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Lies about Social Security

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  • Lies about Social Security

    Thought people would like to read this, which reflects my own views about what is being tried -- another deception and manipulation of the American public.


    Little Black Lies

    By PAUL KRUGMAN

    Published: January 28, 2005

    ocial Security privatization really is like tax cuts, or the Iraq war: the administration keeps on coming up with new rationales, but the plan remains the same. President Bush's claim that we must privatize Social Security to avert an imminent crisis has evidently fallen flat. So now he's playing the race card.

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    This week, in a closed meeting with African-Americans, Mr. Bush asserted that Social Security was a bad deal for their race, repeating his earlier claim that "African-American males die sooner than other males do, which means the system is inherently unfair to a certain group of people." In other words, blacks don't live long enough to collect their fair share of benefits.

    This isn't a new argument; privatizers have been making it for years. But the claim that blacks get a bad deal from Social Security is false. And Mr. Bush's use of that false argument is doubly shameful, because he's exploiting the tragedy of high black mortality for political gain instead of treating it as a problem we should solve.

    Let's start with the facts. Mr. Bush's argument goes back at least seven years, to a report issued by the Heritage Foundation - a report so badly misleading that the deputy chief actuary (now the chief actuary) of the Social Security Administration wrote a memo pointing out "major errors in the methodology." That's actuary-speak for "damned lies."

    In fact, the actuary said, "careful research reflecting actual work histories for workers by race indicate that the nonwhite population actually enjoys the same or better expected rates of return from Social Security" as whites.

    Here's why. First, Mr. Bush's remarks on African-Americans perpetuate a crude misunderstanding about what life expectancy means. It's true that the current life expectancy for black males at birth is only 68.8 years - but that doesn't mean that a black man who has worked all his life can expect to die after collecting only a few years' worth of Social Security benefits. Blacks' low life expectancy is largely due to high death rates in childhood and young adulthood. African-American men who make it to age 65 can expect to live, and collect benefits, for an additional 14.6 years - not that far short of the 16.6-year figure for white men.

    Second, the formula determining Social Security benefits is progressive: it provides more benefits, as a percentage of earnings, to low-income workers than to high-income workers. Since African-Americans are paid much less, on average, than whites, this works to their advantage.

    Finally, Social Security isn't just a retirement program; it's also a disability insurance program. And blacks are much more likely than whites to receive disability benefits.

    Put it all together, and the deal African-Americans get from Social Security turns out, according to various calculations, to be either about the same as that for whites or somewhat better. Hispanics, by the way, clearly do better than either.

    So the claim that Social Security is unfair to blacks is just false. And the fact that privatizers keep making that claim, after their calculations have repeatedly been shown to be wrong, is yet another indicator of the fundamental dishonesty of their sales pitch.

    What's really shameful about Mr. Bush's exploitation of the black death rate, however, is what it takes for granted.

    The persistent gap in life expectancy between African-Americans and whites is one measure of the deep inequalities that remain in our society - including highly unequal access to good-quality health care. We ought to be trying to diminish that gap, especially given the fact that black infants are two and half times as likely as white babies to die in their first year.

    Now nobody can expect instant progress in reducing health inequalities. But the benefits of Social Security privatization, if any, won't materialize for many decades. By using blacks' low life expectancy as an argument for privatization, Mr. Bush is in effect taking it as a given that 40 or 50 years from now, large numbers of African-Americans will still be dying before their time.

    Is this an example of what Mr. Bush famously called "the soft bigotry of low expectations?" Maybe not: it isn't particularly soft to treat premature black deaths not as a tragedy we must end but as just another way to push your ideological agenda. But bigotry - yes, that sounds like the right word.



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  • #2
    Another interesting tidbit--

    The Bushies are intentiionally distancing themselves from the term "privatization" after polls showed that "private accounts" poll a full 20% lower than "personal accounts." Watch how the discourse changes in the next few weeks.

    I also want to know who is going to pay for the benefits of those people who won't have a trust funded by a generation of workers. Even if private (or personal) accounts are the answer, the administration seems to have missed the most important question.

    Comment


    • #3
      I have always believed that one of the reasons for government is that it will provide services to maintain a society. There was a sort of social contract - we vote for them, pay taxes etc and they provide health care, education, infrastructure, etc and in turn we will defend it when called upon. Unfortunately, most western governments these days are so infatuated with The Market that they have attempted to divest themselves of these responsibilities, saying that The Market will provide. Most governments these days seem to confuse democracy with capitalism, equating free markets to freedom.... What they fail to explain to people is that thyour political power in a free market is defined by the level of capital under your control.

      So unfortunately things like education, health care, aged care, social security, environmental maintenance etc are, in commercial terms, loss centres. Because the benefits that they provide cannot be easily turned into entries in a profit and loss statement they are seen as providing little value.

      The other day there was a story on the news wires about some guy in America who accidently fired a nail gun into his head. While most people concentrated on the (admittedly) humourously ironic aspects of the story, I couldn't help but notice that the emergency treatment he required cost him over $80,000USD. Shouldn't the state provide health care for its citizens? If not, then what is its purpose?

      Social Security is a similiar thing. If The Market makes employment of some people untenable, shouldn't the state provide for them? I don't mind some form of appropriate mutual obligation, but I think people need to start thinking a bit creatively beyond so called "work for the dole" type schemes. And when it comes to "retirement" haven't those people already fulfilled their half of the obligation. In fact many people don't actually want to retire but are forced into it by ageist policies...

      Oh, don't worry Mike, it's not just the American Public, it's beginning to happen here in Australia as well....
      Does it follow that I reject all authority? Perish the thought. In the matter of boots, I defer to the authority of the boot-maker.
      Bakunin

      Comment


      • #4
        Check out a few different social security calculators:

        These two are brought to you by "the man"
        http://www.heritage.org/research/fea...ocialsecurity/
        http://www.teamncpa.org/calculator/calculator_ncpa.htm
        I especially love the way this one projects that all other factors equal, a used car salesman will gain half again more benefits than an English teacher.

        And a couple that seem to be more centered in reality:
        http://www.iwpr.org/sscalc4/calculator.html
        http://democrats.senate.gov/ss/calc.html

        I have not reviewed the methodology of each of them, but I suspect that at least the top two don't factor in brokerage fees, which many critics see as likely to eat up half or more of an average persons PRA.

        And let's not forget what dropping a few trillion extra dollars into wall street will do to the market - can you say crash and burn? Good, I knew ya could.

        Here are a few more links, afl-cio put together a little quiz http://www.afl-cio.org/issuespolitic...ity/ssquiz.cfm, I got 12 of 12 (hint, when they start going into administrative costs, pick the smallest ones for the current system, and the largest ones for the Bush plan)

        And here http://democraticleader.house.gov/do...%201%2D6%2Epdf is what you could expect benefits to look like by state if the Bush plan were in effect today.

        Also of note is that the republican strategists are now talking about funding the 2 trillion dollar transition by reducing current benefits.

        Comment


        • #5
          The UK papers this weekend have been full of the NEETs - Not In Education, Employment or Training - or what was previously called the underclass. As you might have guessed, they are responsible for 567% of crime and 283% underage pregnancies, and are unlikely to have registered to vote, so everyone is lining up to blame them for societies woes.

          Anyway, one interesting thing that came out of this was the large burden on the tax-payer of someone dropping out of education without having picked up enough to make them 'employable'.

          If there was ever an argument for the cost-effectiveness of state-funded education, that is it - without it the tax-payer will end up paying for the uneducated in terms of benefits - or even more should they end up in prison.

          Comment


          • #6
            Originally posted by Jules
            If there was ever an argument for the cost-effectiveness of state-funded
            The fact is that government programs (Social Security, Education, Medicare, etc) operate with amazingly low administrative overhead (less that 1% in the case of SS), and private run programs tend to have admin overhead of 12% or more - this is one of the main reason that we "need" reform.

            Comment


            • #7
              Hi Jules. Welcome back. You've been missed!

              Comment


              • #8
                I was chatting with a friend of mine today who has just retired from a career as a marine engineer. He has been through a union coup that almost wiped out the pension fund, and is not inclined to trust the management of his pension to the union anymore, so he opted to take a lump payout and invest it privately. He has been talking to some brokers, and is looking at spreading his money around wall street, but with an emphasis on composite stock funds. During the course of the conversation, it dawned on me that if (or when) social security privatization dumps a few trillion dollars into wall street all my friend's investments will probably suffer for it. In fact, when put in that light, I realize that privatizing is actually a brilliant strategy for raping not just social security, but every privately managed retirement fund that invests in wall street stock and most investors that do not practice inside trading as well. I might be crazy, but I think I am beginning to see the light at the end of the tunnel, and it looks like the biggest pump-and-dump ever.

                Comment


                • #9
                  Originally posted by Groakes
                  Oh, don't worry Mike, it's not just the American Public, it's beginning to happen here in Australia as well....
                  *sigh*. This really gets me pissed to see even aussies get treated by freemarket jargon and shitty governance. Privatizing everything doesn't solve anything. I blame mostly the economic aspect going on. I guess capitalists either can't help it or are pushed into this kind of system.
                  I'm maybe more a social-liberal and i think keynes had his points.
                  There's a lot of hatred against socialist ideas now and everybody is for the "freedom of free enterprise". And privitization doesn't really make you "trust your mechanic" does it?

                  Comment


                  • #10
                    Originally posted by invalid nickname
                    I was chatting with a friend of mine today who has just retired from a career as a marine engineer. He has been through a union coup that almost wiped out the pension fund, and is not inclined to trust the management of his pension to the union anymore, so he opted to take a lump payout and invest it privately. He has been talking to some brokers, and is looking at spreading his money around wall street, but with an emphasis on composite stock funds. During the course of the conversation, it dawned on me that if (or when) social security privatization dumps a few trillion dollars into wall street all my friend's investments will probably suffer for it. In fact, when put in that light, I realize that privatizing is actually a brilliant strategy for raping not just social security, but every privately managed retirement fund that invests in wall street stock and most investors that do not practice inside trading as well. I might be crazy, but I think I am beginning to see the light at the end of the tunnel, and it looks like the biggest pump-and-dump ever.

                    I see it happening. Not only will small private investors like your friend suffer, small non-corporate brokers will, too. The people who stand to benefit most from this are large investment houses, which already control most of Wall Street. I may not trust the government fully, but I certainly trust it more than Wall Street.

                    Comment


                    • #11
                      Privatization is with us

                      I'm glad this issue has been raised. I don't know much about what is happening Stateside, but I have first hand experience of the UK situation. I'm disabled, and the condition is permanent and slowly getting worse. Yet every two years I have to prove this to the Social Security system. This is done via medical carried out by private firms (and has been done so since Maggot Thatcher sold off sections of the social security system to her chums). Every two years I am told there is nothing wrong with me and I have to go through a Tribunal system. The people who hear my case can earn up to آ£600 a day (and there are at least three of them). To date, I have always had my benefits re-instated (and I worked bloody hard as a teacher of deprived kids on a pittance salary to earn those benefits). But it is a sobering thought that as the system is privatized it is covered by commercial confidentiality laws and their decisions are extremely hard to challenge. What is more, the process of denying me money, paying someone to defend me, paying for all the paperwork to be processed, and paying for a Tribunal, amounts to what I get in a year. I realize that there has to be a means by which fraudsters (who are very few and far between compared with the real fraudsters at Westminster) can be weeded out, but if the system were open and fair, everyone would be happier and it would cost a lot less to run. But that would be too much like true socialism.

                      I'll stop. It's a hobby horse of mine. But it is a situation that many are not aware of and it reaches into all parts of the UK benefits system. A lot of the work done by Job Centres is now privatized. Much of the health service is already in private hands. It won't be long before it reaches the point where the World Bank can step in say that the whole thing has to be opened up to competition and the welfare system will collapse completely.

                      Should a politician dare to show their face at your door in the UK in the next few weeks, just ask them about this. Please.

                      Comment


                      • #12
                        What is sad is social security will probably not be around when I get old (even though I am paying in it). I don't know what the answer is. However, I would not invest my social security in the stock market.

                        Comment


                        • #13
                          It's sad that people are facing so much insecurity. Talking to my colleagues in Social Services about the recent local government pensions dispute, I was shocked by how many don't contribute to the pensions scheme. I could tell them it's the best on the market (but I'm not allowed to, not being a qualified Financial Adviser!) but the sad truth is that many of them just don't think they can afford it on their salaries. And for our lowest paid members, its simply not worth their while anyway. I have heard people in the staffroom discussing in a semi-serious way how they intend to commit a serious crime when they get old, so they can retire to the privilege of a warm prison cell! :?
                          \"...an ape reft of his tail, and grown rusty at climbing, who yet feels himself to be a symbol and the frail representative of Omnipotence in a place that is not home.\" James Branch Cabell

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                          • #14
                            Hi Doc - I feel like I actually am back now. Taken a new computer (so my wife can do her schoolwork and I can waste time on the web) and work finally easing bacj enough that I feel like looking at a computer in the evening. But yep, I'm back.

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