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U.S. rulers campaign for cuts in social wage
In national tour, Bush seeks support for Social Security ‘reform’
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A socialist newsweekly published in the interests of working people
Vol. 69/No. 7February 21, 2005


Read about new victory in fight of Co-Op miners union struggle!
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Excluding Kingston kin votes OK'd
UWMA applauds labor relations board decision about voter eligibility at Co-Op

lead article
U.S. rulers campaign
for cuts in social wage
In national tour, Bush seeks support for Social Security ‘reform’
AP/Nati Harnik
Protest outside the University of Nebraska in Omaha during Bush's February 4 speech on Social Security “reform.” Most such actions at the president’s tour stops have been small and have included personal attacks on Bush and patriotic slogans such as “Support our troops, bring them home.” Banner in front says “Ask Chile, UK about privatization,” referring to Social Security.

In a tour of five states he began February 3, the day after his State of the Union speech, U.S. president George Bush launched a campaign to win public support for “reforming” Social Security. Bush claims this is necessary to “strengthen” and “save” government-guaranteed retirement pensions from what he alleges would be the program’s eventual bankruptcy in about 35 years.

The centerpiece of the president’s proposals to solve what the U.S. rulers describe as a looming crisis is creating “personal retirement accounts.” Another proposal Bush says is on the table is raising the retirement age.

The private accounts would be introduced gradually and would be aimed at younger workers who would invest a portion of their paychecks in stocks and bonds for an individual pension plan that the “government cannot take away from you,” as Bush puts it. At the same time, these workers would see their pension benefits, now guaranteed by the government, cut when they retire. And the character of Social Security as an entitlement for all would be undermined.

These proposals are part of a ruling-class effort to increase the rate of exploitation of the working class. Over the last 25 years, declining profit rates have fueled accelerating competition between imperialist powers over re-division of the world, driving them to press harder against working people. The progress individual employers have made so far in their effort to increase profits through cutting wages, speeding up production, extending working hours, and worsening working conditions falls short of what the capitalists must accomplish. The ruling class needs to slash payouts for Social Security pensions, Medicare and Medicaid, unemployment insurance, and other components of the social wage. They must shift more of the costs of education, public transportation, and other government-funded services onto individuals and their families. This is what the Bush administration is now leading.

So far most Democratic Party leaders have opposed Bush’s proposals while promoting the ruling-class notion that Social Security does face a crisis. Liberal politicians and pundits are counterposing few “solutions” of their own, among them the unpopular proposal of increasing payroll taxes.

A number of Republican politicians have also expressed concern that any proposals to cut Social Security benefits—even if only for younger workers—would face stiff resistance.

These reactions reflect the reality that tens of millions in the working class and middle-class layers have come over decades to consider Social Security, Medicare, workers compensation, and other such benefits as rights. Most working people depend on these benefits for survival after retirement, or after an injury or illness that has left them unable to work.

At this point, the odds are not great that the White House will be able to push through Social Security “reform” during the president’s second term. The Bush administration, however, has taken the initiative in leading the drive by the billionaire families that rule the United States to cut the social wage.

According to the Gateway, the student newspaper at the University of Nebraska in Omaha, where Bush spoke February 4 as part of this campaign, the president “plans to travel to 120 cities and towns during the next months to discuss the social security issues that are facing Americans today.”  
Rationalizations for the ‘crisis’
“I’m going to spend a lot of time traveling our country talking about the problem because I fully understand that in the halls of Congress, if people do not believe we have a problem, nothing’s going to happen,” Bush said in his Omaha speech.

Bush began his tour to sell his plan on Social Security on February 3 in Fargo, North Dakota. “After here, we’re going to Montana,” Bush said in his remarks at the University of North Dakota, and then to Nebraska, Arkansas, and Florida. He stopped in Fargo about 14 hours after delivering the State of the Union address at a joint session of Congress, where Social Security reform was also a central theme of his speech.

In Omaha, Bush appeared with Ben Nelson—the only Democrat in the U.S. Senate to openly side with Bush so far on Social Security “reform”—and other politicians.

In this and other appearances Bush began by stating that Social Security worked in the past. “Social Security was a great moral success of the 20th century,” he said in his State of the Union speech. “The system, however, on its current path, is heading toward bankruptcy,” he told Congress.

“When the Social Security system was designed, the average life expectancy was about 60 years old and benefits were at a certain level,” Bush said two days later at the University of Nebraska. “What has changed since then is that we’re living longer. The life expectancy now is 77 years old. And as a result of living longer, you’ve got people who have been made promises by the government to receive checks for a longer period of time than was initially envisioned under Social Security.”

As part of his three main rationalizations for convincing people Social Security is heading toward insolvency, Bush also said “the benefits that have been promised are increasing.”

The third reason for the approaching potential catastrophe, the president argued, is the specter of the “baby boomers” who, like himself, will be retiring soon, implying there will be proportionately more retirees and fewer workers. The term “boomers” is used to describe the generations born between 1940 and the mid-1960s, during the post-war boom, when the birthrate rose to an average of four children per family—compared to two today.

Bush, using charts as visual aids to promote his message, claimed that for these reasons the Social Security trust fund will go broke by 2042.

The president reminded the audience at the University of Nebraska that in his State of the Union address he mentioned briefly a range of proposals that have been floated the last quarter-century by Democratic and Republican politicians to “fix” the retirement pension program. These include a higher eligibility age for Social Security and Medicare, which the Clinton administration and others proposed. “Everything is on the table except raising payroll taxes,” Bush said, reiterating one of his core themes that he will seek to make permanent the tax cuts passed during his first term.  
‘Personal retirement accounts’
The main proposal he is putting on the table, Bush said, is “that younger workers ought to be able to set aside some of their own payroll taxes in what’s called a personal retirement account.” This would be voluntary and would be implemented gradually, eventually allowing all eligible workers to put 4 percent of their wages into these accounts, diverting it from current payroll taxes earmarked for Social Security. Workers who sign on to this system would use these private accounts to draw out funds to complement government-guaranteed Social Security benefits, which will be reduced to lessen the state’s obligation to fund retirement pensions.

To appease fears among the 47 million people currently receiving a check from Social Security every month—retirees and their dependants; under-age survivors of deceased workers; and the disabled—Bush claimed no adults older than 55 now will see their benefits cut. “It is really important for our senior citizens, those who have retired and those near retirement, to know nothing changes,” he said in Omaha. “Social Security is in good shape and will meet its promises to those who have retired or nearly retired. The problem exists for younger workers.”

To lure support for his proposal, the president claimed that individuals who choose to open private accounts would end up with higher pensions because gambling the funds on the stock and bond markets would bring in higher interest. “If you invest your money in conservative stocks and bonds, you’re likely to get around a 4 percent rate of return, which is greater than double than the money you’re earning right now in the Social Security trust,” Bush said. “In other words, you’ll have more money when it comes time to retire.”

To buttress his arguments, the president called on people from the audience, who exalted the virtues of a similar plan that currently exists for federal employees or said that 401(k) retirement accounts—pension funds by private employers invested in the stock market—are already increasing their future retirement pay. These included a worker at Omaha Steaks who attended the University of Nebraska event, and a 30-year-old female Major in the Air Force Reserve, who took part in the Fargo meeting.

Workers who follow this advise and invest in a good “mix of stocks and bonds” will be butchered in a sudden economic swing—like the 1987 stock market crash or the more mild international banking crisis at the end of the 1990s—when investments in the stock and bond markets can be wiped out in the blink of an eye and savings deposited elsewhere can be eaten up quickly by an inflationary burst.

To soothe such concerns, Bush said in Omaha that “there are ways to mitigate risk for, you know, market downturn. But the truth of the matter is, when you look at the history of the stock market, over time, the markets always increase with a conservative mix of stock and bonds.”  
Appeal of ‘ownership society’
The president also claimed that the proposal to create private pension accounts gives people a sense of ownership. “We want people owning more things in America,” he said. “This is your account. Government cannot take it away from you. It’s part of your legacy to your family.” The latter statement was part of sugarcoating the pill by promising that benefits from these private accounts can be passed on to any relatives when someone dies, which is not permitted under the current Social Security system except for those under age.

This line of argument follows one of the main themes of Bush’s concluding speech at the Republican national convention last September. While toning down the rhetoric, Bush has continued to peddle the notion that “one of the benefits of an ownership society is you can decide what to do with your own assets,” as he put it in Omaha.

If implemented, these proposals would be a disaster for working people. And to many, the president’s arguments may seem ludicrous.

Bush, however, is taking the initiative for the ruling class to press for carrying out what the wealthy consider a necessity. His proposals do get a hearing among substantial layers of workers and the middle classes because the administration is playing on the well-founded insecurities of millions. At the same time, opposition to Bush’s proposals from the labor officialdom and its liberal “friends” in Congress is built around the fallacy that workers and bosses have common interests in preserving Social Security and other social benefits rather than the fact that the interests of the vast majority—workers and farmers—are irreconcilable with those of the exploiting capitalists.

Working people are deeply fearful of what the future has in store for them, and rightly so. They know they are working longer and harder and earning less than they did 10 years ago. The problem is that they have never lived through the kind of depression conditions that are developing in the world. Many think they’ll be better off managing their own savings than trusting the government to give them a pension some time in the future. And on the second part of that they are correct.  
How Social Security was won
Through the labor upsurge of the 1930s during the Great Depression, working people won the concessions contained in the Social Security Act of 1935—including guaranteed pensions, disability and unemployment benefits, and Aid to Families with Dependent Children (AFDC), also known as welfare. At that time, the average life expectancy was 58 years for men and 62 years for women. So the employers counted on relatively few workers living beyond the retirement age of 65 to get full benefits. According to an article in the January 30 New York Times Magazine, the proportion of U.S. residents over 65 was 5.4 percent in 1934. It rose to 12.65 percent by 1990. Today, someone retiring is expected to live on average another 12 years.

In addition, government-guaranteed retirement pensions at the end of the 1930s were not meant to provide adequate means for survival. The first Social Security recipient, for example, started with a benefit of about $22 per month, the equivalent of $300 today, according to the Times. The average monthly stipend for a 65-year-old retiring today is roughly $1,200, the Times said.

This sea change was accomplished through the civil rights struggles of the 1950s and 60s. Through the fight led by Black workers to end Jim Crow segregation in the South, these gains were extended with Medicare, Medicaid, food stamps, and cost-of-living protections—that is, automatic adjustment of benefits to make up for inflation. They have become part of the basic living standards of working people.

According to the January 30 article in the Times, about half of U.S. residents have private pension plans. But for two-thirds of the elderly, Social Security supplies the majority of day-to-day income. For the 20 percent at the bottom of the income scale, about 7 million now, Social Security is all they have. This translates into 67 percent of retirees depending mostly on Social Security to survive. The ruling class is bent on changing that.  
Bush campaign signals shift in strategy
“I talked about Social Security in the State of Union,” Bush said in opening his remarks on Social Security in Omaha. “Now that would signal that we got a problem. Otherwise—most presidents shied away from talking about Social Security, except to make the benefits better. I see a problem and I used time at the State of the Union to speak directly to the American people about the problem. That’s why I’ve come to Omaha.”

This signifies not just a change in emphasis or vocabulary, but an acceleration of the ruling-class drive to lay the groundwork for slashing the social wage.

In the late 1970s the ruling class began to howl in unison that Social Security would go bankrupt. Since then, however, Bush’s predecessors have largely stayed away from touching Social Security benefits.

As a Republican politician, for example, Ronald Reagan campaigned against Social Security for 20 years before becoming president. During his two terms in the White House in the 1980s, however, he appointed a bipartisan commission but did virtually nothing. Under the Reagan administration, Congress voted to hike the retirement age from 65 to 67 with bipartisan support but that was not to be implemented for another two decades. The retirement age is currently 65 and 6 months.

Clinton did keep his election campaign promise to “end welfare as we know it,” eliminating AFDC. In his eight years in office during the 1990s, though, his administration also created a bipartisan commission to study fixes for Social Security but did not touch retirement benefits either.

A range of government officials and other capitalist politicians and pundits have talked about Social Security “reform” in recent years—including Federal Reserve chairman Alan Greenspan, who sounded similar alarm bells last year. Bush’s current nationwide speaking tour, however, signals a shift in the determination of the U.S. rulers to swing their ax at the social wage.  
Crisis of state financing and war
A main theme of the Republican-led campaign to gut Social Security is the call for “smaller government.” Under Bush and his predecessors that has been simply rhetoric. But the crisis of state finances is real for the ruling class. This is reflected in the current debate on the White House proposals for the 2006 budget.

In the budget he has now sent to Congress, Bush proposes cuts in a host of federal programs—including farm subsidies, medical care for veterans, and transportation. The White House claims this plan would result in cutting the ballooning federal deficit, now at $427 billion, by half within four years. This is unlikely to happen, however. An article in the February 6 Washington Post pointed out that a year ago the White House targeted 65 programs for cuts amounting to $5 billion, but in the end only five were cut for a total of $292 million.

In addition, the White House plans to ask for another $75 billion to pay for Washington’s ongoing military operations in Iraq and Afghanistan—part of an estimated $80 billion emergency supplemental appropriation that is not included in the 2006 budget.

At the center of the proposed budget is a hefty increase in military spending. According to an article in the February 8 Washington Post, the $419 billion the White House has allocated for the Department of Defense represents, in real terms, a 4.8 percent increase over this year and is 41 percent higher than the 2001 figure.

The military budget includes generous reenlistment bonuses of as much as $150,000 for Special Operations troops, who are increasingly lured by private “security” companies. The budget also projects an increase in Army soldiers by 30,000 to 512,000, which is supposed to be temporary. In a recent press conference, however, the Post said, Defense Secretary Donald Rumsfeld pointed out that the troop increase might become permanent. This will depend on the number of wars U.S. imperialism and its “coalition of the willing” are fighting.
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