Under Ryan and McConnel’s proposed tax plan, tax breaks for corporations will drive up stock markets, creating the impression that they are a more secure haven for retirement funds than Social Security. The Republicans will advance legislation to transfer Social Security obligations to private investment funds.
Remember that during the corporate restructuring of the ’90s, companies with well-funded pension plans were bought out, raided, and the folded up, leaving pensioners destitute. The new Social Security fund managers will reap windfall profits, and then default on Social Security commitments.
The New Deal recognized a fundamental fact that Republicans don’t wish to honor: “innovation” in financial services generates profits by churning wealth and increasing risk. That’s fine for those with money to play with, but the middle class needs a safe haven for its wealth. Those havens have been steadily decimated.
Prior to deregulation of the Savings and Loan industry, the middle class loaned money out to each other and earned interest on savings at a 1% differential. Today the differential is closer to 8%, and the profits go to Wall Street.
Prior to the regulations of the Affordable Care Act, which stabilized health insurance markets, the middle class paid for insurance and was denied coverage by corporation that hired huge teams whose sole purpose was to find technical errors in their applications for coverage. It was fraud.
And now we confront the desire to privatize our retirement planning. The financial industry drools over the huge pool of Social Security funds, but it is a temporary opportunity. Social Security comes directly off of our paychecks, and so reduces disposable income. Once that direct deduction is removed, people will be faced with a choice between putting money into a retirement fund and buying a fancier car or replacing a broken water heater,. Most of them will choose to spend the money, and the cost of living will rise to absorb all of their disposable income, eventually leaving nothing for retirement savings. This is what happened in the era before Social Security, and our country’s elderly were the poorest segment of society.
So, yes, Ryan and McConnell, burn down the house that Roosevelt built. Your friends on Wall Street, understanding the demographic realities, will siphon off the money to finance mansions on the pristine federal parkland that I am certain you will sell off to them. And you will be remembered as the facilitators of the greatest con ever run against the American people.