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The Battle for Social Security: From FDR's Vision to Bush's Gamble Excerpt from The Battle for Social Security: From FDR's Vision to Bush's Gamble

by Nancy J. Altman



Breaking ranks with every former president, Republican and Democratic alike, President George W. Bush is engaged in a high-profile campaign to undo Social Security. He hopes to accomplish what has eluded his ideological brethren who fought for similar ends over the last 70 years. Like Representative Carl Curtis in the late 1940s and early 1950s, Bush seeks to curtail the benefits of all but the lowest-paid workers, so that all beneficiaries would receive meager, basically flat benefits, largely unrelated to earnings. Like the president's ideological predecessors in the 1930s and 1940s, he wants all but the poorest workers to be primarily on their own -- this time with the added twist of individual private investment accounts. His revisions would fundamentally alter the philosophy that underlies Social Security, a philosophy that has guided the program's policy makers throughout its history and kept it strong.

Perhaps having learned from the past, President Bush has cleverly avoided attacking Social Security on ideological grounds. Rather, he has endeavored to sell the reduction in benefits as a reform that is progressive because it spares the benefits of the lowest-wage workers. He holds out the hope of large gains with his talk of individual investment in the stock market. He even praises Franklin Roosevelt, the person Bush once called a "socialist," for his creation of Social Security. Instead of a frontal assault on the ideology of the program, President Bush seeks to convince Americans that Social Security is outmoded and unsustainable.

While President Bush will most likely fall in his quest to restructure Social Security, he and the Leninist strategists who support him have already succeeded in undermining a fundamental benefit that Social Security is intended to provide: security. President Roosevelt envisioned much more than a program that would keep people out of poverty, or even one that provided wage replacement up and down the income scale when work was no longer possible. Roosevelt wanted beneficiaries of the program -- virtually every man, woman, and child in the United States -- to have the confidence and peace of mind that they would be financially secure at retirement and in the event of lost wages due to tragedy.

President Bush has toured the country delivering the subversive and erroneous message that Social Security is designed for the last century and unworkable for an aging population. The increased average life expectancy of Americans is one of the greatest accomplishments of human ingenuity and modern science. Yet President Bush and others seeking to shake confidence in Social Security refer to the increasing longevity of Americans as if it were an unwelcome burden.

The president's erroneous refrain that Social Security will be "bust" and "flat broke" has gone a long way in elevating anxiety and fear about the future of the program. A New York Times/CBS News Poll conducted June 10 to 15, 2005, found, "Fifty-one percent of respondents said they did not think Social Security would have the money to pay the benefits they expect when they retire." A whopping 70 percent of those under age 45 held that belief.

Klaus Meyer, who lost a part of his private pension when his employer declared bankruptcy, captured the concern of many of his fellow Americans when he said, "[P]art of the retirement [benefit] I was promised . . . is gone. And now my Social Security is at risk. Where does it all end? You feel brutalized by the system." Meyer's concern about Social Security is a product of the Leninist strategy; if Americans cannot count on Social Security, perhaps they can be convinced to gamble on their future security with the president's private accounts.

In proposing such a radical change in Social Security, President Bush has taken on a gamble himself, a political gamble. He seeks to convey an image of political courage when he says, "Social Security has been called the 'third rail of American politics . . .' But if you don't touch it, you can't fix it." What he misses is that Social Security has the reputation of political invulnerability because it embodies fundamental American values that have overwhelming support.

Those basic values are what have made Social Security so effective and so popular. In all the many amendments of Social Security, these basic principles and intrinsic values have remained unchanged. Social Security is a conservatively structured program. Hemmed in on the left by Dr. Townsend and his supporters who advocated unrealistically large grants to all the aged and on the right by many conservatives advocating only means-tested welfare, Social Security was created with basic American values in mind. Its financing has always been conservative, relying on a dedicated tax and equal contributions from employers and employees to keep costs in check. It was built on the premise of work. Only those who have worked long enough to gain insured status and those workers' dependents are eligible for benefits.

It has been prudently and conservatively managed. It has an early warning system through its annual trustees' reports and 75-year projections, so Congress knows well in advance if the program needs fine-tuning. And it is one of the most efficiently-run programs around, public or private, with 99 cents of every dollar collected paid out in benefits.

Social Security's protections extend beyond just the individual to the family, a point that those advocating individual accounts fail to acknowledge. Within four years of enactment, the Social Security Amendments of 1939 added protection for children and spouses. These provisions have prevented millions of children who have lost parents from being engulfed in poverty. They permit those who stay home to care for children, and so reduce their own earnings, to have reasonable standards of living when the workers on whom they depend grow old, become disabled, or die. And the provisions have been amended to provide the same financial protection to dependent spouses who become divorced after many years of marriage.

Though Social Security has prevented millions of people from falling into poverty, it is much more than a poverty program. It is a program of social insurance, which provides benefits as a matter of right, not as a result of need. Franklin Roosevelt envisioned a program in which all workers paid in during their working years and drew benefits out when they were no longer working.

In converting that vision into reality, the staff of Roosevelt's Committee on Economic Security and those who followed recognized that benefits had to be adequate for those at the bottom rung of the economic ladder. The program would be unacceptable if low-income workers paid in over their working lives and then received nothing more than what was being provided down the street at the welfare office. To provide a meaningful return for those workers while restraining overall costs, the original program was designed with a weighted benefit formula that provided a higher return on first dollars earned.

In addition to providing adequate benefits to low-wage workers, the founders recognized that Social Security had to offer a fair return to higher-paid workers, if the program was to last. Social Security accomplishes both goals. The finely balanced formula produces benefits that are a higher proportion of a low-paid worker's wages, but a higher absolute dollar amount for higher-salaried workers who have contributed more dollars to the program during their working years. In that way, Social Security embodies goals of equity as well as adequacy.

Excerpted with permission of the publisher John Wiley & Sons, Inc. from The Battle for Social Security. Copyright (c) 2006 by Nancy Altman. This book is available at all bookstores, online booksellers and from the Wiley website at www.wiley.com, or call 1-800-225-5945.