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TechnoratiAnyone Want to Buy a Private Pension Plan? Going Once…
That deafening silence you hear coming from the McCain campaign is straight-talkin' John touting his plan for privatizing Social Security...not.
With Wall Street banks falling like dominoes, a hundred billion dollars vanishing overnight, and the Treasury Department scampering about with trying to prop up failing enterprises from Bear Stearns to Fannie Mae, and with domestic and global equity and bond markets swooning, Americans are afraid to open those envelopes that come every quarter telling them the value of their hard-earned 401(k) retirement plans.
No wonder John McCain isn't touting privatizaton these days.
It's not just that many of those private 401(k) plans McCain and his ilk so love for the working stiff were invested in the very financial institutions that have seen their share values drop to zero, or in other financial institutions that were themselves heavily invested in the stocks or debt instruments of the growing list of failed institutions. It's that the tottering US financial edifice is shaking the broader markets, making stocks, bonds, and even giant insurance companies like AIG look like houses of cards, and a poor bet for funding one's dotage.
Paul Krugman, in today's New York Times, says that the Federal Reserve Bank and the US Treasury Department, in letting Lehman Bros, the nation's fourth largest investment bank, go bankrupt, instead of doing yet another government bailout, was a kind of financial Russian roulette. Could Lehman's collapse lead to a wholesale collapse of Wall Street and the US banking system, ala 1929-31? Krugman says, incredibly, that nobody really knows, including Fed Chairman Ben Bernacke and Treasury Secretary Henry Paulson.
That's not the kind of thing you want to hear when you've managed, over the course of a working life, to save maybe a few hundred grand in a tax-deferred retirement plan that is all invested in stocks and bonds. Nor is it very comforting, if you are one of the millions of Americans who put your money into some kind of insurance annuity, expecting to get a guaranteed stream of income for life, to hear that AIG, the largest insurance company and one of the biggest issuers of such "private pension" programs, is struggling to come up with $40 billion in cash to avoid going belly up itself.
Now fortunately, for nearly all American workers, there is a backstop: Social Security, which is not invested in any financial instruments, and which pays out monthly benefits to retired and disabled workers and their dependents based not upon the whims of the markets but on the lifetime earnings of the worker in question. Unlike a 401(k) investment, which is dependent for its size and reliability on the performance of the financial markets in which its assets are invested, or an annuity, which is dependent upon the financial survival and viability of the insurance company which issued it, Social Security is a program in which the payments of benefits are an obligation of the federal government, and are paid from a fund of money that has been paid into by the retiree and her employer in earlier years, by current workers and their employers who pay a tax on current earnings, and, if necessary, by supplemental funds allocated by the Congress. Social Security benefits are adjusted each year for inflation (though since President Bill Clinton, those adjustments have been reduced because of a sleight of hand that makes inflation appear to be less than it really is).
McCain, and Republicans in general, have been pressing for years to have Social Security privatized, or partially privatized, with at least some of the money taken from employees and employers for Social Security invested in financial instruments such as stocks or bonds. They've tried to sell this snake oil to young workers by pointing to the rising stock market, and claiming ominously that some day, with so many current workers approaching retirement, Social Security will go "bankrupt." Last year, the Bush Administration, which has filled the Social Security Administration with GOP hacks, actually had notices sent out to every American worker warning that "unless something is done," Social Security might not be there for younger workers when it's their turn to retire.
This kind of cynical scare tactic is beneath contempt, and is designed to weaken support for one of the most significant progressive legacies of the New Deal. The reality is that as the Baby Boom generation reaches retirement, starting with the first Boomers who will hit 65 in 2011, the elderly lobby, already enormously powerful, will swell to become perhaps the most powerful "special interest" voting bloc this nation has ever seen. Retired Americans will have the electoral clout in another 10 years to make Social Security whatever they want it to be.
They (we really, since at 59 I am part of that generation) will insure that the government pays us and our fellow retirees a decent retirement stipend, and we will also insist that reforms be undertaken to insure that our kids also get secure retirements.
We will do this not by undermining the program, as McCain and other Republicans have called for, by privatizing all or part Social Security, but by making sure that every dollar earned by even the richest of people is taxed, instead of having the social security tax limited to the first roughly $100,000 of earnings. We will demand that if more taxes are needed, they be paid by employers, not workers. Currently employers and employees each pay about 7.5% of wages as a payroll tax into the Social Security Trust Fund. There is no reason why that split should be 50/50, though. Employers could pay a bigger share. (Right wing economists try to argue that any tax paid by an employer ultimately comes out of the employees' wages, but this ignores the law of supply and demand: workers don't negotiate wages, or accept a job at a certain pay level, based upon the gross wage being paid, but on what they will be taking home each payday. Extra taxes paid by an employer could not be automatically taken out of employee pay. They would have to come out of corporate profits.)
The timing of the current spreading financial crisis has exposed McCain's call for privatization of Social Security as a bad idea masquerading as reform. Since McCain can be expected to pursue the idea if elected, it's just one more reason for American voters to reject his candidacy.
19 Comments so far
Show Allroflmao.
big, fat, hairy chance of that happening. The bulk of the lemmings in this cesspool can't even be awakened to see how many billions are fed to Zionist Israel to support their terrorist activities, make their, (the lemmings),spawn go die for phoney GWOT crap....what you say is naught but wishfull thinking. Nice thought tho.
SAILA: I am a writer who's been committed to raising consciousness since I graduated college and taught school. I had lots of exposure during the l980's & l990's, but then our media was taken over by a handful of corporations that began to streamline those messages they considered allowable for public discourse and the shaping of consensus on various scales. Since that time I have had less than 10 articles published in US media, and never had TV or radio interviews since l995. Other writers, whistleblowers, or persons who are not part of the Washington consensus report similar experiences. Luckily a percentage of the truth does get out there, some in the form of independent filmmakers who have the $ to produce their own work.
Since 2009 could conceivably open the digital bandwidth to invite in more diverse voices, perhaps Americans will begin to find their thought processes shaped behind those visions OK'd by Disney, and/or the media-military industrial complex. Getting truth out there is something probably others in the CD forum are equally committed to, but it's a daunting task!
"a hundred billion dollars vanishing overnight"
When I "lose" money, it is usually in a pants pocket in the dirty clothes basket, or stuck down the couch cushions.
How can money just vanish? Somebody's got it, it went somewhere. We should be trying to find out how to get it back.
Maybe we should do some laundry.
Let's start with a 100% tax on golden parachutes for CEO's of financial institutions.
In the early thirties a wiser government than we have now decided to regulate banking so a 1929 failure could not occur again.
All this money that these big banks supposedly had could not be looked at because banking had bribed the regulatory agencies to allow them to regulate themselves. All we had was their word that they had enough money to be able to cover massive loans which changed hands at ever faster rates.
The money was never there. Our pension funds were invested with these banks who made outrageously reckless gambles with it. They lost. If the government intervenes at all it will be to save the banks. My 401(k) is not worth their bother.
If my neighborhood banker had done this to me he would have a good reason to be afraid.
Roses are red
Violets are blue
Phil Gramm
Eats Shit
This country was -is- more than rich enough for every working person to have a decent life, health care, and generous retirement benefits.
Republicans allowed what are called banks (really they are gangs of speculators who have managed to pass themselves off as legitimate commercial banks) to use those resources earned by us to make wildly reckless "investments".
Finance corporations bribed governmental regulatory agencies FIRST, before anybody knew what was going on, before the bets were made. "Our" government was supposed to make sure the conditions for another 1929 crash could not exist. They sold us out to the scum of wall street.
More than any other single person in government, Phil Gramm personifies all that our government was supposed to do for us and didn't. Instead Phil Gramm and his kind worked us longer, harder hours for less money and fewer benefits, so that Daddy Warbucks could use what we had earned to place bets.
He lost our money. In case you are worried that Phil might miss a meal or two---don't. He won't.
This is McCain's reason for being. They will fix the election if they have to so he can get on with dismantling social security.
The Reagan repugs have been drueling over this for 25 years now. Rush Limbaugh has been planting seeds of doubt on ss and now its time to harvest. How long has McCain been in DC?
I know it's difficult to trust a 'nobody' opinion, but believe me, this is a dead issue.
There is only one rational reason for Social Security to be privatized, and that to ensure that even more Money goes to the wealthy elites. They see trillions of potential dollars there and WANT IT.
With all these crashes, bank failures and the likes, the John Mccains the GW Bushes, the Nancy Pelosi's will NOT be hurting. They might take paper losses but they will still be very very wealthy.
This contrasted with that Middle class who would be unable to eat or would not have a home to live in if they lost thier meagre savings.
Its a great con game. It is deliberate. The bank Crash was forseen. It was planned for.
PK
Go here and read - it will all start to make sense.
http://www.financialsense.com/transcriptions/2006/1018griffin.html
the author makes one of those "obvious" but extremely useful points. much thanks.
Thanks David. The great Republican experiment has been a dire failure - the privatization of those things best handled by government (including our military and attempted privatization of social security), the idea that the market will regulate itself, the Bush Doctrine, and their so-called family values bringing us a divorced, scandal-ridden presidential candidate with his holier-than-thou racist, sexist, animal hating, global warming denying, vindictive, petty, lying, mother to a teenaged pregnant daughter running mate whose church preached that Israeli's brought terror attacks on themselves as God's judgement for not accepting Christ as their Savior.
I know it's a long sentence, but it's been a long time coming for these evil-doers.
Now, will we have the intelligence to go down a different road, or will we embrace four more years of the same deadly policies?
Pat Thurston
matti is correct: it's the poor middle class this and the poor middle class that. To be frank, the upper classes don't give a crap about either the 'middle class' or 'poor.' Ditto for most of the poor and middle class; they strive to climb up that same ladder; they want to reach the top. Few ever question its 'sturdiness' in the first place. Thus, all classes contribute to the whole in their own way. The powerless are striving for power, while the wealthy and powerful are striving to keep and/or acquire more; the LAST thing they want to do is share and, if they do, do it grudgingly.
Elites seem to love walking the tight rope between maximum exploitation and rebellion. And as history has proven over and over, have gone too far in their oppression, resulting in a backlash that usurped them. The financial and industrial lords are nothing but 'intelligent' parasites, who feed off the labors of others, never realizing that sharing the benefits is both good business and good policy, and especially for the greater society in which they too must live.
"...Americans are afraid to open those envelopes that come every quarter telling them the value of their hard-earned 401(k) retirement plans."
Of course, tens of millions of us "Americans" have NEVER recieved such a check because we work jobs that are -though essential for the operation of Society- considered unworthy of such "benefits".
Tens of millions of us "working stiffs" aren't "invested" in much of anything except our clothes, our cars, our funiture and a few electronics.
Tens of millions of us will never "over the course of a working life" be able "to save maybe a few hundred grand in a tax-deferred retirement plan that is all invested in stocks and bonds."
This is not because we are lazy -we work hard, much harder then others in terms of physicality of Labor (even they lady who has to stand for 6 hours at the checkstand at the Wal-Mart has a more physically demanding job then almost any "middle-class" office worker).
And this is not because we are stupid -though there is a strong correlation between years of formal education completed and income (and a correlation between years of education and income of one's parents that is, if anything, stronger)
It is because in this game, Capitalism, that is simply how it works, there are winners and losers.
For a long time the game was rigged so that more and more people could become winner/losers, the formerly small "middle-class" of those who we comfortable, but still derived their comfort from daily (or regular) work -whether wages or sales. Now it is rigged the other way, for the benefit of the winners and the detriment of everyone else. But as the bloated "middle-class" begins to - finally!- to feel the hurt that so many of us have been feeling since the '70s, they are taking up to much of the stage, eclipsing the rest of the Workers from view.
----------------------------------------------
Over-identification with -to the point of being blind to others - the "middle class" is a mistake both the Democratic Party and Progressives have been making more and more over the last decades. This trend "tracks" fairly well with the aging and increase in average finacial wherewithal of "Boomers" such as Mr. Lindorff, I'd say.
This opens them up to all of the "elitism" charges that the even more truly elitist Republicans and "Conservatives" (Fascist Revolutionaries) have been more and more effectively employing in the "media" over the same period of time.
So, I realize this is not the point of Mr. Lindorff's article and that this is a slight "derailment" (I find CD's new format to be more conducive to such things without problems or confusion). But it seems to me to be very important.
Not every "American" is middle-class.
Not every "American" has a 401(k).
There are tens of millions who don't and aren't.
They should be the backbone of the Progressive movement, as the "progress" that is wanted for society is mainly to their benefit, but they aren't.
They should be the backbone of the Democratic Party, but as that group continues to move away from the working-class they increasingly aren't, or are only reluctantly and out of habit.
The "class divide" has poisoned and hindered much of the work toward Social Progress in the United States. It is a problem that is only getting worse. It is exacerbated by "social" wedge issues promoted by the Republicans, and by the Democrats' focus on the "middle-class" as if they were selling an appliance and not a candidate (and hence needed a target-buyer with some money to spend).
It is high time for both the Progressive "wing" of the Democratic Party and the general progressive movement -on all fronts: social, economic, law, political, environmental, etc. -to alter this trend.
After November 4th, don't forget the Abstainers. Don't label them "apathetic". Don't file them away to the "irrelevant file" in your mind.
Find out why they didn't vote. Find out who, with what ideas, they WOULD vote for. And be ready to be surprised to find out that the "missing Party" in the U.S. may best be called the Christian-Worker's, or the Constitutional-Progressive, or even the Democratic-Socialist!
Have Fun,
-matti.
SAILA: People in this forum are aware of what's going on; but try reaching those who only hear the rants of the Rush Limbaugh/faux-Fox news, etc. They are fed a steady diet of dis-information, and many from this audience tend to believe in "the experts" speaking from TV. They are naturally prone to listening to so-called authority and will spew venom at anyone who tries to awaken them from their deluded slumbers posing as "being informed."
Mr. Lindorff: The only silver lining in Wall st's curent cloud is that it's hoped enough people who might vote for McCain realize what that will mean to their remaining savings. I guess it takes END TIMERS to bet their full hand on a losing gamble, even as it is going down before their eyes... the Titanic meets Wall ST and McCain says, "Bring it on!" As Palin jumps up and down with cheerleading pompoms on her toes.
Siouxrose: Point well said and well taken, but I won’t be able to do it. I am living on the other side of this world where you are—more than 10,000 miles away.
The Republicans are making social security and medicare wedge issues by pitting young people against old people.
Unless the young people vigorously oppose the republicans, they will find that the old people that already have the "family wage' jobs with benefits will not be able to retire, thereby diminishing the number of "family wage" jobs with benefits available for young people to move in to.
And when young people reach retirement age, retirement will be something that only very wealthy people experience and 75% of the elderly will live in poverty, just like it was throughout the history of the US prior to FDR's New Deal in the 1930s.
The Republican attempt to foment an age war in order to kill Social Security, while it should certainly be condemned, is doomed to failure. After all, current workers like myself are paying right now for the benefits for our parents, and have you ever heard anyone complain that her or his parents' Social Security checks were too big? Of course not. Who would want to have to shoulder the full burden of financing their parents in their old age? Nobody.
Young people need to know that the taxes they pay are helping their parents to live productive lives in dignity, and that when they are old, younger workers, including their own children and grandchildren, will do the same for them.
It is nothing short of insanity to say that each person should be responsible for saving for his or her own retirement.
And we haven't even discussed disability. If a young worker is disabled, whether by disease or by some accident, Social Security is there, in full, right away. The same is true for young children who lose their parents because of some tragedy. No savings plan does that.
This is not an exploitation of one age group by another. It is community at its best.
Visit Dave Lindorff's website at www.thiscantbehappening.net
Dlindorf,
Thank you! This is article illustrates very nicely how my, our, generation is responding to the privatization of SS. And how we will continue to respond. After all, at least 50% have offspring and the last I heard, the only ones eating their offspring were the a cult in the Republican Party. This story is for some, I think young people, who think we all have half a million socked away. I almost had that in my house, only one. Now maybe a quarter mill.
However, the early '70s' to about 1980 were hard times for most boomers, though progressively getting better. Housing started to skyrocket, oil/gas since '74 was tripling and short, employment wasn't great. In fact, a job might last a few months and you had to it the streets again. Whenever I was without a job, my ad in the pennysavers' for yard cleaning and garden rototilling kept me in cash for months. I never received unemployment. Even after I was discharged. My GI education benefits helped up through my first year of Grad school. (Here I was very fortunate, I started receiving fellowships.)
When I turned 40 I landed my first secure teaching position. But not one cent of SS was taken. Now I'm retired, disabled and can't collect disability SS. There was a rule change. Ten prior years with SS to receive disability. My SS from before I was 40 is a benefit of less than $400.00 at 65. I knew this before I retired, but when I retired my annual SS changed to 'not eligible for disability.' My public pension is o.k..My crummy little $150.00 a month IRA for 17 years lost over 25% in the what '99-'00 tank and I know it's going to get hit by 30% this time. I just recouped my losses of equity in Oct. '07. Sheez.
But I had some great times...And I was one of five in a single mother household. My father's disability SS for 6. My father died when I was young. SS total might have been, gee, I don't know! I never asked! And now she is gone, too. I'm probably the first, if not the only, in generations to earn a grad degree, let alone with fellowships.
You get what you need...and
pass the joint.
America is a huge caravansary without a gatekeeper. Every elected officer here comes and literally shits, and then leaves scot-free. There is no accountability.
Take for instance Mr Bush. The whole world knows that he lied about Iraq, as a result of which more than $3 trillion of the taxpayer money vanished into the pockets of corporations. More than 4000 Americans died and tens of thousand suffered injuries, some permanently. So, what happens after his term is over? He goes to his ranch in Texas and cuts sagebrush. What is the matter with you people? There’s nobody in the whole world like you.
Phil Gramm who is said to have had a role in creating Wall Street crisis should be hanged. Yet, in a photo on CD today, he is standing behind McBomb and laughing-----at you!
I’m sorry. As a people you still don’t know your rights.