[Mb-civic] More on Bush Social Security scam AND W. Post on War Crimes

[ean at sbcglobal.net]

The Devil is in the details of the Bush Social 
Security Privatization

By John Case

The Goldman-Sachs "US Economics Analyst" Global
Economic Research Bulletin for December 17, 20904 has
published a detailed analysis of the most likely Bush
Social Security proposals. It shows the Bush program
to be fraud -- but a clever fraud.

Before summarizing the Goldman-Sachs analysis, it is
worth reviewing some basics about Social Security:

1. Social Security is basically a pay-as-you-go
program, enacted as part of the New Deal under Franklin
Roosevelt in 1935-1936. Payments workers make into the
fund through the Social Security payroll tax are paid
directly to current retirees. It is NOT a savings or
investment account. Payments to workers are indexed on
their WAGES, not inflation--as we shall see, a very
important point. The amount of benefits you receive is
roughly based on your last 5 years of EARNINGS.

2. Based on payroll tax increases drafted by Alan
Greenspan and others in the 1980's (the last time there
was a "Social Security Crisis") there is currently a
surplus of payments over receipts. This surplus is put
into the Social Security Trust Fund, and invested by
the government. Federal spending has also been
borrowing from this trust fund.

3. The current "Social Security Crisis" is based on
projections that the Trust Fund will go from surplus to
deficit at some point 20-40 years from now depending on
which economic model is employed. The fundamental
underlying reason for the change is that workers are
living longer and the ratio of working to retired
persons is decreasing in favor of the latter. HOW much
longer they are living strongly reflects the sharp
racial and class divisions in US society. Nevertheless,
this deficit, when and if it occurs, will have to be
paid by: a) increasing the social security payroll tax;
b) increasing general revenues; c) reducing benefits;
or d) extending the retirement age.

 The retirement age has already been extended once.
As Paul Krugman has noted the entire issue could be
disposed of by a modest increase in the social security
payroll tax -- merely a fraction of what Bush already
spent in his massive tax cut for the rich in 2001. So
in a sense the entire "crisis" is of Bush's making.

However that is not the Bush plan. The Goldman, Sachs
analysis reveals the following:

 The leading reform proposal of the Bush team --
"Reform Model 2" proposed by the Presidential
Commission on Social Security in 2001--would establish
personal savings accounts by diverting a portion of the
social security payroll taxes that fund the current
system. --Benefits would be cut sharply relative to
current law; --The budget deficit would climb during a
long transitional phase as payroll tax receipts fell
sharply; --The new system would make Social Security
retirement benefits partially dependent upon the
performance of stock and bond markets.

A. Workers less than 55 could voluntarily redirect 4
percentage points of their payroll taxes up to $1000
annually (indexed for INFLATION) into a personal
savings account (PSA). Upon retirement the funds in
these accounts would generally be converted into an
INFLATION-indexed monthly annuity payment.

B. Traditional Social Security benefits would be cut at
a rate equivalent to the worker's PSA contributions
PLUS a 2% compound interest rate -- referred to as the
"clawback".

***C. Benefits under the traditional Social Security
system would be INDEXED TO PRICES BEGINNING 
SEVEN YEARS
AFTER THE REFORM PLAN IS IMPLEMENTED!! Even if 
not a
single person opted to establish a PSA in the next 75
years, the 48% cut in benefits from the switch to price
from wage indexing ALONE would "restore the Social
Security Trust Fund to solvency". Even if EVERY single
person chose to divert monies into PSAs -- and NEVER
TOUCHED THE ACCOUNTS -- there would still be an 
average 27% cut in benefits at the end of the same 75 year
window. Of course a big portion of PSA funds would be
absorbed as investment firm profits and administrative
fees. Goldman, Sachs estimates these fees at 10%.
However experience in some Latin America countries
(e.g. Chile) where privatization of social security has
been showcased suggest it will be much higher.

D. A new welfare-style change in Social Security would
be added establishing a minimum benefit for long-term
low wage workers at 120% of the poverty line. Benefits
for widows would be similarly "protected".

E. Proponents of the Bush plan assert that the PSA's
would earn on average about 4.6% per year after
deducting "administrative" fees--BROKER PROFITS. This
they claim is 1.5% higher than current long-term
Treasuries, and thus there might be a net national
savings gain. However Goldman, Sachs disputes this
guess, estimating the gain at around .5%. Both
estimates are probably wrong, and high. Any worker
making less than 50K per year, and many making more
than that, will be under tremendous pressure to cash
out their PSA's every time there is a layoff,
especially in the absence of universal health care. In
addition financial asset returns are volatile. For
example a 50% decline in stock prices -- what occurred
in 2000--would cut benefits payments for PSAs by
15%-25%.

Why does Bush want to cure the "crisis" -- which does
not really exist -- by privatizing?

 1. Since the entire so-called "crisis" is averted
by the slashing of benefits from the change in indexing
alone, the PSAs will generate a windfall for Wall
Street brokers and investment firms.

 2. Eliminate or weaken a key economic base of the
 Democratic Party.

 3. Bankrupt the federal government through huge
deficits as the principle means of eliminating
entitlements. The latter being the key impediment to a
more perfect market-dominated allocation of resources.
The Republicans seem ideologically committed to this
position, despite the huge risks it poses for the US
global economic position. Look for the first round of
this whip-sawing to begin in Bush's 2005 budget
proposals coming up soon.

 4. Get ready to hear the Bush propagandists jump
through hoops to HIDE and DISGUISE the indexing change.
Expect much hoopla over the welfare-izing of the low-
wage worker benefits which will be heralded as an
INCREASE when it is really a CUT.

In other words, get ready for the fight of your lives!

***

 Washington Post
 December 23, 2004

 The Washington Post | Editorial

 War Crimes

 Thanks to a lawsuit by the American Civil Liberties
 Union and other human rights groups, thousands of
 pages of government documents released this month
 have confirmed some of the painful truths about the
 abuse of foreign detainees by the U.S. military and
 the CIA - truths the Bush administration implacably
 has refused to acknowledge. Since the publication
 of photographs of abuse at Iraq's Abu Ghraib prison
 in the spring the administration's whitewashers -
 led by Defense Secretary Donald H. Rumsfeld - have
 contended that the crimes were carried out by a few
 low-ranking reservists, that they were limited to
 the night shift during a few chaotic months at Abu
 Ghraib in 2003, that they were unrelated to the
 interrogation of prisoners and that no torture
 occurred at the Guantánamo Bay prison where
 hundreds of terrorism suspects are held. The new
 documents establish beyond any doubt that every
 part of this cover story is false.

 Though they represent only part of the record that
 lies in government files, the documents show that
 the abuse of prisoners was already occurring at
 Guantánamo in 2002 and continued in Iraq even after
 the outcry over the Abu Ghraib photographs. F.B.I.
 agents reported in internal e-mails and memos about
 systematic abuses by military interrogators at the
 base in Cuba, including beatings, chokings,
 prolonged sleep deprivation and humiliations such
 as being wrapped in an Israeli flag. "On a couple
 of occasions I entered interview rooms to find a
 detainee chained hand and foot in a fetal position
 to the floor, with no chair, food or water," an
 unidentified F.B.I. agent wrote on Aug. 2, 2004.
 "Most times they had urinated or defecated on
 themselves, and had been left there for 18 to 24
 hours or more." Two defense intelligence officials
 reported seeing prisoners severely beaten in
 Baghdad by members of a special operations unit,
 Task Force 6-26, in June. When they protested they
 were threatened and pictures they took were
 confiscated.

 Other documents detail abuses by Marines in Iraq,
 including mock executions and the torture of
 detainees by burning and electric shock. Several
 dozen detainees have died in U.S. custody. In many
 cases, Army investigations of these crimes were
 shockingly shoddy: Officials lost records, failed
 to conduct autopsies after suspicious deaths and
 allowed evidence to be contaminated. Soldiers found
 to have committed war crimes were excused with
 noncriminal punishments. The summary of one
 suspicious death of a detainee at the Abu Ghraib
 prison reads: "No crime scene exam was conducted,
 no autopsy conducted, no copy of medical file
 obtained for investigation because copy machine
 broken in medical office."

 Some of the abuses can be attributed to lack of
 discipline in some military units - though the
 broad extent of the problem suggests, at best, that
 senior commanders made little effort to prevent or
 control wrongdoing. But the documents also confirm
 that interrogators at Guantánamo believed they were
 following orders from Mr. Rumsfeld. One F.B.I.
 agent reported on May 10 about a conversation he
 had with Guantánamo's commander, Maj. Gen. Geoffrey
 D. Miller, who defended the use of interrogation
 techniques the F.B.I. regarded as illegal on the
 grounds that the military "has their marching
 orders from the Sec Def." Gen. Miller has testified
 under oath that dogs were never used to intimidate
 prisoners at Guantánamo, as authorized by Mr.
 Rumsfeld in December 2002; the F.B.I. papers show
 otherwise.

 The Bush administration refused to release these
 records to the human rights groups under the
 Freedom of Information Act until it was ordered to
 do so by a judge. Now it has responded to their
 publication with bland promises by spokesmen that
 any wrongdoing will be investigated. The record of
 the past few months suggests that the
 administration will neither hold any senior
 official accountable nor change the policies that
 have produced this shameful record. Congress, too,
 has abdicated its responsibility under its
 Republican leadership: It has been nearly four
 months since the last hearing on prisoner abuse.
 Perhaps intervention by the courts will eventually
 stem the violations of human rights that appear to
 be ongoing in Guantánamo, Iraq and Afghanistan. For
 now the appalling truth is that there has been no
 remedy for the documented torture and killing of
 foreign prisoners by this American government.

http://www.washingtonpost.com/wp-dyn/articles/A20986-
2004Dec22.html



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