...1935 FDR signing of the Social Security Act
There’s much more at stake than the large amount of money within the Social Security Fund.
One of my regular readers recently respond to one of my older columns with a question about why the Republicans, year after year, continue to go after privatizing the nation’s Social Security Insurance Fund.
It’s a good question because it’s about much more than the fact that Wall Street continues to drool over the possibility of having direct access to all that money for investing it in their private stocks and bonds. There are even more important issues that go well beyond that giant potential pile of available US dollars.
Let’s look at what the “real” Social Security Fund issues are for the Republican Party.
The day after “Dubya Bush” won his 2nd term in office, the first thing he did was to go after privatizing Social Security. Fortunately, the people saw through his plan and he was unsuccessful.
One might ask, “Why in his final term in office, would he take on the so called “third rail of politics”? Why take that risk?”
Well, the rewards of privatizing Social Security do justify virtually any political GOP cost.
One might then ask, “Really, why is that?”
OK, first, to privatize a giant financial government operation such as Social Security would mean defunding a very popular and a very large government organization and it would totally reconfigure the way Americans interact with it.
The transition costs of doing this would be so high that if it didn’t work out, it could never be justified for reversing it back. Any scheme to privatize Social Security would cost so much that no country, including the US, could consider the cost of changing it back.
Then, once all the trillions of dollars were diverted from the US Treasury to stocks in private companies, here’s what would most likely occur.
With such a flood of money on Wall Street, it would boost the net worth of the super-wealthy and the brokerage houses and mutual fund companies too unheard of heights.
Next, the flood of money out of all of the government accounts would drive the federal deficit up into outer-space which would have the affect of defunding thousands of federal government projects including infrastructure and defense spending. ( i.e., a huge loss of government and private jobs.) This would most likely bring on an immediate national, or possibly a global recession.
The overall effect is that it would open the balance of government up to reacting to the open market place, regardless of the directions given by the president and the US Congress.
In other words, moving the massive trillions of the finances of the Social Security Fund into the private market would have the effect of taking the power away from the American people and would put it in the hands of the corporations and the super wealthy.
It would lower wages as American labor organizations would have little influence in these markets run by big money and multi-national corporations. It would also put environmental decisions in the hands of the market place. There would be no one interested in legislating for higher wages or cleaner air or safer food requirements. Social Security would no longer be the government’s “third rail of politics”, it would totally become a tool of the leaders of the financial community and Wall Street.
But let’s get back to the importance of the effects of driving up of the federal debt and deficit.
Back when Ronald Reagan ran for president, he did something that no presidential candidate had ever done. Up to this point, and especially since FDR and the New Deal, Americans usually felt that the government was probably very inefficient, but in general, it was good for them and their well being.
It was the Reagan presidential campaign that kept saying that, “The US Government couldn’t fix the nation’s problems because government WAS the problem!” (Sound familiar?) This was the beginning of the early years of the Republicans starting to preach that the US government was too big, too intrusive, and it needed to be cut and managed as a “business”. (And remember, businesses are just “mini-dictatorships” where the workers have very few rights and the workers don’t elect their leaders.)
The conservatives also learned during the Reagan era that since they had little chance of getting at the finances in the Social Security fund, (But that will never stop them from trying), they could possibly achieve the control of the country in other ways.
They learned that, as it is in other third-world countries with high debts and deficits, it’s the very wealthy and the banks and corporations that run the governments of those countries, not the country’s elected officials or the workers or the voters.
The GOP realized that if they could drive up the US federal debt by spending the nations riches without paying for them, this would force the country into having to cut the nation’s support programs or force them into the private markets. With high, unpaid federal debts and deficits, they could possibly drive programs such as Welfare, Medicare, Medicaid and even Social Security toward privatization.
When David Stockman, Reagan’s Budget Chairman realized all this, the nation’s spending began in earnest, and that spending was all put on the nation’s Credit Card, but not in the nation’s budget. When they were done, Reagan’s administration had incurred debts and deficits that were “larger than all the presidents since George Washington , combined.
What is ironic is that to this day, the Republicans refer to the other political party as the, “Tax & Spend Democrats”.
But the difference between the political parties is that the Democrats usually spend on programs and infrastructure projects for the people, and they tend to “pay-as-you-go” for them with taxes or fees. That is exactly why the deficit and debt is so high today. As he assumed his office, President Obama put the last two wars and the prescription drug program on the budget which Dubya had chosen not to do. This is the way it was done before, starting back with FDR, and it pretty much stayed that way until the 1980’s and the Reagan administration.
It’s also why there was a balanced budget and a budget surplus in the Clinton Administration.
But starting with that Reagan administration, every Republican administration since has run up the federal credit card debt without paying for any of the costs. Under “Dubya Bush” alone, there were those two unpaid for foreign wars (the most expensive wars in history) and an unpaid for prescription drug bill that was nothing more than a giant pay-back to the pharmaceutical industry.
That massive spending, combined with the Republicans tax cuts, their deregulation and DC Lobbyist driven tax-code / loop-holes are exactly what caused the market crash in 2007 and the mess we are trying to remove ourselves from today.
So the moral of the story is that the Republican conservatives are not interested in helping the average working American. They are only interested in going after the programs that support the average American and in giving those programs to the private corporations that just happen to be their largest benefactors.
This is why they will never stop trying to privatize the largest government social program, Social Security. If they ever succeed, the average working American will be doomed when it comes their time to retire.
Copyright G.Ater 2012
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