A Big Social Security Lie to Watch Out For

One way that the Bushie's will sell their attack on Social Security will be to make their plan seem less radical than it is. They'll start by saying that the private accounts are voluntary for most, if not all workers. If you don't like or trust a private account invested in the stock market, you can just keep the old plan instead. Don't fall for this.

The creation of private accounts will, after all, cost money, that will be funded with debt from the US Treasury. Someday, the debt will have to be paid off. The only way to do this is to reduce Social Security expenditures down the line. Now, if you have a private account, the logic goes, you won't have to worry about that because your private account will more than offset the cuts they'll have to make in the rest of the program. You'll be fine.

But what if you choose not to have a private account? Well, here's the current social security cutting plan: currently, your social security payments increase as you live on in your retirement. They increase based on a formula that is wedded to average wage growth across the country. The moral behind that is that your retirement payments should at least sort of keep up with the wages of those around you since the wages of those around you determine your standard of living. Under some new plans, the increases will no longer be tied to wages but to the Consumer Price Index. The CPI grows more slowly than wages and it leaves a lot out (mass transit fares were hiked? The CPI doesn't reflect that...) The CPI is a common indicator of inflation. So, rather than keeping up with the standard of living, social security will keep up with inflation. To give you an idea of how assinine and cruel this is... say you retired in 1980 and your retirement wages have been indexed exactly to inflation since then. Your standard of living, in 2005, would be... a 1980 standard of living.

If you choose the private account option, maybe you don't care so much. Maybe. But what happens if you retire when the bond and stock markets are in turmoil? Do you have to wait? How long do you have to wait? Look at the Dow... it has just barely, 5 years since the market crash, recovered to its former levels. Look at the Nasdaq... it is still at half the level it once was, 5 years later!

And, the private account is a fixed sum of money that you have to live on until you die. It doesn't guaranty, as Social Security currently does, payments that will increase over time in order to make sure that you hav a chance to keep up with the increasing standard of living.

At the root of this debate is what we're owed for working our entire lives. I don't think that a proper, guaranteed retirement is too much to ask. Bush does. He doesn't think you're owed anything. And that's what you get for not being born rich.