The New Social 'Security'

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Author: Robert Cavanaugh

Started: January 5, 2005, 6:28:31 am

Target: The White House

Category: Government & Politics

Supporters:

Goal:

10,000

Goal Progress:

Status

Active

The purpose of social security is forced savings. Because so many people do not save enough on their own, the government created a tax which is the equivalent of a mandatory safety net.

The way it is now.
It's already not enough! Estimates as of 1/5/05 are that currently, social security supplies about 1/3 of the money needed to retire. The new plan, although not guaranteed, is estimated to supply less than 20% of funds needed to retire.

Proposal.
The Bush administration in its effort to undo what is historically known as the 'New Deal', believes that the beneficiaries of Social Security will be better off if all or most of each person's social security account is privatized.

What's wrong with this?
It's short term thinkinig. In the short term, It will be good for stock brokers and money professionals who will be solicited to manage these private accounts. The private accounts will almost certainly be put directly into the stock market and mutual fund economy. Good for them, no matter what. Probably not good for you.

Comments.
I believe that this attempt at revising social security is guided by the belief that free enterprise can solve anything. It can't. You can not replace a safety net for non-savers with a network of investments that are not guaranteed and probably managed largely by amateurs.

Even if you are a 'less government is better government person',
do you honestly believe that a virtually unregualted business community is a better custodian of your future than a guaranteed savings account? It doesn't have to be Enron, or Global Crossing, or Adelphia to ruin you. It doen't even need to be fraud. Just a bunch of poorly run companies, and you're screwed.

If you believe that completely unregulated free enterprise is the only way to approach any problem in a sustainable way, ask yourself a few questions: Has it fixed the airline industry? The telecommunications industry? The energy busniess? The venture capital community? The Wall Street community? No.

Because the tendency of unregulated free enterprise to become terribly wasteful if not corrupt is well documented and constant. Some would say prevalent. I would say, frequent enough, that I don't want to stake my safety net to this kind of business. That's a different kind of investing. The kind you do when you can afford to lose it. And if you need social security, you can't afford to lose it.

The fact that the SEC is overworked and understaffed speaks volumes to me about the general ehical standard of American business. It's apparently too tempting to get rich quick with other people's money. Yours.

Another example of what private ssi accounts could do is to take a look at all the geniuses who call themselves 'day traders'. That's what a lot of these private accounts would be like. A bunch of non professionals who spend a ton of money on commissions and transaction fees with no guarantee of return....interest or principal.

Stop the privitization of Social Security.