Privatization of Social Security

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by Lon FranklinHedgesville, WV304-754-9310

Retirement is not a topic most college students think about. Unfortunately, you do not have that luxury. You must think about it right now! The outcome of this election will determine if Social Security is Privatized, and the ramifications will affect you and yours forever. George W. Bush vows to privatize Social Security; John Kerry pledges to never privatize it! So, what exactly is Privatization? Privatization is a Republican program to phase out Social Security. Your retirement taxes are diverted to an “Individual Investment Program” and invested for you. Republicans are deliberately vague about the specific details of Privatization but four “benefits” are always mentioned: (1) Privatization is voluntary, implying you can join or not and can quit anytime you want; (2) only part of your retirement taxes goes into it, implying you are not totally committed; (3) Privatization gives you control over your money; and (4) your money is invested in the stock market which, returning double that of Social Security, will build you real wealth. For the truth, Google “HR 4895”, the latest bill in Congress to privatize Social Security, download it, and read it. HR 4895 was introduced by a Texas Republican and co-sponsored by fourteen other Republicans, so it is reasonable to assume that it includes the real intentions of President Bush and the Republican Party. (1) If you were born after Jan. 1, 1983, the vast majority of college students, you are by law a participant in Privatization, no options. If you were born between Jan. 1, 1950, and Jan. 1, 1983, you can choose to join or not. But, once in, you cannot quit. (2) All, not part, of your retirement taxes goes into Privatization. None go into Social Security. All of your past contributions are also removed from the Social Security Trust Fund. Because Baby Boomers will not join, you will be paying twice, for their Social Security benefits plus your own retirement, for the next forty years, aka, your entire working life. (3) Your Privatization bank account is invested in stocks selected by brokers hired by a presidentially appointed Board. You do not choose the Board, nor the brokers, nor the stocks. The brokers compile several portfolios; you must pick one, you cannot NOT invest. You cannot add a specific stock to it nor eliminate one from it. If your bank balance is high enough, you can select as your Trustee a private-sector financial institution which has brokers who compile more portfolios. You can transfer funds between these portfolios, but again, you cannot choose your own stocks. Those are your only choices. You have no real control over your money. You are playing their game by their rules on their field. (4) You will not receive higher returns by investing in the stock market. Proponents compare a “historical” stock market average rise of 7% to the 3% return from Social Security, but the 3% is a guaranteed net return, whereas the 7% is an average gross return before “administrative expenses” are taken out. (Being an average, many professional Wall Street investors make more than 7%, but many do not!) HR 4895 pays all of Privatization’s costs, costs you cannot negotiate, out of your bank account! How much profit do you need to make to pay for administrative expenses? Workers making a median income or less will be lucky to keep their tax contributions. When you retire, you must buy a Board-approved retirement annuity from a Board-approved, private-sector financial institution. If it fails (think ENRON!), you lose everything. In contrast, Social Security is paid by the US Treasury which will never go broke. If you retire with a low bank account, you have a choice: you will be given enough to buy an annuity worth 120% of the poverty level, currently about $10K-$13K, or you will be given your balance as a lump sum. Nothing after that! Some “real wealth!” Privatization puts you at enormous risk for at best minimal gains! Who wins? Follow the money. Privatization’s bureaucracy absorbs your taxes. Wall Street gains from obtaining access to Social Security funds. Retirement annuities enrich private-sector financial interests. It’s classic Reaganomics: Take a little from everyone and give it to a few, the rich. The choice is clear: A vote for President Bush guarantees Privatization, especially with a Republican Congress. A vote for John Kerry stops Privatization cold. Your only choice is now. Register and vote. Your vote counts.