Billionaires Rally to Ask Americans to Donate Their Social Security Checks

On Wednesday, April 28, 2010, the Peter G. Peterson Foundation met with billionaires, millionaires and politicos at the Ronald Reagan Building in D.C.

The day after the new Fiscal Commission held their first meeting, these leaders gathered in secret to devise ways to cut Social Security (SS) benefits (not the reason for the budget deficit) in the name of the federal budget deficit.

OUTSIDE the meeting, ‘Billionaires for Social Insecurity’ gathered to ask the public in a more outright fashion to hand over their SS checks.

George W. Bush said that his greatest disappointment as President was failing to push through SS reform. Bush said that the GOP leadership said Social Security privatization that it would cost them votes. The GOP leadership was right on.

SS privatization never had a prayer. Bush himself said, his proposal was blocked by congressional Republicans. Democrats wanted nothing to do with it either. It was dreamland.

Rightardia was just getting started as a blog when Bush showed up in Tampa in front of invited blushing GOP supporters for conservative propaganda event on why SS should be privatized. If you had the wrong bumper stickers on you car you were banned from this 'private event."

What would grandpa and granny face if SS were privatized? First the SS fund managers would collect annual management fees which would reduce Social Security payments to retirees. This is not an exaggeration. Congress created the 401k's as a saving plan. When people lost their jobs, and tried to live off their 401K plan, they found that up to a third of their savings were gone due to management fees.

Second, experienced Social security workers would be replaced by $8-10 hour boiler room telemarketers. When a worker reached SS age or applied for Social Security disability, the process would be a lot harder because the the SS workers had limited experience.

Third and perhaps, most importantly, your SS check would be a crapshoot that was dependent on current market conditions. If you applied for SS retirement in 2008, you would have gotten a substantially smaller check that a SS retiree got in prior years due to the financial meltdown.

This is exactly what happened in the UK after Margaret Thatcher privatized the British Social Security system.

Britain's experiment with substituting private savings accounts for a portion of state benefits was a failure.

A explanation for what has gone wrong is that the costs and risks of running private investment accounts outweigh the value of the returns they are likely to earn. On average, fees and charges can reduce pension lump sums by up to 30 percent on retirement.

The UK savings industry, which sells those private accounts, had already acknowledged this.

In 2002, many U.K. insurance companies, mindful of tough new rules against giving bad advice, began to write to their customers urging them to consider abandoning their private savings and returning to the state pension system -- something hundreds of thousands of Britons had to do because the UK privatized SS system was a failure.


Ros Altmann, a Harvard-trained specialist in pension economics and a governor at the London School of Economics, says that neither the voting public nor most politicians understood the true implications of the UK privatization plan.

But those who pushed for the change knew what they were doing:  Altmann notes. “But with the effects of compound interest, that amounts to nearly a 50-percent reduction in the value of benefits over 30 to 40 years.”

As a result, the basic state pension in the United Kingdom -- the equivalent of U.S. Social Security -- is today lower than that in all but four other European countries: Portugal, Greece, Belgium, and Ireland.

It is also substantially below that of its U.S. counterpart. Clearly privatizing SS in the Holy Grail of conservative agenda in the US.


source: http://www.prospect.org/cs/articles?articleId=8997

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