Lawmakers see problems with Social Security privatization

Members of Congress who spent Feb. 21-25 back home meeting with constituents heard an earful about President Bush’s plans to privatize Social Security.

Most Democrats held forums specifically on the subject of Social Security, while Republicans, like Eastern Oregon Congressman Greg Walden, tended to sidestep the issue. Walden focused his “town hall” meetings on measures to combat methamphetamine addiction.

Asking Oregonians what they think about Social Security privatization, Senator Ron Wyden held town hall meetings in Bend, Medford and Portland. He also met with union members at a Feb. 25 breakfast meeting.

Wyden’s Portland town hall, held Feb. 22, featured a panel that included Oregon AFL-CIO President Tim Nesbitt, as well as representatives from the American Association of Retired Persons (AARP); a disability rights group; and the pro-privatization Cascade Policy Institute.

Steve Buckstein of Cascade Policy Institute compared Social Security to the Titanic, the biggest cruise ship of its day. “Social Security is the biggest government program of our day,” Buckstein said, “and its crew sees a financial iceberg coming.”

Nesbitt responded, if you’re headed for an iceberg, you want to stay calm, not abandon ship. “Private accounts are a system of everyone for himself, where what you own is what you get.” He also dismissed what he called “trash talk” about the bonds held by the Social Security Trust Fund — “a solemn obligation to America’s workers.”

On Feb. 25, more than 100 union members attended a Portland breakfast with Wyden that organizers said was the best-attended ever.

Wyden made his position clear right away: “I will never support taking safe Social Security dollars and turning them over to Wall Street equity traders so they can get another house in the Hamptons.”

“Do you want to tear up the safety net and replace it with Russian roulette?” Wyden asked. “There’s no way to get to privatization without massive borrowing or massive benefit cuts.”

Wyden said he could support other measures to encourage private saving for retirement, and said he questions whether rich people like Donald Trump should collect Social Security checks.

Congressman David Wu told constituents at a Feb. 25 town hall that he is “utterly opposed” to Social Security privatization because every such proposal involves cutting guaranteed benefits and/or borrowing enormous sums of new money. Wu said Social Security needs to remain the “secure” part of Americans’ retirement, which should also include private pension funds and individual savings.

“Investments should be laid on top of Social Security, not sliced out of it,” Wu said.

At a Feb. 26 forum on Social Security, Representative Earl Blumenauer shared the stage with Mark Weisbrot, co-director of the Center for Economic and Policy Research, an economic think-tank in Washington, D.C., that opposes privatization.

Blumenauer contested Bush’s claim that his proposal won’t change Social Security for workers over 55. Under the change to “price indexing” — part of the Bush plan — Social Security benefits would grow at a slower rate, amounting to a cut in benefits from what participants over 55 can now expect.

Blumenauer said he advocates making the rich pay the same Social Security tax as everyone else. Right now, the 6 percent of Americans with the highest earned incomes pay no Social Security tax on the portion of their income above $90,000 a year.

Weisbrot, an economist, took issue with the assumptions in the Social Security Trustees report, which the president’s backers have used as evidence in support of privatization.

The predicted shortfall in future Social Security revenues rests on a pessimistic prediction of economic growth, Weisbrot said. But if those predictions come true, then private accounts wouldn’t outperform Social Security, because in the long term, stock prices can’t grow faster than the underlying economy they are linked to. So either the economy will do poorly and stocks won’t be a better investment than Social Security, or the economy will do well and Social Security won’t end up having a shortfall. “You can’t have it both ways,” he said.