Social Security, the Stock Market, and the Elections
Social Security was the crowning achievement of Roosevelt's New Deal. It has been the most successful and still remains the most popular of all U.S. government programs. More than a pension program, Social Security provides for workers and their families in the case of early death and disability, in addition to retirement. In 1997, it provided about twelve trillion dollars worth of life insurance alone, more than that of the entire private life-insurance industry. Furthermore, it does all of this in the form of social insurance, in which the distribution and the amount of benefits provided are determined by family relationships and basic economic rights--factors that private insurance and pension plans ignore. Nearly one-fifth of the elderly in the United States rely on Social Security as virtually their sole source of income, while two-thirds of all recipients depend on it for at least half of their income. Almost half of all white seniors would be classified as poor without their Social Security benefits; nearly half of all black and Latino elderly depend on it for 90 percent or more of their income (Business Week, June 26, 2000, p.34). For many years it was drummed into the heads of the working population that their Social Security benefits were sacrosanct; they had paid for them and they were owed them. Beware the politician who attempted to take them away.
Yet, in what is surely the most momentous development in the current presidential elections, Social Security is being presented as a system that is on its last legs, as a bad investment deal for individuals--supposedly justifying its privatization. In Republican presidential candidate George W. Bush's plan, the first decisive steps would be taken toward Social Security's privatization, with 2 percentage points of the Social Security payroll tax (16 percent of what the worker and his/her employer are taxed) being diverted to individual retirement accounts to be managed by private investment firms. This would mean that Social Security would lose an estimated trillion dollars in revenue in the first decade after the institution of the Bush plan, preparing the way for drastic curtailments of benefits and the further dismantlement/privatization of the system (Wall Street Journal, July 28, 2000). True, Bush claims that there would be no immediate cutbacks in benefits to present Social Security recipients. But the Bush proposal would leave Social Security permanently lacking a substantial portion of its revenues and therefore would create a severe long-term crisis for the system--as long as it continues to be treated as a self-supporting entity, to be funded entirely out of its own payroll tax revenue. The logic of Bush's approach is therefore aimed at reducing future benefits for today's workers and promoting the system's complete privatization.
The plan that Democratic presidential candidate Al Gore has presented to counter the Bush plan would establish government-subsidized investment accounts for working people that would consist of individual savings with matching income-tax credits, costing the federal government two hundred billion dollars in lost revenue over the next decade (New York Times, June 25, 2000). These accounts would not divert funds from Social Security--and are designed to counteract the greed factor in Bush's plan while protecting Social Security. Gore proposes to pay off the national debt with the current Treasury surpluses and then use the savings on interest payments on the debt to shore up Social Security. Nevertheless, leading Democrats in the Clinton era have increasingly bought the idea of Social Security privatization. Among its most vociferous advocates in Congress has been Gore's Vice Presidential running mate, Joseph Lieberman, Chairman of the Democratic Leadership Council. (Although he changed his tune the moment he was added to the Democratic ticket.) Under the Democrats, too, then, the future of Social Security is far from secure. …