It’s amazing that Social Security is again on the republican party chopping block after George W. Bush’s failed strategy to privatize the system for about 9 months after the 2004 election. Some permutation of Bush’s plan is under discussion in no less than 85 congressional and senate races around the country. It’s being discussed here in Illinois and in the Tenth Congressional District as Kirk and Giannoulias, and Seals and Dold battle it out along party lines. Given the recent history of the privatization plan, that we’re still discussing this is beyond me.
In 2005, Bush painted social security as a fiscal crisis, a system about to run it’s own deficit in 13 years and be completely broke in less than 40. With this data, Bush attempted to create a panic among seniors that they were about to receive deep cuts in benefits.
It didn’t take long before Bush’s privatization plan drew skeptics. The 2005 Trustee’s report failed to prove the system would be completely broke, showing instead that it would still pay 73% of scheduled benefits even after trust fund revenues were exhausted sometime after 2041. The CBO carefully qualified its social security doomsday prediction on the condition that tax policies, the 2001 Bush tax cuts, remained in place. AARP refused to fall in line, openly disagreeing with privatization despite Administration supporting media pressure. The Center for Budget and Policy Priorities pointed out that Bush’s privatization plan of diverting 4% of taxable earnings into private accounts would require trillions of dollars of borrowing unless accompanied by benefits cuts or tax increases. Diverting payroll taxes to private accounts, they found, would “reduce the revenue available to pay Social Security benefits and thereby advance the date when the program’s benefit costs exceed its non-interest income.”
The Bush Administration Social Security privatization proposal hit the skids almost as quickly as it started. By May of 2005, Social Security privatization was on the back burner, absent from then House Majority Whip, Roy Blunt’s list of priority legislation. By summer, congressional republicans were floating their own social security fixes, including increases in benefit age and decreases in benefit payments. By September, the Bush Administration was blaming budget problems caused by Hurricane Katrina for its failure to pass Social Security privatization.
After Bush’s failed foray into Social Security privatization, quickly abandoned by his own party, why are republican candidates talking about similar plans now?
This post is cross-posted at my Illinois Tenth Congressional District blog.