CAF Responds To GOP Attack On Social Security Analysis: Fails To Defend Bush Privatization Campaign

WASHINGTON – The Campaign for America’s Future responded in detail today to the RNC’s Friday night attack on the group’s analysis of the impact of President Bush’s campaign to privatize Social Security. The RNC issued a press release and statement late on Friday night that distorts the truth and attacks the Campaign for America’s Future even as the American public and policymakers from both parties express increasing skepticism of the president’s plan to privatize Social Security.

Campaign for America’s Future Co-director Roger Hickey said that the RNC campaign of name-calling is a sign of their weakness.

“We stand by our analysis of the president’s privatization plan,” said Hickey. “The RNC’s distortions of Campaign for America’s Future and other privatization critics only signals political desperation and an unwillingness to come clean with the facts. Privatization will cut benefits for every working American.”

The Campaign for America’s Future reports attacked by the RNC show that a typical 20-year-old worker would lose $152,000 in guaranteed Social Security benefits if the president’s plan to privatize Social Security is implemented.

The RNC’s attack came as the Campaign for America’s Future promotes the efforts of more than 20 organizations critical of the president’s privatization plan–including the AFL-CIO, the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans, USAction and others. The groups unleashed a broad assault on the president’s privatization plan, joining with local leaders in every city the president visited following his State of the Union address to launch daily news conferences, rallies and advertisements.

Center for Economic and Policy Research Co-director and Economist Dean Baker, Ph.D., whose data was cited in the Campaign for America’s Future’s reports, immediately responded to the substantive flaws in the RNC’s attack.

Baker said that the president has no evidence that privatization would boost guaranteed benefits, citing that the president’s Social Security Commission refuses to provide evidence that a set of dividend and capital gains could add up to the 6.5 percent rate of return they claim is possible with private accounts.

“The president, and now the RNC, are playing games with the numbers in describing the impact of their Social Security privatization proposal,” said Baker. “If the president wants an honest debate on the merits of his proposal, he should allow the SSA’s actuaries to rigorously derive a set of projections of stock returns from the profit growth projections used in its analysis of the Social Security programs.”

Hickey noted that the president has not proposed a real, detailed legislative proposal to improve the long-term solvency of Social Security or explain how he would pay for the massive cost of private accounts.

 “The president’s actual plan is a blank sheet of paper. It’s hard for the RNC to push their distortion campaign when there is nothing behind it,” said Hickey. “If the RNC wants to correct us, they should tell the American people the real details of what the president plans to do to the guaranteed benefits we’ve paid for.”

The Campaign for America’s Future examined Model 2 of the president’s 2001 Social Security Commission to produce the analysis, the only detailed plan released by the Bush administration.

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RNC DISTORTS THE TRUTH IN SOCIAL SECURITY ATTACK
Rhetoric V. The Reality For American Workers

RNC Didn’t Read The Campaign For America’s Future’s Analysis:
Report Analyzes Commission Model That The President Said Is The Basis Of His Plan.
The reports the Campaign for America’s Future released are based on the only detailed plan advanced by the White House, which includes a scheduled reduction in Social Security’s guaranteed benefits phased in over time. Plan 2 of the president’s Social Security Commission cuts benefits by 10 percent for workers age 55. (CBO, “Long-Term Analysis of Plan 2 of the President’s’ Commission to Strengthen Social Security,” 7/21/04)

RNC Implies President’s Plan Is Worse Than Bankrupt:
President’s Plan Offers Fewer Benefits Than The System The RNC Calls “Bankrupt.” RNC Comm. Dir. Brian Jones said that “Social Security will go bankrupt unless action is taken,” in their attack on the Campaign for America’s Future. The president’s plan would provide workers age 55 and younger with smaller guaranteed benefits than the current Social Security system, which the RNC calls “bankrupt.” (CBO, Ibid.)

RNC Exaggerates Stock Market Gains:
Private Accounts Can’t Make Up For The Benefit Cuts Privatization Requires.
The White House refuses to provide evidence that a set of dividend and capital gains could add up to the 6.5 percent rate of return they claim is possible with private accounts. (Dean Baker, “No Economist Left Behind Social Security Test,” www.cepr.net, Accessed 2/12/05)

RNC Plays A Numbers Game To Obscure The Facts:
The RNC Says Guaranteed Benefit Cuts Are 4 Years Later Than CAF’s Report Projects. The president introduced a 4-year delay in the proposed implementation of his privatization plan. (State of the Union, 2/2/2005) This only delays the massive benefit cuts outlined in the Campaign for America’s Future’s reports by four years. The RNC did not refute these results, only that the timing now includes a delay.

RNC Doesn’t Know The Details Of President’s Plan:
The President’s Plan Is So Secret, Even The RNC Doesn’t Know It. The RNC claims that “price indexing” is not a feature of the president’s plan. However, the only plan discussed at length by President Bush clearly includes price indexing (Model 2, President’s Commission; 2004 WH Economic Report, Ch. 6, www.gpoaccess.gov/eop/index.html) A recent White House memo clearly states that the president “cannot solve the Social Security problem with PRAs alone.” The memo says that “under current law benefits are calculated by a ‘wage index’ – but because wages grow faster than inflation [prices], so do Social Security benefits. If we don’t address this aspect of the current system, we’ll face serious economic risks.” (WH OSI Dir. Peter Wehner, Memo, 1/3/05) Price indexing is the White House’s method to eliminate Social Security’s guaranteed benefits.

RNC Doesn’t Represent A Majority Of Americans:
The RNC Is Pushing The Agenda Of A Narrow Set Of Special Interests. Very few people support an overhaul of the Social Security system or any reduction in its guaranteed benefits. Recent polls find that resistance is growing to the president’s plans to privatize Social Security. While 55 percent believe the president’s privatization plan is a “bad idea” and 85 percent say benefit cuts are “too risky,” including 83 percent of Republicans and 84 percent of independents, RNC Chairman Ken Mehlman e-mailed a memo to millions of people that says core right-wing voters will define the RNC’s success on this issue. (CNN, 2/8/05; Newsweek poll, Marcus Mabry, 2/5/05; WSJ/NBC News poll, John Harwood, 1/18/05; Ken Mehlman, Memo to RNC members, 2/11/05)
 
RNC Wants Wall Street Firms To Make Billions Off Everday People:
The President’s Privatization Campaign Relies On Wall Street And Corporate Interests. The president is mobilizing big business and financial institutions that stand to benefit from privatization. (CATO Foundation Journal article quoted in the Los Angeles Times, 1/30/05).

The National Association of Manufacturers, the nation’s largest industrial trade association, created the Alliance for Worker Retirement Security to fund a public campaign to sell privatization. The Alliance includes the Securities Industry Association, which includes nearly 600 of the world’s most powerful investment houses. (www.sia.com)
• Alliance members spent $108 million lobbying the federal government in the last two years. Alliance members donated $34.6 million to federal candidates and political parties since 1999, $25.8 million went to Republicans. (Center for Responsive Politics, 1/25/05)
• Alliance leaders say that Schwab Brokerage is helping to fund their privatization campaign. The conservative Cato Institute also reportedly received funds from American International Group, T. Rowe Price, E-Trade Financial and others to fund studies on private social security accounts. (Los Angeles Times, 1/18/05)
The Coalition for the Modernization and Protection of America’s Social Security is actively pushing for private accounts. COMPASS plans to spend millions of dollars on the privatization campaign. (San Francisco Chronicle, 1/26/05)

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