January 25, 2005 - 48 million Americans receive a Social Security check each month. For one third of them that check is 90% or more of their income that month. For another third the figure is 50% or more. For only one third of the 41 million will other income from investments, private pensions, or continued work exceed the amount of their benefit checks. Each month Social Security payments pump $41.5 Billion to fuel the consumer economic engine. As those dollars are spent they generate 7 times that amount in economic activity. Economists call it the “multiplier effect”. That is what we are talking about “reforming”.

The Republicans are talking about pulling two percent of the payroll taxes that fund the Social Security System out for what they are calling personal investment accounts. If things are left as they are; no change in the payroll tax; no reduction in the benefits; no change in the adjustment formula; and no further increase in the retirement age; they tell us that the system will have to start dipping into its reserves in 2018. If we cut the amount going into the reserves by two percent how much sooner will the day on which the depletion of the reserve begins? That is the inevitable result of privatizing part of Social Security that they don’t want to talk about.

There is another thing that they don’t want you to realize. Let us assume that you are still in your working years and you make a gross income of $50,000 from wages. You and your employer pay 12.4% in Social Security taxes on that income - $6,200 a year. If two percent of your payroll tax is diverted into a private investment account you will start accumulating money to supplement your reduced Social Security benefit at the rate of $120 per year.

The Republican’s promise not to cut benefits for today’s retirees or for those who will reach retirement age in the near future while you get your $120 out of the system. That means that in the first 10 years of “reform” they will have to borrow another $100 Billion a year on top of their already planned deficits to cover what they call “transition costs”. In the second 10 years the figure will be $140 Billion a year. The deficit for the last fiscal year for which we have final figures was $413 Billion. Their reform will add 25% to the red ink – and the President is already going to ask Congress for another $120 Billion this year to pay for his adventures in Afghanistan and Iraq. The math is, as the President likes to say, “fuzzy”.

During the campaign the President called it, “the ownership society” and told you that you would “own” your private investment account. You can leave it to your kids when you die. What he did not stress is that while you live it means you are increasingly on your own. But look on the bright side. There will be pie in the sky when you die for your kids to eat – at least that part of the pie that Wall Street doesn’t gobble up.