McCain’s Social Security Privatization: Bad Idea When Bush Proposed It, Bad Idea NowOct 1, 2008
The events of the last two weeks have illustrated the volatility of America’s financial markets. Today, the Dow closed below where it was on George W. Bush’s first day in office.
And yet, John
McCain still supports a Bush-style Social Security privatization plan that would encourage Americans to risk their retirement benefits on the stock market.
Social Security provides the majority of income for most seniors and is a vital insurance system for disabled workers and dependent spouses. Income provided by Social Security keeps 13 million seniors from living in poverty.
McCain’s proposal, which would allow workers to divert their social security payments into private accounts, is risky, expensive, a financial boon to Wall Street, and would undermine, not shore up, the long-term solvency of Social Security.
This is a debate that’s been had before. When Bush proposed a similar plan in 2005, analysts were able to assess its impact and debunk its myths. Here’s what they concluded:
Private accounts are risky:
BUSH AND MCCAIN tout the potential for higher returns as a reason to shift Social Security payments into the stock market. But an analysis by Robert Shiller of Yale University of a standard “lifetime” personal account, as envisioned by Bush and McCain, show they actually lose money one-third of the time. Furthermore, projections of rosy growth used to justify personal accounts stand in stark contrast to the projections of slower growth that indicate there may be an eventual shortfall in Social Security.
What McCain won’t tell you: The cost of closing the long-term shortfall in Social Security is less than the cost of extending Bush’s tax breaks for the richest 1% of Americans, as John McCain has proposed.
But McCain seems less interested in saving Social Security than gambling it away.
http://wonkroom.thinkprogress.org/2008/09/...ation-bad-idea/