"It's About Coalitions, Not Purity" Part Forty-Three

George W. Bush and Social Security

Upon entering his second term, George W. Bush chose to pursue changes to Social Security, an idea he had mentioned early in his first term. The Social Security issue was and is complex and this won't be a recounting of the whole system and the proposals for change. If you are interested in this subject, please check your local library for more detail.

There were various proposals made about Social Security, but essentially Bush proposed allowing individuals to invest a small percentage of their Social Security contributions in private investments of some type (generally stocks and/or bonds). The idea was that each American would then have a private account with their own retirement funds.* There were two major problems with this: one, the money used for these investments would be diverted from the existing Social Security system, thus depriving the system of that income. Two, stocks and bonds fluctuate in value, and this fluctuation, as well as the knowledge needed "to try to make" wise investments, added a definite risk to each person's account. If you were "lucky," and your investments turned out well, you would have more money than someone whose investments were less profitable, and likely far more than someone whose investments went "sour." ** With less money going into Social Security, how much damage would that mean to the system? If Social Security payment amounts to individuals were reduced and your "investments" had gone "sour," what kind of "security" did this provide for you at the most vulnerable part of your life, old age? Social Security isn't perfect, but it invests in special government (and very, very low risk) bonds, which earns the fund interest.

In 1935, the Social Security law was passed by large majorities in both houses of Congress, with a large percentage of Republicans voting "yes," and it was then signed into law by President Franklin Roosevelt. As the years passed, more and more conservative opposition to Social Security mounted until, in the 1964 election, conservative Republican Barry Goldwater,*** the GOP presidential candidate, espoused making Social Security voluntary. Because Democrats and FDR had led the campaign to get Social Security enacted, the American public tended to give Democrats the credit for the law, something which continues pretty much to this day, although conservative opposition to the law has helped the public decide which side is in their favor.

While Bush's proposal would have had individuals investing in stocks and bonds, Wall Street investment banks and stockbrokers nationwide would have seen new streams of money from these investments.**** The public heard Bush's proposal and it essentially fell like a dud, and the President eventually gave up on actively promoting the plan. This Social Security non-starter, as well as the continuing wars in Iraq and Afghanistan, mounting oil and gasoline prices, and the loss of jobs to technology and to low wage countries, all tugged mightily to drag down George W. Bush.  

* Many Americans "may" believe they have a bank account type Social Security account in Washington D.C., complete with funds being held in that account. This is not true. Social Security is a "pay as you go" system, with relatively recent revenue (how recent has varied over the years) being paid out to current recipients.

** This is simply how private investment goes, and to be honest, some people study all sorts of information about investing, hoping to do well, but they get "burned," because there is risk, even considerable risk, in any such investments. "Knowing how to invest" is not an exact science, and there are no guarantees, although it can be helpful, in my opinion. On the other hand, someone little versed in investments may score big, purely by luck, and luck is certainly a factor in investments. Roulette anyone? Having done a bit of betting on horse and dog racing earlier in my life, I can tell you how some people had all kinds of formulas and used all sorts of info to figure out how to make a bundle with their "educated bets." The thing was, not a one of these people ever made enough to vacation on the Riviera, or to even travel much more than about fifty miles away. I actually ended up ahead of the game over those years, but not all that significantly, although I once picked the winner in five straight races, and I didn't have a formula.

*** I say, "conservative Republican," because in those days, the two political parties were mixtures of progressives, moderates and conservatives.

**** I've noted here in some articles over the years, how my father, who was a staunch Republican, supported Republican ideas about voluntary Social Security and private investment of funds (Bush's plan was not really all that new). My dad supported these ideas, that is, until he retired, at which time he saw how necessary Social Security was to so many people, including to himself and to my mother, who had worked for a good part of her life, thus earning her a separate Social Security check. When the Republicans took over Congress in the 1994 election (taking office in early 1995), they began to press for changes to Social Security, which brought a scathing comment from my father that the Republicans and big business couldn't wait to get their hands on that Social Security money. My father was very good with numbers, as he had been both an auditor for an auto parts company and then the head of the credit union for his Steelworker local. It took his own retirement to see what his previous support for the Republican ideas had really meant.

WORD HISTORY:
Hearth-This word goes back to Indo European "ker," which meant "fire, heat." This gave its Old Germanic offspring "herthaz," which meant "fireplace, the ground used for fire." This gave Old English "heorth," meaning "fireplace, fire," and even, "home," apparently from the usage of the word for "indoor place for fire;" thus making it a symbol for one's home (this extended meaning was also in German). Later "heorth" became "herth," before the modern version. The other Germanic languages have: German "Herd," which means 'hearth," but also transferred to the modern cooking device; thus "stove, range;" Low German "Heerd," also meaning "hearth/stove;" Dutch "haard," meaning "fireplace;" Swedish "härd," borrowed from Low German and meaning "hearth." I could not find a form in modern Frisian, but Frisian once had "herth," meaning "hearth, fireplace." Apparently forms of the word died out in the northern branch of Germanic, but Old Norse had "hyrr," meaning "fire," and as noted, Swedish borrowed the word from Low German, "perhaps" because Sweden was a military power in the 1600s and 1700s, and the Swedes occupied sections of northern Germany, which was Low German speaking, although trade between northern Germany and Sweden is also certainly a possibility.