Inventing a Crisis By Paul Krugman
New York Times Op-Ed Columnist - December 7, 2004 http://www.nytimes.com/2004/12/07/opinion/07krugman.html Privatizing Social Security - replacing the current system, in whole or in part, with personal investment accounts - won't do anything to strengthen the system's finances. If anything, it will make things worse. Nonetheless, the politics of privatization depend crucially on convincing the public that the system is in imminent danger of collapse, that we must destroy Social Security in order to save it. I'll have a lot to say about all this when I return to my regular schedule in January. But right now it seems important to take a break from my break, and debunk the hype about a Social Security crisis. There's nothing strange or mysterious about how Social Security works: it's just a government program supported by a dedicated tax on payroll earnings, just as highway maintenance is supported by a dedicated tax on gasoline. Right now the revenues from the payroll tax exceed the amount paid out in benefits. This is deliberate, the result of a payroll tax increase - recommended by none other than Alan Greenspan - two decades ago. His justification at the time for raising a tax that falls mainly on lower- and middle-income families, even though Ronald Reagan had just cut the taxes that fall mainly on the very well-off, was that the extra revenue was needed to build up a trust fund. This could be drawn on to pay benefits once the baby boomers began to retire. The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem. But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending - less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts - roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year. Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come. It's true that the federal government as a whole faces a very large financial shortfall. That shortfall, however, has much more to do with tax cuts - cuts that Mr. Bush nonetheless insists on making permanent - than it does with Social Security. But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one. My favorite example of their three-card-monte logic goes like this: first, they insist that the Social Security system's current surplus and the trust fund it has been accumulating with that surplus are meaningless. Social Security, they say, isn't really an independent entity - it's just part of the federal government. If the trust fund is meaningless, by the way, that Greenspan-sponsored tax increase in the 1980's was nothing but an exercise in class warfare: taxes on working-class Americans went up, taxes on the affluent went down, and the workers have nothing to show for their sacrifice. But never mind: the same people who claim that Social Security isn't an independent entity when it runs surpluses also insist that late next decade, when the benefit payments start to exceed the payroll tax receipts, this will represent a crisis - you see, Social Security has its own dedicated financing, and therefore must stand on its own. There's no honest way anyone can hold both these positions, but very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success. For Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it. E-mail: [EMAIL PROTECTED] Copyright 2004 The New York Times Company _______________________________________________________ portside (the left side in nautical parlance) is a news, discussion and debate service of the Committees of Correspondence for Democracy and Socialism. It aims to provide varied material of interest to people on the left. To subscribe: http://lists.portside.org/mailman/listinfo/portside *** Rally to Support the Cedars-Sinai Registered Nurses Tell Cedars-Sinai to respect the nurses and recognize their union! Dec. 10th, 11am-1pm Join Rabbi Allen Freehling, Senator Sheila Kuehl, Assemblymember Judy Chu, the Jewish Labor Committee and registered nurses from throughout Southern California to mark International Human Rights Day & the 2nd Anniversary of the Cedars-Sinai RN election Victory (NW corner of Gracie Allen/San Vicente, One block south of Beverly Blvd. - in front of Cedars-Sinai Imaging Dept.) The management-dominated labor board recently overturned the union vote of the Cedars-Sinai RNs. The nurses are still going strong, fighting for their right to organize, fighting for united voice as patient advocates. You can read below about the wonderful events on Oct. 20 and the founding of Community United for Respect and Equality at Cedars-Sinai. CURE Cedars-Sinai: concerned community members united with nurses to fight for fa irness and quality healthcare. We need your help, too. Please join us to call attention to nurses' struggle, and to tell the hospital to respect the nurses and recognize their union! Some more recent developments: Anti-union consultants have been roaming the hospital, conducting repeated propaganda sessions with RNs individually and in groups, while CNA representatives have been banned from providing information. RNs continue to organize, which has taken on new importance as Cedars-Sinai implements a patient care restructuring plan and campaigns in favor of rolling back the nurse-to-patient ratio laws. Unfair Labor Practice charges are pending in response to heavy-handed anti-union campaigning and deception. U.S. Dept. of Labor, Office of Labor Management Standards is investigating Cedars-Sinai's failure to report union-busting expenditures. Community leaders are joining together in support of the RNs, and formed Community United for Respect and Equality at Cedars-Sinai: Antonio Villaraigosa; Judy Chu; Rabbi Allen Freehling; Annalisa Enrile of GABRIELA; Josh Perlroth of the Committee of Interns and Residents, SEIU; Doug Heller of Consumers for Quality Care; and, of course, the Cedars-Sinai RNs. We are also pleased to be joined by Warren Furutani from the Community College District, John Delloro of APALA and SEIU 1000, Jay Greenstein on behalf of Assemblymember Paul Koretz, Josh Kamensky on behalf of City Councilman Eric Garcetti, as well as SEIU 399, the Workmen's Circle, the Philippine American Bar Association, Habi-Arts, LEAP, Health-Access and First Unitarian Church. *** An International Human Rights Day Roundtable Sponsored by the Pilipino Workers Center (PWC) and People Of Color Against Globalization (POCAG) Let’s celebrate International Human Rights Day by updating ourselves on human rights issues in various places around the world and learning what we can do to do our part in the international movement to uphold our human rights. At this roundtable, you will hear from a speaker about the massacre at Hacienda Luisita where 14 peasants, including children where brutally murdered for protesting by the Armed Forces of the Philippines and the Philippine National Police. This incident happened only weeks ago. You will also hear from speakers about other human rights violations in other parts of the world. 7:00PM-9:00PM Friday, December 10, 2004 153 Glendale Blvd., 2nd Floor Los Angeles, CA 90026 *Light Refreshments Served For more information please contact Francis or Mike at (213) 250-4353. *** Save Section 8 Coalition Celebration and Fundraiser!!!! Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. -From the Universal Declaration of Human Rights, Article 25 (adopted December 10, 1948)* When: Friday, December 10 6:00-9:00 pm (International Human Rights Day) Where: 520 S. Virgil Ave., 3rd Floor, Los Angeles, 90020 (Office of the Los Angeles Coalition to End Hunger and Homelessness) What: Music, Refreshments, Some Coalition Memories from this year, a chance to socialize with the amazing people who make up the Save Section 8 Coalition, and a chance to make a financial contribution to make sure the Coalition continues to fight effectively for affordable housing ------------------------ Yahoo! Groups Sponsor --------------------~--> $4.98 domain names from Yahoo!. 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