Wall Street Drooling Over Privatization

[POA]

Published on Wednesday, November 24, 2004 by the Madison Capital Times (Wisconsin)
Wall St. Drooling Over Privatization
by Dave Zweifel


If you're wondering what all this Bush administration talk about private Social Security accounts is all about, you need look no further than Wall Street.

Thanks to Bush's win on Nov. 2, the industry that makes lots of money off of other people's money is already lining up to share in the spoils should the president get his way with his self-described "reform" of Social Security.

That, after all, is what it's always been about - freeing up tens of billions of dollars on which the big financial houses can earn commissions, taking that role away from the federal government, which, incidentally, has been able to administer the entire system at a cost of less than 2 percent of the assets.

But those Wall Street investors are loyal contributors to the Republican cause and private Social Security accounts is the least they should get in return for their support.

The Wall Street Journal reported last week that the stock prices of a number of mutual fund companies are outpacing the market's overall gains since Nov. 2 in anticipation of a Social Security bonanza.

This anticipation may be a bit premature, though. The president still hasn't let the rest of the country know any of the details of his plan, presuming, of course, he really has one.

As many continue to point out, but the Bush people can't seem to comprehend, Social Security was never intended to be a traditional pension plan. Rather, it's a pay-as-you-go plan. Workers of each succeeding generation finance the benefits of the retired. Plus, tens of thousands of widows and children receive help to put food on the table and continue in school. (There would actually be hundreds of billions in surplus had the Social Security money not been raided over the years to help finance the rest of the government's deficits.)

If Bush would now allow wage earners to siphon a portion of their Social Security payroll deductions into their own personal private accounts, either another way must be found to make up for the shortfall that will occur for existing retirees - or benefits for those retirees and the widowed and orphaned will have to be cut.

If, for example, workers would be allowed to put up to 20 percent of their Social Security taxes into a personal account, the cost to the government to continue current benefits to the retired would amount to at least $1 trillion over the next 10 years.

That might have been possible a few years ago when the country was running budget surpluses. But, today, thanks to massive tax cuts and escalating costs for the Iraq war, we're already running a half-trillion dollars in the hole every year.

So hang onto your hat. A lot of people are likely to get hurt. It won't, however, be the money changers on Wall Street.

Dave Zweifel is editor of The Capital Times.

[Moses]

Things are getting really bad, and fast. If Howard Dean isn't able to take over the Democratic Party, then I really hope that there is a walk-out of the representatives we have left with any kind of patriotism and form a third party. It is impossible, with the Democratic Party made rotten by DLC personnel, to feel any allegiance to it at all.