Social Security privatization to hurt baby boomers

The efforts to private social security has scared not only the senior citizen but also the baby boomers who are about to retire. While President Bush has tried to tell the senior citizens that their benefits and those near retirement will remain unchanged, no one is so sure any more because under the proposed changes, disclosed in a leaked White House memo, the basis and assumptions will be changed. Or in other words, baby boomers who have already lost a lot of
their retirement savings in 401(k) accounts after the burst of the bubble, are now afraid that they will have nothing left for their retirement under President Bush's social security privatization plan.

And their fears may be well placed. Economist and author Allen W. Smith, Ph.D. is warning them about the impact of Bush's proposal on the baby boomers. He says, "Baby boomers beware! You have contributed more to Social Security than any other generation, but there are those who would rip you off. You have gone that extra mile and prepaid the cost of your own retirement in addition to paying the cost of the generation that has preceded you, but you are being used as scapegoats for the problems facing Social Security. You may not have liked those extra taxes, but you paid them and expected your government to keep up its end of the bargain and pay your full benefits. You probably had full confidence in your government's commitment to you until that fateful day of February 25, 2004 when Federal Reserve Chairman, Alan Greenspan, sent shock waves throughout the nation with his first call for Social Security benefit cuts. This is the same Alan Greenspan who headed the 1982 presidential commission on Social Security to fix the baby boomer problem. He and his fellow commissioners foresaw at that time the potential problem that would exist when the baby boomers began to retire in about 2010, so they urged Congress to enact their recommended solution to the problem. Congress did so in 1983."

Professor Smith continues, "The solution was quite simple. TAX, TAX, TAX THOSE BABY BOOMERS UP FRONT! Hit them with a double whammy by making them pay enough taxes to prepay the cost of their own retirement in addition to paying for the retirement of the preceding generation. The baby boomers did all that was asked of them. Their extra tax dollars have generated approximately $1.5 trillion in Social Security surpluses since 1983, and continue to generate surpluses of more than $400 million each and every day. By the time they retire, the baby boomers will have paid for their own retirement in addition to having paid for the retirement of the previous generation. The trust fund should contain a large enough reserve to pay full benefits until 2042 when the youngest of the baby boomers will be 78 years old."

Smith goes on to ask, "So why is President Bush now making scapegoats out of the baby boomers and telling the public that the boomers are the reason the system needs reform? Why is the president quoting worker-to-retiree ratios when that calculation was done back in 1983, at the time taxes were raised to take care of the worker-retiree imbalance that would occur with the retirement of the baby boomers?"

And his answer is simple, "He is doing so because the government has been "borrowing" and spending (embezzling) all those baby boomer surplus tax dollars for the past two decades. Although both Bush and Gore promised to end the practice during the 2000 presidential campaign, and Bush repeated that pledge in his first State of the Union address, he "borrowed" and spent $509 billion of the baby boomers' retirement contributions in violation of both federal law and his pledge to the American people. Even as he publicly blames the baby boomers for the Social Security problems, Bush continues to misappropriate more than $400 million of their retirement money each and every day." (Related article: Bush's plan for privatization of social security)

He reminds that money taken out of the fund is the main culprit, "Every dollar of the Social Security surplus has become the victim of what Senator Harry Reid first referred to as "embezzlement" and "thievery" in a Senate speech on October 9, 1990. The money has been taken from the trust fund and replaced with worthless IOUs that Senator Fritz Hollings has referred to as "a 21st century version of Confederate banknotes. Because of the looting of the trust fund, when Social Security begins to run annual deficits in 2018, it will be necessary to cut benefits or raise taxes in order to generate the necessary revenue to repay the government's huge debt to Social Security. Most Americans are not yet aware of this "embezzlement" of Social Security funds, and Bush and Greenspan would like to keep it that way."

Recommended article: Bush's approach for privatization of social security questioned