Privatization: Part IV
'Social Insecurity' in the hands of Wall Street's vultures
By Mike Krauss
Bucks County Courier Times
Private prisons, private roads and bridges, a private postal service, private water and sewer systems — even private schools for public education — are all great money makers for Wall Street and the 1 percent.
But nothing comes close to the potential of privatizing Social Security. Wall Street has coveted this prize for decades.
It’s not hard to understand why: money. It’s not just the billions in fees and commissions to be made from managing private retirement funds. It’s the assets Wall Street will get to play with.
Social Security collects more than $1 trillion a year. Think what the barons could do with that.
They will do just what they did with mortgages, savings, investments and pensions in the run-up to the crash — gamble it away.
Social Security has been prudently managed since its inception by officers of the government accountable to the people. Wall Street, we now know, has made a business model of fraud and is accountable to no-one.
So when one or more of the Wall Street firms which will control your retirement security goes under, when some wizard guesses wrong, loses enough to take the bank down, what happens? Another bailout?
Of course. Congress and the administration have made it clear they will go on bailing out banks that are actually quite unimportant to most Americans. If the retirement security of actual Americans is threatened, they will have no choice.
And it is precisely this, the knowledge that Congress would have to bail them out, that will guarantee the gambling and fraud that will put any private Social Security at great risk.
We are told that Social Security is “in trouble.” Don’t believe it. This is the story line of the army of flacks on Wall Street’s payroll, from the think tanks to Congress, and it is propaganda — decades of propaganda.
The propaganda claims Social Security adds to the deficit. It does not. It is funded by employees and employers, not any appropriation of taxes from Congress.
The propaganda claims there are not enough young to keep up payments to the old. Nonsense. The U.S. population has grown steadily for decades, and will keep growing. The problem is not a lack of people, it is a lack of jobs for the people.
The propaganda claims the fund is broke. But in fact, Social Security was accumulating large surpluses in its trust fund right up to 2012; surpluses, which in fact it loaned to the federal government. And Social Security has been so well-designed that the interest paid on government bonds more than made up for the shortfall resulting from the economic collapse.
The propaganda claims Social Security must go broke because Americans now have higher life expectancy, which was not accounted for at the program’s inception. Again, not true. As Yves Smith points out in her blog Naked Capitalism, “It is absolutely clear from the record that the designers knew that the number of people over the age of 65 was going to increase and that people were going to live longer.”
More important, it is not life expectancy — how many years we live — that drives the overall cost of benefits; but how many years we live after we start to collect, which for most Americans is in the middle of their 60s.
Life expectancy is now longer because infant mortality was so much higher when the fund was created. But life expectancy after the age of 65 has grown only modestly.
The drive to privatize Social Security is fueled by Wall Street and the biggest lobby in Washington — the U.S. Chamber of Commerce. What’s their angle? Are they laying awake nights worried about the future of American workers?
Of course not. The Chamber is dominated by the largest employers and the multinationals. And they hate having to pay into Social Security. It reduces their profits to pay the mega salaries and bonuses of CEOs and dividends to the 1 percent.
But, won’t the private sector run Social Security so much better and more efficiently than the government?
The Social Security Administration exists only to deliver retirement support. (For millions, all the support they will ever have.) It has no expense for marketing or advertising to lure you away from a competitor. It is run by civil servants at a civil servant’s salary.
Today, if you have a problem with Social Security, you can email, or call, or make an appointment and get attention. If that fails, you can call your congressman or congresswoman. Almost all have staff assigned specifically to Social Security.
But if Social Security is privatized and you have a problem, you will call a “Customer Service Specialist,” who will probably be sitting in Karachi or Calcutta. Press 1 for English, 2 for Spanish, and you will speak with someone whose English or Spanish you will struggle to understand, and whose job is to make sure the company doesn’t spend a dime on you.
Kind of like your “managed care” provider: they will manage to keep their profits high and your care low.
The only real danger to Social Security, the only real threat to a modicum of dignity and security for tens of millions of aging Americans is that Social Security will be privatized.
Mike Krauss is a former officer of Pennsylvania county and state government and chairman of the Pennsylvania Project. www.papublicbankproject.org Email: firstname.lastname@example.org
Editor’s note: Last in a series.