Keeping Social Security out of Wall Street's hands - The Nation hyperventilates again

The Nation Magazine's latest email has a hard time with the facts. Even the title misrepresents the situation. The Nation doesn't want to keep Social Security out of Wall Street's hands, they want to keep it out of the hands of you and me. They are against choice.

Also, it is worth noting that even if some of Social Security was privatized, there is no requirement that the money be invested in "Wall Street." People could invest anywhere.

The Nation says that with privatization the "returns would not be guaranteed, as they are now." This is a bit of rhetorical slight-of-hand, since presently there is no return at all. The Social Security Trust Fund is the receptacle for all Social Security monies the government receives. Upon receipt, the government issues payment to the various payees, and whatever is left over is transferred to the general fund by means of a bond sale, bonds that only the government can buy and sell. These special bonds are issued to the trust fund, and the cash is moved to the general fund.

Yes, these bonds pay interest, which comes, of course, from the general fund. Are you catching the shell game going on here? There is no cash in the Trust Fund, only special interest-bearing bonds. That interest is paid with deficit spending by the government, spending facilitated by the cash received by selling those bonds to the Trust Fund!

The Social Security Trust Fund is not an asset, is is a liability that will have to be paid back.

The Nation deems it a "successful program." What? How many times has Congress had to "save" the system? How many times have we read news reports about how Social Security will run out of money in 2030, 2015, 2040, or whenever? This is success?

And couple that with the fact that "running out of money" is predicated on the assumption that there are actual assets in the Trust Fund, and we have to conclude that Social Security is bankrupt NOW.

We Must Keep Social Security Out Of Wall Street’s Hands Recent plans discussed on Capitol Hill include privatizing Social Security. In 1935, Social Security was established as a way to create a financial safety net for retirees but these recent proposed changes could turn retirement security into a Wall Street gamble. With private accounts tied to the Stock Market, returns would not be guaranteed, as they are now. Seniors’ savings could disappear over night and take years to rebuild after a market decline. There’s also the risk of outliving your investments—something that can never happen with Social Security. > Act now to protect your Social Security benefits. Join us in the fight to save your retirement income. Turning this successful program over to the for-profit sector would cost roughly $5 trillion—a cost that would come out of taxpayers’ pockets. Unlike private investments, the cost of administering Social Security is less than 1.5% of the benefits paid. Yet there are those in Washington who want to dismantle it. The National Committee believes that Social Security is a critical safety net meant to protect everyone and it should not become a windfall for Wall Street. Social Security is the foundation of a secure retirement. It’s designed to protect against poverty in old age and it’s one of the most successful programs in U.S. history. Privatization is NOT a plan to save Social Security; it’s a plan to kill it. We need your support now! Add your voice to the National Committee’s by joining its efforts to protect these crucial benefits. The National Committee to Preserve Social Security and Medicare is not affiliated with any political party or branch of government.