Monday, February 07, 2005

The Drooling Capitalists

There is a quiet set of individuals that have to be salivating like Pavlov's dogs over the idea of privatizing the Social Security system - even to the slightest degree...and drum roll please, this has to be the money managers who will handle all the trades involved in "helping" us invest our funds. Market goes up, make a trade - they take a cut. Market goes down, make a trade - they take a cut. At a minimum, of let's be minimalist here, they would make say 7 bucks a trade, or up to 25 bucks a trade, the big winners are - according to W, it is the people.

Not so. Watch where the folks in the money managing industry are placing their lobbying dollars and how much they are spending to push the "reform/fix," and it will reveal what they think about the privitization of SS dollars. Follow the money and you find the biggest pigs at the trough.

The big winners will be the drooling capitalists, as they eagerly hump and stumble over each other, glad hand politicians, grease the wheels and palms of the american political elite, and certainly not make any noise publicly for fear that they portray themselves as sharks for greenbacks, for the opportunity to help us "grow our social security dollars."

Don't be fooled by the wolf in sheeps clothing. Aesop was no fool, and nor should we be.

Slice from the NYTimes:

The more we learn, the worse it gets.

Last Wednesday, as President Bush prepped for his State of the Union address, a White House official gave reporters a background briefing on some of the details of Mr. Bush's Social Security privatization plan. Almost point for point, whatever the president said that sounded good sounded bad when the details were filled in.

For instance, Mr. Bush said, "Personal accounts are a better deal," because "your money will grow, over time, at a greater rate than anything the current system can deliver." But the privatized system actually contains hidden costs that could leave retirees with less. Your Social Security benefit would be reduced, dollar for dollar, by the amount of money you deposit into your private account and an additional charge amounting to 3 percent plus the rate of inflation.

All the money that is drained off would presumably go to pay for the enormous upfront government borrowing - $4.5 trillion over the next 20 years - that privatization would require.
That means people whose private accounts steadily earned three percentage points over inflation throughout their working lives would wind up with exactly what they would have gotten if Social Security remained untouched. Anyone who earned less than that would end up with less than is offered by the current system. When asked what would happen to the people who would not have enough income to avoid poverty, the administration official said, "I'm not sure if I'm understanding your question."

The benefit cut is only the beginning. There is still the problem of strengthening Social Security's finances. On its own, establishing private accounts does nothing to solve the long-term shortfall in the system. The president alluded to this fact when he said, "We must pass reforms that solve the financial problems of Social Security." He dutifully listed various benefit cuts that would do the trick, without taking the politically risky step of endorsing any of them.

Neither the president nor his aides have been willing to acknowledge the extent of benefit cuts that would be needed. And no wonder: All in all, they would leave the average worker with a government benefit worth only about 10 percent of his or her preretirement earnings.

End slice:

Why is it that with W at the helm, as he firmly grabs the "third-rail" of American politics, it is "We, the people," that are the ones about to be electrocuted?


Charone said...

I gave up on SS a long time ago. The system has never really been in trouble, but that doesn't stop the administration. Is there one single thing Bush & CO. have done for the actual good of the people? He hasn't mentioned Medicare even once. That's actually a program where costs are skyrocketing out of control.

Anonymous said...

Just remember socialist programs like social security (which was never meant to be the sole means of financial support for retired individuals when it was developed anyway) only survive when capitalism thrives and not the other way around.

Boy, isn't odd that Germany and France, havens of social democracy and not free market democracy, because their economies are bogged down by excessive social practices and programs, are trying fervently to reorganize their economies and government spending on social programs to make their economies more vibrant?