E-mail a friendMichael Hiltzik
airdate May 31, 2005
Michael Hiltzik is a Pulitizer Prize-winning columnist for the Los Angeles Times. In his more than 20 years with the paper, he's worked as a financial, political and foreign correspondent and as a technology writer. He's also won a Gerald Loeb Award, the highest honor in American financial journalism. Hiltzik has written several books, including Dealers of Lightning, the nonfiction A Death in Kenya and, his latest, The Plot Against Social Security: How the Bush Plan Is Endangering Our Financial Future.
Michael Hiltzik
Tavis: Michael Hiltzik is a Pulitzer Prize-winning journalist and a longtime writer and columnist for the 'Los Angeles Times.' Last year, his twice-weekly columns on business won the Gerald Loeb Award, the highest honor in U.S. financial journalism. His latest book is called 'The Plot Against Social Security: How the Bush Plan is Endangering our Financial Future.' Michael, nice to have you on the program.
Michael Hiltzik: Nice to be here. Thanks.
Tavis: Let me ask, as if I need to, what got you to write this one?
Hiltzik: Well, it actually is an outgrowth of one of the columns I wrote late last year. I wrote a column questioning why we were talking about privatizing social security and having people put their social security money in the stock market when the stock market had basically crashed over the last couple of years, and I said this just doesn't make sense. After I wrote that column, I got e-mails and letters galore from people who--who asked me about it, and it was obvious that there was a real need to give people hard information and nonpartisan information about how this program works.
Tavis: So at the end of the day, what did you conclude? Why are we having this conversation?
Hiltzik: Well, I think the conversation is basically ideological. It's not even political, in a sense of Republicans versus Democrats. This is really an ideological conversation that goes all the way back to 1935 when this program was started. The arguments against it haven't really changed. Uh, its--the enemies are conservatives who simply don't like the relationship that it fosters between individuals and the government. They want to sever that relationship. They don't want the government to help us be communally responsible for--for all of our welfare.
Tavis: I wonder if I can, with your assistance, kind of center our conversation for the next 10 minutes around these myths and truths that you think we need to be aware of, with regard to the conversation that we are having about social security, so I've written them down. I wanna run through them. Before I get to those myths and truths, though, let me start with the political techniques that you argue the faux reformers are actually using. Let's run through those right quick. Number one, their strategy is to undermine public confidence in the system.
Hiltzik: Right. Well, this goes back to 1982, when a group of conservatives basically wrote a manifesto how to destroy social security, and what they said was you have to divide and conquer. This is a program that has tremendous public support. You have to undermine that support, and the best way to do that is to try to tell people that the program isn't going to be there for you when you retire, and--now, that was 1982 when this strategy was conceived, and this is exactly what you hear from the Bush administration and all the enemies of social security today, so you can see the strategy working.
Tavis: It worked. The second strategy was--or is to question the relevancy of the program to our contemporary workforce.
Hiltzik: Right. Well, this--you hear President Bush talk about how the world has changed. Women work, women are in the workforce, people are living longer--all these sorts of things. Well, these were all trends that were foreseen by the creators of social security. In fact, this is a program that has remained remarkably relevant for American workers for 70 years now.
Tavis: Mm-hmm. The third strategy is to bemoan its effect on workers and its impact on the economy.
Hiltzik: Right. Well, once again, in 1935, during the thirties, the opponents of creating social security said, you know, you're gonna make people lazy. If they know they're gonna get something from the government when they retire, they're not gonna save for themselves. They're not going to take care of themselves. They're gonna think, "When I retire, everything will be done for me." You still hear this argument today, and it's always been false, because the--the real usefulness of social security is being part of a comprehensive retirement plan, but you need that solid, basic foundation of--of retirement income that can't be affected by changes in the economy, changes in the stock market, what have you.
Tavis: All right, that's the strategy that you see that these faux--f-a-u-x--I used to love that word as a kid. I can never pronounce it right. F-a-u-x--faux reformers are engaging in this social security debate. Now, let me jump to these myths. I think it makes this conversation more amenable, certainly for me and I hope other viewers as well. The first myth--the system is heading for bankruptcy.
Hiltzik: Right. Clearly untrue. This system, right now and for the next 20 years, is running a surplus of a couple of hundred million dollars a year. This surplus is being put in a reserve, and it will be spent to help cover the retirement of the baby boomers starting a few years from now. This system is more solvent than the rest of the federal government.
Tavis: Myth number 2--the trust fund is just an illusion.
Hiltzik: Right. Well, now, this is based on the idea that all the trust fund holds--and this is a trust fund that is now one and a half trillion dollars worth of federal government securities. These are government bonds exactly like the bonds that you can buy from a bank. They're exactly like the bonds that are held, in fact, by the Bush family trust and by foreign governments. The argument there is that because the government is selling bonds to a government agency, this must be some sort of mythical transfer. Well, it's not. These bonds are solid. They're as solid as any other obligation of the federal government, and we have to acknowledge that this is really what makes social security financially strong.
Tavis: Myth number 3--social security will be the biggest drain on the federal deficit in the coming decades.
Hiltzik: Right. Well, clearly, the system has--by the time the baby boomers start retiring, this system will have $3 to $5 trillion in assets. It's still running a surplus. Even when the surplus runs out, the system will be drawing in enough money to pay for 3/4 of everybody's retirement bill. Uh, so it is not gonna be a drain.
Tavis: Social security is going to be broke because there are fewer workers per beneficiaries than there used to be. That's myth number 4.
Hiltzik: This is something that you hear President Bush talking about all the time. He talks about how in the past, there were 16 workers for every retiree, now there are only 3, and soon there are only gonna be 2, and he presents this as a threat to the basic financial stability. What he doesn't say is that the change from 16 workers per retiree to 3 workers per retiree all happened in the first 20 years of the program, when people started retiring and receiving benefits. Well, going from 16 to 3 didn't hurt the program. It stayed solvent. So going from 3 to 2 1/2 or 2 is certainly not going to hurt the program, so this is--this is basically a twist--twisted mathematics and twisted economics that are used to promote an ideological campaign.
Tavis: Myth number 5. The system cheats African Americans of their fair share.
Hiltzik: Yes, and this is an insidious point of view. This is an insidious claim. This is based on the idea that African Americans, in general, have shorter life expectancies than--than white Americans. Well, that may be true, but it's a lot less true now than it used to be, but in any event, what that ignores is that African Americans get--get much more out of aspects of the program that don't have much to do with retirement. African Americans benefit from the system's disability insurance component much more than other Americans. Their children, uh, receive survivor benefits and dependant benefits at a much higher rate than other Americans, and because African Americans, on average, earn lower wages than--than average Americans, they benefit from another aspect of the program, which is that it pays a larger relative benefit to lower-income workers than higher-income workers, so they're getting all of this. They pay less into the system than the average American worker, and they get more out of it, and these are aspects that the enemies of social security don't really want people to understand.
Tavis: We've gotten at some truths by going through these myths obviously. Let me jump at a couple other--jump to a couple of other truths before my time runs out here that fascinated me. Social security, you argue, actually operates at a surplus.
Hiltzik: Right. Absolutely. Since 1982, Americans have been paying more in payroll taxes than the system actually needs, and the whole reason for doing that was to prepare the system for the retirement of the baby boomers, which is going to start in about 10 or 15 years. In 1982, a commission led by Alan Greenspan, whose name, I think, is familiar to most--most of us, they foresaw this coming, this--this wave, this tidal wave of retirements, and they came up with a way to make sure that the system was prepared, and the way they did it was to--to raise the payroll tax slightly so that it would have this surplus.
Tavis: Let me ask you then whether or not you are hopeful, confident, that in this debate, that we will arrive at a place where the system will be solvent, where it will be still workable and doable by the time your 2 kids reach retirement in, what, 2084 and 2086, something like that?
Hiltzik: Something like that. That's right. Well, I think we will. I think that--that the debate, in a way, has been very healthy. I think Americans are beginning to understand the value of this program, what it means to them, and they're beginning to understand how to fix it, repair the minor flaws in it without destroying it, and--and I recommend a number of things in the book to do that they don't require dismantling the system. They don't--they don't wreck it, they don't eliminate it, but they do make it healthier.
Tavis: The book is 'The Plot Against Social Security: How the Bush Plan is Endangering our Financial Future,' authored by 'L.A. Times' longtime columnist and winner of the Pulitzer Prize. He's the best at what he does, Michael A. Hiltzik. Mr. Hiltzik, nice to have you on.
Hiltzik: Thanks for having me.
Tavis: Glad to have you here. Up next on this program, Oscar-winning screenwriter Akiva Goldsman. Stay with us.
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