This article was originally published as a two-part series entitled “Is Social Security Broke?” in 2005. While the current administration has not yet set its sights explicitly on Social Security, it appears inevitable that they will do so. For this reason, we are republishing Maya’s astrological analysis of the origins and underpinnings of Social Security within our governmental system. Her work remains as timely and cogent as ever.
Is Social Security Broke?
The answer to this question is a resounding NO, contrary to what the right-wing spin doctors would have you believe. Look at the chart for the day that President Roosevelt signed the Social Security Bill. It is an even more stable chart than is that for the NY Stock Exchange. Out of the ten major planets, six are in fixed signs, which stay put, and three are in flexible signs, giving it sufficient flexibility to bend when it has to—which it has done.
I’ve tried to avoid getting into this, because it’s been clear that Social Security is not in crisis, and I haven’t wanted to deal with the lies, conflicting statements, hypocrisies, and pure spin of the Administration. However, it’s been pushed to the front of the nation’s consciousness, and I’m motivated to push back. Bear with me. This will take time, probably a few issues of Daykeeper.
The U.S. Capricorn Pluto is in the U.S. second house of money, showing the power of our structures of wealth. The Social Security Act was signed at the U.S. Pluto opposition, with Pluto in Cancer in the 8th house of shared wealth. Cancer itself is a sign of the people; Capricorn a sign of the elite. (The U.S. vigor—Sun—is in the hands of the people; the U.S. wealth—Pluto—is in the hands of the elite.)
When Franklin Roosevelt signed the bill in 1935, he stated its purpose clearly, “We have tried to frame a law that will give some measure of protection to the average citizen against poverty-ridden old age.” It is not an investment program; it is a straightforward insurance program to protect the PEOPLE. It has been a phenomenal success.
And in the eyes of many right-wing politicians who have been working long to dismantle “the welfare state,” (welfare to corporations and the rich is OK), its problem is exactly that. It is a successful people’s program. In fact, the most successful one.
Economist Paul Krugman, NY Times columnist who has tracked the Social Security Program, says, “Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people’s lives better and more secure. And that’s why the right wants to destroy it.”
This right-wing desire to destroy Social Security began even before the ink was dry on the bill. Notice how familiar the following quotes sound (thanks to Jim Hightower in his great monthly sheet, Lowdown):
1936: Alf Landon, Republican candidate for President:
“The promised benefits are a hoax.” (We know better.).
“The taxes paid into the trust fund are wasted.” (They’ve been invested with an average return of 6.6%.).
“The so-called reserve fund is no reserve at all.” This is not at all true. It has been a fund of trillions of dollars, used to pay benefits. George Bush, borrowing to pay for his tax cuts for the wealthy, has almost emptied it. More on this later.)
In 1964, Goldwater painted a picture of a collapsing system. He said it was not “actuarially sound,” and claimed that he merely wanted to “make Social Security solvent, to improve it,” as he called for privatization. Letting slip his real aim, Goldwater said, “Maybe Social Security should be abolished.”
Ronald Reagan followed this theme of saving Social Security through privatizing it.
On December 15, 2004, George W. Bush convened an economic summit to talk about privatizing Social Security.
The day before, December 14, at an Economic Policy Institute press conference, economist Aaron Henry, a senior fellow at the Brookings Institute and chairman of the National Academy of Social Insurance Board of Directors, came out strongly against the proposals:
“At a time when the U.S. is borrowing $100 million an hour from abroad, the $5 trillion debt is escalating, medical costs hammer wages and profits, and the income inequity is skyrocketing—for an economic summit to discuss diverting revenue from Social Security is the most perverse agenda this administration has come up with to date.”
Kenneth Apfel, former Social Security commissioner, said the discussion has been solely around privatization, benefit reductions, age increase, and a change in the way benefits are calculated—all right-wing schemes to eventually disappear Social Security.
All of this comes at a time when Social Security revenues are in good shape, although right-wing spin would make the public think otherwise. According to the numbers used by everyone, including the President’s commission, Social Security can pay all promised benefits for the next 38 years without any changes at all. Later the Congressional Budget Office upped that estimate to 48 years.
By either measure, the “long-term problem” faced by Social Security over the whole next 75 years is actually less than it faced in each of the decades of the 50’s, 60’s, 70’s, and 80’s. During those decades, minor tweaks corrected the problems.
When pushed, economists will agree that Social Security is more financially sound than it has been during most of its 69-year history. Even with the CBO projections that the Trust Fund will run out in 2052, it still will not be “bankrupt.” Revenues will cover 81% of promised benefits.
Paul Krugman wrote in the December 7 NY Times that “to extend the trust fund into the 22nd century with no change in benefits would require additional revenues equal to only 0.54% of the gross domestic product.” This is roughly the portion of Bush’s tax cuts going to people with annual incomes over $500,000.
Tax cuts for the rich, or pensions for the elderly. What do we, the people, choose? What kind of a society are we?
But George Bush has another urgent reason for dismantling Social Security.
In thinking about Social Security, we forget that it is a money collector (via special taxes and the interest from their investment), and a LENDER to the government (which was not part of its original intent).
It is not a spender of the government’s money. It spends only its own money, which was collected for the purpose of pension and survivor insurance, and is supposed to be held and invested for that purpose. The Trustees have made sure that it collects more than it spends, and it always has a large surplus. Currently, the fund can pay full benefits until 2042, or 2052 with no fixing (because there’s nothing wrong with it). It could continue indefinitely paying full benefits with just a little tweaking, such as raising the cap on income taxed (currently at $90,000) or raising the retirement age a bit.
The real problem is with the U.S. budget, an entirely separate thing. For decades, the U.S. Congress has borrowed money from the Social Security Fund to help meet its own deficits. The amount has skyrocketed since the Bush ascendancy—almost $1 trillion.
The Social Security Fund holds those IOU’s in the form of U.S. Treasury bonds, which do come due. U.S. Treasury bonds are the gold coin of investments. The only way they would not be paid is if the government defaults. Which is currently unthinkable. (Also, that is the only way Social Security could go broke.)
The amount by which Social Security taxes exceed benefits is beginning to shrink. By 2018, the flow reverses—much sooner if private accounts are created. This won’t be a problem for Social Security, but it will be a big one for the GOVERNMENT. Instead of spending the Social Security surplus, the government will need to begin paying off IOU’s. Repaying Social Security will become a huge drain on a government already under fiscal stress. Deficits will skyrocket. Confidence in the U.S. will further diminish.
The U.S. budget IS in crisis. And Bush does not want to admit this to the public, especially since his tax cuts, his war, and his spending on expanding government have contributed mightily to it.
Instead, we have, as Jim Hightower says, as with Saddam and WMD’s, the Big Lie of the Looming Crisis, and the demand that Congress authorize the Big Rush into the ideological abyss where the Big Mess awaits.
If this country is rushing into bankruptcy, it has nothing to do with Social Security. The government’s financial policies are the problem.