Entitled to Know

Make no mistake about it...the Bush administration clearly understands the value of a well structured and financed public relations campaign. Yesterday’s release of the first in a series of Treasury department “issue briefs”, signals the start of another run at defining Social Security reform in a way that best suits this administration’s ultimate goals...the creation of private accounts and massive benefit cuts. What the White House doesn’t seem to get is that sometimes even the best PR and Marketing strategy can’t sell misguided policy goals.

Here’s our analysis of this first Treasury brief entitled "Social Security Reform: The Nature of the Problem".

The Brief overstates the problem repeatedly by using the discredited “infinite horizon” calculation. The American Academy of Actuaries, the leading professional organization of actuaries, has warned that infinite-horizon projections “provide little if any useful information about the program's long-term finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic, and actuarial aspects of the program's finances into believing that the program is in far worse financial shape than is actually indicated”.

Focuses on Benefit Cuts. Treasury Secretary Paulson says that Social Security can only be fixed by raising taxes or cutting benefits, yet he is focusing on benefit cuts.

Issue Brief Introduction: “Social Security can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax revenues.”

Secretary Paulson’s Statement : “While differences over personal accounts and taxes dominate the public debate over this issue, in my conversations I found that there are many other things on which people agree.”

Statement from the White House: The Associated Press reports, “But White House officials stressed that President Bush remains opposed to raising taxes."

So, while the Administration says tax increases and/or benefit cuts are the only solutions, they again propose only benefit cuts as the solution. To suggest that there are only “differences over personal accounts and taxes” (implying people agree on the need for benefit cuts) does not reflect the political reality.

Resurrects Privatization. The report makes it clear the Administration is interested in resurrecting privatization. However, rather than addressing it directly, the report uses “prefunding” as the code-word for privatization.

Issue Brief Statement: “Fairness to Future Generations Requires True Pre-Funding” and “Only if pre-funding is ‘real’ can this goal of fairness be achieved.

This is the setup to Social Security privatization. Remember when the White House renamed private accounts as “personal” accounts? The American people still understood this was the privatization of Social Security and they rejected it. The new buzz-word (for the same thing) appears to be “pre-funding”. Changing the terminology doesn’t change the fact that the political goals remain the same.

The Administration is merely resurrecting its arguments for privatization and laying the groundwork for President Bush’s plan for so-called progressive price-indexing of Social Security benefits, a plan which would cut benefits drastically affecting 70 percent of future retirees.