BY MAURICE WILLIAMS
A presidential federal advisory council formally presented its three-option plan January 6 to invest Social Security benefits into the stock market. The report, first floated in December as a trial balloon for privatizing Social Security, is among the various schemes being advanced by capitalist politicians and other bourgeois figures as part of their assault on social entitlements.

The 13-member advisory council, appointed by Health and Human Services Secretary Donna Shalala in 1994, agreed that action must be taken "as early as possible" on their proposals. Social Security, which more than 60 percent of retirees in the United States count as their only source of pension, is portrayed by capitalist politicians and media as a fund that will be broke by 2029. By that time, they argue, payments to beneficiaries will exceed revenues paid into the Social Security Trust Fund by workers. The income, they claim, will then cover only 75 percent of benefits costs. One article in the January 8 New York Times did acknowledge that "in one sense the Social Security crisis is synthetic," noting that by the government's own reckoning there is no problem with funding for the next 20 years.

The investment of Social Security funds into private stocks and equities is touted in the report as a solution to the supposedly impending financial crisis. "Private investment is the key to bolstering the return on workers' very substantial tax payments," declared panel member Carolyn Weaver, director of Social Security and pension studies at the American Enterprise Institute. Weaver said the "proposal could produce larger retirement incomes for workers" and retirees would get a higher rate of return than from U.S. treasury securities. Under current law Social Security assets not used for paying benefits are invested exclusively in government bonds.

While the big-business media has been promoting the privatization plan, they acknowledged that pouring retirement money into stocks could inflate a financial bubble, and leave many retirees facing financial ruin if the bubble bursts and the value of their investments drops. "The Social Security system - or its beneficiaries, depending on who bore the brunt of declining stock prices - would be worse off than ever," wrote Floyd Harris of the New York Times.

Politicians press bipartisan assault
Eager to press forward, Republican Rep. Gerald Solomon introduced legislation January 7 to allow the government to invest Social Security assets in the stock market. Sensing the powder keg involved in going directly after an entitlement that so many view as their basic right, the Clinton administration has been cautious in backing the advisory panel's recommendations. The president "is not wedded to any of the suggestions made by any of the separate groups of members of the council itself, but agrees that many of these ideas will have to be discussed further," stated White House press secretary Michael McCurry.

The bipartisan report, described by the Times as "a turning point in the history of Social Security," represents the U.S. rulers' furthest probe against these entitlements yet. The Social Security Act of 1935 codified gains won from labor struggles in the 1930s. It was expanded through the civil rights battles in the 1950s and '60s. Some 44 million people currently receive monthly cash benefits, including 31 million retirees, 7 million survivors of beneficiaries, and 6 million disabled people.

The three top union officials participating on the advisory council are among a group that had initially proposed investing 40 percent of Social Security funds into private stocks. They retreated slightly in the final report, calling for a study of such a scheme instead. Gerald Shea, assistant to the president of the AFL-CIO; George Kourpias, president of the International Association of Machinists; Gloria Johnson, director of social action for the International Union of Electronic Workers; and three other council members are promoting the so-called "Maintain Benefits" options in the advisory council plan. This plan includes cutting benefits and diverting funds from Medicare to Social Security. Other recent government moves have already targeted Medicare for spending cuts.

The "Personal Security Accounts" scheme backed by Weaver and four others is the most direct in attempting to privatize Social Security. Under this variant each worker would be required to invest their Social Security taxes into a personal retirement account, tying a major portion of their income to the fluctuations of the stock and bond markets. Guaranteed benefits would drop to $410 a month, below the poverty line, and the retirement age would be increased from 65 to 67 in 2011.

The "Individual Accounts" option, supported by council chairman Edward Gramlich of the University of Michigan and one other panel member, imposes an additional 1.6 percent tax on workers' wages, establishes a mandatory savings account, and cuts benefits. It would also lift the retirement age to 67 in 2011.

The Senate Budget Committee scheduled a hearing January 29 on the three recommendations.

Other schemes to lower social wage
Sen. Patrick Moynihan, the top Democrat on the Senate Finance Committee, which has legislative authority over Social Security, pooh-poohed the panel's report. He is instead pressing Clinton to adopt a proposal for a cut in cost-of-living adjustments for Social Security, based on a December 4 report claiming the government overstated inflation by 1.1 percent for at least a decade. Doing so would not only lower Social Security payments but also affect - to the detriment of working people - a broad range of benefits and taxes that are pegged to the consumer price index.

As capitalist politicians debate schemes to lower the social wage of working people, federal Supplemental Security Insurance (SSI) benefits were cut off January 1 for recipients in California who are disabled by alcohol or drug addiction. The Social Security administration in California is sending out one million letters to legal immigrants informing them of a cutoff of their SSI benefits as well, under the "welfare reform" law Clinton signed last year.

Social Security administration spokesman Philip Gambino said the agency had beefed up security in its offices around the country, anticipating confrontations with those inquiring about their loss of benefits. "Some people will be quite upset about the possibility of losing their only income," he stated.

Meanwhile, Republican Newton Gingrich was narrowly reelected as Speaker of the House of Representatives January 7. Gingrich admitted December 21 that he provided misleading information to a congressional committee over the financing of a college course he taught to promote his right-wing views. He still faces a hearing on ethics charges. Several prominent Republicans had publicly called for him to step down prior to the vote, and 11 refused to vote for him, reflecting strains in the party. "Step aside, Newt," was the advice of conservative columnist William Safire.

Former vice presidential candidate Jack Kemp weighed in on the Speaker's side the morning of the vote, with a get- out-the-vote column in the Wall Street Journal praising Gingrich as "among the most honorable and conscientious men I have known."

Gingrich had been the foremost advocate of the Contract with America and the so-called Republican revolution that sought to push through broad assaults on social entitlements in 1995, many of which failed to gain majority support among the U.S. rulers at that time.  
 
 
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