The truth hurts

Bush used windy rhetoric and outright deception to sell his privatization plan. What else is new?

By Joe Conason

Published February 3, 2005 6:49PM (EST)

The morning after the president's emotion-drenched 2005 State of the Union address, Americans may be wondering what he actually explained about his intentions for a second term. Although George W. Bush and the White House aides who craft these public spectacles become increasingly adept at manipulating the feelings of his audience every year, their underlying method remains the same: to shade inconvenient realities with rhetorical vagueness and outright deception.

Whether the presidential tropes sound creative or clichéd, euphonious or clunky, matters less than the overall effect -- which permits Bush to elide all troublesome details with ringing declarations of grave necessity and great purpose. Decorative touches are often provided by references to illustrious forebears -- including deceased leaders of the opposition party -- which lend Bush false authority and bogus bipartisanship.

Last night's rollout of the latest White House political product -- recently rebranded as "Social Security personal accounts" -- adhered closely to those familiar techniques. Bush proclaimed the imminent bankruptcy of the nation's most successful and popular government program, surpassing his previous exaggerations of the retirement system's projected financial problems. He associated himself with Franklin Delano Roosevelt and the late Sen. Daniel Patrick Moynihan (and cleverly put every proposal to cut future benefits in the mouths of Democrats, living or dead).

And still, after months and years of promoting Social Security privatization, and after many weeks of preparation for this crucial address, Bush failed to propose a serious, detailed plan to "reform" the system. Instead he offered deceptive advertising of his sketchy plan. And, of course, he repeated his irresponsible warning that the "entire system will be exhausted and bankrupt" in a few decades, blithely ignoring the fundamental fact that payroll taxes will continue to cover at least 70 percent of outlays long into the future.

Worse yet than his familiar false alarms, however, was Bush's refusal to confront the only predictable effect of his privatization scheme -- namely, that the system will veer into serious and permanent deficit if he succeeds in diverting funds into "personal accounts."

To the extent that Social Security faces a future financial shortfall, the diversion of payroll taxes into private accounts will severely exacerbate that problem. In his speech, Bush sought to overcome that objection by delaying the full implementation of his plan by a few years, but that is merely another deception. His scheme will require enormous benefit cuts and gigantic amounts of public borrowing, because the cost of privatization mounts into the trillions with each ensuing decade. Every American born after 1950 will be paying those costs in higher interest rates, increased taxes and denied benefits.

But Bush saw no reason to mention those disheartening details to his listeners at home in the heartland. To them, he promised an investment bonanza that would belong to them and their families in his great new "ownership" society. In fact, he offered a series of guarantees to younger workers for which he will never be held accountable:

"Your money will grow, over time, at a greater rate than anything the current system can deliver -- and your account will provide money for retirement over and above the check you will receive from Social Security. In addition, you'll be able to pass along the money that accumulates in your personal account, if you wish, to your children and -- or grandchildren. And best of all, the money in the account is yours, and the government can never take it away."

That last sentence is an outright lie, according to information provided by the president's own advisors. Indeed, to the extent that "senior administration officials" were willing yesterday to disclose the important footnotes their boss won't mention, those personal accounts sound much less attractive -- and not quite so "personal," either.

Without explaining exactly what he plans, Bush briefly alluded to the sharp restrictions on the privatized accounts -- which are designed to prevent the frauds that have plagued privatization schemes in other countries.

"You" will only be permitted a few selected funds for investment, in accounts administered by a government agency and run by private contractors. (Imagine the tsunami of campaign contributions from Wall Street bidders for those deals.) "You" may or may not earn enough, depending on economic conditions, to make up any benefit cuts imposed on the system by Bush. At retirement, "you" will be required by law to turn over the proceeds from those accounts to approved vendors of annuity accounts (priming still more Wall Street and insurance industry political contributions). "You" will not be able to will that annuity to your heirs, even if you happen to die long before you have used up its proceeds.

And there's one more important caveat that flatly contradicts the president's sunny promises.

According to an unnamed senior presidential advisor who briefed reporters yesterday, "you" will have to surrender to the government any earnings in "your" personal account up to 3 percent, adjusted for inflation -- which happens to be the projected growth of earnings under the existing system.

To be more precise, "you" wouldn't have to surrender those earnings on retirement, because the government would already have control of "your" personal account. The government would simply seize that sum from your account -- and pay whatever fees are due to the private fund administrator -- before turning the remainder over to "you" and your family.

That might not amount to very much, particularly after "you" buy that mandatory annuity. Estimates by the Social Security Administration and the Congressional Budget Office place the inflation-adjusted gains -- after paying off that initial government fine -- somewhere between 0.3 percent and 1.3 percent.

Don't forget to subtract the possible 40 percent cut in benefits that the Republicans mean to inflict on those of us under 55 years old, plus the debt service on the money borrowed to pay for the transition costs. If this plan is ever approved, "you," and I, and most Americans will be big losers.

Perhaps that is why the president prefers bloviating rhetoric and uplifting spectacle to all those disturbing details. He knows from experience that the truth won't sell the product.

Joe Conason

Joe Conason is the editor in chief of To find out more about Joe Conason, visit the Creators Syndicate website at

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Social Security State Of The Union