President Bush, no stranger to dramatics, finally unveiled a few elements of his privatization plan in his State of the Union speech. Needless to say, it doesn't live up to the airy promises of the last few months. (Don't be suprised when they claim that the Social Security Trust has acquired WMD's.)

But that hasn't stopped the echo machine from perpetuating more of the same myths and deceptions. Here's a few of the classics:

MYTH: The Social Security Trust Fund does not exist

All the extra Social Security taxes we've paid over the years haven't actually been saved in the trust fund; they have been spent by Congress.

-Pete du Pont, The New New Deal, Wall Street Journal, 1/27/05

REALITY

Social Security has been running a surplus for some time -- currently, Trust Fund has $1.5 trillion to its name, and that number is expected to keep rising for at least twenty years. As the Social Security Administration explains, this money is held in U.S. Treasury bonds, long considered the safest investment in the world.

When Privateers make the claim that the Trust Fund is simply "worthless IOUs," they are suggesting that the U.S. government will default on them when it is time for Social Security to collect. What that would mean is that our economy would collapse, and the dollar would become almost worthless, for what investor would buy a bond we won't honor?

It is true, however, that the government will have to raise money to repay Social Security, either by raising taxes, borrowing more from foreign banks, or simply balancing the budget. Thanks to Bush's profligate spending combined with his tax cuts for the wealthy, we are on a dangerous course of debtorship in which we may find ourselves paying our entire revenue -- 20% of GDP -- on interest payments alone by 2040.

MYTH: Social Security is a bad deal for blacks

And for minority workers, who have shorter life spans and often don't live to receive Social Security benefits, the assets their survivors would receive would be a huge positive. (du Pont)

And Bush is right -- according to the National Center for Health Statistics , at age 65 the median African American male lives 14.6 more years, compared with 16.6 more years for whites.

-Donald Luskin, National Review Online, 1/31/05

Personal accounts will make Social Security more fair for African Americans because, at death, the value in those accounts will be allowed to be passed on to loved ones. [...] Krugman's position is extremely confused. He is taking the position that Social Security reforms that make the system fairer for African Americans must be opposed because President Bush hasn't waved his magic wand and bestowed upon African Americans the same statistical life expectancy as whites. (Luskin)

REALITY

This is another attempt to make privatization a wedge issue, by trying to separate one group from another.

Bush claimed that, because black men's life expectancy at birth is 68 years, they unfairly lose Social Security benefits. But, as Paul Krugman explained, the more important number is the life expectancy of a 65-year-old black man: "Blacks' low life expectancy is largely due to high death rates in childhood and young adulthood. African-American men who make it to age 65 can expect to live, and collect benefits, for an additional 14.6 years - not that far short of the 16.6-year figure for white men." While a two-year difference is still disturbing, it's hardly indicative of a grand imbalance in Social Security.

On the contrary, due to the even more unjust economic inequality that puts blacks at a disadvantage, on the whole they will benefit more from the progressive taxation of Social Security. And African-American seniors depend more on Social Security checks -- one third subsist on SS alone.

As for the claim that a private account is "transferable" to dependents upon an early death -- perhaps they forgot the Survivor part of Old Age, Survivor and Disability Insurance (OASDI).

MYTH: Look out! It's a CRISIS!

We need to transform Social Security from a ticking Debt Bomb to a Prosperity Machine through owning and controlling our own finances. (Charles Jarvis, USA Next, 1/25/05)

If private Social Security savings accounts had been made available 40 years ago, the system would be solvent today as opposed to facing an $11 trillion shortfall. (du Pont)

REALITY

There is no crisis. What conservatives fail to mention when peddling doom is that Social Security has been running a surplus, and will continue to do so for at least another twenty-odd years. This is in stark contrast to the rest of the government under Bush's stewardship, which is being driven into an inescapable hole of debt as we speak.

In reality, under a pessimistic projection of growth, there may be a shortfall in Social Security in about forty years. At that time, if no adjustments are made, Social Security will be able to pay 70-80 percent of the benefits promised, which would still be more in real dollars than today's benefits.

To put it in perspective, see this chart from the Center for Budget and Policy Priorities. If nothing is done to Social Security, and we borrow money to pay for the scheduled benefit increases, the deficit Social Security would face over 75 years pales in comparison to other Bush programs, such as tax cuts and the Medicare prescription giveaway. If Social Security faces a "crisis," then the Bush budget is Armageddon.

MYTH: "Ownership" (Privatization will make you rich!)

[Quoting another wing nut] With a combination of stocks and bonds, the low income worker could retire with an account worth in excess of $270,000, again considerably higher if invested solely in stocks, with monthly benefits in excess of $2100 compared to current Social Security monthly benefits of approximately $1170.

-Donald May, "Who's afraid of Social Security reform?" Town Hall, 1/29/05

[Bush's] Ownership Society will further assure our prosperity by taking economic control away from politicians and bureaucrats and putting it back where it belongs in the hands of the people. This will include not only Social Security and health care but also education, other entitlements, and welfare. (May)

[Rep. Ford said] "The key to retirement security and upward social mobility is wealth creation." That, indeed, is the core philosophy underlying President Bush's initiative to reform Social Security with personal accounts -- it's the heart of his vision of an "ownership society." (Luskin)

Second, the NCPA estimates that using historical stock and bond market growth, the $11 trillion of unfunded futureSocial Security payments would be eliminated. (du Pont)

The best way to reduce the debt burden over time, though, is to streamline wasteful federal spending. Specifically, reforming Social Security and Medicare can save trillions of dollars that would otherwise drive the debt ratio to painful levels.

-Brian Riedl, "Debt dramatics," National Review, 1/27/05

The Social Security system was designed in a, obviously, in an era that is long gone, and it has worked in many ways. It's now in a precarious position. And the question is whether or not our society has got the will necessary to adjust from a defined benefit plan to a defined contribution plan. And I believe the will will be there. But I'm under no illusions. It's going to take hard work.

-George W. Bush, 12/20/04, press conference

REALITY

Let's first get one thing clear. Social Security is not, and has never been, any kind of individual retirement savings or investment plan. It is a security against your other nest eggs, to ease the risk and pressure of investment, and to provide a basic level of sustenance. It benefits everybody.

How does it do this? It's a form of insurance -- we all pay a premium and we all get protection, whether when we are retired, when we are disabled, or when the breadwinner in our family passes away.

Social Security is not meant to be your only source of retirement income -- you should plan ahead by putting away in 401k's and IRAs, and more saving should be encouraged. But whether you find yourself at the end of the line with a sizeable nest egg, or whether you find it has evaporated in some Enron scheme, or whether you never earned enough to put anything away -- in any case, you have a floor beneath you with Social Security.

As Josh Marshall explains, it is a defined benefit program -- everyone is guaranteed a modicum of support when they retire. When Bush talks about the "Ownership Society," what he means is he wants to phase-out the defined benefit and introduce a defined contribution program -- where there is no guarantee of support, just mandatory risk.

This would be bad enough -- hard-line anti-government ideologues moving collective risk into individual risk. But it's worse. Not only will the government costs of this transformation run into the trillions, the Bush plan doesn't even address the supposed "crisis" in funding shortfalls, as the administration admits. Instead, what he seems to be proposing to do is to rob from the Trust Fund (which he claims doesn't exist, see above) to cover debts incurred by his massive tax cuts for the wealthy. The biggest wealth transfer from the middle class (Social Security tax is capped at $85,000) to the rich. It's scandalous.

MYTH: Democrats resist privatization because they are addicted to power

[A]s columnist Robert Novak says: "The Democratic establishment is appalled at the thought of private Social Security accounts turning ordinary Americans into owners of stocks and bonds and, therefore, potential Republicans." (du Pont)

The power taken from politicians will be immense, as retirees will have retirement incomes greater than they would receive from the current plan. Since the taxpayers will own their retirement accounts, trying to frighten them at election time with threats that the opponents will cut their Social Security benefits will no longer work. (May)

There is much inaccurate information coming from politicians and organizations that wish to keep the populace dependent on government. They suggest saving Social Security by decreasing Social Security benefits and increasing taxes.... Only socialists have the nerve to suggest such a solution. (May)

REALITY

Democrats created Social Security, the most successful government program known to mankind. Indeed, it is the best embodiment of what the party stands for: that a responsible and prudent government of the people can provide protections that the free market cannot or will not. Because of the undeniable effectiveness of Social Security, and what it means to all Americans, personally, Republicans have also supported maintaining its promises.

It is only recently that anti-government ideologues and Enron-age Wall Street pirates have taken hold of the Republican Party and led it down a path of fiscal meltdown.

We're the first to admit that the Democrats, stunned by Karl Rove politics, have too easily rolled over and played dead on one boondoggle after another -- the "grave and gathering threat" of Iraq, the drug-company welfare called "Medicare reform," the unfunded bait-and-switch of No Child Left Behind, and the cronyism of energy policy and Iraq non-bidding, to name just a few.

But the privatization plan, which is built on fiscal recklessness and social irresponsibility, and which doesn't even claim to solve the so-called "crisis" -- is a completely transparent scam to all who care to examine the numbers. Those Republican politicians who take part in this grand lie, and who believe they can get away with it, they are the ones who are addicted to power.