TIME Magazine has an article out which describes the “pros and cons” of the Bush Social Security privatization plan, but you begin to wonder if they too have been paid off by the Bush administration; the pros are overstated and the cons are understated, to say the least. The “pros”:

1 Control. Under the current system, each generation of workers pays for the retirees ahead of it. With a private account, some of the money you put in would be there for you alone rather than fund someone else’s golden years.

This “pro” is illusory–you would not “control” your account as much as the unpredictable stock market would. There is far more stability in the current system. As for “funding someone else’s golden years,” under social security it is far more likely the other way around–most people get far more out of the system than they put in. The “funding others” is a communal safety check, one that privatization lacks, making it far less stable or dependable. Under the current system, you can know exactly what you’re getting into; under the Bush plan, it will be impossible to plan for retirement, as you will be unsure of what your account will be worth when you retire. If anything, there is less control, not more, under Bush’s plan.

2 Better Returns. With Social Security, funds set aside for the future earn a minimal return over time, because the government invests them conservatively, in Treasury bonds. Investing in the stock and bond markets via private accounts could allow those dollars to grow faster.

“Could” is the operational word there. This plan will allow your retirement savings to tank far faster as well. There’s a reason why you want conservative investments for retirement, and cover your possible losses. It’s why social security has worked so well over so long a time: it’s safe. Somehow the “conservative” politicians today have lost all sense of conservatism when it comes to economics.

3 Offset the Pain. Benefit cuts will probably be necessary to keep Social Security solvent as the number of retirees grows. The appeal of private accounts might persuade voters to accept the trade-off.

This is amazingly overstated: the private account system could drain social security by as much as one-third of its funding, bring forward the insolvency and therefore benefit cuts by a matter of decades earlier than otherwise. The “appeal” (a purely subjective and one might even say imaginary benefit) itself would make the benefit cuts grow far faster.

4 Encourage Savings. Private accounts reinforce a mind-set of saving. When you see a direct connection between what you put in now and how it can grow in the future, you may be motivated to save more elsewhere.

Are they insane? First of all, this is not saving, it is investment. Second, does the writer of this piece really think that no one understands the potential benefits of saving their money outside social security? And finally, it is a pipe dream to think that this will really encourage people to save more–if anything, the false hope of riches that could come from investment accounts will probably encourage people to not save as much, because they will believe that the private accounts will be enough for their future.

5 No New Taxes. The commission’s plan, if adopted, avoids the unpleasant medicine of higher payroll taxes. Set at 12.4% of taxable wages, they already squeeze earners.

Oh, for crying out loud. Taxes by any other name squeeze just as hard. There ain’t no such thing as a free lunch. There will be taxes, just for different things, like paying off the enormous debt incurred by this system, not to mention to massive bailouts that will have to be paid when a generation of seniors gets their benefits destroyed by a market fall just when they retire. Or else we let them starve, of course. But taxes? You bet there will be taxes, and maybe even more than before.

The “cons” listed by the article:

1 Risk. Getting a good return on your private account is up to you. If you make poor choices, you can lose money, and your nest egg will suffer. Invest too conservatively, and you will not be able to make up for the cuts in benefits.

Well, this is rather mildly understated. Under the privatization system, we will see in effect a lottery for retirement funds: some will get more money because they will retire under a market boom. But the market drops as well, as we are seeing now. If we had had privatization already, we would be seeing millions of seniors, who would have been so hopeful in their 50’s when they saw the boom, instead get their private social security accounts wiped out just as they are reaching retirement age. Either we abandon so many people like that to poverty, or–especially in election years when the seniors vote strongly–we see a bailout proposed and paid for with either more debt or taxes.

2 Debt. The costs of making the transition to a private-account system are estimated at up to $2 trillion. That burden will widen the government’s already yawning budget deficit, and could put the economy at risk for higher interest rates.

This is massively understated; as Paul Krugman points out, the $2 trillion figure–already an unbearably massive amount–just covers transition costs over the next ten years. The fact is, privatization will cost more than it may reap for the next forty five years, and those transition costs will be $15 trillion! It would mean a tripling of the already bloated national debt, not to mention that annual servicing of the debt will increase to one trillion dollars per year, almost half the entire current budget. This could be severely crippling to the entire economy, unless–you guessed it–we institute massive tax hikes. Bush always talks and acts tax cuts, but everything he does incurs massive debt, and that means future tax hikes, like it or not.

3 Uncertainty. Private accounts on their own do nothing to solve Social Security’s solvency challenge and may discourage people from supporting real solutions.

“Do nothing to solve” the solvency problem? Are they kidding? It is widely known that the Bush plan will accelerate the solvency crisis! Right now, social security is solvent until 2052, and even after that, will meet 81% of all payouts. Bush’s plan will take away huge chunks of social security’s funding, bringing the insolvency much closer, and probably making the program less able to pay as much as 81% of benefits when that insolvency comes. And TIME’s own understating of the real costs and detriments of the Bush plan are a huge part of what will discourage people from finding a real solution to the problem.

The last two “con” points of the TIME article similarly understate the problems while at the same time contradicting the “pros” listed before; #4 speaks of “undersaving,” which contradicts the Pro #4; Con #5 is about the pushing of debt from this plan–wildly understated in this article–to future generations. But the cost will be not just for future generations, as we have to service the debt that is incurred, and will have to deal with the damage to the economy, and then the damage to senior’s accounts when the economy takes inevitable dives.

All in all, the TIME article looks like it was written by an administration flunky, and this is why I am frightened by the prospect of Bush’s plan passing. Not because it holds merit, but because the media is so generous to Bush and his agenda that people will get an incredibly skewed misperception about what that agenda really means. Just like Bush’s “tax cuts for the middle class,” which were nothing but robbing-Peter-to-pay-Paul schemes, taking money from taxpayers’ pockets to provide them with the illusory “cuts” (damned right it’s “your money,” just not they way you thought), in order to pacify the people just enough to give real tax cuts to the massively wealthy. But the press went with it full-bore like the good whores and patsies they are, just like they’re doing now. God help us.