Thursday, February 03, 2005

Bush’s ‘bait & switch’ SS privatization scam 

All that talk about workers investing up to $1,000 of their Social Security money in that big casino called Wall Street, as part of the “ownership society” that George W. Bush bleated about Wednesday night, in his State of the Union address, is a worse con than the lies he told about why the US had to engage in an illegal preemptive war on Iraq.

That $99,800 in today’s dollars that would accrue from the $1,000 a worker puts into the scam for 40 years—assuming a dubious 4 percent rate of return—which Bush said he could use for his retirement or pass on to his heirs is another one of George W.’s whoppers. The truth is, according to a corrected article in the Washington Post, 3 percent or $78,700 of that money would go to the government—the amount the worker would have contributed to Social Security, plus 3 percent interest above inflation to cover what the fund would have realized from investing in government bonds. That leaves the retiree with $21,100 and a reduced Social Security monthly benefit check, assuming the rate of return was 4 percent on his yearly private account.

If the rate of return on the private account falls to 3.3 percent, which is in line with the assumption of the Congressional Budget Office, the worker’s gain is a wash.

And even if the retired worker could keep the whole enchilada of $99,800, what would that do for him 40 years down the road? Assuming he is still alive 10 years after retirement, that breaks down to $9,980 a year, plus the reduced amount he receives from Social Security. In this era of slave wages, vanishing pensions and 401(k)s that go poof overnight when an Enron collapses, do you think he can live on that or will he have to beg a job at Wal-Mart or commit suicide to spare his children from supporting him?
If the 20- to 54-year old crowd thinks this a good deal, they better think again, because when the 54-year old working stiffs retire, their children are going to have to help support them or send them packing to the streets, and each successive wave of retiring wage slaves also will need their children’s financial support.

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