My Grandmother, at 92, is one of a dwindling number of living Americans who can remember, as an adult, what it was like to live through
the Great Depression. I can recall one bucolic summer Sunday afternoon in the mid-1980's sitting with her and my Grandfather talking about what life was like on a family farm in those troubled times.
For folks in the Upper Midwest, they said, things got really bad....but not as bad as elswhere...farmers used a barter system based on raising hogs and chickens and milking dairy cows to stem the tide when they lacked money to pay for essentials. The bad weather and soil erosion of the Dust Bowl nearly pushed many folks over the edge...in response, my grandparents said, women and men worked side by side in the fields trying to save whatever harvest they could. Whole families mobilized to stave off poverty, hunger and the loss of their land.
Hearing all this, and seeing in their eyes that I could not really understand what they went through....ages 17-28 mind you...I tried to break the ice by quipping..."Gosh, it sounds like you didn't have a dime."
My Grandmother smiled...and looked me directly in the eyes...
"We didn't have a nickel."
The folks who want to privatize Social Security are banking on a fact that most of us don't even begin to realize. We are so removed in this nation from widespread poverty and the consequences of a prolonged economic downturn that we've forgotten the roots of why our government instituted the New Deal and the Great Society in the first place.
In 1960, when Michael Harrington wrote the Other America (click on the link for an excellent article by Harold Meyerson from which this data is culled): "the Census Bureau had concluded that almost 60 percent of seniors had annual incomes under $1,000 a year, at a time when the government estimated an adequate yearly budget for a retired couple to be roughly $3,000." In other words...most of our nation's senior citizens lived in, or close to, poverty.
As a 36 year old with a good memory...I can recall that childhood visits to the homes of older relatives and neighbors were often revelations of the simple life of seniors who lived on a meager fixed income and lacked many of the "necessites"...or "amenities"...of modern life. A television. New clothes. Access to an automobile. Electric appliances.
As Meyerson writes:
Today, however, the United States is governed by a president who is affronted by the very idea of a successful government program. According to a story in yesterday's Post, President Bush wants to change the Social Security indexing formula in a way that will reduce monthly payments by 32.5 percent by 2052 and 45.9 percent by 2075. Today a retiree receives a Social Security check that equals 42 percent of the average worker's wage; if Bush's plan is enacted, that check will shrink to just 20 percent of that wage.
Having tossed America's future seniors 100 feet overboard, the administration then proposes to toss them a 50-foot rope: They can invest a portion of their incomes in the stock market.
Smartone and rygriffin333 have both written excellent diaries highlighting articles by Paul Krugman and Roger Lowenstein respectively dealing with Social Security and the GOP proposals. Read them for the real story on what the President proposes, and the "fake crisis" he's manufacturing to sell his plan. What I'd like to do here is put things in very simple terms.
As a temp with a large financial services corporation in the early 90's I worked on a pilot program for bringing financial planning, heretofore the domain of the rich and the very rich, to Americans of more modest means. We ran a software program analyzing the net worth and retirement prospects of all of our new clients. For most folks, and admittedly many of them were solidly middle class and above, Social Security was still the one foundation for planning for retirement, the base from which every other decision flowed. The reasons for this were simple. Social Security is:
- predictable
- stable
- comes with COLA adjustments
- and, for the majority of our clients, was the single, bankable, absolutely guaranteed income stream for their retirement years
The reason for this is straighforward. Most Americans do not put nearly enough in their savings, IRA, 401K and pension plans and, instead, tend to leave the bulk of their net worth in real estate. Even families with relatively large net worths that owned their own homes free and clear...tended to have a second piece of real estate as their other major source of net worth. Further, it was not uncommon to see households, especially younger ones, with levels of credit card debt that rivalled the amount they had socked away in their retirement accounts. Simply put, in this environment...Social Security was the bedrock of almost every single one of our client's retirement planning, even some clients with large net worths.
What the President and the GOP propose to do in this environment is chilling:
- they want to make Social Security unpredictable.
- they propose to make Social Security unstable.
- they propose to make the defined benefits of Social Security guaranteed to shrink instead of respond to inflation and grow with the cost of living.
- they want to take the single most bankable, predictable income stream that most Americans count on for retirement and turn it into a privatized market investment, which, as Adam Smith would tell you means one thing....an investment is a gamble that involves risk.
This makes no sense. And in the context of an economy where too many Americans have tied their mortgage...ie. their major source of net worth...to the repayment of their revolving debt (ie. their credit cards)...it's literally insane. The GOP plan would put the majority of Americans in a position where they could not really
plan for retirement...because their retirement accounts would be, like the Christian gospel describes...
a house built on sand.
Imagine a scenario where a retiree hits age 65 and the market tanks....for nine years. Further, imagine that the market tanking coincides with rapid inflation at some point during those nine years. At the same time, keep in mind that millions of Americans have rolled their credit card debt into their largest investment...their home mortgage...and that many of these Americans are committed to paying off that mortgage well into their retirement years.
The Republicans want us to gamble with our retirement. The GOP wants to take a "house built on rock" and move that house onto the sand. The President is so committed to his vision of a "program in crisis" that he cannot see that Social Security, as it stands, is the healthiest part of a majority of American's retirement plans. It is a system that works, has worked and will work if we run it properly. But to do so requires a committment to good stewardship of our government. That is something, friends, that the GOP is incapable of.
The GOP, quite simply, does not believe in good government because they don't believe in government at all. That is not simply a disaster in the making. It is, after the lessons learned by my Grandmother's generation...and the hard work they put into building the policies and government programs that flowed from those lessons...an abject crime.