Mark Weisbrot says what no one at Bush’s summit did:
That’s right, according to Reform Plan 2 of the carefully misnamed “President’s Commission to Strengthen Social Security,” this partial privatization would mean a sizeable loss of benefits for most Americans. A 20-year-old just entering the labor force would lose 34 percent of his or her expected benefits under this plan. This would amount to almost $134,000 over a lifetime of retirement. They would have a chance to gain back, on average, about $47,000 of this from an individual account — provided the stock market doesn’t tank like it did from 2000-2002, just in time for their retirement. For the next poll, here is a more accurate question: would you like to see your Social Security retirement benefits cut by 34 percent, and have a chance at getting back a fraction of that from a private account? That’s for the young workers. The amount of the cuts decreases as you move up the age ladder, but the plan still provides a net loss for the vast majority of Americans.
How many people do you think would say yes to a deal like that? But that’s the deal that President Bush appears to be offering. His commission, which unlike other such bodies was stacked with people who favor privatization, came up with three plans. Mr. Bush hasn’t explicitly chosen one, but shortly after the November 2 election he indicated that he is talking about Reform Plan 2. Note to journalists covering this issue: let’s get the headline news up front. Big cuts to create private accounts, and for what? So that people can invest some of their Social Security taxes in a stock index fund? We already have a number of means by which people can take their earnings tax-free and put them in the stock market, such as Individual Retirement Accounts or 401 (k) accounts. Yet less than 5 percent of employees are taking full advantage of these opportunities.
Time for the Democrats to take Theda Skocpol’s advice:
Paint Republican privatization plans not as an attack on the elderly alone, but as an attack on all working Americans. “They are going to take the taxes everyone has contributed for years and use them to pay fees for Wall Street brokers.” “They are going to let richer people opt out of paying their fair share into Social Security–and make the system go broke very soon.” “They are going to break the promises long ago made to all of us who contribute to Social Security, take away the benefits we have built for our own retirement, as well as to take care of our parents and grandparents.” “Social Security works as a savings system for all of us together. We save efficiently that way. It leaves each of us free to save more if we can. But no one should have to give up their promised benefits so Republicans can pay off their rich friends.”