Social insecurity.

The Plot against Social Security By Michael A. Hiltzik HarperCollins Publishers US$24.95

U.S. President George W. Bush started his second term in full battle cry: Fix Social Security, or it will go bankrupt! An alarming prospect, since a third of all U.S. citizens over the age of 65 earn 90% of their total income from the enormous retirement program. Plus, the millions of Americans paying taxes into the system today expect to receive that pension in their own golden years, and they expect timely payments for having diligently paid in over an entire working life.

So what is Bush's message? Put simply, it's that in the year 2018 the U.S. government will begin paying out more in Social Security disbursements than it collects, and that this deficit will then grow every year thereafter. By 2042, workers who are currently about 25 years old will start to retire. According to Bush, the system by then will be utterly broke--if taxpayers don't act now to save it. The proposed solution is to create a system of voluntary personal savings accounts for workers. The money extracted from workers' salaries and paid into these accounts would be invested in stocks. Currently, Social Security is tied up in low-returning, but safe, U.S. bonds.

Despite months of talking and touring, the administration has failed to secure solid popular support for its Social Security plan, in reality a privatization of the system. Los Angeles Times journalist and Pulitzer-prize winner Michael Hiltzik argues in The Plot Against Social Security that the U.S. system of disbursements to retired and disabled workers is not only solvent--contrary to what the Bush administration is saying--but that it's also more financially sound than it has been since the 1970s.

To make his case, Hiltzik examines the history of Social Security since its creation after the Depression years of the 1930s. He finds that the alarm bells being sounded today have been pulled repeatedly over the years, ever since the beginning of the program. Deploying an arsenal of statistics, the author posits that Social Security's contemporary critics cite contradictory data to make their case that the system is bankrupt. What's more, Hiltzik argues, even if Bush's proposed private-investment accounts did produce the fantastic returns the White House predicts, a large part of the gains would be lost to administrative expenses. The book then examines different privatization models and asks who would really benefit from the proposed reform? The workers whose retirement is threatened, or the investors, speculators and private fund administrators who would get their hands on the tremendous flow of money involved?

Hiltzik insists that it's essential to complete an objective study of Social Security that would produce reliable predictions about its financial health and long-term viability. He emphasizes that the study must be realistic and honest so that it doesn't merely serve as a basis for the agenda of one or another political ideology.

Reform. It is precisely this last point that seems to be the essence of the presidential campaign to reform the retirement system. The author recounts a conversation with Michael Tanner, who leads the Social Security project at the conservative think tank the Cato Institute. Tanner says the central theme of the debate isn't really the solvency of the system but rather the relationship between the individual and government. Should the government control retirement and the funds people will receive when they stop working, or the other way around? Or should it be the individual who takes responsibility for his own future, instead? In his drive to sell Social Security reform, so far with dubious results, Bush has studiously avoided talking about the ideological underpinnings of the reform. It's clear, the author states, that the debate over Social Security is the start of a grand battle of ideas in the United States that could eventually alter the social balance achieved alter the Depression.

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