Who does privatization help?

As of today, here are some facts about privatizing Social Security:

1. The current proposals do nothing to ensure solvency of Social Security.
2. The privatization plan is apparently so risky that President Bush does not want anyone over 55 to be part of it. There are fears that these folks will immediately slide into poverty. (Related article: Will baby boomers be hurt by privatization?)
3. No one really knows what the personal retirement accounts really are. The president has not yet released the details and everyone else is praising or criticizing them without really knowing how these would work.
4. If you opt for a personal retirement account, your guaranteed benefits will be cut. The expectation is that the stock market will come to your rescue and you will offset your cuts through higher returns on stock market investments. This is generally true over the long term. But what if your timing is not right? There is no safety net available for those who fail to beat the market. (Related article: Retirement wage cap change better than personal retirement accounts, analysis shows)
5. If you do extremely well in the market, because you are smarter than everyone else, don't expect that it is all yours. Uncle Sam will keep most of your gains.
6. The transition to privatization will take money out of the existing pool of funds (no wonder AARP folks are scared that before you know it, there will be no money left to pay them). The president proposes that we can simply borrow more. By the way, we borrow mostly from the Chinese Government these days since they seem to have huge dollar reserves once we started to buy almost everything made in China.
7. The young Americans seem to be the most positive about personal retirement accounts and the reason the Bush administration is targeting them is not because anyone really cares about their personal finance or retirement planning. It is simply that these folks traditionally do not vote for Republicans. Most of these young folks are smart with college degrees and greater awareness of current issues. Tend to be more open-minded, globalized, care for the environment/civil liberties/choice. They often oppose most conservative policies. If they support privatization, they are expected to help Republicans in mid-term elections and probably Jeb Bush is 2008 presidential elections.

So why privatization if it does not help most Americans?

That is a good question since it now appears that privatization is unlikely to help even Wall Street firms that has pushed for privatization behind the screens. At this point, it is mostly driven by Bush's traditional allies within conservative groups and the business world. Officials from the conservative group FreedomWorks have worked closely with the Bush administration to coordinate the president's town hall meetings on Social Security, often suggesting names of the people on stage, report White House Correspondent Holly Bailey, Senior White House Correspondent Richard Wolffe and National Correspondent Tamara Lipper in the March 14 issue of Newsweek. (Related article: Bush fails in his marketing efforts)

FreedomWorks, founded by former vice presidential nominee Jack Kemp and former House GOP leader Dick Armey, campaigned heavily for Bush's re-election last year and now fights for his plans to overhaul Social Security. Another group that is actively supporting privatization is The Alliance for Worker Retirement Security which is backed by over 40 organizations representing large and small employers, corporations, and other diverse groups. Membership includes the National Association of Manufacturers, U.S. Chamber of Commerce, the Business Roundtable, NFIB, Pfizer (a company that is trying to develop a cozier relationship with the government since two of its drugs Celebrex and Bextra are mired in controversy), the Hispanic Business Roundtable, the United Seniors Association. (Related article: Only the poorly informed Americans are the ones left supporting Bush's plan)

At least five of FreedomWorks's activists have appeared with Bush, and the group has bused hundreds to eight of his events in recent weeks, Newsweek reports. By the group's own tally, at least one third of the audience at a town hall-style meeting in downtown Tampa last month were FreedomWorks members. And in Westfield, N.J., last week, an advance team of White House officials held a dress rehearsal for participants the day before an event (which the town's newspaper said was simply meant to "gauge opinions of New Jerseyans"). Officials do this before each show, usually with a stand-in playing Bush, to help people on stage "say things clearer," says one FreedomWorks member.

Over the next two months, the White House plans a national roadshow of 60 events with the president and other senior officials. Their goal: to turn around public opinion that has steadily drifted against Bush's beloved idea of diverting payroll taxes into private accounts. And it's not just the public that the president has to win over. Since the Social Security debate began late last year, Republicans on Capitol Hill have grown increasingly vocal in doubting the president's prospects for success. Sen. Rick Santorum, the third- ranking Republican in the Senate, appeared to admit last week that the party was losing ground. "We are behind in focusing our message on the youth," he wrote in a memo obtained by Newsweek, "mostly because we have needed to reassure current retirees and those nearing retirement." Santorum argued for a shift in strategy, focusing less on personal accounts and more on retirement security.

Win or lose, write Bailey, Wolffe and Lipper, the early slide in the polls on Social Security suggests there are limits to the powers of White House stagecraft. In a debate shaped by Congress and outside pressure groups, it is becoming harder for the president to control the script once he steps off the stage.

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