It's Not Broken, Don't Fix It

By Fr. John Rausch
Herald Columnist
(From the issue of 1/20/05)

After multiple sclerosis crippled my father making him quit work, the family drew Social Security Disability Insurance. Some years later my father joked about how the government finally cured him. He showed me a letter he got from the Social Security Administration that read, "Dear Mr. Rausch, With your 65th birthday, you are no longer disabled. You are retired."

But, his retirement lasted only 15 days. Two weeks after his birthday, he suffered a heart attack and died. With that, his check came to my 69-year-old widowed mother.

Social Security arrived when I was 11 and my sisters were teenagers. It gave my family stability when it faced the crisis of my father's illness, and afforded my mother dignity in her senior years. Today over 47 million benefit from Social Security, the Old Age Survivors and Disability Insurance program, many of whom reflect my own family's history.

In 2004, the Social Security Administration crunched the numbers and targeted 2042 as the year the trust fund would hit zero balance. Political opportunists seized the projections to promote their own agenda — privatization. For people of faith the current alleged crisis pits the ideology of rugged individualism (neo-liberalism) against the concept of community proclaimed by the social teachings of the Church.

Consider these ideas for the current debate:

Social Security appears as strong as ever. In 1996 Social Security's trustees projected a zero fund balance by 2030. In 2000, they adjusted the projection to 2036, and today it's 2042. Projections keep changing because the trustees continue to make unrealistic, low-end assumptions about future economic conditions, like a GDP average growth of just 1.8 percent for the next 75 years. If the economy grows at a more realistic 2.4 percent annual rate, the increase in real output and real incomes will ensure the trust fund never going to zero. The opportunists have hysterically changed public policy from "keep an eye on it" to "the sky is falling."

Privatization will transform Social Security from insurance to risk taking. By investing part of their Social Security money in private accounts, younger workers are enticed by promises of better returns at retirement. Current wisdom: investors do far worse than the market generally. Retirement money will fluctuate with poor investing or a declining market. Privatization threatens communal justice by changing "we're all in this together," to "every man (woman) for himself."

Finally, privatization will produce great profits for banks and brokerage houses, but reduced benefits for Social Security beneficiaries. To track the proposed millions of private accounts, administrative costs that cut into benefits will rise tenfold, if handled by a single government-managed system, and possibly thirtyfold, if by private financial institutions. Currently, Social Security administrative costs represent less than 0.6 percent of annual benefits.

The debate about privatization can find economists with numbers to support either side. Yet, neither side can deny critical decision making time remains decades away. Meantime, merely mid-course corrections and slight policy adjustments of Social Security "can keep an eye on it."

Preserving Social Security represents the safety net that has lifted 1 million children out of poverty and helped another million avoid extreme poverty (living below half the poverty line). Today, about 10 percent of seniors over age 65 live in poverty. Without Social Security, that rate would climb to 50 percent.

The proponents of privatization are framing an important question: what kind of society do we want to create — one based on exaggerated self-reliance, or a community of care encouraged by the Gospel?

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