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February 4, 2005
Rep. James McCrery (R-LA), chairman of the House Ways and Means Subcommittee on Social Security, admitted yesterday that diverting money from the Social Security trust fund into private accounts will undermine the program. "That is true on its face. It does decrease the level of the fund," he stated. McCrery's statements come on top of those by an "anonymous" senior White House official who candidly admitted that the president's privatization scheme "would do nothing to solve the system's long-term financial problems," according to the LA Times.
- This isn't a plan to save Social Security; it's a plan to replace Social Security. By definition, the president's plan for private accounts entails the undermining of the system. Shifting money out of the trust fund to pay for private accounts, while borrowing trillions of dollars to pay promised benefits, does nothing to ensure solvency and will accelerate the program's financial strains. Privatization does nothing to "save and strengthen Social Security."
- The president's assumption of high rates of return for private accounts assumes overall economic growth sufficient to keep Social Security solvent for decades. As Paul Krugman rightly points out, the estimates on the rate of returns pushed by the president assume a rate of growth in the economy that would "yield a bonanza of payroll tax revenue that will keep the current system sound for generations to come… [A]ny growth projection that would permit the stock returns the privatizers need to make their schemes work would put Social Security solidly in the black."
- Younger workers will lose more than they gain under privatization. Younger workers beware – any potential increases in private savings will be more than offset by the higher taxes you will certainly have to pay to cover Bush's $2 trillion borrowing to fund his privatization plan.
Daily Talking Points is a product of the American Progress Action Fund.
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Daily Talking Points is a product of the American Progress Action Fund. |
