ustxtxb_obs_1998_08_14_50_00019-00000_000.pdf

MOLLY IVINS Who’s Guarding the Henhouse? Some nice people who produce cartoons for children based on classic fairy stories and Mother Goose rhymes have asked me to do “a treatmen4” as they say in the film world of “Henny Penny” she who \(along with her friend Chicken Licken, the one that started the whole This is causing me to call my friends and announce dramatically, “I’m having trouble with Goosey Loosey’s character development,” or, “I can’t work Ducky Daddles into my new subplot.” Ah, the trials of the creative artiste. As we all know, however, great literature enriches our understanding of everyday life, and so it is with the immortal Henny Penny. Look around and you’ll notice dozens of Hennys, hopping up and down while shrieking: “The sky is falling! The sky is falling!” You might think the moral of Henny’s story is, “We have nothing to fear but fear itself.” But if you haven’t reread it lately, you may have forgotten that in the end, Foxy Woxy eats the fowl friends. So let’s start with this simple moral: People who can convince you that the sky is falling can also make you forget that Foxy Woxy would like you for lunch. Which brings us to the Social Security system. As you may have heard, Social Security is supposed to be in trouble; “crisis” is the preferred description here, and many a Henny Penny is hopping up and down, shrieking: “It’s going to go broke! It’s going to go broke! You’ll never see a nickel of your money!” Here’s the problem: S.S. is now taking in $101 billion more a year than it pays out in benefits. We are building up a surplus to finance the retirement of the baby boom generation. In April, according to Senator Paul Wellstone, the trustees reported that S.S. will be able to cover benefits for the next thirty-four years until 2032. After that, with no changes in the system, it will still be able to pay out 70 to 75 percent benefits indefinitely. The problem is not so much the bulge of retiring baby boomers as it is increased longevity in all cohorts. The solution, obviously, is to fix the shortfall. And the shortfall itself, according to an article in the July issue of The Atlantic Monthly, is based on the most pessimistic assumptions: that economic growth will average just 1.8 percent during the next two decades, a lower rate than in any comparable period of America’s history. This also assumes that the growth will slow even further in later years, to less than half of the 2.6 percent of the past two decades. The numbers most commonly used to convince us that this particular sky is falling? In 1960, “There were more than five workers for each beneficiary; today there are 3.3 workers; by 2030, there will be only two workers for each beneficiary.” Eeek! “THE INCREASED COSTS OF PROVIDING FOR A LARGER RETIRED POPULATION WILL BE LARGELY OFFSET BY THE REDUCTION OF EXPENSES ASSOCIATED WITH CARING FOR CHILDREN.” But those numbers ignore both the surplus now generating revenue interest to support the system, as the ratio of workers to beneficiaries falls, and the increased productivity of workers, which means it takes fewer workers to support each retiree. In that Atlantic is a comprehensive examination of myths about S.S. It reports: “To assess the burden accurately, it is necessary to examine the total number of dependentbeneficiaries and children each worker will have to support. It is projected this ratio will rise from 0.708 per worker at present to 0.795 in 2035. But even this number is well below the ratio of 0.946 that prevailed in 1965 … thus, the increased costs of providing for a larger retired population will be largely offset by the reduction of expenses associated with caring for children.” So why all this talk of “crisis” and need for radical change and privatization? Money. Mutual fund companies, stock broker ages, life-insurance companies, and banks would love to have tens of millions of new customers and billions of bucks in new commissions and fees. So, of course, they’ve poured millions of dollars into a fat PR effort backing privatization and then there’s those hefty contributions to lawmakers and would-be lawmakers. \(Why, Says the Washington Post of September 20, 1996: “Lobbyists for Wall Street are trying to stay behind the scenes as they argue for privatization of Social Security because they and their firms so obviously stand to profit by the changes they are promoting, according to financial industry executives. Representatives of mutual funds, brokerages, life-insurance companies and banks are involved in the lobbying effort to have the government let Wall Street manage a slice of Social Security’s money. Representatives of investment firms have begun lobbying Capitol Hill and the White House to advance their agenda.” Social Security has administrative costs of less than 1 percent, with no fees or commissions. According to Wellstone, in Chile, where the social security system has been completely privatized, an estimated 19 percent goes to administrative costs, and fraud is rampant. ‘ According to the Atlantic article: “If $1,000 is invested through a brokerage firm for forty years, the investor will have been charged in excess of $400 in fees on the original investment, plus an additional 1 percent a year on all gains…. Meanwhile, the operating expenses of the Social Security system are less than $8 for every $1,000 paid out to beneficiaries.” Hiya, Foxy. Molly Ivins is a former Observer editor and a columnist for the Fort Worth StarTelegram. Her new book is You Got to Dance With Them What Brung You. You may write to her via e-mail at mollyivins @ star-telegram. corn. AUGUST 14, 1998 THE TEXAS OBSERVER 19