President trades American promise for a Wall Street gamble

Mondo Washington
From Security to Risk in One Easy Bush Plan
President trades American promise for a Wall Street gamble


by James Ridgeway
February 2nd, 2005


President Bush's State of the Union speech Wednesday night was the expected mixture of right-wing pomp and platform—from the celebration of liberty in Iraq and Afghanistan to the push for privatization of Social Security. It offered nothing new in the way of health insurance reforms, but once again put the administration behind a system that offers consumers a wider range of choices—and little else. Bush went out of his way to identify the administration with an attack on same-sex marriage, further catering to his conservative flank by offering promises to keep stem cell research under tight controls so as to prevent human embryos from becoming what Bush called "commodities." And the president once again affirmed his backing for a "culture of life"—which in this term may come to mean a culture of at least curtailed reproductive rights.

But the president's most important constituency is not the Christian right, but Wall Street, which stands to gain hefty new benefits from the privatization of part of the Social Security system in the form of individual investment accounts. The main Wall Street lobby, the Alliance for Worker Retirement Security and its 35 members, gave $34.6 million in individual and PAC contributions from 1999 through late 2004, according to the Center for Responsive Politics. Members of the Alliance spent $108 million lobbying the federal government during 2003 and the first half of 2004. Arrayed against the Wall Street lobby is the AARP, the main lobbying group for seniors. It is adamantly opposed to privatizing Social Security and spent $20 million in lobbying in 2003. AARP has launched a $5 million advertising campaign against the president's program.

The 44 Democratic members of the Senate are likely to work as a group to oppose Bush on the issue. "Social Security is not in crisis," insists Democratic majority leader Harry Reid of Nevada, who led his party's response after the speech. "Social Security is okay for the next 50 years."

The proposal for privatization comes as the fixed-income pension is being increasingly eroded in this country, and replaced by 401k's. Bush's plan would make that transformation—from a guarantee of security for retirees to one of risk in the marketplace—complete. This would be not a reform but a sea change in the way America treats its elderly.

One little-noticed feature of Bush's proposed Social Security reform is its attack on working women, who do most of the childrearing in the nation and who have much lower employment rates than men. Because young women are in and out of the labor force, their early savings are often less than they would be if they worked full time, and consequently their contributions to Social Security are reduced. Leave them dependent on market-based accounts, and you create a new generation of grandmothers with no means of support.

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