Wednesday, November 3, 2010

Erskine Bowles: Social Security's Enemy No. 1?

Erskine Bowles: Social Security's Enemy No. 1?

 

By Dean Baker, t r u t h o u t | Op-Ed

truthout

November 1, 2010

 

http://www.truth-out.org/erskine-bowles-social-securitys-enemy-no-164708?print

 

Nearly everyone following the Social Security debate is

familiar with former Wyoming Sen. Alan Simpson, the co-

chairman of President Obama's deficit commission. Simpson,

the son of a senator, thrust himself into the national

spotlight with an infamous, late-night email. In addition to

displaying an ignorance of bovine anatomy, this email

displayed open contempt for Social Security and the tens of

millions of retirees and disabled people who depend on it.

 

While Simpson has seized the spotlight, it may prove to be

the case that Erskine Bowles, his co-chairman, poses the

greater threat to Social Security. The reason is simple:

Bowles is the living embodiment of the rewards available to

politicians who would support substantial cutbacks or

privatization of the program.

 

On either policy or political grounds, Social Security should

be very safe right now. In policy terms, it would be

difficult to envision a more successful government program.

Social Security does exactly what it was intended to do. It

provides a modest retirement income to the vast majority of

the country's workers and their families, keeping them out of

poverty in their old age. Almost two-thirds of retirees rely

on Social Security for more than half of their income.

 

The collapse of the housing bubble has destroyed much of the

home equity of near retirees. The plunge in the stock market

that followed in its wake severely deflated the retirement

accounts of middle-class workers. As a result, near retirees

are likely to be even more dependent on Social Security than

those already retired.

 

Social Security also provides workers with insurance against

disability in their working years. Nearly 20 percent of

beneficiaries are receiving disability payments. Many workers

are not even aware of the disability insurance aspect of the

program, but if they find themselves unable to work due to

disability, they will be glad to learn that they had

insurance through Social Security.

 

And, contrary to the Washington fear mongers, Social Security

is in solid financial shape by any reasonable definition. The

Congressional Budget Office projects that it can pay all

scheduled benefits for the next 29 years with no changes

whatsoever < http://www.cbo.gov/doc.cfm?index=11580&type=1].

Even after it first is projected to face a shortfall in 2039,

the program could still pay nearly 80 percent of benefits

into the next century without any changes at all.

 

Modest changes, such as raising the cap on taxable income

(currently $106,000) would eliminate much of the projected

long-term shortfall. Changes of the size implemented by the

Greenspan commission in 1983 would make the program fully

solvent long into the 22nd century. Remarkably, virtually no

policy wonk seriously disputes these numbers in spite of the

near universal hysteria among the chattering class over

Social Security.

 

On policy grounds, Social Security is a smashing success. It

scores even better politically. Poll after poll finds that

everyone from Tea Partiers to actual socialists strongly

supports the program. Yet, many members of Congress stand

prepared to vote for substantial cuts to Social Security or

even a partial privatization of the program.

 

Why would members of Congress be prepared to take a vote that

is both bad on policy grounds and also could hurt their own

political survival? Erskine Bowles is a large part of the

answer. Bowles is an unsuccessful politician, having twice

lost in runs for the Senate in North Carolina.

 

Yet, he is very successful financially. He pockets $335,000 a

year as a director of Morgan Stanley, one of the huge Wall

Street banks that was rescued by taxpayer dollars in the fall

of 2008. He likely pockets a similar sum from sitting as a

director of GM, another company rescued by the government.

 

This means that Bowles pockets close to $700,000 annually (at

$600 monthly Social Security checks) from attending eight to

twelve meetings a year. This must look like a pretty

attractive deal to current members of Congress. In other

words, the message Bowles is sending members of Congress is

that if you betray your constituents and vote to undermine

Social Security, you will be amply rewarded even if the

voters give you the boot.

 

For this reason, Bowles should be a very scary figure to

supporters of Social Security. By example, he is telling our

elected representatives of Congress that they need not worry

about either good policy or their voters' wishes.

Unfortunately, many members of Congress may find Bowles

career to be an attractive route to follow.

 

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