Social Security

So, until today when W identified "evangelical democracy" as his first priority, one of the central goals of the second term was presented as reforming Social Security. I can't tell if I would rather have this team make a mess abroad rather than at home. Not a choice I guess we really get.

The administration wants to revolutionize Social Security to save it. There's been quite a bit of talk about the privatization of the program. It turns out though that at the moment all they are talking about is "private accounts." Although I am quite certain that this is just a wedge. The same way that illegal partial birth abortion is just a step down the road to no abortion at all, private accounts are a fairly clear first step toward dismantling the program.

Maybe the reason that the talk has gotten more tentative is because it seems like private sector involvement in guarantee payout systems has turned out to be fairly unsuccessful. There's a system in Britain that's been in place for a while. Soon they will have to reduce the guaranteed payout because the system is running out of money. The was a South American program, instituted by some of the same personnel now working for the Bush administration, that failed entirely.

So maybe its just a crappy idea.

Or maybe it just doesn't matter. A few weeks ago I stumbled across this article:

One Man's Retirement Math: Social Security Wins

Its the story of a man who keeps records much better than I do. At retirement, this particular person figured what all of his social security payments had been, and when. He took those amounts and dates and put them into the stock market, just like the government wants to make possible for all of us. Propagating the accounts through the market fluctuations from his first payment until his retirement, he calculated what his private investment payout would have been. In the end, what did he discover? He would have made more staying in the system.

The real factor that decides how much you get out of social security has less to do with the rate of return or how much you put in and much more dependence on when you begin receiving payments, and how long you live.

So, in terms of investment, maybe it just wouldn't make a difference to individual workers.

Take that though, and add to it that what the administration is asking for is not a complete privatization, but just 4% of payments. If 100% makes no difference, how big an impact will 4% have? Of course the answer to that is 0.04xNo Difference. Zip. Nill. Nada.

What's the point?

I'll guess. Although 4% of an individual's retirement account amounts to almost nothing, the sum of all of that money would still have a huge impact on Wall Street. It's like the right wing version of a class action suit. The righties are always decrying the lefty trial attorneys that get rich over class action law suits; pulling down multi-million dollar fees next to individual claimants who gross less that $100. This is the righty version; channeling millions of dollars in retirement insurance payments to the CEOs of publicly held companies while the individual investors take a wash. Just a guess.

I guess in some ways that's still a good thing. That capital would do good things for the economy, wouldn't it? We've already established that it would make almost no difference to the investor. Still its slimy, and what amounts to an enormous public gift, a reverse robin hood taking a little bit from everyone that has nothing and lumping it into huge gifts for those that are already doing better. I would hope that turns out to be unamerican.

Watch your wallet.