Stop the War on Social Security

Republicans are preparing for war on Social Security and Medicare. Democrats had better not be asleep in the guardhouse.

Wall Street, coveting the billions of dollars in fees they could skim off the top of privatized Social Security accounts, is preparing to fund the latest assault on the New Deal's most hallowed program. Then comes Medicare. Right-wingers think they have their best chance in a generation to cripple the signature liberal accomplishments of the 20th century.

George W. Bush, having pushed an improbable tax break for the super-rich through Congress, now hopes to follow up with a "cure" for Social Security. "The threat to the stability of Social Security has been apparent for decades ..." he said last month when he stacked a "blue ribbon" commission with members who want to privatize the system. "We can postpone action no longer. Social Security is a challenge now; if we fail to act, it will become a crisis."

Bush's own Treasury Secretary, Paul O'Neill, exposed the administration's agenda in an interview with the Financial Times when he questioned why the government should provide Social Security, Medicare or any other social insurance. "Able-bodied adults should save enough on a regular basis so that they can provide for their own retirement and, for that matter, health and medical needs," he said, echoing a familiar Republican refrain -- from the 1920s.

The "Coalition for American Financial Security," a group of financial executives, plans to raise millions of dollars from insurance companies, mutual fund firms and financial services to promote privatization. At an organizational luncheon June 18 in New York, O'Neill launched a broad attack on Social Security, saying it has "no assets" and leaves Americans vulnerable to the whim of "someone else's promise."

His disregard of the facts is typical of the right wing's assault on Social Security. Reporting on the speech, the Washington Post's Glenn Kessler noted that the most recent report signed by O'Neill, the managing trustee of Social Security, listed more than 50 Treasury securities held by the trust fund worth nearly $900 billion. The bonds pay a market rate of interest (currently about 7%).

O'Neill's attack on Social Security, which raised hardly a ripple in public opinion, shows how right-wing economists and think tanks have succeeded in their disinformation campaign to create a phony crisis 20 years after Ronald Reagan had to retreat from his attempt to dismantle Social Security.

The Post's Kessler on June 26 reported that the Cato Institute, a Washington think tank, has spent about $3 million in the past six years to run a virtual war room to promote Social Security privatization. The Heritage Foundation and the Dallas-based National Center for Policy Analysis have joined Cato to popularize notions that Social Security was a bad deal.

The campaign's success is measured in surveys that show many young people believe that Boomers will have exhausted Social Security funds by the time later generations reach retirement age. Many commentators take it as a given that drastic cuts in benefits and/or increases in retirement ages are needed to keep the fund solvent. In fact, the diversion of Social Security funds to private investment accounts as Bush and O'Neill suggest would cause shortfalls that would force those drastic changes in Social Security benefits.

Social Security now supports 45 million people -- nearly one in six Americans, notes Mark Weisbrot of the Center for Economic and Policy Research (www.cepr.net). He is co-author, with Dean Baker, of Social Security: the Phony Crisis. Combined with Medicare, Social Security provides a critical safety net for our nation's seniors. And, the lies of the "reformers" notwithstanding, the Social Security fund is in good shape and will remain so for the foreseeable future.

The doomsayers are using the most pessimistic projections of national economic activity to forecast trouble for Social Security. If the US has anything approaching normal growth, the fund will remain stable into the foreseeable future. Marilyn Watkins of the Seattle-based Economic Opportunity Institute (www.econop.org) notes that the most recent annual report by the Social Security trustees confirms that with normal economic and productivity growth, Social Security should easily pay full benefits through 2075 and beyond, even with longer average life spans.

Still, mainstream news media and even some Democrats have embraced the need to restructure Social Security (see Dean Baker's column on page 14).

If there is any restructuring to be done, it should be to improve the system. Economic Opportunity Institute has reasonable suggestions:

* Adjust benefit formulas to increase benefits for the lowest income earners and for elderly widows and widowers.

* Roll back the retirement age to 65. (It starts increasing in 2003, up to 67 for those born in 1960.)

* Raise or eliminate the $80,400 cap on taxable income.

* Build universal pension systems in addition to the existing Social Security system, not replacing it.

As we went to press, the Senate approved a bill that would reform managed-care health plans and give patients rights in obtaining medical care, but Republicans, with the support of business groups, will try to promote a substitute bill in the House that would limit the ability of patients to seek relief from state courts when a health plan denies them needed coverage.

Business owners are concerned that insurance companies would increase their premiums if the courts forced them to actually pay for medical costs. And some businesses are concerned that they too might end up getting sued by workers.

It is reasonable to limit the liability of businesses that make good-faith efforts to provide insurance for their employees, and the Kennedy-McCain-Edwards bill backed by the Democrats would do that, but the debate underscores the need for universal health coverage that would take businesses and insurance companies out of the roles of deciding which patient gets a medical procedure.

When a business offers a health plan workers have a reasonable expectation that it will cover their medical needs. If a business is self-insured, it must be accountable just as an insurance company is accountable to the patients it covers. When a bean-counter decides that a procedure won't be covered, the patient needs recourse to an independent authority that can order the procedure. If necessary, patients need an appeal to a court that can order the insurer to pay damages for the delay.

As long as medical care is controlled by private businesses that are ruled by a balance sheet of profits and losses, patients need the right to go to state or federal court to seek damages from health plans that deny necessary procedures. Otherwise, insurance companies will continue to deny coverage in marginal cases, hoping the patient will not bother to fight for their right to treatment. If there is no money in store, there is no incentive for lawyers to help aggrieved patients. But the insurance company will have its lawyers available to put every procedural roadblock in the way of the patient.

Congress should pass HMO reforms that give patients the right to appeal medical decisions to court if necessary, but these reforms are a stopgap. The "Patients Bill of Rights" does no good for the 40-plus million working Americans who cannot afford to buy HMO coverage in the first place, as well as the uncounted millions more who have inadequate coverage. Ultimately, Congress needs to expand Medicare or devise some other universal health plan to cover all Americans.

Contact your senators and member of Congress through the US Capitol switchboard, 202-224-3121. Urge them to support HMO reform today and universal health care tomorrow -- and keep their hands off Social Security, too. -- JMC

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