The $200 Million Disinformation Campaign
By Molly Ivins
Working for Change
Tuesday 22 February 2005
Social Security privatization cabal will break the bank to convince you to break yourself.
AUSTIN, Texas -- Among those still interested in fiscal sanity, and that includes quite a few Republicans, I bring your attention to two tax cuts that should be repealed right now for the sound reason that they are perfectly nuts.
A whopping 54 percent of the two cuts goes to the two-tenths of one percent of Americans who make more than $1 million a year. And 97 percent of the cuts goes to the 4 percent of the population with incomes over $200,000. (All figures from the Center on Budget and Policy Priorities and the Joint Committee on Taxation.)
The two cuts were not part of President Bush's original tax-cut proposals, they were slipped in by Congress in 2001 and will be fully effective only in 2010. One repeals a provision that scales back the magnitude of itemized deductions taken by high-income taxpayers. The other repeals a provision under which the personal exemption is phased out for households with very high incomes.
The Joint Committee estimates that these two cut tax cuts will reduce the government's income by $9 billion in 2010 and $16 billion in 2015. The center points out that the cost of cuts is significantly understated because the estimates do not assume relief from the alternative minimum tax, a measure popular on Capitol Hill this year.
The center's report says, "If these two tax cuts were to be cancelled ... Congress and the president could avert cuts in areas like health care, child care, housing assistance and food stamp assistance for low-income working families."
It is a rather clear choice of moral values.
Also of note is what appears to be a new dimension in how monied special interests buy legislation through Congress. We are all familiar with both corporate lobbyists and the system of legalized bribery known as "campaign finance." But now comes an unholy tsunami of corporate money aimed not at politicians but at ourselves. Over $200 million will be spent to convince us that we should privatize Social Security and change the rules of class-action lawsuits. In other words, they want to make us in favor of our own screwing by corporate special interests.
This has been done before, but not at this incredible level. When the insurance industry mounted a $10 million campaign in 1993 to defeat the Clinton health insurance plan (remember Harry and Louise?), no one had ever seen that kind of money spent to kill a single bill before. And now, The Washington Post reports, "Corporate America, the financial services industry, conservative think tanks, much of the Washington trade association community, the Republican Party, and GOP lobbyists and consultants are prepared to spend $200 million or more to influence the outcome of two of the toughest legislative fights in recent memory."
Bush's Social Security privatization plan is so bad (not to mention that it doesn't fix Social Security, as even he now admits), it is unclear if even a massive public relations campaign can save it. But be prepared to watch them try. Coming soon to a television station near you, ad after ad assuring you that Social Security is going broke right now and only private accounts can save it. The sponsors of these ads (and Republican money can buy some mighty high-priced ad agencies) will all have lovely names, like "Committee to Save America" and "Society to Save Old Folks." But it's pure political propaganda, and more fool you if you buy into it.
The point of tort deform is not to save business from a non-existent "flood" of frivolous lawsuits. The flood is just as phony as the Social Security "crisis." It's a fight between big business and the trial lawyers, and as the African proverb says, "When elephants fight, it is the grass that suffers." We're the grass in this titanic clash of special interests. What we stand to lose is the great America right to sue the bastards. What business calls tort "reform" just means the doors of the courthouse will be shut to average citizens. You cannot get justice.
In Texas, medical malpractice "reform" is in full effect. I know one guy who had jaw surgery, and he kept tearing his tongue on what felt like a needle sticking up from the bottom of his mouth. It turned out to be a bone splinter, and he was out $6,000 for a second surgery to correct it. No lawyer would take his case, and all he wanted was to get the $6K back.
The latest onslaught of special interest money, reported in The New York Times, is $10 million from a lobbying group called USA Next, which will be used solely to attack the AARP for opposing Bush's privatization plan.
"They (AARP) are the boulder in the middle of the highway to personal savings accounts," Charlie Jarvis, president of USA Next, told the Times. "We will be the dynamite that removes them." If you can't win an argument on the merits, then dirty up your opposition.
It's not bad enough we have to fight corporate lobbyists and huge campaign donations, now we have to deal with an endless Republican campaign on specific issues?
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Some Inheritance
The New York Times | Editorial
Wednesday 23 February 2005
As he stumps for Social Security privatization, President Bush always gets a big round of applause for promising that the money in a private account could be passed on to one's heirs.
If those happy clappers only knew the details.
Under the president's proposal, when you retired you would not be able to start spending the money in your private account until after you bought an annuity, a financial contract in which you hand over a lump-sum payment and, in return, get a monthly stream of income for life. The upside of buying such an annuity would be that you'd be protected against outliving all of your money. The downside is that even if you died immediately after retirement, the most your heirs would inherit would be the amount that remained in your private account after you had paid for the mandatory annuity. (If you lived longer, of course, you might well need to spend the remainder to supplement the annuity's low monthly payout.
The idea of making the private accounts part of one's estate is particularly appealing to low- and middle-income earners, who may not have all that much to leave to their heirs under normal circumstances. But those are exactly the people who would have to use the largest share of their accounts to buy annuities. The government would require that annuities be large enough to keep recipients above the poverty line for life. The less you had to start with, the less you'd have left over after buying the mandatory annuity.
What if you died before you retired? As with many claims Mr. Bush makes about Social Security privatization, the fate of your private account in the event of your untimely death is unclear. But one issue that raises big doubts about whether that money could be inherited is the question of how the trillions of dollars the government would have to borrow to set up a privatized system would be repaid.
Under the president's proposal, when you retired, your traditional Social Security retirement benefit would be cut by an amount equal to all the deposits you had made into your private account plus interest. (The interest would be three percentage points higher than the rate of inflation.) The benefit cut would be each person's contribution to repaying the huge debt the Bush administration would take on to "pay for" privatization.
But if you died before you retired, you would have already used some of that borrowed money to set up the private account and yet would never have made any contribution to repaying the debt. So in that case, how would the government recoup your share of the amount it had borrowed? Well, it could let your share of the debt go unpaid - in effect bequeathing to your heirs and their fellow citizens ever-higher deficits. Or your spouse could inherit your private account and the benefit cut that went with it. Or the government could take its cut from your private account before the money went to your survivors - a grab that could wipe out your stash.
The White House would hotly deny that the last alternative could happen. Nothing freaks out the Bush administration more than the suggestion that the government would ever tap someone's private account - even for money that is owed to the government. It doesn't, however, seem too bothered about gutting your traditional benefits. Go figure.
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