The Plot Against Social Security
How the Bush Plan Is Endangering Our Financial Future
By Michael Hiltzik
Relentless and ominous, the drumbeat echoes across the land: Social Security is on the verge of bankruptcy. The warning has been repeated so often that it has become a dismal article of faith for the millions of Americans who pay Social Security taxes and expect to collect benefits someday. But it is flatly untrue. Social Security today is as financially strong as it has been in decades. Despite its relative good health, however, it is facing the most dangerous political challenge to its existence since its birth 70 years ago. The Plot Against Social Security explains who is really behind the efforts to “reform” this system and shows that the most frequently proposed fix—diverting a huge portion of its assets into private investment accounts—will damage it beyond repair, undermining retirement security for generations of Americans.
Award-winning journalist Michael Hiltzik documents the privatization lobby’s ties to the brokerage and insurance industries that stand to profit from the proposed changes. He debunks the myths disseminated by Social Security’s enemies, repeated by rote even by its friends and now accepted as gospel by many Americans—including claims that the retirement of baby boomers will plunge the system into bankruptcy; that the $1.7 trillion in government securities held by the Social Security trust fund are worthless pieces of paper; and that workers can earn better returns on their payroll tax contributions by investing them privately than by leaving them in the system. Finally, he offers a clear set of remedies for those few elements of Social Security that do need repair—proposals that will shore up the most effcient social insurance program in America’s history rather than destroyingit in the name of reform.
From Publishers Weekly
A Pulitzer Prize-winning financial journalist for the Los Angeles Times, Hiltzik gathers arguments made by a plethora of economists and skeptics into a comprehensive, biting critique of the privatization agenda and what he calls the “astroturf” alliance of right-wing ideologues, Wall Street opportunists and Republican political operatives that “aims to propagate, and then exploit, public ignorance.” Prophecies of the Social Security trust fund’s bankruptcy, he finds, are based on dubious and politically biased forecasts; more realistic projections have the trust fund growing nicely over the next 75 years. Even if doomsayers’ predictions come true, he notes, the system’s solvency can be safeguarded by straightforward fixes; simply lifting the cap on Social Security taxes—thus taxing high-income workers at the same rate as everyone else—would make up Bush’s projected shortfall and then some, he says. Hiltzik also reads the fine print of privatization schemes, unearthing what he sees as hidden costs, risks, benefit cuts, bureaucratic pitfalls and wildly optimistic market return predictions for private accounts. The real issue, he contends, is whether the pension system will be a get-rich-quick scheme for the powerful or a collective guarantee that the elderly, the poor, the disabled and the unfortunate will be shielded from the vicissitudes of life.
Prize-winning financial reporter Hiltzik focuses a probing, analytical eye on the current drive to substitute private investment accounts for America’s Social Security program and finds this new approach wanting. Hiltzik delves into the history of opposition to Social Security since its inception during the Great Depression, revealing that today’s demands for change mirror criticisms that have perennially dogged the program. Offering statistics from multiple sources, he finds the claim that the system faces a financial crisis to be manufactured, and he notes that the program’s critics cite contradictory evidence about the purported coming bankruptcy of the system. He sheds light on myths whose prevalence has diminished constructive dialogue. He cites the pressing need for honest projections of Social Security’s present and future fiscal health, observing that using either too optimistic or too pessimistic forecasts only opens the door to political grandstanding from either direction. Hiltzik fears that even if people were to enjoy the rosy returns on investment that the present administration promises, much of their “profit” might disappear in administrative fees. Hiltzik has provided history, facts, and figures that propose some much-needed perspective on this important contemporary debate.