OP - The Social Security Problem Does Not Require a Privatization “Solution”

My grandparents do not closely follow the national political scene, so when I was recently visiting them, they asked me which candidate I preferred in our home district, NY-23’s, upcoming congressional race. When I told them I supported Bill Owens, a centrist Democrat, I secured Owens two more votes by merely mentioning his opponent’s desires to privatize Social Security—a program from which they receive a monthly check.

Matt Doheny, a self-identified conservative, has, on multiple occasions, publicly questioned the solvency of government-run Social Security—a program he called the “worst, worst, worst investment you can ever make” in August. Of course, Doheny, after defeating conservative primary opponent Doug Hoffman, now realizes he must play to the center, not the far right, in the general election against the much more moderate Owens. Therefore, Doheny suddenly opposes the privatization of the program.

Doheny’s wishes strike a common chord within the Republican Party. In 2005, with a majority in both chambers of Congress, the Bush Administration sought to partially privatize the world’s largest government program into personal investment accounts. This initiative was quickly shot down on a bipartisan basis, citing widespread disapproval among elderly constituents—those counting on Social Security benefits to live healthily in retirement.

Imagine if Bush’s plan for Social Security had been enacted into law. Millions, if not billions, of dollars would have been invested into a financial structure that was a few years removed from utter collapse, and future retirees would have lost any hope of an adequate post-work life. This goes without mentioning the transfer costs of setting up privatized accounts, where retirees would receive less benefits, and Wall Street managers would pocket even more working-class dollars. Instead of a simple system where benefits are paid directly by the government to the workers, enrollees would have to go through investors and other bureaucrats, wasting hard-earned money on unnecessary administrative costs.

Earlier this year, Wisconsin Representative Paul Ryan, capitalizing on tea party fervor, proposed his “Roadmap for America’s Future.” This budgetary plan included a proposal to give workers under the age of 55 the option to invest a third of what they would otherwise pay in Social Security taxes into private investment accounts. To help pay for the program’s initiation, Ryan also proposed cuts in benefits for future enrollees. This plan illustrates that the Republican Party cares more about fattening the wallets of corporate executives who donate billions to their campaign coffers than the average, working Americans they are elected to represent.

If the Republicans win control of the House in the upcoming midterm elections, which seems inevitable at this point, Ryan, who is also currently serving on the president’s deficit commission, will become chair of the budget committee. Ryan’s roadmap had only attracted 13 congressional sponsors as of September, and future Speaker of the House John Boehner was not one of them. However, as the party continues to move to the right to appease and accompany the tea party, this policy will only gain support.

Senate hopefuls and tea party darlings Joe Miller, Rand Paul, Marco Rubio, and Sharron Angle have all at one point supported the privatization of Social Security. Sadly, all four of these candidates are favored to win their respective races. It’s almost as if hardcore conservatives want to wipe out the government one stroke at a time, rendering it quite ironic that they’re running for public office.

Luckily for sane Americans, these conservatives are a minority. A recent poll of 1,202 adults nationwide conducted by the Kaiser Family Foundation found that 44 percent of respondents trusted the Democrats to better handle Social Security, whereas only 29 percent gave the edge to the Republicans. Furthermore, in a March Bloomberg Poll, 34 percent of respondents strongly disagreed with the privatization of Social Security or Medicare, and another 25 percent mostly disagreed.

With that said, members of both parties recognize that, as baby boomers near the enrollment age for Social Security, the program must be reformed. When the plan was enacted in 1935 as the core framework of President Franklin Roosevelt’s New Deal, there were approximately 42 workers for every retiree, but today there are about three workers for each retiree. With advances in health care and a generally improved society, life expectancy continues to increase, as well.

Thus, most estimates show that by 2016, the government will be paying out more in benefits than it’s collecting in payroll taxes, both by employers and employees. At this point, the system will have to use money from the Social Security Trust Fund, which consists of Treasury Bonds that essentially amount to government i.o.u.’s. These will be exhausted by 2037, at which point incoming taxes will no longer cover the prescribed benefits.

Currently, workers can retire at the age of 62 and receive reduced benefits, or they can wait until 65 and receive full benefits. Since 2003, though, the full retirement age has been gradually easing up to 67 for workers born in 1960 or later. Over 90 percent of retirees receive Social Security benefits each month.

To continue this program, politicians will either have to raise the retirement age, cut benefits, or raise taxes, as politically unpopular as it may be. A September USA Today/Gallup poll found that more respondents preferred raising taxes (42 percent) than cutting benefits (31 percent) as the solution.

Although raising taxes may not be politically viable, it may be the only way to preserve one of the most successful government programs in American history, regardless of what the anti-intellectual deficit hawks may believe.

According to studies done by the Social Security Administration, two-thirds of retirees count on Social Security benefits as their major income source, and the remaining third sees it as their only income. If conservatives really cared about the elderly, they wouldn’t want to toy with such an integral program—one that proves that the government does indeed possess some form of competency.