Published on Friday, December 28, 2001 in the Miami Herald
Say 'Enron' to Social Security Fix
by Bob Ray Sanders
For those who think it is a good idea partly to privatize Social Security, I have just one word: Enron.
Enron is the Houston-based energy company that collapsed this year, sending shock waves through the financial and political communities. The company, which filed the largest bankruptcy case in U.S. history, saw its stock fall from a high of $90 a share to just pennies per share.
Falling with that stock are the dreams of thousands of employees who lost their jobs and retirees who lost their life savings while many company executives still made off like bandits.
What does all this have to do with Social Security? A lot.
George W. Bush's campaign platform included a promise that he would find a way to let you keep more of your money rather than sending it all to Washington. Part of that plan included allowing the taxpayer to keep a percentage (at least one-third) of the money paid to Social Security to invest in private accounts.
The president has appointed a commission and charged it ostensibly to find ways to shore up the Social Security system. The commission understood, however, that its role was also to present a plan that would address the president's campaign promise.
Since Sept. 11, there hasn't been much discussion about the commission's work, but a plan is moving forward.
If you were not convinced before that this was a bad idea -- reducing the amount of dollars going into the Social Security Trust Fund while gambling on the risky stock market -- just think Enron.
The scene in a recent Senate hearing room should help members of Congress and the administration realize that precious retirement funds should not be used for gambling.
Tearful retirees told members of the Senate Commerce subcommittee how they had watched their nest eggs disappear. A 61-year-old Florida woman said her Enron stock holdings shrank from $700,000 to $20,418.
``It may be too late for you to help me,'' she told the panel. ``It is not too late for you to take some action to make sure this does not happen to anyone else.''
While employees remained loyal to their company by holding on to declining stock, some company officials were not remaining loyal to them. When it was apparent that the Enron stock was definitely headed for the bottom, investors in the company's 401(k) plan were not allowed to sell their stock, but it appears that company officials did an ``end run'' and dumped about $1 billion of their own stock holdings.
This year we've seen how fickle the stock market can be and how it can be manipulated by bad news (some of it false), economic indicators and a sneeze from the Federal Reserve Board's chairman.
Think of those who lost their life savings on one company's failure, and imagine what it would be like if millions of people retired and realized that one-third, or half or any portion, of their retirement money had disappeared.
That's the fear that some people have if we move forward with privatizing any portion of Social Security. That's my fear.
So, when the subject comes up again, just remember: ``Enron.''
Bob Ray Sanders is a columnist for The Fort Worth Star-Telegram.
Copyright 2001 Miami Herald