Stealing Social Security, the Biggest Corporate Raid in History
thepeoplesvoice.org

By the EDITOR

There is no question that government securities under the Social Security system are the best investment one can make. Social Security insures that every American receives a secure retirement benefit, regardless of their financial status or the actions of the stock market.

All Americans have the opportunity to risk their spendable income in the market, but there must be a base benefit separate from the market for working men and women who will rely very heavily on that benefit when they retire.

Securities and Investment firms proclaim the S&P 500 index has averaged a 7-1/2% return over the past seventy years and if one includes dividend reinvestment, returns could reach 8-3/4%. They say this is better than Social Securities 6.8% return, and Social Security cannot be inherited or passed along in a will.

The Securities and Investment firms aren't telling Americans that private retirement accounts must be annuitised in order to receive monthly benefits. Like Social Security funds, annuitised accounts cannot be touched or removed. For the majority of Americans private retirement account savings would be minimal. In a private retirement account the consultancy fees and the cost of maintenance range between 1% and 2% a year. If the additional costs and fees were 1%, this would result in 20% being removed from a benefit savings account in a 40-year period. If the costs and fees were 2%, 40% would be removed, and this does not include the cost of setting up the annuity which is an additional 15% to 20%. Potentially 60% of a private retirement account could be spent on fees and maintenance!

Statistically people are better off with Social Security, which has a maintenance cost of 1%, or 20% in a 40-year period. Social Security has a lower rate of return than the stock market, but without the high privatization costs, the amount of money available at the time of retirement is an additional 15% to 40%.

Every American from the day they enter the work force is insured by Social Security and can receive disability benefits. Millions of American families have suffered the loss of a breadwinner when the children were young. Social Security survivor benefits support the family and pay for the children to attend community colleges, and state universities. For the majority of working American this is the best form of security for themselves and their families.  

Clandestine organizations like the Cato Institute serve only the interests of Securities and Investment firms whose primary focus is to privatize Social Security. They say that "Social Security is in a financial crisis and will begin running a deficit in 15 years". They want to frighten and confuse Americans into letting Wall Street take over the role of our trustworthy Social Security system. In reality, the alleged crisis has been manufactured by those who would reap gigantic profits if they gain control of the American peoples Social Security retirement benefits.

According to the House Ways and Means subcommittee on Social Security, if we take no action at all to maintain our Social Security system, Americans will continue to receive 100% of their benefits until the year 2028, and 88% until 2075. Bush and his advisors ignore these facts, pushing ahead with the privatization initiative. His so called Social Security commission held their first meeting on June 11, 2001. Their goal, to give partial control of the American peoples Social Security retirement holdings to the insurance companies, the banking industry, and the investment firms.

In recent years these greedy corporate entities have spent tens of millions of dollars on slick advertising and so-called public education campaigns targeting young people, women, blacks, and low-income workers. They repeat the same lie endlessly, that a crisis exists - that Social Security won't be there for twentysomethings.

Republican leadership in Congress, with powerful backing from investment and banking interests, proposed scrapping the 65-year old social insurance program and replacing it with individual investment accounts.

The Securities Industry Association and the Investment Company Institute, representing investment banks, brokers and the mutual fund industry, are playing an extensive role. According to The Nation magazine, large firms like State Street Boston, Paine Webber, the SIA, and Pete Peterson of the Blackstone Group, are openly backing privatization. Others, like Merrill Lynch, Fidelity, American Express and ICI, are quietly, financing academic studies and providing technical expertise to Congress and the White House.

Four years ago, the idea that Social Security might be privatized was confined to a tiny group of radical conservatives and libertarian ideologues like the Cato Institute, the Heritage Foundation and the Dallas, Texas based National Center on Policy Analysis. Leading the attack is the Cato Project on Social Security Privatization, a corporate front organization that churns out a steady stream of propaganda and lies called policy papers and Congressional testimony. Cato also conducted background briefings for members of Congress and the Washington policy community, spreading misinformation and pushing their privatization agenda. The Cato project, financed by Wall Street donors including Salomon Brothers, Prudential Securities, T. Rowe Price and American Express, recently recruited a team of executives to head up their advisory committee on Social Security privatization.

The Securities and Investment firm's paid political cronies are pushing hard to immediately privatize one-sixth of the Social Security system, funneling at least $80 billion a year into privately held accounts, investing in stocks, bonds, mutual funds and money-market accounts. Of the $80 billion, some 5 percent - $4 billion, would immediately be used for investment management fees. The financial-services companies and investment houses alone would receive $1 billion each year.

Once privatization of Social Security begins, pressure would quickly increase to complete the process. If the Securities and Investment firms gain control of the people's Social Security money, current retirees will see their benefits cut drastically to cover the new fees and administrative costs. Recent privatization bills introduced in Congress raise the retirement age, cut guaranteed benefits, and reduce cost-of-living increases.

Speak out against the theft of your Social Security. If the idea of going back to the pre Social Security days of soup lines and tent cities worries you, write to your senators, congressman, and state representatives. Cato's e-mail, phone, and fax numbers are provided below. Open a prewritten and addressed letter to socialsecurity@cato.org,

The Cato Institute Project on Social Security Privatizaton
mailto:socialsecurity@cato.org and,
Cato Institute web site editor Jerry Brito, jbrito@cato.org
1000 Massachusetts Ave., N.W., Washington, DC 20001-5403 • phone: 202.842.0200 • fax: 202.842.3490