Left Wing Reforms for Social Security

Iraq has largely outbid Social Security for both the President's and the public's attention. There are good reasons for oppossing what the President has proposed. However, there are also good reasons to meet him half way. We need to focus not on the risk (this country thrives on risk) or even on replacing social insurance (this country is leery of the term social insurance AND you can insure private accounts and have the same effect as the current program). We need to attack how what the President has proposed will further disempower workers and then offer counter-proposals. Why not just use this as an electoral issue? Because first, we can really do some good for the working class by engaging in this debate and second, the first time we did in 1992 we were calling for private accounts. I will address why below.

We need to expand our attack in the following ways:

1. Point out that you can't eat stock shares any more than you can eat a social security check. The real problem is demographic and the way to solve that is to propose the following:

a. A living wage through the tax system so that every parent gets a raise anytime a child is born.

b. Move the responsibility for funding education (college, votech and even secondary) from parents to future employers, the same way we fund military academy and ROTC students. Also, make sure that teen parents are funded the same way, so that having a kid is not a death sentence to economic progress.

c. Expand day care and provide tax breaks to stay at home parents (like me).

2. Point out that the "ownership" proposed contains no control over that stock, which will lead to more jobs being sent offshore and lower wages, since the fund managers vote for short term profitability rather than the interests of the workers, or even the firm. In short, if you thought Enron was bad, wait to you see what's coming if this bill passes.

3. Take the incentive out of privitization:

a. Credit the employer contribution equally, regardless of the employee contribution. Note that this does not involve raising taxes and it makes the contribution more closely match the benefit (adjust benefit formulae accordingly).

b. Direct the trustees to use realistic economic assumptions. If they used realistic numbers there would be no crisis.

c. Raise the income cap, which brings the system into financial balance (in fact, it would necessitate cutting the general tax rate or going to something like private accounts because the trust fund surplus would be too large given honest economic assumptions). More importantly, doing this would raise the average income amount and lead to much higher payments to retirees. Surpisingly, Bush said today that he is amenable to raising the cap.

Just saying no is not nearly as effective as raising these points. Doing so takes us out of the role of defending government for its own sake (which is where Andrew Card wants us going into 2006) and puts us back into the position of defending workers. Raising the question of a living wage in order to make abortion rare also gives us street cred with the red state union members who used to be Democrats and are no longer.

If all of these objections are raised, there is room for compromise. If the cap is raised, an average employer contribution is credited and realistic ecomomic assumptions are used the Social Security trust fund will have too much money.

This is why personal accounts are neccessary and why Democrats proposed them in 1992.

Senator Moynihan thought it unconscionable for the government to subsist on payroll taxes in order to build up the Social Security Trust Fund. We should too. The Clinton proposal was to create add on accounts above Social Security with a tax incentive for doing so. In other words, he did not object to personal accounts per say but the manner of funding them. Either way, these accounts will be funded from the general fund, so the difference is mainly semantic. If the stocks in that account were controlled by the worker or her representatives (union, professional society, etc.) and she could invest some of these funds in her workplace then we might have a deal which actually benefits workers. See http://www.geocities.com/iowaequity/ for more details.