Tuesday, January 04, 2005

Bush's Con on Social Security: Cut Benefits and Roll the Die

January 4, 2005

Preliminary details of President Bush's plan to dismantle Social Security emerged yesterday, and the early indications confirm the worse. Rather than finding a sensible way to ensure Social Security's solvency, the White House is proposing to cut benefits for retirees by one third over the next decade, forcing Americans to gamble for the rest of their retirement income in the volatile stock market.

  • Your Social Security benefits will be cut under President Bush's privatization scheme. The White House is currently floating the idea of "price indexing" of Social Security benefits—shifting the calculation of benefits from what you earn to annual inflation rates. "It's like saying elderly people today should live at a 1940 standard of living," said Robert Greenstein, executive director of the Center for Budget and Policy Priorities. What does this mean for you? The Washington Post reports, that "a retiree in 2075 would receive 54 percent of the benefit now promised."

  • With Social Security benefits cut, you will be forced to make up the difference on your own. The White House wants you to believe that the "miracle" of private accounts will magically make up the retirement money lost from your soon-to-be cut Social Security benefits. But analysis by MIT professor Peter Diamond and Brookings economist Peter Orszag shows (based on figures from the Social Security actuaries) that average life time earners retiring in 2075 can expect to make up less than half of the cut to their Social Security benefits through private accounts.

  • Bush's privatization plan is nothing more than a con: "Let me have twenty bucks, give you ten in return, and you can make up the difference and possibly more at the track." Social Security is the most successful social program in U.S. history. It has led millions of elderly Americans out of poverty and has protected the disabled and orphans. President Bush—the same president who squandered a $5 trillion budget surplus to provide tax cuts for the wealthy—now wants you to give it all up for a hit-or-miss private account. Americans would be wise to avoid this con.

  • Daily Talking Points is a product of the American Progress Action Fund.


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