Privatization, Take 2 

Crapo offers "compromise" Social Security plan; audience calls it anything but

On June 22, over a video link from Washington, D.C., to Boise, Sen. Mike Crapo gave a small group of Idahoans a preview of the latest Republican strategy to privatize Social Security into "personal accounts." He also justified a new bill, introduced a day later and co-sponsored by both Crapo and Sen. Larry Craig, as "an effort to find a compromise with folks like you," since his audience were all outspoken opponents of privatization. When the video link ended, the parties on both sides of the issue remained exactly where they stood before the meeting.

The group was Idahoans United to Protect Social Security, the organizers of several recent protest demonstrations outside of local pro-privatization brokerage firms like Wachovia Securities and Charles Schwab. Idahoans United had also staged a 150-person "empty-seat open house" dedicated to Crapo on June 2, at which the group's members taped themselves calling on Idaho's junior senator to meet with them, and to clarify his position on President Bush's Social Security agenda. To illustrate their concern at that event, many of the group's supporters wore pins reading simply, "Where's Mike?"

At the June 22 teleconference, Crapo left no doubt where he is. "I personally am a believer that we should start a shift toward personal accounts," he told the seven-person panel, who were also representing such diverse organizations as the Idaho Education Association, the American Association of University Women, the National Active and Retired Federal Employees Association, the National Association of Social Workers, the American Federation of Government Employees and the Idaho Chapter of the Christian women's group Church Women United.

Crapo added that he preferred a "more pure personal account approach," like the one President Bush is currently stumping in support of, but Crapo said he was compelled by groups like Idahoans United to back a new and equally controversial plan sponsored by Sen. Jim DeMint of South Carolina, titled the "Stop the Raid on Social Security Act of 2005." After hearing the senator's explanation and perusing the new legislation, the various delegates all insisted that the new plan suffers from the same flaws as the last one.

"It seems to me that he is still in lock step with the [Bush] administration on pushing private accounts down our throats," said Sandra Schmidt of Church Women United. "This is a lot of smoke and mirrors to confuse the public and is totally unacceptable to me and our organization."

The new Republican plan proposes taking money from the surplus that the Social Security trust fund is running and parceling it out to individual accounts-with no mention of stock market investments. These new private accounts, like the ones in Bush's plan, would later be used to pay for workers' retirement benefits and could be inherited by their heirs. Currently, the federal government can borrow against the Social Security surplus, creating special bonds that go into the Social Security Trust Fund. Under the Senate bill, Congress would no longer have access to the privatized surplus money for government spending (hence the gallant title of "Stop the Raid").

Crapo called the proposed accounts a "lockbox" to protect against Congress's "secret spending," and warned that without a move into personal accounts, "there are only two options left: one is to raise taxes in some way, the other is to reduce benefits." However, as critics of the plan are quick to point out, that lockbox comes at a price: an inevitable-some say disastrous-inflation of the federal deficit.

"There is an up-front cost that would have an immediate impact on our deficit today," Crapo admitted at the meeting. While Crapo did not give an estimate of the potential cost, the Social Security Administration has projected that for the Bush plan, it could run on the order of $3.5 trillion over the first decade-which Crapo labeled "the maximum assumption." The senator quickly added, however, "There is not a long-term problem, and if the returns on those personal accounts was sufficient, it would actually have a beneficial impact on solvency long-term, as I see the numbers."

Whether those numbers really add up to long-term solvency is already a point of heated contention, just days after the bill was introduced. Sen. Charles E. Schumer (D., N.Y.) recently called the Stop the Raid Act a "shell game," a term that William Whitaker with Idahoans United and the National Association of Social Workers also favored upon hearing Crapo's plan.

"The new proposals are nothing more than attempts to mislead the public by sneaking the first steps toward privatization in while pretending to be concerned with solvency of Social Security," Whittaker told BW. "Taking money from the surplus would undermine Social Security by reducing the length of time it will be able to pay full benefits under current conditions."

Lucinda Hormel of Idahoans United, who organized both the open house and the meeting with Crapo, said after the meeting that while she appreciated the senator's openness-like when he allowed 10 minutes more than was originally scheduled for the discussion-she still felt that "he kind of missed the whole point" with the Stop the Raid Act.

"It's playing into what people are fearing," she said of the legislation. "It's being disguised to make it more palatable to some demographics, but I don't see a desire to work on the real problem. Private accounts are the real threat."

Kathy Haley from the American Association of University Women, Dick Chilcote from the Idaho Education Association and Arnold Hartigan from the National Active and Retired Federal Employees Assocation all respectively echoed Hormel's concern, and promised that their organizations-with over 50,000 combined members in Idaho-would continue to oppose privatization in all forms.

"His compromise is no compromise at all," Hartigan said. "We appreciate Sen. Crapo's willingness to, at last, sit down with his constituents and talk about the issue. Now we wish he would just listen."

To read the Stop the Raid on Social Security Act of 2005, click visit http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.01302:.

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