Gutting the New Deal

Sometimes I really want to scream. I want to scream at all those hapless souls that voted for Bush. Really, sometimes I want to scream, "don't you get it, he doesn't care about you, he doesn't give a shit about most people. The only ones he is looking out for are the wealthy, the big corporations, the ones that made him and his family rich."

This morning he starts his dog and pony show designed as his first step to gut the New Deal. I know, I know, that isn't what he is saying; he can't just come out and say it. So instead of saying we will end Social Security as we know it for future generations, he has a "White House Conference on the Economy". It is all smoke and mirrors.

Edmund Andrews has been writing on this issue in the New York Times (I posted on one of his articles a day or two ago). On Tuesday in the Times we got BoBo and no Krugman but we did get Andrews telling us what more experts are saying about Bush's plan. While Bush has not made clear what his plan entails,

[M]ost of the Republican proposals would also reduce the role of Social Security as a source of guaranteed retirement income, slowly but surely.

The simplest cut is the one developed by Mr. Bush's advisory commission on Social Security in 2001. That proposal, which White House officials often cite as a model for how the system could be changed, would change the way future benefits are calculated.

Instead of setting benefits as a share of a person's pre-retirement wages - about 42 percent, for a middle-income worker today - the government would link future benefits to inflation.
But many analysts contend that the change could also leave future workers with a huge drop in income as soon as they retire and would erode a basic premise of the current old-age system.

Under today's law, a middle-income worker who retires in 2065 would be entitled to an annual Social Security benefit of $26,400, or about 40 percent of the worker's wages.

Under the proposed change, that same worker's benefit in 2065 would decrease by 40 percent to $14,600, about 22 percent of the wages. That prospect troubles many experts, including some conservatives.

That is drastic stuff folks, but that isn't all.

"What people are forgetting is why the system is there in the first place," said John Goodman, director of the National Center for Policy Analysis, a conservative research group that strongly supports private accounts. "The reason is that people don't want to reach retirement age and have their standard of living cut in half. If you use price-indexing, you won't be keeping up with your neighbors."

Critics of the administration contend that Mr. Bush is using the tangible allure of personal accounts to mask a profound reduction in the government's main safety net for the elderly.

"They are using smoke and mirrors in the sense that they are cutting taxes in the here and now and making cuts way off in the future," said Laurence J. Kotlikoff, a professor of economics at Boston University who has written extensively on the long-term financial problems of Social Security and Medicare. "What I see them doing is very gradually wiping out the old system, and putting something very minor in its place."

There is no free fix to this problem but there are fixes that would be less painful.

Democratic lawmakers say the problems in Social Security can be fixed with modest changes that would be phased in slowly. Lifting the ceiling on payroll taxes, which are capped when a person earns more than $87,900, would fill much of the gap. Pushing back the normal retirement age, which is already set to shift from 65 to 67, would reduce the deficit even more.

So what is this all about? What it should be about is making the system work for those about to retire, and those 40 years away. It is the deal we made. But Bush and his friends don't need Social Security, the money millionaires like him are entitled to when they hit retirement age is a drop in the bucket compared to his overall wealth. It is about lowering taxes, taking the money out of the government bank account so that there will be a corresponding drop in spending. Period. So don't let anyone tell you he gives a shit about the safety net created for aging Americans. It isn't about saving Social Security, it isn't about protecting our retired, or the promise of the same for future generations. The message he is sending is good luck, you are now on your own. The New Deal compact between those of us that now pay to support it and those in their retirement years is on life support. If Bush has his way, the system we now support will not be there in any way, shape, or form familiar to anyone reading this post.

Now I need to go scream.