New phase of Bush’s sinister scheme

Will mid-April’s three-day stock market crash, when the Dow Jones Industrial Average fell over 400 points, dampen the Bush administration’s enthusiasm to invest workers’ retiree accounts in the Wall Street stock market?

Workers get their first Social Security cards at the end of the Depression.

NASDAQ also took a dive, partially connected to losses in blue-chip IBM stocks. Standard & Poor’s 500 took big-time hits, sending markets around the world reeling with heavy losses. Will this stop the anti-worker president’s hard sell to privatize Social Security?

Not likely.

The snake-oil salesman in the White House hears only the demands of the one percenters—the wealthiest sector of society. There is no turning back for this master of deception and his co-conspirators, who are determined to coerce the workers into giving up their Social Security accounts to the financial institutions.

In a sinister preemptive strike, he has marshaled government agencies, their bureaucracies and Wall Street lobbyists in a country-wide 60-day promotional blitz. The aim is to bamboozle millions of hard-working Social Security participants, primarily the baby boomers, into believing that Social Security is in crisis and that only private accounts will provide them with a secure retirement.

The Bush administration has siphoned off government funds from the Small Business Administration, Social Security itself, the Treasury Department and other bureaucracies, illegally commandeering the vast resources of the federal government in order to promote the privatizing of Social Security.

Taking security out of the trust fund

Recently, Bush traveled to the Bureau of the Public Debt in Parkersburg, W.Va., a secretive institution unknown to the average worker/retiree. He went there to prove to the millions of baby boomers his contention that the Social Security trust fund is in crisis and may go broke.

Referring to a file cabinet in Parkers burg filled with securities purchased for the Social Security system, Bush remarked, “There is no trust fund—just IOUs that I saw firsthand.” (Wall Street Journal, April 13) He blamed the government and questioned whether the government should control it.

But Bush is no innocent bystander! He is the CEO of this government. And he has commanded it to serve a capitalist empire that has plundered and profited from imperialist wars as well as the war against U.S. workers.

Alarmed and angry, Charles Rangel, a Black Congress member from New York and the top Democrat on the House Ways and Means Committee, wrote to Treasury Secretary John Snow, point man for Bush’s privatization plan: “I urge you to clarify whether these bonds are real, and whether the U.S. intends to honor them.”

The truth is, there are no bonds or other marketable securities in the trust fund. They have been totally replaced with IOUs from the government that are not marketable. In 1985 the trust fund was put at the disposal of the Reagan administration to use on an emergency basis for non-pension liabilities. But since then, both Democratic and Republican administrations have extended this provision, allowing them to use its assets to cover other debts.

Thus, hundreds of billions of workers’ retirement money has been spirited away without transparency, or oversight, or any independent working-class trustee to monitor these illegal transactions. Will future governments honor these IOUs?

Bush is doing everything he can to undermine confidence in Social Security—not to fix it, but to destroy it.

Former Treasury Secretary Paul O’Neill spoke the truth before he was forced out of the Bush administration. He warned the public in 2001 that “unlike private pension funds, the trust fund holds zero marketable assets, even though workers paid in cash surpluses. It contains only non-marketable bookkeeping IOUs for which no budget commits their pay-back and no cash interest is paid.” (Associated Press, July 10, 2001)

There are no appropriations in past, present, or future fiscal budgets to replace the surpluses created by the Federal Insurance Contributions Act (FICA). The IOUs have yet to be backed by U.S. dollars, bonds or Treasury notes that could gather interest and add many billions of dollars to the trust fund. Bush’s outrageous plan is to continue these illegal transactions and be sure the trust fund has no marketable funds.

The total government debt at the end of fiscal 2004 was $7.4 trillion, according to the Federal Debt Report. The total amount siphoned off from the Social Security trust fund to date is $1.5 trillion; an additional $1.6 trillion has been ripped off from a variety of other trust funds: the Federal Employees Retirement System, Federal Hospital Insurance Trust Fund, Railroad Retirement Fund, Military Retirement Fund and others. This doesn’t include what it would cost the government to set up private Social Security accounts: over $2 trillion.

Here is the fundamental question: Will Bush ultimately succeed in depleting the Social Security trust fund, with no plan to restore the surpluses needed to support future retirees? Shifting Social Security funds into private accounts is the first step in this sinister process.

The half truths from the Bush neo-con inner circle smell of a neo-fascist technique—a broadside attack against the workers and the oppressed and poor while posing as their savior. The Bush-created crisis is blamed on those who oppose him privatizing Social Security.

Inflation and stagnation

The practice of ripping off trust fund surpluses to cover deficit spending hides the true costs of debt incurred by the capitalist government. With inflation and stagnation surfacing, the Bush administration will deplete these funds at a more rapid rate.

Funds have been sip honed off in the hundreds of billions to expand the Penta gon and to pay for the occupations of Iraq and Afghan i stan. The money is also used to service the huge budget deficit—in other words, to pay the interest on huge loans from banks and other financial institutions.

Nevertheless, Social Security continues to generate a huge surplus each year—workers are paying much more into it than retirees take out. In that sense it is alive and well and has a surplus of cash for at least the next four decades. That surplus would last much longer if the government were to protect the current trust fund accounts. But they have not and will not. In fiscal 2004, over $139 billion that went into the trust fund has since been removed to pay for non-pension liabilities.

Bush and his conservative ideologues are well aware of these facts. So are Wall Street accountants and actuaries, as well as informed academics and politicians of both capitalist parties, all entwined in a conspiracy of silence. The Bush strategy is to sow confusion and fear in order to win over the baby boomers to the campaign to create private Wall Street accounts.

Social Security is one leg of a three-legged stool that seniors and baby boomers hope will provide them with a modicum of security. The other legs of the stool have virtually disappeared: savings accounts, which have largely dissipated due to credit card and other consumer debt, and private and corporate pensions. From the cradle to the grave, poverty looms larger than ever.

The income gap between the wealthiest one percenters and the workers and oppressed grows rapidly.

The capitalist government is raiding Social Security—not saving it. It is of deep concern to the workers and the oppressed that Social Security could become nothing but a memory—a social safety net won toward the end of the 1930s Depression through labor’s heroic battles with its class enemies.

While Bush is barnstorming the country with lies about a Social Security crisis that he is causing, the Democrats have now agreed that there will be a crisis down the road. They have shown a willingness to discuss the problem if Bush would give up his proposals to privatize Social Security. A compromise that would increase the current tax, postpone the age of retirement, and maybe even reduce payments is on the table.

Hands off Social Security!

There must be no compromise on these potential concessions. Millions of workers and oppressed, their families and loved ones, the disabled and others are totally dependent on Social Security. With inflation and a stagnating economy, a militant campaign is necessary to stop the government from raiding the trust fund.

Social Security must be the line in the sand that will marshal an independent class-wide struggle in the spirit of 1938, when Social Security was won. It is an issue that can win the hearts and minds of young and old, whites and people of color, the organized and the unorganized. The fight to retain and expand Social Security will be historic—no less than the struggle over a century ago to gain the eight-hour day, which is commemorated the world over on May Day.