Widespread opposition to Social Security privatization

Just watching the reaction to President Bush's proposal to privatize Social Security has been an interesting experience. While American companies and a few fringe groups support privatization of Social Security, in general the opposition is widespread across all segments of the society.

According to former congressional Aging Committee Director Robert Weiner, "President Bush's Social Security radio address confirms the cry-wolf, Granny-you're-on-your-own, Wall Street giveaway that the President wants to make the program become. The President is exaggerating a manageable problem when he calls it 'the coming crisis'. Social Security is not broken, or in a looming crisis. Even if the economy stays where it is, incomes and reserves are adequate to pay all benefits until 2052 and 80 percent of promised benefits beyond that, according to the Congressional Budget Office." (Related article: Is Social Security in trouble?)

Jody Grage Haug, co-chair of the Green Party of the United States, agrees. She says, ""In his first term, Mr. Bush fabricated an Iraqi crisis, based on a counterfeit reports of WMDs, collusion between Saddam Hussein and al-Qaeda, and an imminent threat to the U.S. This year, Mr. Bush is relying on manufactured claims of an impending Social Security crisis in order to achieve the long-time Republican goal of dismantling one of our most successful and necessary social programs. By attacking Social Security, President Bush is declaring war on people who work for a living."

Weiner adds, "Congressman Pepper would roll over in his grave if he heard the Bush Social Security proposals today. To put Grandma at risk of the volatile stock market is an outrageous giveaway to Wall Street, who would reap the windfalls of the plan. Even the most secure 401K's based on the Fortune 500 have been hurt the last five years by seeing the market go from 12,000 to 8,000 and now only to 10,600. When the market is down, that's real food off seniors' tables. Social Security has helped reduce poverty among the elderly by a third -- do we really want to go back to that so that Wall Street can make hundreds of billions of dollars in fees and bring trillions of dollars of seniors' money into company coffers?" (Related article: New business opportunities emerge from privatization of Social Security)

"All of these doomsday projections are based on economic failure in the coming decades, but the absurdity of President's plan is that, if the economy really did fail, the last place you'd want your retirement money would be Wall Street," said David Cobb, the Green Party's 2004 presidential candidate, echoing the concerns of Weiner. "The only people who'll benefit from Social Security privatization will be investment companies, people with large investments in investment companies, and Republican and Democratic politicians who take campaign contributions from investment companies." (Related article: Why Bush wants to privatize Social Security?)

"Social Security is at risk from the ideologues again and we're here to declare our opposition to President Bush's plan to dismantle America's most successful social protection and anti- poverty program," said Campaign for America's Future co-director Roger Hickey. "The president's plan would dramatically cut guaranteed benefits that are very popular with the American people."

"America's working families are being squeezed as never before. Too many people are losing good jobs, health insurance, pensions and now they face the prospect of losing the one thing that has been a guarantee - Social Security," said AFL-CIO President John Sweeney. "The only group that would benefit from privatization is the financial service industry, to the tune of nearly one trillion dollars in fees to manage the private accounts. This would be the largest windfall for that sector in American history."

"For African Americans already suffering from high unemployment, privatizing Social Security would only cause more harm," said NAACP Chairman Julian Bond, highlighting the same concerns that Congresswoman Tubbs Jones has expressed. (Related article: Social Security privatization to hurt Hispanics and African Americans)

National Organization for Women President Kim Gandy also spoke at the news conference, noting that dismantling Social Security disproportionately hurts women and children because they are twice as likely to depend on its benefits for their sole income. "Social Security is not in trouble. George Bush is in trouble," said Gandy. "More than half of elderly women would live in poverty without the benefits of this guaranteed insurance program. This destructive proposal is effectively economic violence against women -- he's risking our livelihoods to satisfy Wall Street donors and corporate cronies." (Related article: Bush's approach to privatize Social Security questioned)

"Seniors don't believe President Bush's false claim that benefits will not be cut," said George Kourpias, president of the Alliance for Retired Americans, at the news conference. "We will mobilize our forces because retirees, their children and their grandchildren, can't afford the president's gamble."

The White House laid out arguments yesterday against raising taxes to handle the $2 trillion in transition costs the president's plan will entail, leading most experts to conclude that the president plans to add that massive sum to the national debt over the next 10 years. The Bush administration and outside organizations like the Heritage Foundation, the Cato Institute and a litany of business groups are raising millions of dollars for their public relations campaign to promote the president's plan to privatize Social Security.

A new Wall Street Journal/NBC News poll finds that public opinion remains skeptical about any shifts in the Social Security program. The poll further finds that the public believes it is a bad idea to let workers risk their Social Security taxes in the stock market, by 50 to 38 percent. (Related article: Will baby boomers be hurt by privatization of Social Security?)

"Moreover, this is not a long-term problem. The President is age-baiting when he says in his radio address that he will not touch seniors' benefits but wants to protect 'our children and grandchildren" from the need to 'dramatically reduce benefits' or a 'ruinous tax increase.' The reality, which he fails to mention, is that the baby boom is a short transitional factor. The 'boomers' aren't booming with babies themselves. The high birthrate of 2.9-per-family that they represent (births from 1940-69) is followed by THEIR children having 2.1 babies per family (1970-2000), the lowest ever, according to the National Center for Health Statistics. After the Baby Boomers, the system goes right back into a huge surplus for having to pay out fewer benefits. The stressing of the system for the Boomers' generation can be solved with one-third to one-fourth of the Bush tax cuts which primarily benefited the wealthy," Weiner asserts. "Moreover, if the economy improves, even this slight infusion may be unnecessary."

Finally, Weiner points out, "There is enormous hypocrisy in President Bush's mentioning Franklin Roosevelt's advocacy and creation of Social Security in the same breath as his own plan to supposedly strengthen it, when what is clear is that President Bush and the Republicans are doing everything possible to destroy this legacy of the New Deal. If anything, Bush is 'the anti- Roosevelt'. There is no doubt that Roosevelt would abhor the Bush proposals." (Related article: Think tank opposes privatization of Social Security)

"It's the Federal Government that can't get to next year without a deficit, thanks to President Bush's tax cuts and his Iraq war expenses. Social Security is doing just fine for nearly fifty years and counting. President Bush's plan would make retirees, young people, the economy, and Social Security's financing problems worse off under a system of private accounts. No thanks, Mr. President!" Weiner concluded.

Financial experts seriously doubt that an average American can be trusted to play with his/her retirement savings by investing them into the stock market which is full of companies that often cook up books and wipe out billions in valuations within a matter of hours. Retirement plan expert Michael Francis of Francis Investment Counsel says it would be a mistake to allow self-directed private social security accounts. He instead suggests the creation of a central Social Security investment board to manage the investment decisions for those who decide to segregate some of their social security assets into a private account. Drawing from more than 16 years of working with 401(k) participants, Francis predicts that if American workers were required to self-direct, most would meaningfully underperform the results of a professional.
According to Francis, this option will save money for both participants and the government by avoiding the hefty costs of individual accounts. "While the financial services industry would like to see private Social Security accounts that are self-directed, I know from experience that this solution would be costly to American workers and detrimental to their long-term retirement prospects," he says.

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