In New Hampshire yesterday, former House speaker Newt Gingrich pulled out the old Bush proposal of privatizing Social Security.[1] It would give people the option of putting their Social Security taxes into private investment accounts. There are three colossal problems that no proponent has ever addressed. In no particular order these are:
- What about inflation?—Dramatically increasing the money chasing after the same amount of stocks and bonds guarantees inflation, creating yet another bubble on Wall Street.
- What about the losers?—Through various combinations of bad advice, bad choices and outright fraud some people will lose everything. What do we do about them? Wasn’t this the reason we created Social Security in the first place?
- How do we pay for it?—If we can’t find the money to fix the current Social Security system how can we find the money to pay for two Social Security systems, funding private accounts while still paying benefits to those already retired and those near retirement?
The primary reason for privatizing Social Security is to transfer money from working people to the very rich. Those already heavily invested in the market will receive massive windfall profits. And that of course is the reason for trying to privatize Social Security. For decades the top 1% have been the primary beneficiaries of the economy.[2] But it is not enough. Now they want to steal our Social Security.
[1] Gingrich unveils plan for personal Social Security accounts, Boston Globe, November 22, 2011
[2] Congressional Budget Office, Trends in the Distribution of Household Income Between 1979 and 2007, October 2011