A Social Security Strategy
to Preemptively Counter Bush's Attack
Executive Summary

A leaked White House memo reveals that the main aim of Bush's Social Security "reform" is to achieve "smaller government" by greatly reducing future SS benefits, and by using the phony specter of future SS bankruptcy (an "iceberg" collision) to scare workers into diverting their FICA contributions into complex and risky stock-market-based Personal Retirement Accounts (PRAs) -- just as they used the phony specter of Iraq WMDs to scare people into supporting the Iraq invasion.

This article argues that the best SS defense strategy is to "re-frame" the SS problem very differently, and spend minimum time and money attacking Bush's bankruptcy bogey and PRAs. It urges launching a powerful preemptive counter offensive based on the following real reforms.

1. Protect Social Security from Economic Mismanagement

The SS Trustees now make three 75-year projections, based on 6.5%, 5.5% and 4.5% unemployment. The 5.5% one -- the only one most people ever learn about -- is depleted ("goes bankrupt") in 2042, or 2052 by Congressional Budget Office (CBO) estimates. This provides a convenient straw man for the privatizers' iceberg specter. But there is a simple, fair and fiscally responsible way to melt this iceberg:

  1. Use the Trustees' 4.5% unemployment projection, which is financially sound for the full 75 years.  Its larger current surpluses (FICA income more than benefit payout) build up the Trust Fund enough that the resulting interest income (over 25% of total SS income by 2025) makes possible full financing of Baby Boom and later benefits without benefit cut or tax increase.
  2. Provide "SS unemployment insurance" to supplement any surplus less than the 4.5%-unemployment amount by a mandatory transfer from the non-SS budget.  Compared to Bush's huge Iraq War and tax cut deficits, and the huge privatizer-alleged SS "unfunded obligations," these replacements would be tiny (perhaps $5-7 billion a year) -- and would end entirely when we get our national unemployment rate back below 4.5%.

2. Improve Federal Budget Transparency

The CBO publishes a "standardized" version of the federal budget that estimates what the congressional-policy-determined main budget values would be with 5.2% unemployment, and calls the residual, economy-determined ("automatic stabilizer") budget component the "cyclical" deficit. It would help make both SS and the main budget more transparent if the CBO used the SS 4.5% unemployment rate to separate Bush's tax cut and Iraq war "Policy Deficits" from the recession-induced "HI-Unemployment Deficits." Then the SS surplus replenishments would become part of this HI-UE Deficit, along with personal unemployment benefits and other deficit-financed "recession-relief" payments -- where they would be easier to think about and deal with. This non-SS Twin-Deficit format is also very helpful in analyzing Bush's non-SS budget.

Pro-SS members of Congress should quickly introduce bills in both House and Senate, embodying these reforms, and hold widely publicized minority-party committee hearings on them. This could

Other, more in-depth, articles are in "Current Policy Issues -- Social Security."

Written: February 1, 2005
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