Today, New York Attorney General (and NY Gubernatorial candidate) Eliot Spitzer came out with one of the most important criticisms of President Bush’s Social Security privatization plan. Chiding the Bush administration for opposing his efforts to clean up corruption on Wall Street in the wake of a number of high-profile scandals, he cited the instability of the market and the danger such a dramatic change would cause.
“You have an administration that failed to protect investors. Failed to protect them. And yet they are the administration that is saying take the safety net that we have and invest it in a system that was fundamentally broken before others stepped in to try to save it,” Spitzer said.
“On the one hand, they are saying the system does not need to be fixed, there was nothing wrong with it, they fought against the changes that we wanted, and then they say, ‘Take your savings and put it into that very system.’ Where would we be if those who are retiring had had their money in Enron and Worldcom?”
This, to me, is the more important point in the argument against Social Security privatization. People can haggle all year about which studies suggest what kind of timeline for what percentage of benefits decrease. The most pointed reason to avoid privatization — aside from the enormous amount of money it would cost to enact — is the fact that the stock market just isn’t safe enough.
Social Security was created to support those whom capitalism had failed. It wasn’t an attack against capitalism, it just served as a lifeboat for people that had trusted the stock market with their life savings.
Creating private accounts essentially takes that lifeboat and nails it to the larger ship that sails through icy waters. Sure, there’s a good chance you’ll get to your destination, but if the Titanic hits an iceberg, you’re going to want those lifeboats away from the wreckage.