Social Security Reform: Feared by liberal groups
Simple arithmetic forces politicians on both sides of the aisle to agree on one point: In 13 years, the Social Security System will be paying out more in benefits than it will be receiving in Social Security taxes. Less agreement is to be found as to when Social Security can only pay out between 70- to 75-percent of currently promised benefits. Most likely, in the year 2042.
Left to its own devices, no Congress -- be it Democrat- or Republican-controlled -- will lift a finger to avert the coming Social Security crisis, either for 2018 or 2042. But if the general public recognizes the inevitable weakening and even possible collapse of Social Security, then the Congress will be forced to fix the system before it becomes even more of a mess.
At some point, the general public will be horrified to learn that the money in the Social Security Trust Fund has been “borrowed” by Congress to pay for current government programs. This began during the 40 years of Democrat reign over both houses of Congress, and the Republicans, in their brief Congressional reign since 1992, have continued the practice.
If the Social Security Trust Fund was in a bank vault you could go visit, you would find a huge room filled with IOUs from the Congress promising to pay back the dollars the Congress has borrowed -- someday. Just enough tax dollars are brought in to the vault each day to pay the current scheduled of benefits to eligible recipients. Again, in 13 years, out-go will exceed income.
When the facts are so obvious, one would think everyone would be clamoring for a fix, and now. Well, federal workers have enjoyed their own fix for some time in the form of their Thrift Savings Plan that allows them to invest up to $12,000 each year in tax-advantaged savings.
But other powerful vested interests do not want Americans under age 55 to be able to participate in the private savings accounts that would start Social Security along the road to fiscal health. For example, the AARP and the labor unions are fierce opponents of allowing Social Security tax-payers to invest up to 4-percent of their Social Security taxes in private savings accounts. Why? Because they fear competition.
To its 35 million members, AARP offers 38 different investment funds. Off each AARP member investment, AARP skims a percentage that goes into AAPR’s coffers. The AFL-CIO, the Teamsters’ Union and the American Federation of State, County and Municipal Employees offer similar investment packages from which they skim off a percentage. Even so, all of these groups contend that the President’ plan for private savings accounts would be too risky, too much of a gamble.
Greed on the part of the Labor Unions and AAPR, while lamentable, is understandable. But the larger anti-Social Security reform picture is a bit more complex.
Essentially, it is the on-going struggle between individualism and socialism. Make no mistake; Social Security is a pure form of socialism in that it transfers a portion of the income of current workers to the income of those who have retired from the workforce. In case you slept through Government 101, redistribution of wealth is the hallmark of socialism. As Hillary Clinton told a California audience last summer, “We’re going to take some things away from you for the common good.”
The Democrats, who created Social Security in 1935, want the system to retain its socialist, wealth-redistribution purity. They fear a wealth-creating component within the system would awake an entrepreneurial spirit among the masses and make them less dependent upon government programs, in general. Moreover, the masses might figure out that Social Security is a lousy investment, and want to scrap the system altogether.
When asked why Democrats fear private savings accounts, the late, Democrat Senator Daniel Patrick Moynihan said, “It’s because Democrats worry that wealth will turn Democrats into Republicans.”
William Hamilton, a syndicated columnist, a featured commentator for USA Today and self-described “recovering lawyer and philosopher,” is the co-author of The Grand Conspiracy and The Panama Conspiracy – two thrillers about terrorism directed against the United States.
©2005. William Hamilton.