WP: Welfare vs. Wall St (Under Bush SS, Goldman-Sachs says 25% of stocks

will be owned by SS private accounts, via regulated "mutual funds") - Total Replacement of SS via private accounts would mean SS private accounts regulatory/administrative authority would control 100% of all stocks. Should Dems really be against this thing?


http://www.washingtonpost.com/wp-dyn/articles/A25616-2005Mar10.html

Welfare vs. Wall St.

By Robert J. Samuelson

Friday, March 11, 2005; Page A23


Let's suppose Congress approves President Bush's "personal accounts" for Social Security. The Social Security system would then become the largest single investor in U.S. stocks. By 2050 Social Security could hold 25 percent of all stocks, estimate economists at Goldman Sachs. This estimate reflects a modest plan for personal accounts; other proposals would permit bigger stock purchases. Hardly anyone has thought about the economic consequences of concentrating so much stock in the Social Security system. My hunch is that it would turn out to be a huge mistake -- or worse.

The idea of personal accounts is that Wall Street should triumph over the welfare state. Just the opposite might occur: The welfare state would triumph over Wall Street. The money flowing into personal accounts would not be invested according to the "free market." Individuals wouldn't have the freedom to invest in Microsoft, General Electric or eBay. Instead, it would be invested according to rules made by Congress, influenced by politics. There would be unrelenting pressure from interest groups, "experts" and public opinion.<snip>

<snip>Personal accounts would be a strange hybrid: part "private" investment, part public entitlement. This is a hard straddle. There's an unavoidable dilemma: Making personal accounts safer for individuals might make the stock market less useful -- less dynamic -- for society. The conflict has already surfaced. One criticism of personal accounts is that they might subject beneficiaries to huge losses, because stocks fluctuate erratically. The administration counters that it would allow accounts to be invested only in "index funds" -- for example, funds representing the Standard & Poor's 500 stocks. The idea is to minimize the risk of big losses on individual or speculative stocks. Sounds sensible. But it would bias the market in favor of existing companies, industries and technologies. It would discriminate against the new, exciting and different.


<snip>What looms is a massive expansion of government power over Wall Street. To be sure, it would occur gradually, over decades, and its outlines are murky. The irony is that it comes from "conservatives." Facing the rising costs of federal retirement programs, practical politicians seek ways to cover the costs without resorting to unpopular benefit cuts. Putting payroll taxes into stocks seems one painless way out.

But even good stock returns can't erase the basic problem. The costs of federal retirement programs are growing much faster than any plausible portfolio of private accounts. Sometime between now and 2030, with the aging of the baby boom generation, the relentless increases in costs will force significant benefit cuts, big tax increases or both. The bipartisan consensus is to ignore this inconvenient fact. In their hearts, the Democrats want to do nothing. Republicans have at least proposed something. Unfortunately, it may be worse than nothing.

where Clinton had them.

This is an interesting article pointing out the "law of unintended consequences" but this makes SS issue too complicated. The program works, it's been tested and all this hullabaloo of "discussion" only covers over the fact that the Repugs don't want to increase taxes on the wealthy.

I find it harder and harder to read arguments which always have the purpose of wanting a discussion going on "well what if the Dems and Repugs compromise to "save" SS"...when the simple fact is that it can be fixed by raising taxes. If it's healthy for 40 years, it's hardly a crisis. Alot can happen in 40 years that will make up for the lack of workers to pay for "Boomer" retirement. The huge discussion about this is only to give the Chimp more "road trips" to cover up his lies about everything else that's causing our country to go into economic ruin.

:nuke:

Just got this after I replied.


http://www.americanprogressaction.org/site/pp.asp?c=klLWJcP7H&b=100480

SOCIAL SECURITY
Misinformation Mania

With White House privatization plans seemingly locked in a tailspin, conservatives are winding up their mighty howitzer of misinformation with one goal in mind: confusing Americans about the fundamental choices regarding retirement security. Some of their claims are so outlandish that a rebuttal seems unnecessary – take the new study blaming Social Security for hastening the decline of marriage, or President Bush's claim yesterday that private accounts would "provide a safety net for future retirees." Others have the potential to seriously mislead Americans about the president's plans. Below are five seriously specious claims to watch out for:

RED HERRING ALERT – THE "ADD-ON" MYTH: Last Friday, President Bush blurted "out something that sounded an awful lot like news" when he described his version of private accounts as "an add-on to that which the government is going to pay you." The truth: the "add-on" model of private accounts – creating an additional program completely apart from Social Security – is the polar opposite of the president's risky "carve-out" privatization scheme, which funds private accounts by raiding current Social Security payroll taxes. To see what a real add-on program looks like, see this report by American Progress fellow Gene Sperling.

RED HERRING ALERT – "BUT IT'S NOT PRIVATIZATION!": In his latest weekly e-mail, privatization pusher Rep. Allen Boyd (D-FL) claimed that "Many who oppose reforming the Social Security program have falsely claimed that personal accounts would lead to the privatization of Social Security." Sorry, but that line shouldn't fool anyone. "Personal" accounts carved out of Social Security are precisely what economists, analysts, and politicians – including President Bush – have always meant by privatization.

RED HERRING ALERT – CONSERVATIVE "COMPROMISE": Last week, two allies of President Bush offered up so-called "compromise" plans, attempting to corral pro-Social Security progressives who are actually interested in seriously addressing retirement security. A closer look reveals the plans are merely "Tangerine and Strawberry phase-out to be added to the plum version the president has already put on the table." Like the president's plan, both include massive, budget-busting transition costs, cuts to traditional Social Security benefits, and risky private accounts (One plan even raises the normal retirement age to 72 years old!).

RED HERRING ALERT – "ALL OPTIONS ARE ON THE TABLE": President Bush is firmly dedicated to pushing privatization. He continues to repeat the mantra that "all options are on the table," suggesting yesterday that he was the first president in history to take such an approach. The truth: The only option now on the table is the phase-out of Social Security through private accounts. Just this week, top White House economic adviser Allan Hubbard "rejected as 'absolutely a non-starter' bipartisan proposals that the administration put aside its drive" to create private accounts in favor of "add-on" versions.

RED HERRING ALERT – "IT'S ABOUT THE SOLVENCY": Hubbard also claimed on Monday that "President Bush's No. 1 goal is passing legislation that permanently solves the solvency problem." Looks like Hubbard spoke too soon. Earlier this week, Government Accountability Office chief David Walker testified before the House Ways and Means Committee that the president's private accounts "wouldn't shore up the system" and would actually "'exacerbate' the system's problems and accelerate the date for when it would start spending more on pension benefits than it receives in annual revenue."

:-(

for the reason of "Socialism by the backdoor" (Myers was SS Chief Actuary from the 40's into the 70's and was there at the initial design in 33-34-35)

Funny that "winning" is so important that the GOP no longer cares what it is "winning".