Imagine What FDR Would Say about Bush's Social Security "Reforms"





Mr. Kashatus is a writer for the History News Service.

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When President Franklin D. Roosevelt was asked in 1935 to defend payroll contributions to Social Security, he said that he wanted"to give the contributors a legal, moral, and political right to collect their pensions and benefits.""With those taxes in there," he tartly asserted,"no damn politician can ever scrap my social security program."
 
Seventy years later, President George W. Bush is making a destructive effort to do just that. Insisting that the Social Security system is in danger of bankruptcy and that the only way to avoid the crisis is privatization, Bush is attempting to dismantle the centerpiece of Roosevelt's New Deal.
 
Social Security is the old-age insurance system that was created in 1935 in response to the widespread suffering caused by the Great Depression. Funding for the pensions of those who reached the age of 65 was to be raised entirely through taxes on employers and employees, not subsidized by general public revenues as in other countries. The size of individual pensions would reflect the amount of the worker's contributions. Thus, the higher one's earnings, the higher one's pension.
 
Amendments enacted between 1939 and 1972 greatly broadened coverage, substantially increased the real value of benefits, and indexed them against future inflation. In so doing, Social Security served to limit rather than exacerbate social inequality in the United States. Yet Bush still seeks to eliminate the system entirely and is taking his case to the nation's most powerful business lobbies to achieve that goal.
 
Two weeks ago, as a key House panel opened its first major review of the Social Security system in 20 years, the president addressed the National Association of Realtors, the largest political action committee, as measured by direct contributions to federal candidates. Asking for their support to"fix the crisis," Bush repeated his forecast about the dismal future of the system. By 2018, he argued, the system will begin to pay out more in benefits than it receives in taxes and will thus be forced to draw on the surplus in the Social Security Trust Fund. By 2052, he went on to say, the Trust Fund will be exhausted and only 70 percent of benefits will be funded by payroll tax revenues. The remaining 30 percent will have to be cut or funded by other sources.
 
In fact, the trustees of the Social Security system offer a more  optimistic assessment. They claim that economic growth in the United States will average 1.8 percent through the period 2015 to 2080, which is about half the rate of growth over the last century. Increase the rate of growth slightly to 2.5 percent, which is entirely possible, and there is no crisis whatsoever in Social Security.
 
Since Bush recently acknowledged that his privatization plan would not help the shortfall in revenue, he now stresses that it would"introduce greater fairness" into the system by protecting the elderly and the poor. It's difficult to imagine how the current system is"unfair" to those groups. Today, nearly 48 million people -- 33 million retirees and their dependents, 7 million survivors (mostly spouses), and 8 million disabled people -- receive Social Security benefits. The benefits are the only source of income for 20 percent of the elderly and for 38 percent of the African American and Hispanic elderly.
 
Together with Medicare, which pays the majority of medical bills for the elderly, Social Security is largely responsible for limiting the poverty rate among today's elderly to just 10 percent. Without the benefits, the rate would be as high as 50 percent.
 
Bush contends, however, that the federal government should no longer bear that responsibility. He insists that private retirement accounts would increase national savings and, in turn, boost investment and economic growth. Private accounts, he says, would also pay a higher rate of return than the Social Security Trust Fund, which is invested in Treasury notes.
 
In fact, under his plan a significant percentage of the payroll tax would be diverted to creating private accounts. As a result, the federal government would have to borrow the money necessary to keep making benefit payments. The borrowing would be covered by selling government bonds. Essentially, investors would be exchanging one set of paper (stocks purchased by the new private accounts) for another set of paper (Treasury bills). No real new value would be created, only profits for large investors generated by an increase in paper values.
 
Bush's plan marks a sharp departure from the New Deal, which sought to preserve the traditional American emphasis on individualism and voluntarism by funding pensions entirely through taxes on employers and employees. Instead, privatization only strengthens the president's"ownership society," in which tax cuts are extended to the wealthiest Americans and corporations and programs that help people survive and ensure national progress are cut rather than strengthened.
        
Were he alive today, FDR would be wise to ploys like privatization. So, too, should we be.


This piece was distributed for non-exclusive use by the History News Service, an informal syndicate of professional historians who seek to improve the public's understanding of current events by setting these events in their historical contexts. The article may be republished as long as both the author and the History News Service are clearly credited.



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Charles Edward Heisler - 6/20/2005


"Yes I do compare as did Amnesty International Gitmo to a Gulag. I think when one adds the tortures at Abu Ghraib, Bagram and the renditions to third countries, you have an outlaw regime that is utterly beyond legitimacy or respect for increasing numbers of peaceloving peoples."

You, Peter, Amnesty International, and the "peaceloving peoples" that you deign to speak for are all either ignorant of what "gulag" represents in real terms. It is unfortunate but not surprising that we continue to listen to quasi-educated people babble this tripe--it shows both historical ignorance and insensitivity as well as a complete lack of emotional control.
Peter you cannot make this analogy work, the points of difference are simply to many both in terms of the victims and the punishments--find another illustration, like "Gitmo is like a youth boot camp!" or something similar.


Peter N. Kirstein - 6/19/2005

I think David Brooks's stunning article on Marx and The Communist Manifesto does confirm that the values of Marxism and the class struggle are not merely embraced by "radical" "dangerous" academicians-- who "embarrass" as THEY SHOULD any institution that wishes to coerce or silence them--but is apparently acknowledged by the nation's leading conservative columnist. This is an article one sees perhaps once or twice a generation and should be lauded for its courage and insight.
http://www.nytimes.com/2005/05/29/opinion/29brooks.html?ex=1275019200&;en=9970f3282b0b87cc&ei=5090&partner=rssuserland&emc=rss

Yes I do compare as did Amnesty International Gitmo to a Gulag. I think when one adds the tortures at Abu Ghraib, Bagram and the renditions to third countries, you have an outlaw regime that is utterly beyond legitimacy or respect for increasing numbers of peaceloving peoples.


Charles Edward Heisler - 6/19/2005

Peter, no hyperbole please. Gitmo and Abu Ghraib are no gulags, not even close and you cannot point a finger at one leftist academician that has been silenced by this administration or by the right. If these leftist academicians no longer speak it is because they have come to realize that their arguments are fallacious and are no longer willing to embarrass themselves.
The sad thing is that the Left is no longer capable of vocalizing any kind of reasonable "vision" in this modern world. All of the pet theories of the left have been trampled by the reality of cultures cast into ruin by the assumption of liberal excuses and a world that refuses to fall in line with the concept that "flower power" is a viable discussion. There has simply been too much reality in recent history to maintain a leftist vision of humanity--evil only responds to overwhelming force. That the "international community" resents that reality is no surprise, they gave over their ability to defeat evil trying to pay for their idea of utopian existence and now have to live with their own impotence--old glories abandoned in the "Old World" necessarily causes resentment.


Peter N. Kirstein - 6/18/2005

I may have exaggerated presidential opposition to federal anti-lynching. Some I think did support it but others can individualise presidential action there.

I share your contempt for the Democrats. I do not even listen to them anymore. They are simply eager to regain power but cannot exhibit the courage to pursue significantly different visions than the Republicans.

I also wish to combat "worldwide terrorism," but I construe this nation as its primary source. Increasingly, the international community does also. It is hard for me to laud "unprecedented wartime freedom" with Gulags in Gitmo and Abu Ghraib and renditions and the silencing of many leftist academicians who offer a different vision from the stagnant voices of the Democratic-Republican center.


Charles Edward Heisler - 6/18/2005

Peter, maybe the most appropriate group to apologize for the failure to pass anti-lynching legislation would simply be the Democratic Party--after all, we must lay blame where blame is due. The Senate did try to right this wrong but were frustrated by Democrats--now that apology would be the most historically correct option and would serve to educate the ignorant in a most meaningful way.
As we near the fourth anniversity of the most devastating attack on America, followed by unprecedented wartime freedom and safety from subsequent attacks on this nation, it is unlikely that our deliberative bodies will apologize to the nation for the protection they have provided. Good causal reasoning tells me that there is a direct effect from all our efforts to defeat and contain worldwide terrorism--a conclusion many seem to forget as they carp and whine about America's response to 9/11.


Peter N. Kirstein - 6/18/2005

Each president opposed it during lynching's history. I think it disgraceful that the Senate Russell Office Building is named after a senator who defended the absence of federal sanctions and filibustered anti-lynching laws to death. I defend the senatorial tradition of filibuster but one can denounce its use for a given circumstance without supporting a rules change--that is what politics is all about.

Anti-lynching laws did pass the House of Representatives but were routinely defeated in the more conservative Senate. So the Senate might also apologise to the lower house as well and if I can throw in, to the nation for supporting in October 2002 authorisation to use force in the criminal war in Iraq.


Peter N. Kirstein - 6/18/2005

Each president opposed it during lynching's history. I think it disgraceful that the Senate Russell Office Building is named after a senator who defended the absence of federal sanctions and filibustered anti-lynching laws to death. I defend the senatorial tradition of filibuster but one can denounce its use for a given circumstance without supporting a rules change--that is what politics is all about.

Anti-lynching laws did pass the House of Representatives but were routinely defeated in the more conservative Senate. So the Senate might also apologise to the lower house as well and if I can throw in, to the nation for supporting in October 2002 authorisation to use force in the criminal war in Iraq.


William J. Stepp - 6/16/2005

As long as FDR is part of the discussion, let us recall that he opposed federal antilynching legislation, which H.L. Mencken supported.


Peter N. Kirstein - 6/16/2005

By "our people" I was referring generally to minorities throughout American history who are part of "our" nation and history.


Peter N. Kirstein - 6/16/2005

I agree with two of your points. That the Senate is basically pusillanimous and incapable of effective action. I also agree with you that symbolic gestures frequently are a sideshow and an effort to prevent more substantive action. In fact the left generally desires more effective recompense such as reparations although I realise such sentiment is not unanimous. Apologies were issued by the Reagan administration with regard to the Nisei and some reparations were paid as well.

Since you seemed to suggest that the mere act of contrition for thousands of lynchings was somehow interfering with more important business of the Senate, it appeared that you were unimpressed generally with actions taken to right historical crimes against our people. If I were wrong, so be it.


Charles Edward Heisler - 6/16/2005

Of course you would love reparations Peter, that would make everything ever so much better but you are wrong about the "modest act of contrition", nothing this bunch of posing, bombastic, ineffective, and cowardly bunch of senators ever do can be called "modest"!
I am not the least bit insensitive to the plight of heirs of former slaves, I just realize that apologies, reparations, prostration, and all forms of liberal hand-wringing does absolutely nothing to further the advancement of those folks. Matter of fact, without clinging to that sad history, what would be used for an excuse?
My point is that these silly symbolic gestures accomplish nothing except for those addicted to guilt and feel good gestures. Reality television has weedled its sorry way into the halls of Congress and it is embarrassing to the intelligent and frustrates progress for everyone.


Peter N. Kirstein - 6/16/2005

While obvious, I realise the Congress was not passing anti-lynching legislation but apologising for NOT doing so during Jim Crow.


Peter N. Kirstein - 6/16/2005

I would argue that passing anti-lynching legislation is important work and one that should not be denigrated. The refusal of the Congress to ban this terrorism over a period of decades is one of the many stains on this nation's history. I am surprised that anyone could object to this rather modest act of contrition. It is not suggestive of an enlightened individual who is sensitive to the plight or to the history of the persecuted. Until actual reparations for slavery are instituted, such apologies, while certainly appropriate, will be insufficientpenitence for a past dripping with blood and the cries and whispers of the middle passage.


Charles Edward Heisler - 6/16/2005

Oh Jon, there you go busting the dreamers' bubble! Gosh, don't you know it is irresponsible and mean to put a pencil to the "No Crises" Democrats' very darkly rose colored rhetoric? After all, if you can get political leverage, what does it matter if you send the entire system down the tube? Anything for the White House and a return to power for the Democrats.
Besides, the Senate has much more important work, ie., apologizing for failing to pass federal anti-lyncing lesgislation--when you can do that important work, why waste time on Social Security Reform?


Jon Robins - 6/15/2005

The point is not whether or not Social Security is a noble social plan or a socialist blight. The point is, it is simply not financially sustainable at our current population growth rates. Period.

What would FDR say if he knew that every cent of excess money collected in Social Security taxes has already been spent on other expenditures, and that American taxpayers will have to cough up the cash to pay out the "Trust Fund" that Congress will eventually owe the SSA?

The money to pay up future benefits will come from somewhere, and unless some creative President starts legalizing piracy on the high seas or decides to tax imports to death, that money will come from higher payroll taxes on everyone. Even totally eliminating the current social security wage tax cap will only bring a few more years of solvency before taxpayers get hit with the bill for the "Trust Fund."


Frederick Thomas - 6/13/2005


This quote is one of the "most-quoted" of Eisenhower's, used by zealots of both parties, but almost always quoted out of context, with important parts completely left out, depending upon the political bent of the quoter.

The above response may be from someone on the left side of the great American divide, but righties use it too. Righties love paragraphs I number as (1) and (3), and lefties love (2) and (4-minus an important name). To me it is much more intersting to read the whole thing. Whole, it shows much about Ike.

By the way, Eisenhower's strange venom ("stupid") against H.L Hunt, a brilliant man whether one agrees with him or not, is puzzling. Surely Hunt's books, radio shows, political activism, charities, and so forth, in addition to the many millions he made in the oil business, coming out of an elementary education in a super - populous poor farm family, show a man that only a fool or a partisan could possibly call ""stupid". This catty part of Ike, and the ad hominem attack, is quite unattractive. Hunt was surely more intelligent than Ike.

Roosevelt really liked "Ike's" ability to talk out of both sides of his mouth in such matters, and believed it the mark of the superior politician.

QUOTE IN FULL:

President Eisenhower to brother Edgar Newton Eisenhower, 8 November 1954:

1. "Now it is true that I believe this country is following a dangerous trend when it permits too great a degree of centralization of governmental functions. I oppose this--in some instances the fight is a rather desperate one.

2. "But to attain any success it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it.

3. "The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything--even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon "moderation" in government.

4. "Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things.
Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid."


Les Hildering - 6/13/2005

If Truman had been listened to, we would have had not only Social Security but also Medicare coverage for all Americans. Truman's original intent was full coverage but he could not get it. At least that is what NYT Krugman said in his column today. I remember LBJ signed the Medicare bill in Independence and I only wish full coverage for all Americans would have been achieved.

I also and I am not totally antiwar concerned that military spending may be thwarting efforts at more social security coverage.


Michael Glen Wade - 6/13/2005

Good piece. Consider your response if someone who failed to honorably uphold his military oath, who lost other people's money in failed business ventures and whose family made a career of feeding at the public trough came to you with a plan to administer your retirement.

Seems as though old Ike might have had one of those Hemingwayesque crap detectors. His statement seems quite contemporary. Well, maybe their number is no longer quite so negligible

"Should any political party attempt to abolish social security,
unemployment insurance, and eliminate labor laws and farm programs, you
would not hear of that party again in our political history. There is
a tiny splinter group, of course, that believes you can do these
things.
Among them are [a] few other Texas oil millionaires, and an occasional
politician or business man from other areas. Their number is negligible
and they are stupid."

- U.S. President Dwight D. Eisenhower, 8 November 1954

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