1. Studies show that over the long term, the Federal Treasury Bonds which is where social
security surpluses are invested, pay about the same as the stock market does. For an
accurate measure of what the stock market earns you have to deduct the fees that stock
brokerage houses charge, anywhere from 5-10%. You also have to take into account that the
market goes up and down. In the last 93 years there have been 55 times the market dropped
more than 10%.
2. State, local
and private pensions do invest their money in the stock market, but only under strict
guidelines. Almost all those pension plans that Clinton mentions are defined benefit
plans. If the pension plan loses money in the stock market, the employer must make up the
losses, because the employees’ benefits are guaranteed. Under Clinton’s plan,
if the stock market crashes and the social Security fund loses money, NO ONE has to make
up the loss. Clinton’s plan calls for investing 20% of the surplus in the stock
market. This amounts to about 500 billion dollars over the next 15 years. Losing any
portion of this money would seriously hurt Social Security.
3. Some people,
even in the labor movement, have supported investing our money in the stock market. Their
claim was that by investing in companies, "we" could have some control over them
and make them nicer to deal with. Their mistake is that they don’t understand that
Clinton is ruling this out. He is calling for a "neutral approach managed by the
private sector." This means even though the government would buy stocks with our
money, the government would have no power as a stockholder over any company. Clinton wants
to give away our money and get nothing in return.
4. The
administrative costs of Social Security amount to less than 1% of the benefits paid out.
This makes it the most efficient operation of its kind in the world. Most insurance
companies spend 40% of the money they collect on all their expenses. In Chile, where the
social security system is privatized, the administrative costs are 20%.
