Archive for the Politics Category

At a national AARP event, Barack Obama has reiterated his opposition to privatization of Social Security:

“[S]ecuring your future starts with protecting Social Security… For millions of Americans, it’s the very difference between a comfortable retirement and falling into poverty. More than half of seniors depend on it for more than half of their income. And as the first baby boomers become eligible for benefits this year, there are steps we can take to secure its future for generations to come. That doesn’t mean embracing George Bush’s failed privatization scheme, as John McCain has.

That’s a clear statement. John McCain appears, or appeared, to be on the other side of the issue. He has

• declared that Social Security should be privatized
• called Social Security’s pay-as-you-go structure a “disgrace”
• said that Social Security “reform” should include private accounts “along the lines that President Bush proposed.”

OTOH, he has also backpedaled. He has said that he “has not made [Social Security privatization] a campaign promise.” He has even declared, “I’m not for, quote, privatizing Social Security. I never have been. I never will be.”

Where does McCain really stand on privatization? Who knows. It sounds like he was orginally for it, but decided to hedge his bets once he saw how unpopular the Bush plan was.

The big Wall Street banking and investment firms—the same fine people who brought us the subprime credit meltdown and the mortgage crisis—are now lobbying lawmakers to allow them to buy up and manage your pension fund money.

According to a recent Business Week report, roughly $500 billion—that’s half a trillion dollars—is currently sitting in so-called “frozen” pension plans. These are corporate pension plans that are closed to new members. Because corporations are cutting pension plans, new pension funds become frozen every day, and the trend is expected to continue. Among well-known companies with frozen plans are Alcoa, HP, Verizon, and IBM.

Currently, many of these plans are underfunded due to many reasons, such as fluctuations in the stock market. When this happens, the corporations can be forced to make up the shortfall. Thus, it’s no surprise that many companies would love to get rid of the pension plans even though they’re full of valuable assets.

And it’s no surprise that big Wall Street firms would love to take them over. They could charge their typical fees of 1% to 2% annually to manage them. That equates to billions of dollars of your hard-earned cash that would be gobbled up.

But the danger isn’t limited to a few percent points per year. As Business Week further reports, if the moneymen get the way, some 44 million future retirees’ money could be put at risk
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Barack Obama has come up with an intriguing solution to the Social Security funding crisis: Keep the existing payroll tax for those earning less than $102,000 per year, also tax incomes above $250,000, and levy no tax on earnings between $102,000 and $250,000, creating a "donut hole" in the middle.
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