Earlier today, a diary on President Obama's attitudes towards Social Security made the Rec List and inspired much debate.
Regardless of whether you agree, in whole or in part, with the diarist's arguments, he's done us a signal service by inadvertently reminding us yet again of the ongoing, decades-old and extremely-well-funded efforts to destroy Social Security.
Paramount among these efforts is working to convince the American public that Social Security is doomed anyway -- so why not let the banksters take it over, eh?. Unfortunately, as evinced by one of the comments in the diarist's thread, this campaign has had a disturbing amount of success.
It's been known for decades by honest economists that Social Security will never run out of money unless it's sabotaged or if the US falls so far we drop back into the Stone Age. Here's the condensed scoop, as I stated it nearly a year ago:
We’ve been through this before, folks. Here’s the deal: The trustees’ long-range economic growth projections are so low-balled that were they actually to occur, Social Security would be the LEAST of our worries.
For example: Economic growth over the period of 1929 to 2004 — years that include the Great Depression — averaged 3.6%. It only takes a 2.7% average to keep SS fully funded forever. Yet the trustees, in order to achieve their sky-is-falling bullshit numbers, consistently project long-term growth rates of around 1.8%, which means they’re predicting Depression Forever — in which case we’d have much, much bigger things to worry about than SS. Such as total societal collapse and cannibalism.
Oh, and as for the recent Pete-Peterson-fueled scare stories about "Social Security running into the red"? Dean Baker debunks those rather neatly.
(By the way, here's an Atlantic Monthly article from July of 1998, nearly twelve years ago, to give you an idea of how long the anti-Social-Security forces have been telling us that it's about to collapse any day now. Dean Baker, the author of that article, has been working against the scaremeisters for quite a while; he helped write a book in 2001 demolishing their arguments, which are nearly identical to the ones being used today. The main difference? Whereas a decade ago the privatizers tried to pretend that the soon-to-disappear growth rates of the Clinton Boom would a) last forever and b) meant that privatized pensions would do better than Social Security, now they're arguing the exact opposite.)
Okay, so it's not going to run out of money. But it's still a drain on the Treasury, right? Wrong. In fact, Social Security was not only designed to pay for itself, it's been so good at it and put so much dough in the trust fund, that Bush used $170 billion of it to prop up his 2006 Federal budget -- even as he was pushing the lie that Social Security was in dire danger of going belly-up!
Ah, you say, but wouldn't private industry do a much better job, with less overhead? Again, nope. From a January 1. 2008 diary of mine:
Oh, and this doesn't even take into account that Social Security's overhead costs are less than 1%, whereas any privatized plan, such as those of the UK and Chile, will be nearly twenty times that (the UK's and Chile's plans average around 14% for overhead costs). Even Bush officials admitted that their privatization plan, even with big cuts in benefits, will have overhead costs ten times that of Social Security as it now stands. This is why the UK has been looking longingly at adopting a plan similar to our very own Social Security!
In short, they can have my Social Security when they pry it from my cold, dead fingers. Until then -- no way, buddy!
UPDATE: In the comments of my 01/01/08 diary, Roger Fox points out that the not-so-trusty Trustees don't count the current interest earned by the trust fund money as part of the SS Trust fund!
See how hard they have to fudge the numbers to get the Doomsday projections they and their Cato Institute buddies want?
UPDATE 2: The amount of bullcrap the privatizers have slung over the years is amazing. A recent trick of theirs is to conflate Medicare (which is in trouble — that’s why the privatizers want nothing to do with it) with Social Security (which is not).
Why is Social Security safe? Because as I've already mentioned, the sky-is-falling projections used by the Trustees are based on unrealistically gloomy economic forecasts (less than 2% per year forever), as if we were going into a permanent recession or depression. Again, the reality is thateven with long-term growth that averages below-par — 2.7% — Social Security never runs out of money. Ever.
But get this: In order to convince Americans to destroy Social Security and hand their pensions over to the brokerage firms, the privatizers were (at least until the Bush bubble finally burst) touting phenomenal rates of return on stock-market-based accounts of as much as 7% per year. These rates are possible only if the economy is growing at 1998-peak-boom-year levels every single year to the end of time, the same levels of growth that had Alan Greenspan applying the brakes with both feet whilst warning of "irrational exuberance". So the privatizers aren’t just arguing Permanent Recession — they’re also arguing Permanent Boom. At the same time!
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