Bush has wiped out the budget surplus — now he's looking at Medicare and Social Security
If you get a tax rebate check this fall, consider yourself lucky. Many working families will get nothing from Bush's tax cut. And even though your $300 or $600 check is chump change compared to the million-dollar tax cuts that America's wealthiest families will realize, you'd better hang onto it.
You're going to need every penny of it to start a retirement account or buy health insurance. President Bush's tax cut is his first step in a plan to take the "security" out of Social Security and the "care" out of Medicare. Workers retiring after 2020 will be the ones who get hurt the most, but all workers should pay close attention to what the White House is doing in these areas.
The problem is that Bush's tax cut and our economic slowdown have combined to completely eliminate the projected budget surplus. The surplus for 2001 will be only about $1 billion, not counting the Social Security surplus. A billion dollars may seem like a lot of money, but it is less than $4 for each American citizen. Not exactly savings you can count on in an emergency.
And even that billion-dollar figure is overstated. At the request of President Bush, the U.S. Treasury has changed its method for reporting the budget, shifting an additional $4.3 billion from the Social Security surplus to other government accounts. Without this accounting gimmick, the non-Social Security part of the budget would be in the red.
Keep this deceptive trick in mind when Bush claims his tax cut didn't force the government to dip into the Social Security surplus. They did. They just found a way to hide it.
Like his father, who, as president, oversaw the largest budget deficits in U.S. history, George W. Bush is determined to keep our country in the red. In less than nine months in office, he managed to reverse the trend toward surpluses that began appearing in 1998.
While many write off his penchant for red ink as incompetence, it is more likely part of a cunning plan to destroy Social Security, Medicare, and many other programs that help working families. Hints of the Bush administration's true agenda come from his advisers. He's too savvy a politician to tell the nation directly that he would like to dismantle our social insurance programs and make corporations exempt from federal taxes, but his lieutenants have been spreading that word.
An article this past May in The Nation magazine quoted Grover Norquist, a Bush spokesman and adviser, as saying his goal is "to cut government in half. To get it down to the size where we can drown it in the bathtub."
I don't have to tell you what programs they will drown in the bathtub. They will start with Medicare and Social Security.
Secretary of the Treasury Paul O'Neill said as much in an interview with the Financial Times. He said he is committed to abolishing corporate income tax and capital gains taxes, shifting the entire federal tax burden to wage earners.
He then proposed doing away with Medicare and Social Security, saying people should put money aside for their retirement and medical needs. That advice is easy to follow when you make $59 million a year, the amount O'Neill made last year as CEO of Alcoa. Working families live in a different world -- a world where unexpected illnesses, layoffs, and other family emergencies can wipe out savings overnight.
We need the safety net of Medicare and Social Security.
During last year's election campaign, Bush promised not only to protect that safety net, but also to improve Medicare by adding a prescription drug benefit. But now that he's squandered the surplus on a tax giveaway to the rich, there is no money left to do so. His prescription drug plan for Medicare is a joke -- asking insurance companies to voluntarily sell low-cost plans to retirees.
His plan for Social Security is even worse -- reducing benefits through privatization. A Congressional Research Office study shows that the added administrative costs of privatizing Social Security would reduce retirees' benefits anywhere from 4.7 to 10.8 percent for those workers who retire after 2020. Privatizing would cost $40 to $800 billion annually -- mostly fees paid to financial managers; current administrative costs are less than $3 billion.
When you look at the long-term cost of the Bush tax cut, that tax rebate check seems awfully expensive.
If Bush continues to get his way, you'll need a lot more than $600 to get yourself back to even.