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Ruminations: Destroying Social Security
By this time, it should be clear to all that the Bush social security plan is to destroy social security. After all, that's what the Republicans have tried to do since FDR introduced this people's pension plan as one answer to the Republican-induced depression of the thirties. They have always called Social Security a Ponzi scheme in which the imbalance between those receiving the benefits and those paying for the benefits grows. However, this built-in problem has always been resolved by keeping with the spirit of the program but tweaking the benefits, the caps, and the age of eligibility, but taking care that it remain universal. There's no reason to believe this method of correction is no longer viable. But Republicans rightly figure that this perfect wave of political dominance-- control over all three branches of government and a growing control of the mainstream media-- offers the best possible time to destroy social security once and for all.

But even the American people, who supposedly were dumb enough to vote Bush back into office after four years of being screwed, aren't dumb enough to throw away social security on behalf of the stock market. So Bush realizes he'll just have to take social security away from them. He plans to go about it by changing the program from a pension plan into a welfare plan, thereby cutting into the universal support that the system presently enjoys. This will be done by calculating returns on the basis of price indexing rather than wage indexing, creating more poverty and driving some into gambling on investment accounts, and cutting the benefits of the middle-class (progressive indexing). The benefits of high-earners will be cut as well, but Bush will offset their pain by keeping the social security paycheck deduction capped at $90,000. Here's how Bush's plan to destroy Social Scurity is described in today's New York Times:

"It is by no means clear that Mr. Bush's plan will be judged on his terms, as a way to ensure the long-term survival of a popular program in the face of daunting demographic challenges. Democrats are already painting it as something quite different: a big step toward dismantling Social Security as we know it.

The change Mr. Bush is embracing would by itself take care of around 70 percent of Social Security's projected long-term financial problems. On the surface, it would leave the basic framework of the current system in place, though with the addition of voluntary individual investment accounts. Anyone signing up for the accounts would have to agree to a further corresponding cut in the guaranteed, government-paid benefit.

But Mr. Bush's approach would arguably lead to a gradual, decades-long but fundamental change in the nature of the system. Over time, the government-paid benefit for higher-income people would move closer to the benefit paid to lower-income people; in that sense, Social Security would become something more like a purer welfare system than what it is widely perceived to be now, a government-run pension plan in which benefits are tied to income.

The end result would be a system in which many workers would rely more on the proceeds of their investment accounts and less on the government-paid benefit, and one in which upper-income people would have less of a stake in traditional Social Security, potentially undermining political support for it.

'This would represent a major change in the philosophy of Social Security,' said Jason Furman, an economist at New York University and a senior fellow at the Center on Budget and Policy Priorities, a liberal research group. "'If you combine progressive indexing with private accounts, you could threaten to unravel the entire Social Security system.'"

--Politex, Bush Watch, 04.30.05


BUSH IS IN THE POCKET OF THE FINANCE INDUSTRY ON SOCIAL SECURITY

--by Doris in Des Moines, 5/8/00

Like a number of other items on the George W. Bush would-be presidential agenda, social security privatization is an outgrowth of a long-range political strategy set into motion during the Reagan -Poppy administration back in the 80's. Begun by Reagonomics experts at the behest of the finance industry in search of ways to get at the vast wealth of social security, which is currently invested in government bonds, not corporate stocks, finance industry funded organizations such as the Cato Institute and the National Comission on Retirement Policy went about designing a propaganda campaign to undermine the stability of social security and to encourage the election of politicians willing to go along with such a plan. In George W. Bush they have found the perfect candidate. With $8 million in finance industry campaign funding, which represents over 10% of all of his campaign funds, Bush is motivated to propose and defend the outlines of their plan as his own. That's what he has begun to do and that's what he plans to continue to do in a speech this week.

Clinton's plan for social security has been bad enough, suggesting that some percentage of the Social Security surplus be invested in equities, in order for the system to take advantage of those marvelous returns everybody loves to gush about. The fact that this plan would accomplish little beyond subjecting Social Security to excessive market risk while lining the pockets of the Wall Street firms salivating for their cut of the action (administrative and broker fees projected to run from five to ten percent of the billions invested) didn't appear to alarm all that many members of Congress on either side of the aisle. For reasons best known to God and the AFL-CIO, Gore appears to have solidly dropped the idea, for which we can all breathe a sigh of relief. It's a bad idea, but Bush's is way, way worse.

There are really only two useful things anyone needs to know about this Social Security ruckus, and as you might imagine, Bush knows neither of them--which is to say, he's lying about them both. The first is that this whole wiggy idea that there's something seriously wrong with Social Security, that it's going "broke" or "bankrupt" or is in some general "crisis," or is, God help us, a "Ponzi scheme," is the result of one of the most startling propaganda campaigns in recent memory. You know that you are in the presence of some obscenely rich people when it can be opined that a system as cash-flush as Social Security is "bankrupt." As Diana Zuckerman noted last year, "I suppose there are some folks who aren't impressed by a program with an annual surplus of more than $100 billion and 'end of the year assets' of more than $756 billion, but even they can't call it bankrupt. . . . A more accurate description of [it] is to say that it is rolling in money, that it has an enormous surplus that is growing every year, and will be for years to come."

More recently, Mark Weisbrot observes that "Social Security is financially rock solid--something that one would never know from listening to politicians argue about who is going to 'save' the program. From what? [The March 2000] Trustees' report shows that Social Security could be left on automatic pilot for the next 37 years and everyone would get every dollar of their promised benefits. Of course, it's silly to make projections further out than that--economists cannot even forecast the federal budget surplus one year out with a margin of 80 percent. But for those who want to speculate about the science fiction future, the Trustees' report also shows that the program's shortfall over the next 75 years is considerably less than one percent of our national income. Is anyone really worried that people earning 50, 60 and 70 percent more than we do today might have to cough up this little bit more to support the elderly?"

Well, Mark, Bush seems to be worried about that, which makes a certain amount of sense given that the loudest wailing about the Social Security "crisis" is coming from the CEO crowd, those folks who, at present, make 5000, 6000 and 7000 percent more than the average working American's entire household. Bush, whose campaign told the New York Times recently that Social Security is "going broke," certainly doesn't want us to notice the real culprit behind Social Security's anticipated future shortfall, wage stagnation. According to Robert Kuttner, "the past two decades have seen unprecedented stagnation in wage growth, producing a depression of Social Security's anticipated income stream. If the bottom two-thirds of the income distribution had the same share of national income in 1998 that they had in 1978, the Social Security shortfall would nearly vanish, even without higher overall economic growth."

This isn't really rocket science, even for those of us who amused ourselves during Economics 101 lectures by reading Elizabethan poetry. Social Security's money comes from payroll taxes. The taxable income is capped, so that only income up to $76,200 is taxed, and the overwhelming majority of workers who make less than that end up paying more in FICA taxes than they do in federal income taxes. Real after-inflation increases in wages at the bottom would pump a healthy infusion of funds into Social Security without changing the FICA rate, and would more than make up for the dreaded worker-to-dependent imbalance caused by the baby boom's retirement. Which would most of us rather have, an individual private social security stock market account containing two percent of our income, less service charges and broker fees, or a decent income that keeps up with inflation from a job that isn't going to move to Mexico or Saipan or China next year, with a solvent Social Security program to provide for us on retirement?

One begins to suspect that Bush actually meant it when he said he wanted to "make the pie higher." The second most important thing to know about the Social Security question is that "privatization" is simply a code-word for "corporate welfare and handouts to the rich." Even those of us without MBAs can ask ourselves why it might be that the same people whose economic projections are spelling doom and disaster for the last great New Deal program are, in the next breath, turning around and telling us that the free market will never let us down and will continue to provide such fabulous returns on investment that we should trust it not just with our 401(k) plans and IRAs, but with our Social Security, too.

As Doug Henwood points out, the long-term Social Security shortfall everyone's knickers are knotted over is predicated on some pretty bearish projections about the economy: "let's take the 1.4% growth projection [used by the Trustees in shortfall calculations] and apply it to the stock market, that cornucopia of wealth that's supposed to replace the public pension system. Privatizers typically assume an average real stock market return of 7% a year, from the combined increase in prices and the cash dividends. How the stock market is supposed to grow five times as fast as the economy is a mystery that's rarely noted, much less investigated." In other words, when it's time to convince us that Social Security is running out of money, the privatizers insist on using the most conservative economic growth rates they can propose with a straight face. When it's time, however, to convince us that we'd all make out like bandits if our pensions were in the stock market, the numbers become inexplicably bullish. This is called "heads I win, tails you lose."

The problem is that most rank-and-file Americans probably don't immediately spot the grotesque illogic of the privatizer position, since most Americans probably don't know the difference between a P/E ratio and gym class. This doesn't mean that normal folks are stupid; it simply means that the propagandists have done a better job of riling up the so-called "Gen-Xers" and miscellaneous ditto-heads with their goofy rhetoric than they have of laying out coherent, detailed arguments that might allow rational non-experts to figure out which shell the pea is under. You are now, of course, shocked to discover that Bush's campaign plans to make a great issue out of "saving" Social Security, but does not plan to release any actual details. In the name of "bipartisan consensus-building." That's a code-word for "both parties conspiring to lie to the public instead of just one."

Even in the absence of a detailed plan with which we might check out some of the "math magic," we can still get a handle on the level of duplicity involved in Bush's "Saving Private Security" campaign by looking at some of the preliminary rhetorical fire he's laying down. So put a new battery in your BS-detector and take a look at some of the whoppers the Bush campaign offered to those trusting souls at the New York Times last week:

"While [the Bush campaign] acknowledged that some voters would find the [privatization] idea unsettling, the advisers noted that nearly half of all households owned stock directly or through retirement accounts, creating a new 'investor class' that extends well into the middle class and is increasingly eager to have control over its own finances. 'People have an understanding of how markets work, and are used to securing a higher return on their savings,' said one advisor to Mr. Bush. 'The debate on Social Security will be joined in a way that we believe will be open to new ideas.'"

This "half of Americans own stock" bit of tripe has been bandied about in the press a great deal recently, and given how shockingly ridiculous it is on its face, you'd think at least one mainstream reporter might be bothered to ask what it might really mean. The NYT certainly won't, so we'll have to rely on Jim Hightower, who reports in his own inimitable style:

"Six out of ten U.S. citizens own no stock at all--not through a 401(k), a mutual fund, a pension plan, nothing. The Dow might as well be a pink- and purple-polka-dotted cow for all the good it's doing the typical household. And most folks who are 'in the market' are barely there. In fact, 89 percent of all stocks are owned by only 10 percent of American households, and nearly half the stocks are owned by those 1 million families who comprise the wealthiest 1 percent of Americans."

Certainly, if you calculate a simple mathematical average of my great-aunt Leafy's stock holdings (nil) and Bill Gates', you could back yourself into an extrapolation that "half" of all households own stock. But, of course, this "new investor class" Bush is appealing to is really just the familiar "old investor class," with perhaps the addition of a few bubble-headed dot-com employees who confuse stock options with compensation. Who else is "used to securing a higher rate of return on their savings"? Who else has savings? Most people I know can't even qualify for an interest-bearing checking account because they can't meet the minimum deposit requirement.

Later in the Times article we hone in further on who this "new investor class" is: "Mr. Bush will probably not specify what portion of a worker's payroll taxes could go into the accounts, but he is leaning toward making participation in the accounts voluntary, his advisers said. Under this approach, a portion of the retirement benefit would be guaranteed and a portion would fluctuate with the performance of the investment account."

So, those who already possess large assets, 401(k) plans, and big old stock options packages, and hence don't anticipate needing that Social Security pittance upon retirement, can "opt out" of paying into the system that subsidizes those who spent their working years cleaning the toilets in Silicon Valley, or staying at home to raise children, or staying at home to nurse a disability that prevents them from working at all. The "opt out" crowd hardly worries about excessive market risk on a few percent of their income up to $76,200, and of course all the income over that isn't subject to FICA taxes at all.

And how can you continue to guarantee benefits when the wealthy get to opt out of paying in? "Mr. Bush will also pledge not to increase payroll taxes, and not to reduce benefits for anyone in or nearing retirement. He has left open whether the retirement age, which is already rising gradually to 67 from 65, might eventually need to be increased again." So it's another famous "five year plan" in disguise. God knows what "nearing retirement" means when they keep raising the retirement age, but let's just guess that anyone over 59 is hereby getting "grandfathered in," meaning the political shit won't hit the fan until after Bush is safely in his second term. For everyone else, it's a safe bet that the retirement age will be pushed to 70 and the cost-of-living index used to recalculate Social Security benefits will quietly get "adjusted," meaning stagnation in benefit levels. But that wouldn't be a tax increase, and you know how much we hate those.

The real "investor class" who benefits most from privatization won't be those few who choose to have two percent of the first half of their income invested in a private retirement account instead of the Social Security Trust Fund. The real winners will be AXA Financial, who has contributed $170,550 to the Bush campaign as of March 1, and Morgan Stanley ($106,800), and Merrill Lynch ($106,600), and Goldman, Sachs ($96,749), and all the other securities and investment interests who have coughed up a total of $3,384,768 so far, according to the Center for Responsive Politics. When you add in major accounting firms like PricewaterhouseCoopers and KGPM, plus all the "miscellaneous finance" and "business services firms," Bush has gotten almost $8 million from folks who will design, manage, administer, audit, and extract broker fees from several million "private savings accounts" carved out of Social Security.

Of course, you can hear the Bush campaign crying, the "private sector" is so much more efficient than the big bad government, which explains why the American insurance industry's administrative costs run to about 10 percent of investments while the Social Security Adminstration's is about 1 percent. Chile's privatized retirement system, the darling of the conservative think tanks from which Bush pulls his economic advisers, devotes a whopping 30 percent of its revenues to administrative costs, according to Henwood. "About $430 billion flowed into [Social Security's] coffers [in 1998]; 10% of that [in privatized funds] would be a very pleasing $43 billion, and 30% would yield $130 billion, a windfall even by Wall Street's standards. Higher fees, lower benefits, greater gender inequality, and more risk--no wonder privatization has to be sold with a cooked-up scare campaign."

Of course, at the moment Bush is only hinting that maybe two percent of the contributions of a "voluntary" group of citizens would be privatized, not the whole enchilada. At least, not yet. Anyone who believes that this is not simply a feint designed to weaken public resistance to privatization, intended to lead down the road to full-scale private looting of Social Security, is of course free to do so. You might, however, wish to ponder for a moment the history of the privatization movement in the last 20 years. Robert Kuttner sums it up nicely in "Rampant Bull":

"Breaking Social Security into individual accounts would explicitly segregate the system's antipoverty component from its contributory aspect and thus erode the political coalition that now supports its solidaristic and universal character. Writing in 1985, in a Cato book edited by Peter Ferrara titled Social Security: Prospects for Real Reform, Stuart Butler laid out what became the right's privatization strategy. In creating individual retirement accounts, Butler wrote, 'The final element of the strategy must be to propose moving to a private social security system in such a way as to detach, or at least neutralize, segments of the coalition that supports the existing system. A necessary step towards this objective is to honor all outstanding claims on the existing system. [Otherwise] the retired (or nearly retired) will strongly oppose any package that threatens significantly to reduce their benefits.'"

Since the early 80s, Reaganomics experts like Ferrara have been pursuing a clever propaganda campaign via outfits like the Cato Institute and the National Commission on Retirement Policy, both of whom rake in huge piles of cash from their Wall Street patrons. (See Robert Dreyfuss' excellent analysis of the money trail in The Nation). In a nutshell, it goes like this: keep telling them that Social Security is broke and needs fixing until they start to believe it. Then make a few modest-sounding proposals that will appeal to over-compensated Gen-Xers and rabid "anti-welfare" types, while carefully lulling the elderly into a false sense of security by promising that the angel of death will pass over their doors. Cozy up to the neo-liberal Democrats enough to make it look "bipartisan" and do as much damage as possible to labor's traditional unwavering defense of Social Security. Some day, you can imagine these clever folks thinking, a witless puppet of the "old investor class" will purchase the Republican nomination for President and we'll be able to dangle the "partial privatization" worm in the electoral waters and see who nibbles.

That day has come. Bush has been given $8 million fron the finance industry to get us to change our social security into social insecurity . While it may be a risky proposition for us, the trade-off is that members of his family, some of his friends, and the finance industry in general will make a tidy profit with privatized money. And that's what it's all about, isn't it?

POINT/COUNTERPOINT: SOCIAL SECURITY

"THE SOCIAL SECURITY SURPLUS IS A FICTION."---TBP

The real Social Secuirty scandal is being ignored by all politicans, by your writer "Doris" and the 'experts' she quoted - Doug Henwood, Robert Kuttner,Diana Zuckerman and MarkWeigbrot. The supposed surplus of the Social Security Fund is a fiction. Most writers and researchers that deal with Social Security issues simply accept the Social Security administration's statements about revenue, expenditures and "assets", without looking at the details on the Social Security accounts.

It's true, that revenue into the Security Accounts from payroll deductions, to the extent that it exceeds expenditures, is invested in Government bonds. And, when expenditures exceed revenue, as is expected to happen in the next 20 years, then "assets" will be "sold" to fund expenditures. The supposed "surplus" occurs because in the 1980's congress intentionally raised the Social Security payroll taxes, to build a surplus for the baby boom retirees - a demographic bulge that may produce a huge number of retirees with a smaller number of workers paying into Social Security.

.What is missed in all of this is what Social Security considers assets. Keep in mind that the whole system of Social Security was not established as a way to invest actively employed workers contributions into a fund to pay for their retirement. An active worker's contributions are simply credits in a calculation of a benefit formula. Social Secuirty has always operated on the basis that actively employed workers' contributions provide the revenue with which to pay the benefits to retired workers. "Investment" of Social Security assets was always a short term requirement until recently, when the baby boom demographics projected an imbalance in how many actively employed workers would be supporting a huge increase in the number of retirees.

.So, where did our excess Social Security contributions since the Reagan years go, and what does the Social Security administration have on it's books as assets, to pay the baby boom genration benefits with?

.Yes, they bought U.S. Government Bonds. And what did the U.S. Treasury do with the money it got from Social Secuirty for those bonds? It spent it, to help offset the budget deficits of the Federal Government.

.Now, how will Social Secuirty get money for those bonds as the baby boomers retire? They will do want most bond holders do. They will redeem them when the bonds "mature". That is, when a bond reaches the date on which the issuer (the U.S. Treasury) said it would then pay a certain amount for that bond, the holder (Social Security administration) will give the bond to the U.S. Treasury, in return for money in the amount of the value of that bond - which will be the original amount paid for the bond plus an interest amount, based on the stated interest rate for the bond.

.How will the U.S. Treasury pay Social Security when the bonds are redeemed. It will pay them from it's revenue (your taxes then) or if the U.S. Treasury is running a deficit , it will borrow again to pay Social Security for the bonds it redeemed. In other words, if it can't pay for the bonds from the taxes it gets from you then, it will issue new bonds which will be paid for from taxes it gets from you later.

.But that is only part of the "assets"of Social Security. Our Federal deficits were so bad until just recently that even "assets" in the Social Security accounts had to be "loaned" back to the U.S. Treasury to offset it's deficits. What did the Social Security accounts get for these loans? It got I.O.U's - promissary notes from the U.S. Treasury - a "promise" to pay back a specific amount by a specific time.

.So is there actually any Social Secrity surplus? No. It is only an accounting manuever which replaced one kind of debt we owed ourselves with another kind of debt we owe ourselves. And, we will pay either form of debt with some form of taxes on ourselves when Social Security needs to cash in it's "assets".

.Either the payroll taxes for Social Security will have to be raised again, or general revenue taxes will have to be used to "cash" the bonds Social Security needs to redeem, or we will create new debt for more distant future tax revenues to pay off.

.Social Security was never and does not now operate as an "invested" fund. Current workers pay for current retirees. Increasing the payroll taxes to provide a "surplus" for the baby boom generation was not a wrong idea. "Investing" that surplus in nothing other than our own promise (U.S. TreasuryBonds) to pay it back in the future did not change a thing. Adding insult to injury, we then borrowed some of those "assets" again when we allowed the federal treasury to run such huge deficits for so many years.

.There is no actual surplus,other than our own promise to pay Social Security back in the future, for having lent us the money we needed to spend these past few decades. But, pay it back we will, in some form of taxes - sooner or later. --TBP, 5/9/00

***

"THE SOCIAL SECURITY SURPLUS IS NOT A FICTION.." ---DORIS

.As I've said before, the battle over Social Security is a political and rhetorical one, not a debate about economics or generally-accepted accounting principles. What language we use to describe the same set of "facts" says a lot about our implied values. I don't mind being perfectly upfront about what my values are. I have in the past accused certain conservatives and neo-liberals of keeping their own agendas secret. This letter does nothing to change my mind about that, I'm afraid.

.TBP makes a rather odd use of scare-quotes. It seems that while revenues are real and expenditures are real, the current imbalance between the two is a "fiction" or just scare-quoted "assets." Why aren't invested surpluses real assets? I happen to own a few government bonds myself, via my mutual fund. I call that an asset, even though it's "really" money I lent to the government. After all, the government hasn't defaulted on a treasury bill yet, and I keep getting statements showing interest paid. Social Security's assets are no more fictional than my 401(k) assets are. Certainly they're more real than the potential future imbalance between revenues and expenditures, which are projected to be "deficits." Will those be fictional, too? Is only bad news real news?

.TBP seems troubled by the fact that Social Security was not designed to be an invested fund. Of course it wasn't. Even though Roosevelt and Frances Perkins, among others, argued passionately for a system that would be funded in part from general revenue, the conservatives of the day demanded a "pay-as-you-go" system because they didn't trust the government to manage reserves. (Sound familiar? George Bush doesn't trust the government to manage reserves either.) The money-in-money-out nature of Social Security has always given the system some vulnerability to demographic changes and stagnation in real wage levels, which is the trade-off you get when the system is funded only by bottom-end payroll taxes.

.Remember that an "economic boom" in which most income is made by a few percent of the population, via compensation over the statutory FICA limit and capital appreciation--stock market wealth--doesn't do anything for Social Security directly because none of that is subject to payroll taxes. On the other hand, high earners and corporations pay the lion's share of income taxes, which create that "general revenue" thing. So, in the 80s, the idea was to cut income taxes--producing budget deficits and a bonus to wealthy individuals and corporations--while raising payroll taxes so that workers could pay for their own retirements without any help from "general revenue."

.I honestly have no idea what it means to say that the government uses the money it borrowed from the Social Security fund--via issuing bonds--to "help offset the budget deficits of the Federal Government." Spending borrowed money doesn't offset deficits, it creates them. If Congress wishes to spend more than it receives in revenue, it has to issue bonds to cover the difference. Social Security is the only government program that is required to live within its means.

.I suffer from a similar confusion when I am told that "our Federal deficits were so bad until just recently that even 'assets' in the Social Security accounts had to be 'loaned' back to the U.S. Treasury to offset its deficits. .. . . So is there actually any Social Security surplus? No. It is only an accounting manuever which replaced one kind of debt we owed ourselves with another kind of debt we owed ourselves."

.I must be reading the wrong reports. Social Security's government bond holdings are counted in the national debt, just like my mutual fund's bond holdings are. Commitments to pay retirement benefits are not counted in the national debt, because they are "funded." Where does the weird accounting come in?

.Look at it this way. I pay my payroll taxes into Social Security. Because SS has more revenue on hand at the moment than expenditures due, it uses part of my payroll taxes to pay retirees and the rest to buy bonds. Just like my mutual fund. When SS needs that money back to make future expenditures, it will liquidate its bond holdings. Just like my mutual fund does.

.On the other side of this, I also pay income taxes into the U.S. Treasury. Because Congress likes to spend more money than it receives, it finances much of its spending by issuing Treasury notes (bonds). My income taxes are, in part, being used to pay the interest and principal due to everybody who bought government bonds, including SS and my mutual fund. Of course the only money the government has to repay bond obligations with is general revenue. The only money it has to buy helicopters for the Pentagon is general revenue.

.It seems to me disingenuous in the extreme to imply that SS's investments aren't really investments because they are backed by government bonds, rather than being invested in corporate stocks or sitting around in cash in a huge vault somewhere. It makes just as much sense to me to say that my payroll taxes funded a lot of the government's domestic and defense spending for a long time, and now those payroll tax dollars should be paid back so that they can be used for their original purpose, which is paying retirees. Income taxes are supposed to be used for domestic and defense spending, and if Congress can't spend only what it has, it needs to either cut spending or raise income taxes or learn to live with a deficit. Whichever position you take on spending, you can't accuse the government of using income tax to finance Social Security. It's more like the government has been using payroll taxes to subsidize income tax cuts.

.I hear a lot of people--the Concord Coalition and Cato folks, pro-privatizers like Moynihan and Kerry--call government bonds "IOUs," as if that weren't the definition of a bond. It strikes me as rhetorical dishonesty. Bonds are simply an agreement to repay interest and principal. Stocks, on the other hand, are equity stakes in a company. Why don't we call stocks IPTMMS--I Promise To Make Money Someday?

.One reason why government bonds--as opposed to Amazon.com stocks, for instance--are generally considered the safest investment going is that they are backed by the "full faith and credit of the U.S. Government." It is part of the definition of a government bond that tax revenues will be used to make them good. Why are we all of a sudden upset about that? If the federal government cannot meet its bond obligations, we've got bigger problems than a potential future shortfall in retirement benefits in 37 years.

.What's lurking here, I really think, is another one of those subtle arguments for redistribution of wealth. The implication is that it's "unfair" somehow to use general revenues to repay the debt the Treasury owes to Social Security. Again, general revenues come from income taxes, mostly on high earners and corporations. For years and years, high earners and corporations have been getting tax cuts, tax-privileged retirement accounts (401(k)s, IRAs), mortgage interest deductions, and of course all the usual corporate welfare. High earners also drive on interstates, use health care resulting from publically-funded research, visit the Grand Canyon, and all the rest of it, just like those who pay more in payroll taxes than they do in income taxes. In other words, we all have benefitted--if unequally--from deficit spending. Some of which, as your writer notes, was financed by borrowing from payroll taxes, which--again, as your writer notes--have not only never been cut but have been increased. So now, the high earners and corporations want another income tax break, and are whining about having to repay the money they borrowed from Social Security. I'm sorry, but the only word I can think of for that is "welfare cheat."

.What George Bush is proposing--or hinting or whatever--seems to be that we should continue to tax workers to pay for their own retirement. On the other hand, we should refund income taxes to the top tier of taxpayers, because the government cannot be trusted to manage money. Further, Bush believes that the Social Security surpluses should be invested not in the government but in the private market, because we can always trust Amazon.com to make a profit. The only thing that gets accomplished by conflating income tax dollars with payroll tax dollars is that it plays into the hands of those who wish to continue the Reagan-Bush policies of income redistribution. --Doris in Des Moines, 5/10/00

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