Thursday, February 03, 2005

Bush Declares War on the Poor

Bush Declares War on the Poor
By Jacques Coubard

Thursday 03 February 2005

Social Security privatization guts the ultimate social protections for the most destitute inherited from the New Deal.

He promised it during his electoral campaign; he does it. Bush will launch his great social security reform, taking the system back seventy years to before President Roosevelt's 1935 establishment of social protection, "welfare," designed to curb the extreme poverty of the elderly during the Great Depression.

The plan Bush and his ultraconservative advisors are promoting sends the present redistribution system down the trapdoor to progressively substitute a capitalization that forces wage-earners to dedicate a portion of their contribution to the purchase of stocks or bonds that would supposedly provide a better return. The argument the authors of this project once again use as a club is fear. Fear of an abysmal deficit that would strike at social security, about to be overwhelmed by the arrival of the new generations, the baby boomers, in 2018. The federal budget will no longer suffice to save retirements, taken here at age 65. On the other hand, they would be indexed from then on to inflation and not to salaries, which always lag behind price rises. The reduction in benefits(1)will consequently be felt immediately in a country where it is common to see men and women work past the official retirement age in order to pay their bills or quite simply in order to live with dignity while poverty continues to extend ever further in a society that enjoys one of the lowest savings rates.

The consequences of the reform have provoked critical reactions even among the ranks of Republican Senators, less concerned about the workers than about the aggravation of the budget deficit the reform will provoke by depriving Social Security of contributions.

Unions, various associations, and Democrats reject this rupture of the social contract. How will low salaries be able to allow the purchase of shares when for the lowest paid workers they barely allow the minimum necessary for survival? As for other workers, they will be penalized without any guarantee of a stable and dependable income.(2) The increase in bankruptcies of the Enron or WorldCom variety has demonstrated all that is risky about the great Wall Street casino game. Tens of thousands of employees who had purchased their employers' shares or contributed to company pension funds found themselves without either savings or pensions.

In the name of his "ownership society" concept, Bush applies ultraconservative dogmas to the letter: always less government, always more privatization, always less taxes (for the wealthiest), so as to make the individual more independent, more free to determine his destiny. In fact, using the deficit as blackmail, he is proceeding to a redistribution of national wealth for the benefit of the brokers, banks, and insurance companies who will profit even from the borrowing aspect of the proposals launched by the White House. People from ... good companies, who have poured abundantly into the Bush electoral campaign coffers.

Bill Paterson, investment specialist for the AFL-CIO, sees this change as "a dangerous collusion between industry and the ideologues of the right." The retired person's association, AARP, has published ads in 50 newspapers denouncing the "social insecurity" the privatization introduces. They all draw attention to the failures of similar privatizations in Chile and Great Britain, which have proven to be more costly (with private companies taking a significant portion of the funds and their administrative management becoming much heavier). Counterproposals have been launched that rest primarily on a gentle increase in wage-earners' contributions.

Bush's success in the presidential elections and his majority in Congress give the means to accomplish his project. The future will tell whether those forces aligned with social solidarity will be able to unite to challenge it. Following the ravages of successive recessions, Kennedy, then Lyndon Johnson, claimed to declare "war on poverty." Now with Bush comes the war on the poor.

(1) In 2003, according to the latest statistics available, 10.2% of retirees lived below the poverty level.
(2) According to an official report, scheduled reductions in payouts will be 0.9 % in 2012, 25.7 % in 2032, and 45.9 % in 2075.

Translation: t r u t h o u t French language correspondent Leslie Thatcher.