The Bush Plan to Destroy Social Security

by JACK RASMUS (Copyright 2004)

This past February 29, 2004 the head of the Federal Reserve Bank, Alan Greenspan, one of the top three economic policymakers in the Bush administration, announced that the Social Security System was approaching a financial crisis and would go broke. Social Security benefits would have to be cut and the retirement age at which workers could begin receiving benefits raised beyond the current 65 years—perhaps as high as 70 years!

This was the same Alan Greenspan who, back in 1983, headed up an 'Emergency Presidential Social Security Reform Commission' for then President Ronald Reagan, and predicted a collapse of Social Security at that time as well. Greenspan's recommendation back then, in 1983, was to 'save' Social Security by increasing the payroll tax paid by workers that funds Social Security.

Greenspan's 1983 recommendations were quickly adopted by Congress. And over the past 20 years, both rates and taxable income levels have continued to rise, to the present 12.4 % rate today on earnings up to $87,900 a year.

The direct result of the 20 year rise in payroll taxes since 1983 has been to generate a Social Security Surplus of $ 1.46 Trillion dollars.

But wait a minute! Hold on! Over the last 20 years a Surplus of $ 1.46 trillion was created and it's again going broke? With that much Surplus, how can Social Security again be on the financial ropes? Is it because benefits were increased dramatically over the years? No. There have been virtually no significant increase in social security benefits the past 20 years. Could it be that millions more 'baby boomers' were discovered hiding under the bed, and will soon be retiring in the years ahead? No. Roughly the same 'boomers' who were born between 1945-1955, and were alive in 1983, are around today.

So where did all that money go? What happened to the $1.46 trillion Social Security Surplus? As the old Buffalo Springfield song of the sixties said: "There's something happening here"...!

What's happening is the biggest financial scandal in U.S. history, the biggest swindle of American working class families, or any working class, anywhere in all of history. The magnitude of the scandal exceeds the $1 Trillion bail out by American taxpayers of the corrupt Savings & Loan industry under Reagan and Bush I during the 1980s. The costs of the current Enron-Corporate rip-offs and scandals under Bush II are dwarfed in comparison.

The $1.46 trillion Surplus paid for by workers to ensure a minimum retirement has been sucked out of the Social Security Fund by administrations from Reagan to Bush (with the agreement of Congress)! Not a penny remains in the Social Security Fund.

Despite legislation passed in the early 1990s declaring a 'lock box' on the Social Security Fund, the entire Social Security Surplus nevertheless has been permanently 'borrowed' every year and transferred to the federal government's general fund to help reduce and offset chronic annual Federal budget deficits over the past 20 years. Deficits totaling approximately $4 trillion dollars from Reagan through Bush—about $2.9 trillion of which went to tax cuts for the rich and for corporations, and the rest to pay for a doubling of military spending by Reagan in the 1980s, for two Iraq wars, the war in Bosnia, and for the current phony War on Terrorism.

In other words, American workers and families have indirectly been paying with their wages and their retirement benefits for the Reagan-Bush tax cuts and wars of the last 20 years! If the $1.46 trillion 'borrowed' were restored to the Social Security Fund there would be a massive excess of funds today in the Social Security System—more than enough to pay for universal health insurance for everyone in America!

The incredible magnitude of this $1.46 trillion theft of workers' wages and retirement security is quantified in the following Table One, illustrating the annual Social Security Surplus and the Federal budget deficit before and after the 'borrowing' of the Surplus.

TABLE ONE (in $billions)

Social Security
Deficit Before
Deficit After
1997$81.4-$103.4 -$22.0
1998$99.2 -$30.0$69.2
2002$159.7 -$317.5-$157.8
Cumulative$1.464 trillion-$3.977 trillion-$2.513 trillion

This grand theft stands in stark contrast to World War II and even during Vietnam. The cost of World War II was financed primarily by a highly progressive Income Tax, as well as other taxes on corporations to prevent excess profits being derived from government contracts. Even the Vietnam War was largely financed by a surtax on incomes, paid largely by wealthier citizens rather than by the transfer of a payroll tax-generated social security Surplus to cover U.S. budget deficits.

If there is a crisis in Social Security it is a political and criminal crisis, not a financial one. The money was there. If it's now gone, it's because it was stolen—by Reagan, by the Bushes, and with Clinton and the Congress conveniently looking the other way.

The Fundamental Economic Strategy of Reagan-Bush

This greatest theft of all time should be viewed in a broader context. That context is the fundamental economic strategy of the Reagan-Bush regimes during the past 20 years. As it was with Reagan, the basic economic strategy of Bush has been purposely to create as big a chronic federal budget deficit as possible.

That's right, the deficits are no accident. They are not the result of political negligence. They are planned!

By generating huge annual deficits those in power can then turn and force through massive cuts in spending on social programs. Without the huge deficits there is no rationale for the cuts. This is, in fact, what has been going on for the past two decades. What remains of most social programs and services today are empty shells of the programs they once were before Reagan and Bush.

But earlier, targeted social services were only the appetizers. With most of those social programs now cut to the bone, the remaining main course meal is the only 'New Deal' target of consequence left—Social Security!. Wall St. has been drooling for years over the possibility of carving up Social Security. Now they are sharpening their knives, grabbing their forks, licking their lips, and getting ready for the real feast!

While the $1.46 trillion Surplus generated between 1983 and 2004 has already been stolen, there is still another additional $1.1 trillion Surplus expected to be generated between today and 2018. That's their target.

In order to get their hands on that $1.1 trillion, what the radical Right and Bush plan to do is to 'privatize' Social Security. They want legal permission to hoodwink workers, to cajole, to lie, to launch a major marketing campaign, and to convince them to roll their retirement dice at the stock & bond casino called Wall St. But for that to happen a crisis must be engineered first. Workers must be convinced that the way Social Security has existed, and been structured, over the last 70 years is no longer viable, and that it will never 'pay out'.

Greenspan's remarks earlier this year were the opening salvo in that campaign to create the appearance of a new financial crisis in Social Security—a crisis which the Reagans, the Bushes, and their right wing friends in Congress, Tom Delay and Bill Frist, like Newt Gingrich and others before them, have themselves been patiently engineering over the years by sucking the Surplus from Social Security.

The Basic Ideological Motive: Dismantle the 'New Deal'

The wealthiest capitalists of this country have never accepted the permanency of the Roosevelt New Deal reforms of the 1930s, when concessions were made to American workers in time of depression and world war. Social Security was the touchstone program of these concessions, of the New Deal itself.

Nixon talked about undoing the New Deal in the early seventies. It was part of his so-called 'New (Domestic) American Revolution' that he planned to launch in his second term, but was cut short by impeachment and Watergate.

Upon first entering office Reagan made an attempt to raise the Social Security privatization flag in 1982-83, but had to back off and settle for the payroll tax increases. The time was still not quite right to pull it off.

The Neocons in the Bush I administration resurrected many of Nixon's plans on paper, but were distracted by the first Gulf War, the recession, and the one term stand of their patron, Bush I.

As President, Bill Clinton slowed down the drive to privatization but could not stop the momentum. Clinton's initial efforts to resurrect New Deal-like programs, such as National Health Insurance, were quickly abandoned and replaced with doomed policies like 'managed health care'. The policy focus of his administration then quickly turned once again to cutting other social services, the most notable of which was welfare reform at the time.

But now Bush and friends believe the time has come once again to privatize Social Security. However, the goal of privatizing Social Security, and diverting its cash flow to Wall St., has not been helped by the collapse of the stock market during the Bush II recession of 2001-03. That is why they now need once again to generate a phony crisis in Social Security to resurrect the campaign.

What they want is not simply to raise the retirement age or cut benefits. That is just the appearance, the symptoms. What they want is to convince workers there is insufficient funding long term for a viable Social Security program as it is now structured.

So the fight for the retirement hearts and minds of American workers is now underway. The misrepresentations and confusion campaign has begun. Yet another Bush 'big lie' has been thrown into the ring, this time by the loyal croupier, Alan Greenspan, the 'capo de capo' for political 'Dons' from Reagan to Bush. Like loaded dice rolling across the crap table of public debate, we have yet to see what numbers come up—sevens or snake eyes. Only the laws of political probability will tell.

Less probably and far more certain, however, is the following: should George Bush be re-elected in November, a major radical restructuring of the entire retirement system in America will be placed at the top of his new domestic policy agenda. The main target: eliminate Social Security as we know it, the last vestige of the New Deal, replacing it with a series of privatized 401Ks, new IRAs, and other half-way house investment vehicles leading directly to Wall St. As part of this restructuring, the system of union negotiated pension plans will also be on the table. But that's a story for another article.

—Jack Rasmus, National Writers Union, UAW 1981, AFL-CIO.

This article is an excerpt from Jack Rasmus's forthcoming book, THE WAR AT HOME: The Corporate Offensive in America From Reagan to Bush, which is available for pre-ordering along with offerings of other plays, music and videos.

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