By Jack Rasmus

Federal Reserve Chairman Alan Greenspan launched the latest drive to privatize Social Security Feb. 29, 2004. Greenspan, one of the top three economic policymakers in the nation, used the prestige of his position to declare—yet again—that the Social Security system was ap-proaching a financial crisis and would soon go broke. Social Security benefits, he claimed, would have to be cut, and the retirement age at which workers could begin receiving benefits would have to be raised to as high as 70.

This is the same Alan Greenspan who headed an Emergency Presiden-tial Social Security Reform Commis-sion for then-President Ronald Reagan in 1983. Back then he was already predicting a collapse of Social Security and recommending an increase in the payroll tax paid by workers that funds the system and a raise in the retirement age for those born between 1938 and 1960 going up in steps to 67 years old.

Congress quickly adopted this recommendation. Over the past 20 years, the Social Security tax rate and the slice of income taxed have continued to grow. Today earnings up to $87,900 a year get taxed at 12.4 percent.

The direct result of the 20-year rise in payroll taxes since 1983 has been to generate a Social Security surplus of $1.46 trillion dollars. With that much surplus, how can Social Security again be on the financial ropes? It’s not because benefits were increased dramatically over the years. There has been virtually no significant increase in Social Security benefits the past 20 years.

It’s not that millions more baby boomers were discovered hiding under the bed and will soon be retiring in the years ahead. Roughly the same boomers who were born between 1945-1955 were alive in 1983 and are around today. So where did all that money go?

The answer reveals the biggest financial scandal in U.S. history, the biggest swindle of American working class families, or any working class, anywhere in history. The magnitude of the scandal exceeds the $1 trillion taxpayer bailout of the corrupt savings & loan industry under Reagan and Bush I during the 1980s. It dwarfs the costs of the current Enron-corporate rip-offs and scandals under Bush II.

The $1.46 trillion surplus built up by workers seeking to ensure some minimal retirement security has been sucked out of the Social Security fund by administrations from Reagan to Bush with the consent of Congress.

Despite legislation passed in the early 1990s declaring a “lock box” on the Social Security fund, the entire Social Security surplus nevertheless has been permanently “borrowed” every year over the past 20 years and transferred to the federal government’s general fund to help reduce and offset chronic annual federal budget deficits. These deficits total approximately $4 trillion from Reagan through George W. Bush. About $2.9 trillion of this went to tax cuts for the rich and for corporations. The rest paid for a doubling of military spending by Reagan in the 1980s, two Iraq wars, the war in Bosnia and the current phony War on Terrorism.

In other words, American workers and families have been paying indirectly for the Reagan-Bush tax cuts and wars of the last 20 years with their wages and their retirement benefits. If the $1.46 trillion “borrowed” were restored to the Social Security fund, there would be a massive excess of money today in the system—more than enough to pay for universal health insurance for everyone in America.

The incredible magnitude of this heist is quantified in the accompanying table (below), illustrating the annual Social Security surplus and the federal budget deficit before and after the borrowing of the surplus.

This grand theft stands in stark contrast to the way World War II and even the Vietnam War were financed. World War II was funded primarily by a highly progressive income tax, as well as other taxes on corporations to prevent excess profits being derived from government contracts. Even the Vietnam War was largely financed by a progressive surtax on incomes rather than by the transfer of a payroll-tax-generated Social Security surplus to cover the budget deficits.

If there is a crisis in Social Security, it is a political and criminal crisis, not a financial one. The money was there. If it’s gone now, it’s because it was stolen—by Reagan and by the Bushes with Clinton and the Congress conveniently looking the other way.

Take the money and run

This greatest theft of all time should be viewed in the broader context of the Reagan-Bush economic strategies over the past 20 years. These regimes have consciously planned to create as big a chronic federal budget deficit as possible.

These deficits fit into a larger, sleight-of-hand strategy by the owning classes to steal back the share of the wealth gained by organized workers and their unions—the fair wages and benefits won through strikes and collective bargaining.

It used to be that the owning classes would simply pay workers peanuts, force them to work long hours in bad conditions and make no efforts to clean up the environmental mess of their factories, mills and mines. But through collective action and legislative power workers won better wages and conditions, an eight-hour day and pollution controls. So employers moved to sneakier ways of ripping off workers.

Under the Keynesian economic practices of the 1930s, 40s and 50s inflation was manipulated to erode workers’ wages. It kept workers and their unions constantly fighting for cost of living increases, but always a couple of steps behind, always losing more each time.

While effective, that strategy did not transfer enough wealth away from workers fast enough to satisfy employers.

That’s when the policies of tax cuts and huge deficits were developed and implemented by Reagan. Tax cuts, sold as ways to shrink government, were structured to give the wealthiest the biggest breaks, leaving workers to shoulder an ever-larger share of the costs of running society. Military spending—huge contracts for a handful of large corporations—ran up monstrous deficits, but no one could question these without being accused of betraying our brave men and women in uniform. Social programs designed to support poor and working people were slashed. When everything from public education to public transportation then fails due to financial starvation, that is used as proof that government can’t run these functions. It becomes an excuse to privatize them, to take the remaining wealth and give it away to corporations that then use the former public wealth for private profit.

Those earlier, targeted social services were really just appetizers. With most of them cut to the bone, the remaining main course meal is the only New Deal target of consequence left—the American workers’ national pension fund. Wall Street has been drooling for years over the possibility of carving up Social Security. Now they are sharpening their knives, grabbing their forks, licking their lips and getting ready for the real feast.

While the $1.46 trillion surplus generated between 1983 and 2004 has already been stolen, there is still another additional $1.1 trillion surplus expected to be generated between today and 2018. That’s their target.

In order to get their hands on that $1.1 trillion, the radical right and Bush need to convince workers to roll their retirement dice at the stock and bond casino called Wall Street in the form of 401(k)s and IRAs.

But for that to happen, a crisis must be engineered first. Workers must be convinced that the way Social Security has been structured over the last 70 years is no longer viable, and that it will never pay out.

With his remarks earlier this year Greenspan fired the opening salvo in that campaign, creating the appearance of a new financial crisis in Social Security—a crisis which Reagan, the Bushes, and their right-wing friends in Congress themselves have been patiently engineering over the years.

Dismantling the New Deal

The wealthiest capitalists of this country have never accepted the permanency of the Roosevelt New Deal reforms of the 1930s, when concessions were made to American workers in a time of depression. Social Security was the touchstone program of these concessions, of the New Deal itself.

Nixon talked about undoing the New Deal in the early 1970s. It was part of his so-called “New (Domestic) American Revolution” he planned to launch in his second term, before it was cut short by Watergate and impeachment.

When he first entered office, Reagan made an attempt to raise the Social Security privatization flag, but by 1983 he had to back off and settle for the payroll tax increases. The time was still not quite right to pull it off.

The Neocons in the Bush I administration resurrected many of Nixon’s plans on paper, but got distracted by the first Gulf War, the recession and the one-term stand of their patron.

As president, Bill Clinton slowed down the drive to privatization, but could not stop it. Clinton’s initial efforts to resurrect New Deal-like programs, such as national health insurance, were quickly abandoned and replaced with doomed policies like managed health care. The policy focus of his administration then quickly turned once again to cutting other social services, most notably welfare.

Now Bush and friends believe the time is ripe to try again to privatize Social Security. However, the prospect of diverting retirement funds to Wall Street became much less appealing after the collapse of the stock market during the Bush II recession of 2001-03. Now they need once again to generate a phony crisis in Social Security to resurrect their campaign.

So the fight for the retirement hearts and minds of American workers is underway. The campaign of sowing misrepresentations and confusion has begun, and yet another Bush “big lie” has been thrown into the ring. Like loaded dice rolling across the crap table of public debate, we do not yet know what numbers will come up—sevens or snake eyes.

What we do know is that if George Bush is re-elected in November, a radical restructuring of the entire retirement system in America will be at the top of his new domestic policy agenda. He will aim to eliminate Social Security as we know it. And next up will be union-negotiated pension plans.

Jack Rasmus is chair of Local 3 of the National Writers Union, UAW 1981, AFL-CIO. To purchase books, plays, and videos on Labor by Jack Rasmus visit his website at http://kyklosproductions.com