Friday, March 04, 2005

IT'S FUNNY HOW Bush wants to privatize Social Security and end the last resort protection of bankruptcy at the same time. Yes, I know the credit card companies have been trying to get this bankruptcy bill passed for 8 years now, but is it a coincidence that it's on the verge of passage just when the Bush administration is saying, "If you're under 55, your financial security for your old age will depend on whether you have enough income to invest in the stock market"? It seems to me Republicans and the banking industry are joining forces to snatch away a 60-year-old program that ensures older Americans' financial survival and simultaneously are removing the only fail-safe fallback protection low-income and middle-class people have to recover from a financial disaster. Is it deliberate? Is it planned? Is it conscious?

Well, consider these points and ask yourself it it could be anything else.

  • Bankruptcy legislation: Under current (and longstanding) bankruptcy law, creditors can take your assets to get their money; but they cannot require you to turn over future income. The proposed new bankruptcy law would force people to work possibly for the rest of their lives just to pay off their debts. It's like indentured servitude with no contract and no end to the term of service.
  • Social Security privatization, via Josh Marshall:

I've said probably too many times over the last couple days that however they choose to dress it up and whatever sort of compromise they want to present it as, the president's goal is still phase-out. That's why he's invested so much in this politically. And if you want to grasp the stakes of all this -- both politically and in terms of policy -- just look at the fact that the White House is now redoubling its efforts to push privatization in the face of public opinion which appears to be congealing against them. They understand the consequences of defeat.

Now, you'll hear from me and others over the coming weeks and months all sorts of different jargon and policy particulars about caps and private accounts and add-on accounts and Trust Funds and rates of return and all the rest of it.

But the terms of this debate are actually pretty straightforward. The president and his supporters want to get the government out of the Social Security business by ending guaranteed benefits. It's really as simple as that. Not complicated. They'll put in its place some system of private accounts where you can save money on your own. And if it works out, great. If it doesn't, it's your problem.

Social Security is about spreading out the risk and the security by having near-universal participation in one program. That's what it is. You pay in through the course of your working years and after you retire you receive your guaranteed benefit every month for the rest of your life. It is that issue of guarantee -- which, in its nature, only a program like Social Security can provide -- which the president and his supporters are trying to do away with, either all at once or in stages.

  • The Republican backers of the bankruptcy bill claim their purpose is to get at wealthy deadbeats who can afford to repay what they owe but choose not to do so. Yet, the "means test" they propose is set at a state's median income, not at the top income levels. In addition, Republicans in the Senate blocked Sen. Edward Kennedy's proposals to exempt people filing for bankruptcy because of overwhelming medical expenses from having to meet the means test; and to allow bankruptcy filers to keep $150,000 of the value of their home, when creditors seized their assets. Another amendment that would have protected financially insolvent Americans who are elderly or who are victims of fraud from restrictions on filing for bankruptcy was also rejected by Senate Republicans. BUT: If you have an extra million or 2 or 3 that you want to place in an "asset protection trust," this new bankruptcy law says, Fine by us. No reason a'tall to get rid of that loophole.
My sources for this post are the Los Angeles Times article about the bankruptcy legislation, and Maha's superb piece on Mahablog today. And Kevin Drum provides a definition of the loathesome credit card company practice of universal default.

1 comment:

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