Maloney Bashes Bush’s S.S. Plan As He Wages Fierce Fight For It
Recently, Congressmember Carolyn Maloney (D–Queens/Manhattan) visited the Sunnyside Senior Center to outline her opposition to the president’s plan, declaring that it would turn one of the most effective social programs of all time into “a roulette game where people have no idea what to expect when they retire and where trillions of dollars in costs will be lost out of the current Social Security Trust Fund.”
The president’s proposal is built around a proposition that workers should be allowed to use some of the money they pay into the Social Security system to set up private investment accounts in stocks and bonds in order to earn more than they would by participating completely in the present system.
However, opponents of the plan, including many financial experts as well as most Democratic lawmakers and some Republicans too, argue that the president’s changes would: cost trillions of dollars, would reduce benefits for Social Security members who stay in the old plan, would be too risky for those who join the new plan and would provide “a $940 billion windfall for Wall Street,” by Maloney’s estimate.
Maloney told the Sunnyside seniors, “Unfortunately, the administration is blatantly misrepresenting the facts in order to scare Americans into taking apart the Social Security system that has provided all working Americans financial support in their old age.”
There is general agreement among the Bush Administration, Congress and financial experts that the Social Security system needs some repairs, but the president’s solution would be too extreme and too costly.
In her presentation and in answers to questions from the Sunnyside Senior Center audience, Maloney declared that Social Security needs support, not an overhaul.
She maintained, “The current Social Security system is at no financial risk for the next 40 to 50 years, even under the most pessimistic budget projections.”
The lawmaker said the system is remarkably efficient, spending less than one percent on administrative costs. By contrast, up to 30 percent of the money invested in private accounts would be consumed by administrative costs, according to the Congressional Budget office and a University of Chicago study.
Citing the risks of privatization, she said that from 1999 to 2002, as the stock market went into a tailspin, people near retirement saw the value of their personal 401-Ks drop by an average of 25 percent, forcing many of them to delay retiring. The 401-Ks are made up of investments in individual stocks or mutual funds, a collection of stock investments.
Summing up, Maloney explained, one of the central problems in the president’s plan is that if you divert money from current retirees to invest money in the stock market, there isn’t enough money to pay for existing beneficiaries.”
Maloney continued, “The president’s plan actually makes Social Security’s financial condition worse than if Congress did nothing.
“We would have to borrow $2 trillion in the next 10 years, and $4.4 trillion in the 10 years after that—meaning that all the Trust Fund assets would be used up by 2021, two decades sooner than if we did nothing at all.”
Maloney, whose criticisms of the president’s plan are generally held by her fellow Democrats, noted that the president hasn’t put an actual proposal on the table yet, but his trial balloons make it clear that he would cut deeply into current benefits and increase the Social Security deficit by trillions of dollars while doing nothing to shore up the system for the future.
Meanwhile, the president has been traveling throughout the country trying to drum up support for his proposals. While Congress enjoyed a recess last week, lawmakers took the pulse of their constituents on the Social Security reform issue.
Some top Republicans reported according to a New York Times story last Sunday, that they found much confusion on the issue and strong well-organized opposition to the president’s plan.
One influential Republican, Senator Charles E. Grassley of Iowa, chairman of the Senate Finance Committee, said the president had the major responsibility for winning voters over to his cause, who then would exert their influence over lawmakers to embrace the program and approve it.
Grassley didn’t seem too optimistic at this time about the chances of the president’s proposals becoming law. He said he hoped to build a Democrat/Republican consensus behind the program “but it’s starting very slow because too many Republicans and Democrats—how would you say it—don’t have the confidence that this issue is ever going to come up,” he was quoted as saying.
However, the president has overcome odds on historic proposals before. Remember Medicare and prescription drug coverage? We’ll have to wait and see if he can get his radical Social Security reforms passed as he did the far-reaching Medicare changes.