MainLine Peace Action/DelMont PDA

August 11, 2010

Save Social Security

Filed under: Uncategorized — Tags: , , — Walter Ebmeyer @ 6:07 am

The Truth About Social Security and Privatization

Our Social Security System vs. “Privatization”

Social Security is a successful intergenerational program that has served this country well. Yet some groups want to “privatize” Social Security by taking payroll tax money that now goes into the Social Security trust funds and investing it instead in private investment accounts.

Under Social Security, people earn the right to participate by working and contributing. The program was never intended to be an investment program. With broader policy goals than private retirement plans, its intent is to provide guaranteed income to seniors, disabled citizens, survivors, and their families. Privatization would severely undermine this system.

The arguments for privatization can seem persuasive at first, but they are all hollow and easily disproved. Following are five simple rebuttals to many common and misleading claims being spread by the privatization movement. When you hear any of the pro-privatization claims, refer to the facts provided here.

When They Say , “Privatization Will Fix Social Security for Future Generations,” The TRUTH is…

Privatization is not a plan to save Social Security; it is a plan to dismantle Social Security. Privatization means increased retirement risks, severe cuts in Social Security benefits, and a multi-trillion dollar increase in the federal debt.

Privatization diverts money out of Social Security into individual accounts leaving an even larger solvency problem. Privatizers fill this funding gap by dramatically cutting Social Security benefits. They cover the rest by borrowing money, thereby increasing the debt burden on all taxpayers by trillions of dollars over the next half century. With market-based accounts, the risk of an adequate retirement is placed entirely on the individual.

When They Say, “Social Security will soon go bankrupt,” The TRUTH is…

If Congress does nothing – makes no changes or “reforms” – Social Security is projected to deliver full guaranteed benefits until at least 2037. Even after 2037, again without any changes, the trust funds will continue to pay 76 percent of benefits for years after that.

It’s true, the aging baby boom generation will strain Social Security in the future. However, if Congress enacts modest changes, Social Security should be able to meet 100% of its benefit obligations for many decades to come.

When They Say, “Workers could get a better return by investing in the Stock Market,” The TRUTH is…

Right now, Social Security provides a guaranteed income, paying benefits every month for life, with increases for inflation. After adjusting for risk, Social Security has a rate of return equal to that of any mix of financial assets in private accounts.

And risk must be taken into account, because stock market returns are never guaranteed! As we’ve seen in recent years, returns can fluctuate wildly. One need only be reminded that between 2001 and 2003, the NASDAQ lost 75% of its value. And the market took a major downturn again in 2008. Nest eggs can disappear in an instant – and take months, if not years, to rebuild.

With privatization, some might do well, many might lose – but our society would lose the benefit of the sound, basic income security provided by Social Security retirement, disability and survivor benefits.

When They Say, “Social Security is unfair because tomorrow’s workers will have to support the Baby Boomers’ retirement,” The TRUTH is…

In fact, the Boomers have helped pre-fund part of their benefits by building a huge surplus that should keep Social Security alive and well for many years. With privatization, however, workers would end up in a double bind – paying taxes to support the Boomers’ retirement plus investing money in their own individual accounts, in hopes of building retirement funds for themselves.

To make matters even worse, today’s workers would have to bear the transition costs of switching to privatization, estimated at nearly $5 trillion over just the first twenty years- a cost that would fall on today’s young people.

When They Say, “Privatization gets rid of the inefficiency of big government,” The TRUTH is…

Administrative costs for Social Security are very low – less than 1% of the program’s budget. Diverting money to the stock market would incur the very high costs of brokers’ commissions, mutual fund management fees, and other expenses inherent in buying and selling stocks and bonds.

Small investment accounts are very expensive to administer. Commissions and fees could easily burn up as much as 15 cents out of every dollar of a worker’s annual investment as they do in some countries with privatized systems.

Wall Street brokers and fund managers would stand to make billions of dollars a year thanks to privatization, so it’s no surprise that they strongly support the privatization movement!

Conclusion: Privatization is NOT the Answer!

Unfortunately, exaggerated media coverage regarding Social Security’s finances has contributed to the illusion that Social Security is in immediate trouble. And the pro-privatization movement has spent millions of dollars promoting that illusion.

That’s why the National Committee to Preserve Social Security and Medicare is spreading the truth, through education material like the booklet you’re reading right now. And that’s why NCPSSM remains committed to blocking any effort to privatize Social Security.

By using these facts, you can help the truth – and Social Security – win! Thank you for supporting Social Security for the benefit of every generation of Americans!

This information was compiled by the National Committee to Preserve Social Security and Medicare  Distributed by


Barney’s “Dear Colleague Letter”

This is the letter that Barney Frank and Ron Paul want the other Congressmen to sign to advance the cause of military spending reduction.


September xx, 2010

National Commission on Fiscal Responsibility and Reform

1650 Pennsylvania Ave

Washington, D.C. 20515

Dear Commission Members,

As the National Commission on Fiscal Responsibility and Reform continues its work of reviewing and recommending an appropriate set of responses to our nation’s mid- and long-term fiscal challenges, we write to urge in the strongest terms that any final Commission report include among its recommendations substantial reductions in projected levels of future spending by the Department of Defense.

Given the size of our deficit and debt problems as well as the political challenges and policy controversies involved in implementing any solutions to them, it is clear to us that cutting the military budget must be a part of any viable proposal. The Department of Defense currently takes up almost 56% of all discretionary federal spending, and it accounts for nearly 65% of the increase in annual discretionary spending levels since 2001. Much of this increase, of course, is attributable to direct war costs, but nearly 37% of discretionary spending growth falls under the “base” or “peacetime” military budget. Applying the adage that it is necessary to “go where the money is” requires that rigorous scrutiny be applied to military spending, and we believe that any such analysis will show that substantial spending cuts can be made without threatening our national security, without cutting essential funds for fighting terrorism, and without shirking our obligations as a nation to our brave troops currently in the field, our veterans, and our military retirees.

Much of these potential savings can be realized if we are willing to make an honest examination of the cost, benefit, and rationale of the extensive U.S. military commitment overseas, which in large part remains a legacy of policy decisions made in the immediate aftermath of World War II and during the Cold War. Years after the Soviet threat has disappeared, we continue to provide European and Asian nations with military protection through our nuclear umbrella and the troops stationed in our overseas military bases.. Given the relative wealth of these countries, we should examine the extent of this burden that we continue to shoulder on our own dime.

We also think that significant savings can be found if we subject to similar scrutiny strategic choices that have led to the retention and continued development of Cold War-era weapons systems and initiatives such as missile defense. While the Soviet Union and its allies nearly matched the West’s level of military expenditure during the Cold War, no other nation today remotely approaches the 44% share of worldwide military spending assumed by the United States. China, for instance, spends barely one-fifth as much on military power as the United States. Instead of protecting us against a clear and determined foe and enemy, Defense Department planning and strategic objectives now focus on shaping the stemming the emergence of new threats by maintaining a vast range of global commitments on all continents and oceans. We believe that such commitments need to be scaled back.

Additionally, we believe that significant savings can be realized through reforming the process by which the Pentagon engages in weapons research, development and procurement, manages its resources, and provides support services. Former Secretary of Defense Donald Rumsfeld has speculated that waste and mismanagement accounted for at least 5% of the Pentagon budget annually, and despite a long history of calls for reform from outside the Pentagon, and actual reform initiatives within it, it is clear that much more remains to be done.

We repeat that we are not urging reductions that in any way would cut resources and supplies necessary to protect American troops in the field. Similarly, while we are not opposed to an honest look at efforts at reforming the way that the Department of Defense provides health care and other services to personnel, we are opposed to cuts in services and increased fees for our veterans and military retirees.

As your commission scrutinizes the federal budget and discretionary spending, we ask that you look closely at the Department of Defense in regard to the issues we have raised, and others. We hope that the report you release this coming December will subject military spending to the same rigorous scrutiny that non-military spending will receive, and that in so doing a consensus will be reached that significant cuts are necessary and can be made in a way that will not endanger national security. We strongly believe this to be the case, and we strongly believe that any deficit reduction package must contain significant cuts to the military budget.