The mocking aphorism about chutzpah has the child who
murdered his parents throwing himself on the mercy of
the court because he's an orphan. The Republicans may
have outdone even that caricature with their new
proposal on Social Security.
"Lock Box Lite" doesn't even pretend to solve any
fundamental problems with Social Security. Rather, it
takes the existing Social Security surplus and invests
it in treasury bonds under the guise of "private
accounts." Its main purpose is to give Republicans
political cover from the debacle of president Bush's
botched Social Security sales job.
Bush came out of the gates in January intent on
spending the "political capital" he claimed to have
earned in the 2004 election. Social Security reform
would be the centerpiece of his second term domestic
But the campaign started blowing gaskets almost before
it began. Bush's initial salvo was a domestic version
of the technique that had worked so well for him in
Iraq: the Big Lie. He claimed over and over again
that Social Security was "in crisis," "flat broke,"
Fortunately, the data on Social Security are not under
national security embargo like, say, records on
weapons of mass destruction. They are posted daily on
public web sites. The fact is that Social Security
has a $1.8 trillion surplus and can pay 100% of
scheduled benefits until 2041 or 2051, depending on
the projections. If that is "flat broke" or
"bankrupt" then Bush is just as surely Eleanor
Roosevelt or the Virgin Mary.
Worse, Bush's plan for "saving" the system would have
actually made it worse. His proposed "private
accounts" would have taken money out of the Social
Security Trust Fund, in effect creating the very
crisis he was pretending to solve. And it would have
left future retirees worse off than if nothing was
done at all.
To do all of this, Bush wanted to borrow upwards of $5
trillion for "transition costs." This would make up
for the current payroll deductions that were going
into private accounts and therefore would not be
available to pay retirees their promised pensions.
Now, the entire U.S. National Debt, run up over 230
years, totals $7 trillion. And Bush wanted to borrow
nearly that much to make worse a problem he was
pretending to fix and that didn't even exist in the
Wait, it keeps getting better-or worse, depending on
your perspective. Even after all that, retirees would
still never have seen any of the money they had put
into their private accounts until they had paid back
the government the money that it had borrowed to set
up the accounts in the first place. And if they
didn't earn at least 3% above the rate of inflation
for the duration of their participation in the system
they would never see a cent.
I am not making this up.
Is it any wonder that the more Bush talked about the
plan, the more the public rebelled against it? His
self immolation on the issue got so bad Karl Rove had
to pull him off the case in May lest he drive his poll numbers-and the rest of the Republican party's with
him-into single digits. But now comes the sequel.
House Republicans just proposed a plan to divert the
Social Security surplus into private accounts. The
plan is for the government to sequester the Trust Fund
surplus into Treasury bonds until retirees begin
drawing them down in 2017. That way the government
won't spend the money intended for retirees. This is
where the REAL chutzpah comes in.
Bush is hands down the all-time world champion spender
of Social Security Trust Funds. When he was running
for office in 2000, he declared, "We're going to save
Social Security by not spending the Trust Fund."
Since taking office, however, he has masked the size
of his record budget deficits by taking money from-you
guessed it-the Social Security Trust Fund.
Last year the heist amounted to $160 billion. Since
he took office, Bush has quietly spent over $640
billion of the Trust Fund's money in this way.
Even more amazing, one of the variations on Bush's
phony "bankruptcy" tune was that the surplus was
really only a bunch of I.O.U.s., treasury bonds.
"There is no Trust Fund," he claimed. Now, he wants
to lock that same non-existent Trust Fund out of his
own reach by using the very same bonds he only last
month decried as "fictitious."
At its root, the problem is that Bush is simply
spending more money than he brings in--$580 billion
more last year. It makes him look like Santa Claus in
the short run but in truth it is a theft from future generations who will be stuck paying it back. If the Republicans put the Trust
Fund in a "lock box" all that will happen is that the nominal deficit will suddenly become all that much bigger. And it, too, is
funded by treasury bonds, by borrowing.
In other words, as long as the Bush spends more than
he brings in, and as long as he borrows to make up the difference, the whole scheme to "lock away" the Trust Fund is a fraud. It
amounts to no more than moving bills from one pocket to another and pretending you're richer as a result. All of the bills in both
pockets still have to be repaid. And if Bush really wanted to help Social Security, instead of simply pretending like he was, he
could balance the budget by raising taxes on his wealthy benefactors or cutting back on his prodigious spending. It worked for
The final indignity of the whole affair is that it was
the working and middle class who put up the money in
the Social Security Trust Fund that Bush used in 2001
to slip his wealthy benefactors their massive tax
cuts. That is the essential scheme by which Bush has transferred ever more of the nation's wealth to those who are already the
wealthiest. Over their life, those tax cuts amount to five times what it would cost to fix Social Security forever so that those
working people who funded the giveaway don't have to live out
their retirement eating cat food.
But rather than doing the right thing, the honest
thing-which is to say actually fix the system by
rescinding just a portion of the cuts-Bush and his
minions play these kinds of games. Apparently Bush
has gotten fat and lazy on the easy lies he peddled in
Iraq. But this one is going to be a much harder sale.
It gives chutzpah a whole new meaning.
Robert Freeman writes on economics, history, and
education. He can be reached at