With President Bush's Social Security wrecking scheme running into trouble both among a skeptical public that no longer trusts him, and a Republican Congress that is worried about the costs-- trillion in new government borrowing just to finance the so-called private accounts--the compromisers in both parties are pulling out another bad idea: voluntary private accounts which would be financed by extra payroll deductions.
Unless such accounts were heavily subsidized by the government--for example by a refundable tax credit for low-income workers (an idea that has as much chance of passage as George McGovern's idea of providing each family with a 00 tax credit)--all this would be is another windfall for the well-to-do.
Where on earth do these phony populists think struggling working people are going to get that extra cash? They are already working as hard as they can and aren't even making it from paycheck to paycheck (consumer debt is rising steadily, as are personal bankruptcies, though Republicans may have solved this latter problem by making personal bankruptcies harder to obtain, and much more punitive). As it is, most people don't have IRAs or 401Ks--those tax-deferred retirement accounts that we're all supposed to be investing in for our retirement. They simply don't have the extra income to put into them. Upper income people love them of course. They can take their extra cash and shelter as much of it as they want from taxes by putting it into these tax-deferred havens where they won't owe anything on the money until they withdraw it in their dotage, when their income tax rates will presumably be much lower. (Besides, if you're already in the lowest tax bracket, there's not much advantage in setting aside money that could even end up being taxes at a higher rate later if income taxes go up over time, as they generally do.)
The proposed new add-on Social Security funds, as proposed, would be the same kind of raw deal--great for those who have the money to contribute, but useless for the rest of us.
If Congress really cared about the welfare of low-income retirees, they'd pass legislation requiring all employers to offer pension plans and to contribute to them, and they'd pass legislation outlawing "vesting" periods, so that even if you worked at a job for a day or a week, the money that was contributed to your pension fund would be yours, to go with you to your next job. This is how it works, for example, with teachers' retirement funds. There is no vesting period, and if a teacher moves to a new school after even a semester of teaching, the fund just moves along with her or him.
Most workers, however, who statistics show end up changing jobs in this new economy sooner than every five years, end up being ripped off of their pensions. They and the employer contribute to a fund from day one, but since it routinely takes five, seven, or at some jobs even 10 years to be "vested," if the employee leaves or is terminated before that time, the employer contribution is forfeited entirely. This is, to put the matter bluntly, theft. The worker takes a job in part on the basis of that pension contribution, which is presented as part of her or his remuneration package, but then if the job ends, either because the worker finds something better, or because the employer is downsizing, automating, or has been bought out, the money is lost.
Back when most workers got jobs for life, fair or not, vesting might have at least had some justification as a way of securing employee loyalty and reducing turnover, but in today's economy, there is no such thing. Employers lay off workers at the drop of a hat, often just to avoid having to pay raises, companies shut down operations and shift them overseas without a thought of their workers, and workers, their wages battered, have to move from job to job just to get a better pay deal.
Making these two pension law changes alone would go a long way towards providing the old-age retirement security that Bush and the Republicans and conservative Democrats so anxious to “reform” Social Security claim they want, and at no cost to the government or the taxpayer.
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