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Jewish World Review August 7, 2001 / 18 Menachem-Av 5761

David Horowitz

David Horowitz
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Social Security Reactionaries and Reformers -- WITH the release of the report of the Social Security Commission, which George Bush created to guide his reform of the Social Security system, the class war has heated up. Reading the websites of Bush's opponents takes a senior like myself back to the days when Stalinism was the fashion in progressive circles and the Daily Worker featured bulbous capitalists in silk top hats with "Wall Street" and dollar signs emblazoned on their tuxedo bibs.

"Big Wall Street fans of privatization stand to make $240 billion over the next 12 years if Social Security is replaced by privatized individual investment accounts," warns the AFL-CIO website in a "social security quiz" designed to show that giving citizens ownership of their own money is a scary venture designed to line the pockets of the ruling class. Since the federal government, municipalities of all sizes, and all government programs favored by the left also make money for Wall Street tycoons who finance their debt, the AFL-CIO position - if consistently argued - would lead to the conclusion that government itself is a bad thing and should be opposed. In fact, what the AFL-CIO socialists really want is to eliminate the system of private enterprise and have the state finance - and politicians control - everything in sight.

The Democratic National Committee is not really distinct from these union socialists. They finance its party operations, shape its campaigns and supply the lion's share of its activists and ideas. Not surprisingly, the DNC has an identical view of the Social Security issue: "The Wall Street crowd, which was generous in its financial support to the Bush campaign, likes this plan." Ergo, it's bad. But one would have to be brain-dead (or have slept through all those Clinton-Gore fund-raisers) not to realize that Wall Street is not a one-party slush fund.

Small "c" communists, like Nader's Greens, invoke the fact that both parties are beholden to Wall Street support to justify their third-party aspirations. They alone are free from the influence of the pernicious corporate meddlers (who just happen to underwrite the privileged lives they all lead). The rest of us who are not saddled with the burdens of Marxist purity, understand that this is how things should work in a capitalist world. Small "d" democrats prefer a system in which Wall Street plays a significant role because this setup has provided more wealth to more people - to more formerly poor people - than any other system in the history of mankind. It is private corporations that made the liberation of the working poor possible. Only religious fanatics of the Seattle-Genoa sect will deny it.

One of those fanatics - Gerald McEntee, who is president of a government bureaucrats' union (AFSCME) - declared that the Bush reform plan was "Welfare for Wall Street." The leftist McEntee was a key Gore fund-raiser and strategist in the last election. This illustrates the Democrats' problem. The Democrat Party is dependent on Neanderthals, like McEntee, so even though it feeds sumptuously off the capitalist teat, at election time it is still a prisoner of the socialist mindset. Guided by the reactionary prejudices of the left, it acts in power as a mighty brake on social progress and social reform. If this is too counter-intuitive for the Salon reader, think of the Democrats' twenty-year war against Republican reformers over welfare. Theirs was a futile effort to defend an indefensible system that did more damage to the inner-city poor, and to minority poor in particular, than any system has done to any group since the abolition of slavery.

Like the Bourbons, who learned nothing and forgot nothing, leftwing reactionaries are on the warpath again. This time they are out to thwart a presidential plan to reform the unjust and near-bankrupt Society Security system. Democrats have dug in their heels to defend a program they created in the Thirties, which has become an epic Ponzi scheme for ripping off working people. (There is no real money in the so-called "Social Security Trust Fund" - hence the "Ponzi" sobriquet - just a lot of government IOUs representing a promise that they will eventually pay you by taxing future generations.)

In order to understand the destructiveness of the Democrats' agenda, it is necessary first to clear away the ideological fog they have created to obscure and smother the Bush reform. The Commission overseeing the reform is, in fact, not a Wall Street-Republican cabal, but a strictly bi-partisan group co-chaired by former Democratic Senator Pat Moynihan. The practical proposal to reserve two percent of individual retirement plans for private accounts is already a practice in social-democratic Sweden. These facts, of course, aren't enough to dissuade ideological storm troopers like the editors of The Nation from denouncing the plan as a "Social Security Heist" for the rich. But others should be more open-minded.

The idea behind the Bush proposal is to give working people control over their financial futures. Contrary to the Democrats' claims, this is not "welfare for the rich," but just the opposite: opportunity for the working classes. Rich people already have control over their financial futures through private plans that pay double - and more than double - what the Social Security system now offers. Unlike those who depend on Social Security, the rich get to control their retirement funds as personal assets and, therefore, to pass them on to their children. The Bush idea is really quite revolutionary: Let's give the working class the same privilege and power over their retirement funds that the "ruling class" has over its.

Democratic big spenders and neo-communist ideologues like McEntee, hate this. They hate it for the same reason that socialist bureaucrats hate all schemes that remove money from their control and put it in the hands of the people: it diminishes their own power. And that's basically what the Bush reform plan proposes to do. It will remove money from the control of government bureaucrats and put it into the hands of the people who earned it.

Since the left can't fight a program like this on the merits, it must resort to fear, which is its favorite tactic for manipulating the masses. "President Bush wants to turn Social Security into Social Insecurity," warns the DNC website. Bush's reform is "a dangerous privatization scheme…. Let him know you don't want him playing Russian roulette with Social Security." At the AFL-CIO website, the warning comes from a senior citizen:

"You don't trust Wall Street," 82-year-old Florence Daniels told Reuters during the [union] rally." It goes up and down, up and down.

In TV spots against Republican Randy Forbes in Virginia's recent special election, Democrats used the visual of a roller coaster to dramatize the insanity of the Republican scheme. Seniors on camera were shot against the roller coaster backdrop, and provided a Greek chorus:

NARRATOR: Did you know Randy Forbes wants to privatize Social Security?

SENIOR MALE: That's crazy.

SENIOR FEMALE: Oh, my goodness, no.

NARRATOR: Your Social Security savings riding up and down on the stock market.

SENIOR MALE: That roller coaster ride would cause a lot of people to have heart attacks.

SENIOR FEMALE: I'd have the pudding scared out of me.

So Republicans want to give old people heart attacks and scare them half to death. No wonder they call them "mean-spirited."

Fortunately almost half the population is now invested in the market and thus financially sophisticated enough to know that this is hogwash. "Wall Street" is not a monolith and there are plenty of investment instruments that are not as "risky" as a roller coaster ride (which, f you think about it, is not that risky either). A 5-year certificate of deposit at your local savings bank will earn you five percent - twice as much as your present Social Security account. All that "privatization" means, is that you control the money you put in your savings plan. Under the Bush reform, you could choose to put your Social Security funds in a savings account. If the entire account were privatized, instead of two percent, you'd be twice as well off when you retired.

The Bush reform plan is better than even this suggests, because it would allow you to pass the money your account accumulated to your children and loved ones when you die. In one or two generations, every working family could acquire the capital to become capitalists. What happens now, instead? The government keeps it.

Having put the picture back in order, we can see what a colossal rip-off the present Social Security scheme actually is, especially for working people. Remember, if you're wealthy, the tax that underwrites the scheme is only an annoyance. It's not 12.4 percent of your income as it is for workers (that's because there's a cut-off after you've earned $80,000). It's an extra dollop in the tax bite the government is already taking out of your pocket. On the other hand, if you're wealthy, you're not even going to notice your Social Security check when it comes, because you have far better options for creating your own retirement nest egg - like investing in the market and making a conservative eight percent (or four times the Social Security returns) for your efforts.

But if you don't have these options - if you're a working person of modest means - the Democrats' plan ensures that you are going to get royally screwed. And not just because the present system is heading for a cash crisis, which will eventually cost you 18 percent of your paycheck (instead of the present 12.4 percent).

If you make $34,000 a year and happen to die at 67, under the present Social Security system, you will have lost $156,000 over your lifetime. That's because you only got $30,000 of the $186,000 they took out of your paycheck before you kicked the bucket. In other words, you didn't live long enough to even make the two percent return that Social Security promises - let alone the five percent you would have earned if the Republicans had been allowed to give you a private Social Security savings account. Because Social Security is already in trouble, the Social Security retirement age is being raised under the current system to 67, so that you won't even get the $30,000.

If you think 67 is a young age, consider this: It is the average age at which African-American males die. Under the present Social Security system, the government takes 12.4 percent of the wages every black man earns, knowing that on average it will never pay him a dime back. Nor will he be able to pass any of the money he earned and saved to his children, as he would under the Bush reform plan. The government will get it all.

Terry Jeffrey is the editor of Human Events magazine. If Tom Daschle were asked to describe Terry Jeffrey, he would dismiss him as an extreme right-winger. (Of course he would refer to the Seattle Marxist Gerald McEntee as a compassionate "liberal"). In the March 12 issue of Human Events, Jeffrey fleshed out the Social Security reality for black workers by imagining a man named "Bob," who was born in South Carolina in 1940, graduated from segregated schools in the Fifties, served in Vietnam in the Sixties, and got married and had two children in the Seventies. In 1998, Bob's wife died of breast cancer, and two years later he himself died of a heart attack.

For 40 years the government had taken a healthy chunk out of Bob's pay before he could even deposit it in the bank. Under government rules Bob's employer was only required to tell him, however, that it took half of what it actually did take. By the mid-1980s, the chunk was 12.4 percent, but on Bob's paycheck it only said 6.2 percent. The Democrat framers of Social Security planned it this way to keep Bob from knowing what they were doing to him.

"Where did Bob's Social Security taxes go in those years?" asks Jeffrey. A good portion went to pay the current benefits of retired people. But "surplus" Social Security tax revenue - money that came in over and above what was needed to pay current benefits - was squandered by the members of a Democratic majority Congress to fund increased government spending for the purpose of enhancing their own power, prestige and political invulnerability."

Among the projects the Democrats might have spent Bob's money on were Andrew Serrano's "Piss Christ," a congressional pay raise, and a bailout of reckless NY bankers who invested in Mexican government bonds. "One place it didn't go was back to Bob, who wasn't a congressman, didn't patronize blasphemy, and was too shrewd to invest in the government of Mexico." It also didn't go to Bob's children, as it would under Bush's plan. Bob had paid the government more than $100,000 over his lifetime, possibly more than $200,000. This was more money than he had ever seen at one time while he lived. If Social Security were fully privatized, the money taxed for Bob's savings would go to his two children. Under the present system, it is just gone. Or rather it is gone to the congressional spenders. Bob's case is typical for one third of all black men. They pay all their lives and die before they collect a dime. Under the Democrats' Social Security system they lose what for them would be a fortune, and get back exactly nothing.

What about the part of Bob's paycheck that went to provide benefits to current retirees? Here is Jeffrey's hypothetical example: "While Bob, at 60 was paying 12.4 percent of the last paycheck he earned to subsidize Social Security, a retired 70-year-old Lexus-driving white lawyer across town, who used to charge his clients $200 an hour and who has a stock portfolio worth $5 million, was receiving regular Social Security checks subsidized by Bob's current payroll taxes. The retired lawyer's habit was to pick up his checks at the Post Office on the way to the country club."

I have quoted Terry Jeffrey's example to show how topsy-turvy our political categories are these days. The Democrats are defending a reactionary scheme that systematically robs black males and working people, bars them from the one chance they have to accumulate capital, and steals ten percent of their hard earned income over the course of their working life. The Republicans are proposing a progressive plan to end this injustice, put power into the hands of working people and return their hard earned money to them. Will they succeed? Only if the American people keep their heads clear of the ideological fog machine.

JWR contributor David Horowitz is editor of Front Page Magazine and the author of several books, including, The Art of Political War and Other Radical Pursuits,
Hating Whitey,
Art of Political War
, Radical Son : A Generational Odyssey . Comment on this article by clicking here.


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© 2000, David Horowitz