Fighting For Social Security

The Alliance for Retired Americans thinks that Florida Congressman Allen Boyd's endorsement of social security privatization is wildly irresponsible. I'd agree with that assessment, but how to back it up?

Social Security isn't the most interesting topic to anyone who isn't on it (amazing how much more fascinating it becomes when people retire), but Americans have grown up for a long time now to expect it to be there for them when the day comes. I remember the first time I got a Social Security statement outlining my expected benefits at some point in the distant future based on my payroll taxes to date. I thought, 'cool, I've got a pension.' A little bit extra to make sure my family would never end up footing the whole bill for my advanced old age, even if everything goes wrong between now and retirement. It was comforting.

That little bit of comfort, however, is about to be wiped away if the Republican leadership gets to add private accounts to the system. I also remember being glad after my California dotcom employer went belly-up that I'd put my savings in my savings account instead of following my friends onto one the ubiquitous e-trading services. Several of them ended up completely wiped out, most of them lost their proverbial shirts compared to their original investments, while I walked away with a savings account that saw me through a very lean couple of years. I attribute this not to savvy on my part, but to a healthy respect for my own ignorance.

I knew I didn't know enough about investing to get into the game, and at the time, I was too busy to spend enough time learning about it properly. In terms of outcome, I didn't end up wildly well off which I might have done if I were a very smart investor, but neither did I end up destitute which I might have done if I were the type of investor that the vast majority of people seem to be. For me, with my lack of stockmarket know-how, not being destitute is a reasonable outcome. Considering that the most likely outcome for retirees anywhere in the world without a social safety net is, in fact, destitution, the guarantee of a minimum standard that mostly keeps retirees warm, dry, and fed is a better outcome than the majority of people would be able to get on their own.

Or to sum up: Social Security is a tax we pay to keep our collective grandparents from starving in the streets.

But getting back to backing up support for Social Security, different arguments work better for different situations. I have the luxury of an easily persuadable audience here, but that isn't always the case when we go talk to people out in the Big Room. So to help me help you to make this argument, I yield the floor:

As to the importance of making our case, Digby explains how the parties developed their 'hard' and 'soft' images, and then outlines exactly how to fight for what you want when you're out of power. He then reminds us that people have been hearing that Republicans want to destroy Social Security for far longer than they've been hearing about any so-called crisis.

Nathan Newman explains that future wage increases would offset future benefit increases, particularly if they were accompanied by raising the $87K cutoff on the payroll tax. Speaking of which, remind people loudly and often that payroll tax only applies to income below that ceiling, while at the same time applying to incomes that fall below the minimum threshold for federal income tax.

Max Sawicky says that buying into the argument of permanent shortfall is a loser from the get go, why it doesn't make sense to borrow now to cover possible expenses 40 years from now, and how Clinton era congressional Democrats held the line against benefit cuts by leveraging Republicans' fear of standing for re-election against people who had opposed benefit cuts.

The DCCC blog seems to get it, pointing out an article on a stalwart longtime defender of Social Security, and that Democrats are starting to get with the message that there is no crisis. They also note that Democratic goodwill is running low for talks with the White House on Social security, but I have to wonder what exactly Bush has to do before elected Democrats realize that the goodwill in question is entirely unrequited?

Seeing the Forest on how sloppy journalism perpetuates the myth that Social Security is in crisis.

ThreeHegemons describes what privatizing their national pension plan did to Argentina. The NY Times' economist Paul Krugman elaborates further on where the money goes when you privatize, also going back to the Argentine example. From Krugman:

...Once you realize that privatization really means government borrowing to speculate on stocks, it doesn't sound too responsible, does it? But the details make it considerably worse.

First, financial markets would, correctly, treat the reality of huge deficits today as a much more important indicator of the government's fiscal health than the mere promise that government could save money by cutting benefits in the distant future.

After all, a government bond is a legally binding promise to pay, while a benefits formula that supposedly cuts costs 40 years from now is nothing more than a suggestion to future Congresses. Social Security rules aren't immutable: in the past, Congress has changed things like the retirement age and the tax treatment of benefits. If a privatization plan passed in 2005 called for steep benefit cuts in 2045, what are the odds that those cuts would really happen?

Second, a system of personal accounts, even though it would mainly be an indirect way for the government to speculate in the stock market, would pay huge brokerage fees. Of course, from Wall Street's point of view that's a benefit, not a cost. ...

Kevin Drum echoes Matt Yglesias in explaining how vitally important it is to make it clear that there is no Social Security crisis, something you probably didn't realize that you already know. President Bush, meanwhile, doesn't want to talk about it.

Matt's argument:

...I'm not sure the older liberals who run the show quite understand how overwhelmingly important it is to keep the "there is no crisis" message front and center in the Social Security debate. Most of the young people I know -- including myself until very recently -- have been taken in by a decades-long effort on behalf of privatizers into believing that Social Security is in "crisis," and that if we do nothing the system will "go bankrupt" before we retire, meaning that the system will somehow collapse and we won't get any benefits.

If you approach the issue from inside that frame, then no amount of cavailing about benefit cuts or "risky" stock market transactions is going to get you anywhere. A smaller benefits package and a stock portfolio that may or may not pay off looks like a really good deal compared to a bankrupt pension plan that gives you nothing. Once you understand that even if we do nothing whatsoever to fix Social Security and the Trustees' overly pessimistic predictions come true, the system will still have enough money to pay my generation more in real terms then current retirees get, everything looks different. Bush is offering us a guarantee of lower benefits and $2 trillion in debt to forestall the possibility that benefits will need to be lowered sometime in the 2040s. That's a terrible deal in a straightforward way. But only if you try and see the truth: There is no crisis. If you can't make people see that, everything else becomes pretty irrelevant.

Have you ever believed that Social Security was already in such a crisis that you'd never get anything from it anyway? I know I used to. Realizing that makes it easy to understand how important it is to counter this, though maybe you still need convincing that you aren't alone in having fallen prey to disinformation.

From the article above that the DCCC blog pointed to:

The result: Polls show that huge majorities of Americans lack confidence that Social Security will meet their needs in retirement. An often-cited 1994 survey found that more people between the ages of 18 and 34 believed in UFOs than believed Social Security would exist by the time they retired. ...

If you're feeling sufficiently motivated by now, contact Allen Boyd, and maybe explain to his staff why you wish he wouldn't go along with selling out our future retirement safety net. (D-FL) DC: (202) 225-5235, Tallahassee (850) 561-3979, Panama City: (850) 785-0812 (Thanks to Atrios for highlighting Boyd's role in whitewashing this.)