In making President Bush its "Person of the Year,"
Time gushed that he
had successfully "reframed reality to match his
design." Ponder that phrase.
A cynic might think it a backhanded way of calling
him a particularly
accomplished liar. Indeed, Bush prevailed in
November largely because
many Americans simply cannot believe that their
president would deliberately
mislead them about matters of life and death.
Consider, however, Bush’s
doomsday pronouncements about the impending bankruptcy
of Social Security.
They’re sheer fiction, contrived to conceal this
administration’s own fiscal
recklessness—the combination of tax cuts for
the wealthy and runaway
spending that has increased federal outlays some
29 percent since his 2001
inauguration. After pledging during the 2000
campaign to set aside $2.6 trillion of
the projected surplus in a Social Security "lockbox,"
Bush has, instead, produced
swelling deficits. Now he promises strict "fiscal
discipline." Do not hold your breath.
Here’s the real problem: Over the past two decades,
ever since a commission led
by Alan Greenspan convinced the Reagan administration
to raise payroll taxes to
fund the retirement of the so called Baby Boom
generation, Republican and
Democratic administrations alike have "borrowed"
the proceeds to finance the
year-to-year operations of the U.S. government.
Instead of cash reserves, the
Social Security Trust Fund, roughly $1.5 trillion
to date, consists of "special issue"
Treasury bonds pledging repayment with interest
whenever the money is needed
to pay Social Security benefits.
Under current projections, that’s supposed to
start happening in 2018, when the
excess payroll taxes paid by Baby Boomers over
35 years to fund their own
retirement will be needed. By then, the trust
fund should be worth approximately
$3 trillion—enough to keep the system solvent
for at least another 30 years with
no benefit adjustments whatsoever.
But here’s the problem, according to Allen W.
Smith, author of "The Looting of
Social Security":" Instead of investing the Social
Security surpluses in regular
marketable Treasury bonds that could be cashed
in whenever additional money
was needed for benefits, the government simply
spent the money, leaving nothing
to invest. The government IOUs held by the trust
fund are not at all like regular
marketable Treasury bonds.... [T] hey are nothing
more than accounting entries
that tell us how much the government owes to
the Social Security fund. They
couldn’t be sold to private investors even at
a penny on the dollar because they
have absolutely no cash value. "
Explaining the need for Bush’s proposed" reforms,
"White House spokesman
Dan Bartlett recently put it this way:" After
2018, the system goes from the black
to the red. We have payments going out that we
can’t afford to make. "
Americans have grown used to hearing such pronouncements
from authoritative
-sounding" experts" from tycoon-funded, right-wing
Washington "think tanks"
such as the American Enterprise Institute, the
Heritage Foundation and the Cato
Institute. Indeed, so many have come to believe
them, the Los Angeles Times
reports, that a "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."
But here’s what Bartlett, Bush and the think-tank
spokesmen actually mean when
they say Social Security’s going broke: They
mean that the trust fund has been
looted fair and square, that everybody who’s
been paying those increased payroll
taxes since 1983 has been successfully swindled
and that the U.S. government
need not honor those special issue Treasury bonds.
As Smith writes, it’s a financial
"crime against the American public that makes
Enron pale in comparison."
You may be interested to learn, courtesy of David
Sarasohn of The
Oregonian, that each and every special-issue
bond in the Social Security
Trust Fund bears the following inscription: "The
bond is supported by
the full faith and credit of the United States,
and the United States is
pledged to the payment of the bond with respect
to both principal and
interest." Under our brave, new Republican dispensation,
the "full faith
and credit of the United States" could prove
a meaningless phrase.
Treasury bonds held by Richard Mellon Scaife,
Japanese banks and the
Chinese government must, of course, be honored,
lest the international
monetary system be plunged into chaos. But it’s
OK to drain Social
Security to pay for Bush’s multimillionaire tax
cuts instead of honoring
solemn obligations made to generations of defrauded
American workers and
their families. Privatization, then, is partly
an elaborate shell game
to distract public attention, partly a utopian
scheme dreamed up by the
same geniuses who gave us the Laffer Curve, S&L
reform and the "Dow
36,000" among other economically destructive
"free-market" fantasies.
As for the deluded peasants whose future has
been stolen, they simply
made a sucker’s bet and have only themselves
to blame.
• Free-lance columnist Gene Lyons is a Little
Rock author and recipient
of the National Magazine Award.