President Bush’s campaign to privatize Social Security grows curiouser and curiouser.
The president and his flacks started by drumming up a fake crisis around Social Security, insisting that we had to act immediately. The president then proposed taking money out of Social Security, cutting benefits and setting up private accounts. But then he admitted that his answer, private accounts, had nothing to do with the problem, Social Security’s distant shortfall.
All the while, the president has been drumming out alarms about a program that is still in surplus, while ignoring one that is in trouble right now —Medicare, or the cost of health care generally. It’s like he decided to replace the roof on the house because its warranty runs out in 20 years, while ignoring the existing leaks in the foundation that are already flooding the basement.
Take a look at the facts. Social Security now is in surplus, bringing in more money than it spends. It will keep doing that for over a decade, accumulating over $5 trillion in Treasury bonds as assets. Cashing those bonds in — and they can’t be defaulted on unless we default on U.S. bonds generally — Social Security can pay out all the benefits promised for the next 40 or 50 years.(Estimates vary). Then, if nothing is done, Social Security will pay a larger benefit than it does now in real terms, but about 70-80 percent of the promised benefit.
No program in government is in better shape. The Pentagon’s budget runs hundreds of billions of dollars short of its plans over the next five years. The education budget shorts the president’s promised funds for reform by $13 billion this year alone.
The president warns that “13 years from now, 2018, Social Security will be paying out more than it takes in” — that is, that it will be drawing on the interest it has earned from its bonds. This, he suggests, is a crisis.
But Medicare is already paying out more than it takes in. And Medicare’s trust fund will be exhausted 20 or 30 years before that of Social Security. Medicare’s costs — tracking health-care costs generally — are soaring faster than inflation. And Medicare’s projected deficits over 75 years are vastly greater than the projected deficits of Social Security. Social Security has a long-term problem; Medicare is part of a health system that is broken right now.
The solution to Social Security’s shortfall is relatively simple. Raise the minimum wage, empower unions so workers capture a fair share of the profits and productivity they help generate, move to a full-employment economy — and the Social Security shortfall disappears all by itself. Or, if you assume a slow-growth, low-wage economy like the one Bush’s policies are producing, just tax all wage income at the same rate. Everybody pays, everybody contributes. Social Security is solvent for the rest of the century.
But Medicare’s problems are not only more urgent but far deeper. Medicare costs can’t be solved without solving the problem of health care in the U.S. We spend far more on health care than any other industrial country, but have worse results in life expectancy.
We’re paying more and getting less. We waste billions on insurance company marketing and administration, billions more on HMOs. But the companies cleaning up on health care have one of the most powerful lobbies in Washington. They rip taxpayers off by paying into what might be the most corrupt Congress ever.
Consider the prescription-drug bill. The Republican majority forced through a bill that requires Medicare to pay HMOs 25 percent more to serve patients than it would cost under traditional Medicare. They then paid off the drug companies by prohibiting Medicare from negotiating a better price for drugs. The billions ripped off could go a long way in covering Social Security’s shortfall.
Bush has directed no attention to our broken health-care system; he’s said nothing about the challenge facing Medicare. Instead, he proposes draining Social Security of funds to set up private accounts — and then admits that the proposal won’t even help address the long-term shortfall that Social Security faces. It’s like we have a smooth-running, efficient automobile with a tire that may spring a leak a decade from now, and the president argues that we should scrap the car and buy a new one immediately.
No wonder Bush’s privatization scheme is in trouble. But even if we stop him from dismantling Social Security, we’ll all suffer because he’s ignoring the real challenge facing the country — our broken health- care system. Common sense is a scarce commodity these days in Washington.