BRANDOLAND: Talking to God...For You!

Monday, January 10, 2005

This morning's headline from the Chicago Tribune:

"Investment pros see bonanza - Social Security proposal would add billions to investments and fees"

Once again, the Bushies get ready to back the truck up to the back of the national treasury.

Do you really need to know anything else about this story? Read the full article here.

A few key excerpts:
The prospect of 100 million Americans each having $1,000 of their Social Security contributions to invest every year has investment professionals salivating at the potential financial bonanza.

About $100 billion a year would be freed up for stocks, bonds and other investments under a tentative plan President Bush has floated to fix the Social Security retirement system by creating private investment accounts.
Which the White House calls PERSONAL SAVINGS ACCOUNTS.
The fees paid to brokers and money managers could run into the billions.

"The potential for investment firms has to be mouthwatering," said Michael Falk, chief investment officer with Chicago-based ProManage LLC, which helps workers manage their employer-sponsored 401(k) accounts. "We're talking about billions of dollars."
Here's the big secret; the Average Joe will NEVER get his hands on that $1,000. He will not get a thousand dollar check...to "invest every year" or spend as he sees fit. By law, his money will go to the big investment houses, and THEY'LL invest or spend it as they see fit.
As Bush says, nobody will be taking their payroll taxes to the racetrack.
Just Charles Schwab. And the Lehman Brothers. And...you get the idea.

"Who Profits?"

The only question you ever need to ask.

More later...

3 Comments:

  • Yeah, yeah, Average Joe will take his $1,000 and hand it to a big investment house, where it will go to whatever they convince him meets his personal investment goals. But there's another lie going on here, as Kinsley has been trying to show.

    It's just not true that the money individuals take out of their Social Security accounts and put into personal investment account will be "freed up for stocks, bonds and other investments". The government already uses the money from payroll taxes that ought to fund Social Security. Those taxes go to fund the general budget, and this borrowing from Social Security reduces the official size of the deficit. When people take their individual $1,000 contributions out of the Social Security system, the government will have to make up that money somehow. It will borrow more in the annual budget - that is, sell more bonds to the open market rather than piling up IOUs to the Social Security system. Every dollar it borrows comes from some private investor somewhere. So there won't be any money freed up to invest in stocks and bonds, and the private markets will not see an increase in capital. For every dollar in new personal investment accounts, the government will have to pull a dollar from the markets to pay for ongoing costs of the country.

    Just another way the borrow-and-waste Republicans get away with running the country like a trust fund kid who blew his entire inheiritance and now funds his cocaine binge with the credit cards he got back when he had money.

    By Anonymous Anonymous, at 11:51 AM  

  • I'll tell ya how we fix this Social Security bullshit. We all just work a couple more years before we retire. Our life expectancy is several years older that it was back when we decided to retire at 65... so now we retire at 67 and party for 10 years before be buy the farm. What's the big deal? That would take care of all our problems. It really would.

    I'm sure you'll disagree, but I still love you.

    By Blogger FoxyStardust, at 11:26 PM  

  • Yeah, raising the retirement age is one way to fix it. But there are other ways that might be even more fair, especially to people who do real work for a living and make it to 65, when their bodies aren't so good for welding or lifting or picking any more. And there still are plenty of people like that in the country, only we don't see them so much on TV.

    Means test the benefits.
    Raise the income limit of the payroll tax. I think last year's cap was $87,900 and in CY 2005 it will be $90,000 That means anyone making over that doesn't pay a cent in payroll tax on income past the limit. Jack that up to $150,000 and there's more money coming into the system too.

    Most of all, PAY BACK the money the government has been sucking out of FICA to put into the general fund so that income taxes can be kept down. 'Cos that's what's been happening: the US has maximised its regressive payroll tax to minimise its progressive income tax.

    Thanks for the class warfare, Alan Greenspan!

    By Anonymous Anonymous, at 4:01 PM  

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