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Sarah Solon

Bad Budgetary Behavior: The Backdoor to Social Security Privatization

Remember the big fan-fare and bright lights surrounding this year's State of the Union - how it was nationally televised and watched? And remember all that media-wide hype anticipating the unveiling of the President's agenda for the year to come? While we didn't necessarily anticipate substantial policy discussion in his speech - is it too much to expect that if your president is going to privatize something, he'd let you know?

Announcing privatization proposals during the State of the Union would have meant using the front door - the entrance everyone in America would like a President to take. Instead, he slid almost unnoticed through the backdoor: dropping off a substantial budget request for Social Security privatization the very next week. Even though he'd been sarcastically applauded by Democrats for his Social Security defeat last year, and even though he'd had the rapt attention of Americans the week before, the President didn't unveil any plans for privatization publicly, opting instead for a quiet, back door route to privatization.

Based on Bush's proposed budget, people could set up private Social Security accounts beginning in 2010, with more than $700 billion of Social Security revenues being diverted to pay for these accounts over the first seven years. It's still not quite clear how hard the reductions will hit basic Social Security recipients in exchange for their ability to set up these accounts - or how exactly the president's private accounts will play out. Never mind the fact that the Social Security system isn't going broke.

Among its list of long-term problems is the fact that Bush's privatization plan relies on "progressive indexing." Under this guise, lower-income people would tie their Social Security payments to wages, while higher-income people would tie theirs to inflation. It's true that higher-income people would pay much more money into the new system than lower-income - which might seem like a much needed dose of social justice - but progressive indexing would strip Social Security of its political following, making it seem less like it an earned benefit and more like a social hand-out.

Usually quiet and composed, Senate Budget Chairman Judd Gregg (R-NH) roared against the White House yesterday for their "irresponsible" and "unrealistic" budgetary behavior. Planning to consider Bush's 2007 budget as early as next week, Gregg says he will stick solid to the president's $870.7 billion ceiling for discretionary funding.

When even quiet conservatives are becoming loud-mouth opponents, we have something to worry about. Not only is the President burying his plan to privatize social security, he's burying it within an unrealistic budget.

Sarah Solon: Author Bio | Other Posts
Posted at 5:45 AM, Mar 02, 2006 in Economic Opportunity | Federal Budget | Financial Justice | Fiscal Responsibility | Social Security
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