When he won re-election in 2004, President Bush asserted that he had won a mandate from the voters and earned political capital. A short time later, Mr. Bush spent that capital on a proposal to privatize Social Security. The idea gained little traction with the public and even less with Congress, and the President, after hawking the plan around the country for months, finally dropped it. With the Dow Jones stock index dropping 778 points on Monday, the question “What if?” comes to mind.
If Americans had been able to put the equivalent amount or some percentage of their Social Security deductions into the stock market, many — especially those within a few years of retirement — could be facing financial disaster today. Supporters of the privatization argue that such a plan would allow shrewd, responsible investors to make more money for their retirements through the stock market. But the other side of the coin is that for every big winner, there likely would be big losers.
Those who do not know history — or have rewritten it — must be reminded that Depression-era programs like Social Security were created because the country would no longer tolerate seeing destitute elderly people. The “poor house” wasn’t figurative, it was a real place, and if the elderly poor were not able to live with their children, they were at the mercy of charities that might provide rudimentary housing and food.
With the mortgage crisis recalling the Great Depression, many eyes are turning back to President Franklin Roosevelt’s response to that crisis. Social Security was one of the measures he took to ensure a better future after banking collapses and the stock market crash.
One of those looking back today at President Roosevelt’s response to the financial crises of his day is Rep. Dennis Kucinich of Ohio, an unapologetic progressive Democrat. On Tuesday, Rep. Kucinich suggested on MSNBC that instead of borrowing $700 billion from banks to then give (or loan) to banks, the federal government should take “a page out of classic New Deal economics” and help the consumers, not the lenders.
Millions of homeowners can’t pay their mortgages, he said, so the federal government should consider creating a body like the Depression-era Home Owners Loan Corporation to buy controlling interest in the so-called toxic mortgage securities and help homeowners re-negotiate payment plans.
Even as FDR’s legacy is being waved about by different people with very different agendas, Rep. Kucinich likely will not see much support for applying one of that president’s fixes to the current problem.
The idea of privatizing Social Security will likely rear its head again. The words from a November, 1936 government pamphlet explaining the then-new program are perhaps the best response:
“What you get from the Government plan will always be more than you have paid in taxes and usually more than you can get for yourself by putting away the same amount of money each week in some other way.”
Words worth remembering, both when the market is down and up.
On 10/3/08 at 6:45 AM,
ShawnDaily wrote:
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Not to worry here people. St Barry of Obama will win this election and "progressive" democrats will run this country into the ground with high taxes, regulation, and rescue Social Security which they say there is nothing wrong with right now. The Democrat controlled Congress is presiding over one of the largest financial disasters in this history of this country and the main stream media is letting them get away with it and point fingers at everybody else. Way to put Democrats feet to the fire. Now that is CHANGE WE CAN BELIEVE IN.
On 10/3/08 at 7:25 AM,
ckc1996 wrote:
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Social Security was originally created to help with old age poverty, unemployment, and the burdens of widows and fatherless children which is good.
Today it has grown it a monstrous entitlement program and has strayed from its original intent.
There are many cases of young able bodied people who could be contributing to society but are collecting Social Security for obscure reasons. I am sorry to say that many use that money for illegal purposes and fraud is rampant.
On 10/3/08 at 9:35 AM,
Mainer50 wrote:
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Well, Just like with the Depression, if it wasn't for World War II, then we would have been longer in "working" our way out then what we did. It was a popular war that gained the patriotism of every man, woman and child. No one was afraid to die or leave their families to fight. GI bill of rights just about guaranteed a life if the boys came back. I would say someone is keeping a very close eye on history and trying to manipulate it for their own pocketbooks. As far as Social Security is concerned, yes there is fraud and last totaled, only 1% of all monies is paid out in welfare benefits. What is the percentage for corporation welfare? We pay billions of dollars to major corporations every year.....where is the fraud in that? Why doesn't anyone say anything about subsidizing the corporations? People complain about this country turning socialist well, who put in for subsidies for big businesses and now want to have the everyday working stiffs to bail them out their own crappy diaper? AHHHH, but we're not suppose to remember these events are we? According to Fox news, we're suppose to feel sorry for businesses because after all, they're ones that hire new workers? Yeah, overseas and only have to pay pennies to workers every day. Who benefits from subsidies? Not the working people and the middle-class had their funeral years ago.
On 10/3/08 at 1:34 PM,
scottcom36 wrote:
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What an absolute lie! Privatization of Social Security is intended to benefit younger workers, who are many years from retirement. Nobody, especially those near retirement would have been forced into the stock market. If investing retirement funds in a mix of stocks, bonds and money market funds is such a terible idea, then how come it's what every 401(k) plan in the country does?
The key is to reap your stock market gains over the long time that you're in the work force, then move more of your assets to more stable bond funds as retirement gets nearer. Reoprters can always find some fool who has to delay their retirement because the stock market is down. Any retiree with an appropriate mix of stocks and bonds can simply draw on their bond funds when the stock market goes down, since stocks and bonds tend to move up and down in value opposite to each other.
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