Bush's Social Security Plan Makes Retirement Less Secure
By PAI
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Related stories: Social security
By PAI, ILCA Associate Member
From ILCA
WASHINGTON (PAI)--GOP President George W. Bush's partial Social Security privatization plan makes retirement less secure while opening retireees' payments to hazards of "Enronization," AFL-CIO President John J. Sweeney says.
In a long, detailed analysis of Bush's privatization scheme, Sweeney also noted the president wants his "private investment accounts" to return only money people would expect above their regular Social Security payments.
"Americans deserve the Social Security benefits we have paid for and we will not accept a privatization plan that makes retirement less secure," Sweeney stated.
"And we will not accept the notion that keeping our elderly out of poverty is not 'fiscally sustainable' while tax breaks for millionaires are," he added.
Bush did not mention the cost of Social Security privatization. His plan would divert one-sixth of the system's payroll tax revenues into the private accounts, starting in 2009.
In his post-election news conference, Bush also said he wanted to convert the nation's universal Social Security pension system from a traditional pension plan to a 401(k)-like "defined contribution plan," such as many corporations now have.
Independent economists and some lawmakers say conversion would cost $2 trillion over a decade for "transition costs" to pay current and pending retirees, even as Social Security's revenue drops. Economists add Bush's tax cuts for the rich cost $1.9 trillion over that time.
"Last night Bush may have been fuzzy about his plans for Social Security," Sweeney said. "But he made clear that when he talks about fiscal discipline, he means disciplining working families and the most vulnerable" to "benefit the very rich. When he talks about an 'ownership' society, he means a 'You're on your ownership' society."
The AFL-CIO has joined a broad-based coalition to fight Bush's privatization scheme, which the president took on the road just after his Feb. 2 speech. But the federation and its partners also plan to draft alternatives to cure Social Security's future ills, which will not start for years.
Those alternatives will provide "common-sense fixes" for Social Security for present and future retirees and for younger workers, Sweeney promised.
But Sweeney spent more of his analysis on faults of Bush's plan. His data were taken from White House background fact sheets and papers. "Here's what we didn't hear," Sweeney said:
Privatizing Social Security would cut guaranteed benefits by 30 percent even for those who do not choose privatized accounts. Workers who choose to open the accounts would get back 50 cents for every dollar in them, "on top of the 30 percent cut in guaranteed benefits."
The average worker who lives 20 years beyond retirement would see a $152,000 cut in guaranteed Social Security benefits. "Privatization would push many more seniors into poverty."
"Privatization would hurt the economy and explode the deficit, passing $2 trillion in debt to our children in the first decade alone. Most of that money would be borrowed from foreign bankers in China and Japan," Sweeney said.
"Privatization would open Social Security up to corruption, waste and Enronization because politicians would hand-pick which Wall Street investment companies could make billions off our privatized accounts."
A study by the very conservative University of Chicago Business School calculated that Wall Streeters would earn $940 billion in commissions off the privatized Social Security accounts. Bush said in his speech that "we'll make sure your earnings are not eaten up by hidden Wall Street fees," but he didn't say how he would achieve that goal.
"Decisions about Americans' retirement security should be based on what's best for average people, not tied to politicians' wealthy friends or companies that have political influence," Sweeney said.
"When the president talks to America about something as serious as working families' retirement security, we need to hear sound facts and straight talk. But that's not what we heard from President Bush," he declared.
