of Mass Destruction, and Social Security isn't going bankrupt.
The Social Security phase-out game starts with a sleight of hand.
First, the President's "plan" switches your benefit calculations from "Wage Indexing" to "Price Indexing." Wage indexing keeps pace with rising standards of living over your working life. Price indexing just keeps pace with inflation. By switching wage indexing to price indexing, the Republican plan reduces retiree benefits.
In fact, the younger you are, the bigger bite this Republican shell game will take out of your benefits. Someone who is 30 years old today will lose about 25 percent of expected monthly retirement benefits (that's a conservative estimate). Today's five-year-old will experience a 45 percent benefit cut and each successive generation loses even more.
Next, we have what's called the Carve Out. The Republican plan would divert one-third of the taxes that are currently targeted toward Social Security into private accounts. In order for Social Security to continue to pay benefits after a third of its resources are diverted, or "carved out", the federal government would have to borrow the missing money, largely from foreign lenders.
And who pays back this money -- who does that leave holding the bag? Young people. The very same young people that will bear the biggest benefit cut as a result of price indexing. Really generous!
Now comes the Claw Back. The Republican plan aims to cut your guaranteed benefit by -- surprise -- one-third to make up for the amount of payroll taxes that were "carved out" of Social Security and into private accounts.
What's more, the private accounts will be reduced by 3 percent annually to cover the costs of the interest that would otherwise have accrued in your Social Security account. In other words, the privatization scheme means that you start in a hole and you would have to rely on your friends on Wall Street to help you dig out of it. Calling Ken Lay! Calling Ken Lay!
So here's the Bush Deal: Young people can have the Bush Social Security "Plan", which will absolutely reduce guaranteed benefits by as much as 45 percent, and hope to make up for those losses in private accounts. Of course, those private accounts already have a big hole to dig out of.
Remember the private accounts have to make up for the benefit losses due to price indexing. Next they have to make up for the one-third reduction in guaranteed Social Security benefits resulting from the claw back. Lastly, the private accounts will not actually grow - contributions aside - unless they grow by more than 3 percent annually, after inflation. Oh, and inflation is usually 2 to 4 percent each year.
(Don't forget the budget deficit that will need to be paid back to China and Japan.)
Alternatively under current law Social Security can pay 100 percent of benefits until around 2050, after which point 80 percent of benefits can be paid forever.
Does that sound like a bankruptcy crisis to any sane person?
Here's the deal the Democrats suggest: With minor adjustments, Social Security can be there for everyone, just like it's there for me. If we let Bush "save" Social Security, it will be destroyed.
Social Security is the most successful government program in history. It lets hardworking Americans look forward to retirement with hope, not fear. It guarantees a financial floor they can never fall through.
From 1935 to 2005 it brought down the number of elderly living in poverty from 40 percent to 9 percent. In other words, Social Security decreased poverty among the elderly by 400 percent.
Privatization is a phase-out scheme for Social Security and nothing more. It moves dollars out of Social Security, divides voters by age, and shaves benefits to the vanishing point.
People are making decisions for you, and the President hopes you are not paying attention. Who the heck thinks of retirement in their 20s and 30s? But those are the people who have the most to lose.
For those 55 and older, the privatization scheme is designed to leave you on the political sidelines. But with no stake in the legacy system, how long will younger voters ante up to keep that "benefits as is" bargain?
Your representatives from Congress have been getting an earful on Social Security during their recess visits home. Ask hard questions of the men and women who represent you in the Congress, and don't let them slide by you with empty slogans framed in fear, instead of security and opportunity.
I don't know where all of you find the time, but progressive bloggers are today's Minutemen -- patriotic "first responders" defending fundamental American institutions and true American values.
Today is a travel day, but I will check in later and respond to questions.
Thank you
Jim