It’s probably too soon to be overreacting to the president’s call for privatization of Social Security, but it seems we have more pressing problems.
“The crisis is now,” Bush told a carefully screened group attending a two-day economic conference last week. They dutifully applauded his pitch for restructuring the country’s long guaranteed retirement plan for workers and their spouses, even as those outside the inner circle were marshaling opposition.
Granted, I’m no expert. I never even took Economics 101, thinking the whole subject a colossal bore. It’s all about numbers, for cripes sake. I don’t do numbers. Well, I can balance my checkbook, do simple arithmetic better in my head than with a calculator and I can usually figure out when I’m being overcharged for something. That’s about it. I have a sister who teaches statistics and calculus and a CPA who keeps me from IRS audits. I want to know something that’s beyond my scope, I ask them.
Of all the things in this country that are totally screwed up today, Social Security barely makes the cut. To say the program is in crisis right now echoes the cries of imminent threat that pushed us into an intractable struggle in Iraq for which we were inadequately prepared. Having seen the results of deregulation run amok, scandals perpetrated by leaders of industry, a corporate ethos that’s deprived older workers of their pensions and their jobs, mutual fund managers cheating investors out of their savings, why on earth would we willingly privatize the only program that ensures at least some financial security for the aged?
Let’s just say I’m not a betting person. I love horse races but don’t bet because I’m a sore loser. It ruins my day to tear up a $2 ticket. Investments? They’re all a crapshoot. Someone tells me I can earn 12 percent, I call the bunko squad.
I think I take after my mother. She always said, put your money in real estate. At least you can see it. She did okay. In the late ’40s, she bought 17 acres of Malibu Riviera at $1K an acre. She said she wouldn’t sell it until it was priced by the square foot. She bought some unimproved lots on a barren windswept stretch of sand “way up the coast from Malibu.” It’s called Zuma Beach now. Mother co-signed the mortgage on my first house, a two-bedroom early GI model on a corner lot in Granada Hills. With a lot of guts and a little luck, I was able to trade up several times. But I could always see where my money was.
Later, when Mom was no longer around to advise me, I invested in a “low risk” mutual fund and investment plan with a major company. My “piece of the rock,” if you get my drift. Dumb, dumb, double dumb. I was trying to plan for retirement and my children’s inheritance. After the fund managers had their way with my portfolio, my little nest egg actually shrank. I mean, I wasn’t day trading. I lost money on “sound” investments. You can see why I think privatizing even part of Social Security deductions is hugely risky.
But there’s a larger issue here. The country is in deep doo-doo, budget wise. We are subsidizing (but not accomplishing) the reconstruction of countries far, far away. We are providing health care for people on other continents while millions of our own have none. China, and European countries we thumbed our noses at, are subsidizing our debt, now in the trillions. As interest rates rise, we pay more on the debt. As the dollar falls, our bonds and Treasury bills are less attractive to foreign investors. If they stop showing up for our Treasury auctions, that could be a real crisis. This is hardly the time to take payroll taxes out of the system, or to add to the national debt. But instituting private retirement accounts would force us to borrow more money to finance the transition over the next 10 years.
Bush needs to attend one of those seminars for credit card junkies. They teach you interest is your enemy. It causes your debt to grow exponentially and the only way out is to cut up all those plastic cards.
According to the board that overseas Social Security, the program will not be short of funds until 2042 and even then, they estimate payroll taxes will cover at least 75 percent of benefits. And have they factored in the growing population of immigrant workers whose payroll deductions could make up for retiring baby boomers?
If Congress could bring itself to rein in spending for pet pork projects and refuse to make permanent Bush’s tax cuts for the supremely wealthy, things might come out even. At least there’s time to make sensible adjustments to assure the system’s solvency.
The crisis – in Social Security, at least – is definitely not now.