I flew United on Bush’s Social Security Tour ’05, and all I got was this lousy T-shirt (and no pension)
And one of you suckers is born every eight seconds.
The war on Social Security is not going well for the American people, especially when our frontline press corps doesn’t connect the dots.
In this morning’s New York Times, the top story in the business section is a beauty: “How Wall Street Wrecked United’s Pension.” Reporter Mary Williams Walsh dissects the monumental default of United Airline’s pension funds, links that crisis to all other pension funds, and comes up with this:
While the money managers and other pension professionals who ran United’s pension plan walked away from the wreck unscathed—indeed, they collected about $125 million in fees over the last five years alone, records show—the ones who will have to pick up the bill for the advisers’ collective failure will be the airline’s 130,000 employees and pensioners, the federal pension guarantor and probably, someday, the taxpayers.
Walsh’s story is fascinating, but why the hell didn’t someone at the Times make a connection with the Bush regime’s continued attempt to convince Americans to play the stock market with their Social Security money? It’s the same sucker’s game that has fucked over all those poor United Airlines employees and has made Wall Streeters even richer.
Yes, the money managers on Wall Street would reap a windfall in fees for handling what Bush touts over and over on his nationwide Social Security disinfomercial tour as “personal savings accounts.”
He’s not advocating that you save it; he’s urging you to put it into the stock market, even though a blindfolded monkey could probably pick stocks better than most professionals. The fact is that United’s pension plans didn’t collapse because of reckless speculation on stocks. The portfolios only look bad in retrospect, as Walsh aptly points out:
But the general approach was in keeping with what most [companies’ pension fund managers] do: about 60 percent stocks, 30 percent bonds, and a mixture of “alternatives” including real estate and private equity investments. Local governments often invest their pension funds much more aggressively.
Even with all that talk about retirement and pension funds, the words Social Security don’t appear in Walsh’s long-ass story.
So we have to turn to the serious-minded folks at the Center on Budget and Policy Priorities—the best de-bunkers of Bush bullshit on Social Security. But they don’t connect that bunkum with the pension funds’ collapse, so I’ll do it.
Typically during Bush’s tour, he sneers at the Social Security system as he promotes privatization for the profit of his pals. This populist rap gets applause, although likely the audiences are more carefully screened to keep out dissenters than our airports are vetted for terrorists.
I’m “fixing” to throw up. Bush continued:
Attack the guv’mint—that always stirs up the common folk. Before we deconstruct Bush’s argument, here was the rest of it:
“So I think you ought to be allowed to take some of your money, set it aside in a voluntary personal savings account so you can invest in bonds or stocks—bonds and stocks, whatever you so choose. You can’t put it in the lottery, by the way. There will be go-bys. In other words, the government is going to say, we’re not going to let you take it to the track; we’re not going to let you—we’re not going to let you take wild risks.
“People do this all the time, by the way, and they get a better rate of return than 1.8 percent. And if you can get a better rate of return than 1.8 percent, that compounds over time. And it’s that compounding of interest that helps create wealth and security in retirement. The voluntary personal accounts will complement that which is available to you through the Social Security system. But you’re going to get a better deal on your own money than in the current system.”
He’s lying. Even according to his own economists and to Wall Street analyses, Bush is lying about this.
And here’s some evidence, rounded up nicely in early June by Jason Furman of the Center on Budget and Policy Priorities. Furman’s no-nonsense piece, “Would Private Accounts Provide a Higher Rate of Return Than Social Security?” said, in part:
Analyses by some of the nation’s leading economists have convincingly demonstrated that the comparisons which private-account proponents often make of rates of return in Social Security to past rates of return in private capital markets are apples-to-oranges comparisons and do not withstand scrutiny.
Oh, yeah? Probably some bleeding-heart socialist saying that, right? Furman continued:
The paper states: “A popular argument suggests that if Social Security were privatized, everyone could earn higher returns. We show that this is false.”
Yeah, well, they’re not in the real world. They’re just economists. Wall Street probably thinks it’s a good idea, right? Furman continued:
OK, but Bush says the rate of return now is crummy. Furman continued:
“Advocates of personal accounts cite the low rates of return in the current system, but this is misleading. Prospective returns to young people are low mostly because we gave benefits to older generations of retirees who did not contribute their share of taxes to pay for them. One way or another, the burden of this generosity has to be borne by the young. From the perspective of the trust fund, returns look low because the fund’s government bonds have paid less than stocks. But the premium on stocks is compensation for risk, as gauged by financial markets. Although the ability to hold stocks is a plus, there is no free lunch of assured higher returns.”
You’re probably too queasy by now for any more talk about lunch, free or otherwise. But here’s the capper from Furman’s piece:
According to a leading textbook by Harvey Rosen, Chairman of President Bush’s Council of Economic Advisers, establishing private accounts would drive up bond yields “or the yield on stocks must fall, or both.”
If this occurred, private accounts would lead to windfall gains for affluent Americans who already own stocks, which would be offset by lower returns for younger, generally less affluent workers who invested in stocks through their private accounts.
Walsh’s piece in the Times is required reading if you want to understand pension funds before you’re too old to comprehend what the fuck happened to your nest egg.
But the grim truth is that if the Bush regime is able to keep that issue separate from its shuck and jive about Social Security, your grandchildren will be cursing you on the way to their graves.