The Star-Ledger

Social Security Privatization, By A Nose

The Star-Ledger — Sunday, August 14, 2005

BY FRAN WOOD
Star-Ledger Columnist

For the past six months, President Bush has been trying to convince us we need to overhaul Social Security, warning that the program is going broke.

At the same time he's been trying to sell us on privatizing part of the system -- and while that is, in many ways, a separate issue from correcting a projected shortfall in benefits obligations, his attempt to sell the two plans simultaneously could certainly leave the casual observer with the impression that privatization is part of the solution.

Whatever our impressions, a sizeable majority of the country has let Bush know it just doesn't like the privatization part.

To which the Bush administration has now apparently responded by trying to sneak it through the back door.

That's why the most festive celebration of Social Security's birthday this year -- it turns 70 today -- has been the delivery of cakes to the offices of congressional Republicans from at least 30 states.

The ones delivered to New Jersey's six House Republicans bore a buttercream facsimile of a Social Security card and the inscription "Cut the Cake, Not Social Security."

Baked at Heritage Bakery in Matawan, the quarter-sheet cakes were personally delivered by members of New Jersey Citizen Action, the state's largest watchdog group, as part of its Keep the Promise campaign.

The cakes are only the most recent weapon in the group's long campaign on this issue. Ever since Bush started promoting his partial- privatization plan, says organizer Marilyn Carpinteyro, the organization has been pressing people to urge their congressional representatives not to support any proposal that privatizes Social Security, calls for cuts in benefits, or increases the national debt.

The point, says Carpinteyro, is that we need to "recognize the guaranteed benefits Social Security has provided for seven decades." And lest anyone think a partial-privatization plan would boost those benefits, the coalition's Web site (www.njcitizenaction.org) has a "Social Security Privatization Calculator," which enables visitors to determine just how much they stand to lose under Bush's plan.

Despite public skepticism about privatization, a small version of the plan is included in HR3304, which was introduced in the House just before the August recess and could come to the floor for a vote as soon as next month.

"Cutting benefits proved very unpopular," says Brad Woodhouse, communications director for Americans United to Protect Social Security. "So they've drafted a bill that doesn't deal with solvency, but purports to capture the current Social Security surplus and set up private accounts. By using this money, they imply they are preserving Social Security. But they're basically giving IOUs. ... It's a smaller version of what the president has proposed, essentially an effort to keep privatization alive."

This is a common political ploy, of course. You take an idea that makes people nervous and you either sell it as a very small-scale plan or you limit its duration, as has been done with, say, tax increases, tax cuts and the Patriot Act.

This is supposed to reassure us. But it's like the camel with his nose under the tent. Once established, a program becomes much easier to expand or extend. What Woodhouse calls this "first bite of the privatization apple" would enable the government to establish small private accounts that then could be built on as the new law is gradually expanded.

In time, the camel can push his way into the tent.

One defender of Social Security as we know it is James Roosevelt, grandson of the president who established the program. To him, the difference between Bush's privatization proposal and the existing system is "risk vs. a solid, guaranteed insurance program."

Roosevelt, who has spent the weekend appearing at anniversary celebrations, notes that Franklin D. Roosevelt had no objection to investing – when it was appropriate.

"My grandfather worked on Wall Street before he was governor of New York, and he was all for people investing if they had knowledge of the risks involved," Roosevelt said on the phone the other day. "That's why he set up the Securities and Exchange Commission."

But the nature of investing "is that you have winners and losers." When it comes to retirement money, having any losers is too big a risk.

There's no traditional gift for a 70th anniversary. But for purposes of Social Security, perhaps we should send mousetraps to our congressional representatives.

Not especially romantic, I'll grant you, but it might show the camel we mean business when it tries to stick its nose into the tent.

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