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August 14, 2014

The great but yet unattained dream of libertarian (Republican?) greed mongers is the privatization of Social Security. The right persists in campaigning for the privatization of this program irrespective of its unpopularity or the number of political careers that are lost in going after this pot of gold. Bush, Jr., after having little to say on privatization of social security leading up to the election of 2004, came out after the election to tell us that privatization of social security was his top priority. He conned us. Had he been honest and campaigned on that “issue” before the election, he would have lost. (Many, including me, think he lost that election anyway – and the one before that, courtesy of Karl Rove, Jim Baker and the Supreme Court in a blatantly political decision that held a federal question was involved when the Constitution assigns election matters of vote counts and recounts exclusively to the states.)
Bush failed, as have others, to persuade America that Social Security should be privatized, and the devastating plunge of the stock market and bailouts for banks on his watch brought the lesson home better than any presidential speech or Wall Street propaganda could. The lesson is and will always be that you don’t entrust the well-being of millions of retirees to crapshooters to roam the globe looking for a quick buck. Such a plan if adopted would amount to exposure to catastrophe for millions but a huge increase in working capital for Wall Street with which to play derivatives games and mortgage securities packaging galore etc. The danger doesn’t end with, say, half-payments to retirees if Wall Street’s investments go sour (and they will in time). Consider the damage to aggregate demand in the economy as billions and billions of dollars are lost to the economy each month (along with increases in unemployment, unemployment compensation, food stamps etc. on the negative side of the ledger).
So what would be some of the early consequences if Social Security were privatized? Thomas Frank writes that “. . . Once the trillions of dollars that pass through Social Security have been diverted from the U.S. Treasury to stocks in private companies”. . . “there would be an immediate flood of money INTO Wall Street, boosting the net worth of the wealthy and lifting the boats of the various brokerages and mutual fund companies who would handle the millions of new private accounts,” but that’s not where the financial carnage ends, because “there would be an equivalent flow of money OUT OF government accounts which would immediately propel the federal deficit up into the stratosphere and defund a large part of federal activities.” (Think infrastructure, education, R & D, venue for investment etc.)
The ultimate effect of such an enormous redirection of the nation’s resources would be to marketize the nation’s politics, elevating forever “the cold rationale of the financial markets over such vague liberalisms as the COMMON GOOD and PUBLIC INTEREST.” Thus radically defunded, the country would have far less resources with which to provide for the public health, welfare, and would even have to reduce funding for such sacred cows as defense and veteran care absent massive tax increases (which Wall Street would, of course, oppose).
As Frank noted further, handing Social Security over to Wall Street would encourage the new paymasters to insist on yet lower wage growth and weaker labor organizations along with a free hand to management in downsizing, outsourcing, polluting etc. Such would necessarily be the new policy background for management of our economy. Why? Well, who is going to legislate for higher minimum wages or safer food or cleaner air when such legislation can be construed as an attack of the portfolios of our nation’s beloved seniors? Much more is involved than who handles the money in such a transformation; Social Security would be changed overnight from the untouchable “third rail of American politics” to a weapon for the business community, who have Social Security’s trillions in their coffers now and a new mantra backed by policy – “TOUCH WALL STREET AND YOU’RE DEAD.”
Naomi Klein in her book The Shock Doctrine points out that the longing for permanent victory over liberalism is not limited to the West. Countries around the world, whether organized as dictatorships or parliamentary, have come up with ingenious ways to limit the public’s political choices. One of the most effective ways (which is at work in our country today) is massive public debt. Even democratic countries have been forced to adopt laissez faire systems they find distasteful in order to pay their debts. Repayment calls for such a nation to agree to restructure its economy the way the bankers bid: by deregulating, privatizing, and cutting spending in the peoples’ surrender to austerity economics.
The American version of this debt trick is evident every time conservatives get into power. Republicans get into power again and again promising balanced budgets and screaming about deficits. They get into office, immediately cut taxes and spending, and thus increase the deficits far beyond what those “big spending” liberals did when in power. Check the record, and you, like I, will believe that if you vote Republican, you can watch the deficit grow. Reagan, Bush I, Bush II – it matters not. All were responsible for much greater deficits than any Democrats of this era.
The formal justification for these tax reduction was tied up to “supply-side” theory; that if you cut taxes you will unleash waves of economic growth on such a scale that revenues to the government will actually increase. That is fiscal mythology; it has never happened and never will (as we have since learned from David Stockman, Reagan’s first Budget Director, who knew it was baloney from the beginning). The whole idea (openly admitted by the Norquists and the unreconstructed Stockman) was to keep the government poor so that the Republicans could “dismantle the government’s bloated, wasteful and unjust spending enterprises – or risk national ruin.” Stockman further pointed out that the Reagan tax cuts, all by themselves, would be a “frontal attack on the welfare state.” So how did this all work out? Reagan and Bush I had quintupled Carter’s budget deficit and more than tripled his long term deficits by the time they left office. Right wing pundits at the time cheered the deficit as “the only effective restraint on congressional spending.” They did not comment on the big tax cuts for Wall Street and aircraft carriers Reagan had built with such decreased revenues other than to say and write that such spending prevented liberals from spending it on THEIR pet projects.
It, as we used to say, is as plain as the nose on your face. The main reason right wingers immediately run up as large a deficit as possible upon assuming power is that deficits defund the left. We are thrown to the austerity hounds, as today, who then are positioned to demand national garage sales of our parks, roads, Amtrak, broadcast spectra; cuts in food stamps, unemployment compensation and every other such “socialist” governmental program. This is not government by democratic rule and consent of the governed; it is GOVERNMENT BY SABOTAGE.
Right wingers would be well advised to come up with a new strategy because the current “scream about deficits and then run them up when elected” plan has ramifications beyond who wins elections. It is a bullying tactic tearing at America’s fabric of social cohesion and is dangerous to national unity. GERALD E


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