We Can't Afford to Privatize Social Security

Bumped up from the forums by Jeff.

Voters of all ages face a critical decision in November, namely, which candidate, Barack Obama or John McCain, will best protect Social Security.

Like many Republicans, Senator McCain has supported President Bush’s proposal for partial privatization. This would allow workers to invest as much as a third of their payroll contribution into stocks and bonds. Creating these accounts would cost at least a trillion dollars.

How could we pay for this? One way would be to divert funds from the Social Security Trust Fund, but this would accelerate the fund’s depletion and require huge reductions in benefits to future (and perhaps current) retirees. Another approach would be to borrow the funds from general revenues, which would explode the deficit and pass on a huge burden to future generations.

Beyond this, do we really want to trust the well-being of future generations to the market? Partial privatization could have a particularly adverse impact on young people, women, and individuals with disabilities, and it does nothing to address the projected shortfall.

Although Senator McCain has said he opposes privatization, the facts suggest otherwise. In March Senator McCain stated that he supports “’private savings accounts…along the lines that President Bush proposed’" (http://www.nytimes.com/interactive/2008/06/17/us/politics/20080617_POLIC...). He has described Social Security’s funding mechanism as an “’absolute disgrace’” (http://articles.latimes.com/2008/jul/14/nation/na-mccainsocial14). In September, McCain defended “his support for privately investing Social Security money in the same markets that had tanked earlier in the week” (http://www.usatoday.com/news/politics/2008-09-19-2130607207_x.htm).

Ironically, partial privatization is unnecessary and counterproductive. According to the Social Security Trustees, including several members of President Bush’s cabinet, Social Security is solvent through 2041; after that, the government will still take in enough to meet 75-78 percent of its obligations. The question is how we should close this relatively modest gap. Partial privatization would greatly widen the gap, making huge benefit cuts inevitable

In contrast with Senator McCain, Senator Obama opposes privatization in any form. He is also against efforts to cut benefits or increase the retirement age. He advocates working with legislators from both parties to develop a bipartisan solution. To meet the shortfall, he would ask those earning more than $250,000 “to contribute a bit more to Social Security to keep it sound.”

It might seem that, in light of our economic meltdown, and the precipitous fall of the stock market, advocates of privatization would throw in the towel. Unfortunately, this is wishful thinking (http://finance.yahoo.com/focus-retirement/article/105914/This-Corpse-Has...). To ensure the defeat of privatization, we need to elect Barack Obama president and return a Democratic Congress.

Social Security is a compact among generations. It reflects the recognition that we are a community and all in the same boat. Social Security helps young people (through survivors’ benefits), individuals with disabilities, and of course older adults. It is the basis of our social fabric and we tamper with it at our peril. Partial privatization is a risky, untested scheme. In November, we should make clear our opposition to it and any politician who supports it.