The White House and pro-privatization leaders in Congress have long claimed that plans to divert Social Security tax dollars into individual accounts – so called "privatization" plans – are necessary to improve Social Security’s finances and the fiscal health of the nation. In fact, since his State of the Union Address in February, 2005, the president and Republican leaders in Congress have been actively campaigning to persuade a growingly reluctant public to support Social Security privatization. But despite widespread and growing public opposition, policymakers continue to advocate privatization as the only viable solution to improve Social Security’s finances.
The White House has even used the tragedy of Hurricane Katrina as a new justification for their privatization plan. On September 7, 2005, Congress Daily reported that "(White House Deputy Press Secretary Trent) Duffy asserted that the vast spending that would be required to address the hurricane’s impact adds to the need to change Social Security, which threatens to strain the budget in coming years."
However, non-partisan analysts estimate that the President’s privatization proposal would add some $1.4 trillion to the national debt in just the first 10 years of the plan, climbing to a whopping $17.7 trillion in new debt by the year 2050. This privatization price tag would dwarf the costs of rescue and recovery efforts for Hurricane Katrina and the most comprehensive Hurricane protection measures combined.
Costs of Privatization vs. Costs of Katrina Cleanup and Prevention:
$150 billion - Hurricane Katrina rescue and recovery cost estimates, making Katrina the most expensive natural disaster in American history (Bloomberg, 9/9/05; Bloomberg, 9/8/05; Washington Post, 9/7/05)
$1.4 trillion - Increase in national debt because of White House Social Security privatization proposal - by 2018 (Center on Budget and Policy Priorities, 8/2/05)
--933 percent more expensive than Katrina rescue and recovery efforts
--10,000 percent more expensive than comprehensive Gulf Coast wetland protection
56,000 percent more expensive than Category 5 hurricane protection for New Orleans
$17.7 trillion - Increase in national debt because of White House Social Security privatization proposal - by 2050 (Center on Budget and Policy Priorities, 8/2/05)
--11800 percent more expensive than Katrina rescue and recovery efforts
--126,428 percent more expensive than comprehensive Gulf Coast wetland protection
--708,000 percent more expensive than Category 5 hurricane protection for New Orleans 
Gloria Bell
To the advocates of privatization we ask, given these numbers, had we had a privatized Social Security system for the last 10 years, would the United States be in any position at all to help New Orleans today? Would senior and disabled survivors of Hurricane Katrina be grateful for a privatized system?
Social Security is not just a tax. And it’s not a get rich scheme. It is a national insurance system that provides a minimum income for our retired workers, our disabled, and families of deceased breadwinners. When the worst case scenario occurs and we no longer have the ability to provide for ourselves, we will still have our Social Security checks. | | 
Mary Johnson
I talked to Mary Johnson and her daughter Gloria Bell—two women who just lost their homes and possessions last month to the storm. Mary turns 95 in December. Gloria is 75. Both are in wheel chairs. Social Security will be the only source of income for them when the FEMA aid runs out. They see the effort to privatize Social Security as a political issue; it makes them angry to think, let alone talk about. The response I got from Gloria was "You don’t want me to discuss that!"
After losing everything you own, surviving a flood, and waiting five days for your government to bring you food and water, the last thing you’d want is that same government messing with your only source of future income.
In the last few days, the proponents of privatization have decided to drop their proposals for the time being. Privatization was never a very popular issue. The plans put forth were all full of problems. But now, especially in the wake of Katrina, with citizens beginning to wake up to their own vulnerabilities in this society, forcing through privatization is considered ‘political suicide.’ The effort to privatize Social Security is under the table for now, but wait. As soon as the Katrina PR debacle is done, you can bet that privatization will rear its ugly head again.
And the question of who will really benefit under privatization is still in need of an answer. Those who don’t rely as much on Social Security, already have retirement accounts based on market investment. They have steady work histories, savings accounts, and life insurance to leave their survivors. According to a poll by the Washington Post, six in 10 evacuees had family incomes of less than $20,000 last year. Half have children younger than 18. One in eight was unemployed when the storm hit. Seven in 10 said they have no insurance to cover their losses. Fully half have no health insurance. Four in 10 suffer from heart disease, diabetes, high blood pressure, or are physically disabled. These are the people for whom Social Security is most important. Social Security provides aid for the disabled and provisions for children who lose a parent. Social Security provides a guaranteed benefit, and not one based on the performance of the economy, or one’s hourly wage.
What promise can we give to people like Gloria and Mary in the future? Will private accounts work as well for them as for wealthier people? Considering the recent market fluctuations, the degree of instability, of fraud, of thievery we have seen, should we trust Wall Street with 100 percent of our retirement futures? And how fair is this new system?
Poor people are poor for a variety of reasons, many of them institutional. Until we solve our society’s problems that destroy the level playing field, that keep opportunity out of some of our communities, we cannot afford to dismantle our Social Security system that pulls so many of the most disadvantaged out of poverty.
The US government is already deeply in debt, which means all Americans are deeply in debt. Any plan that addresses reforming Social Security must be a well thought out, rational and fiscally responsible plan that actually doesn’t cost us more than doing nothing. |
