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If you think Hillary Clinton will protect Social Security you're nuts
Bill was ready to privatize as we read here today:
http://www.democraticunderground.com/10027724810
We know Obama wanted a "Grand Bargain..."
Tony James arrives as a panel member for the breakout session at the Clinton Global Initiative 2014 (CGI) in New York, September 23, 2014.
Tony James looks beyond Blackstone
http://www.reuters.com/article/us-blackstone-group-james-exclusive-idUSKCN0JI0C620141204
Reuters has learned that James was offered the job of commerce secretary when President Barack Obama reshuffled his cabinet two years ago. He turned down the previously undisclosed offer because he wanted the post of Treasury secretary or national economic adviser, one of the sources who was briefed about the offer said. The White House did not immediately respond to a request for comment.
http://www.nakedcapitalism.com/2016/10/blackstones-tony-james-touting-what-looks-like-hillarys-scheme-to-gut-social-security.html
Blackstone’s Tony James Touting What Looks Like Hillary’s Scheme to Gut Social Security
Posted on October 19, 2016 by Yves Smith
Readers may recall that Bill Clinton planned to privatize Social Security in the second term of his Presidency. The Monica Lewinsky scandal derailed his plan.
As the Clintons knew, only a Democrat can dismantle Social Security. Hillary looks to be picking up where Bill left off. As David Sirota describes in a must-read story, Hillary is planning to introduce mandatory retirement accounts, a scheme that Hillary has mentioned in high concept form earlier. As details emerge, this “enrich Wall Street at the expense of everyone else†program is even more attractive to pet Democratic party constituencies than the 1.0 version of going after Social Security directly. No one in the Clinton or George W. Bush administration was so audacious as to cut in private equity and hedge funds in the way this variant would.
But Hillary, and her major advisor on the plan who is also on her short list of Treasury Secretary candidates, Blackstone CEO Tony James, are too adept to label these required savings accounts as a stealth replacement for Social Security.The plan, as described in Sirota’s article parallels the way the contributions are made now to Social Security, with both employers and employees required to put aside a percentage of payroll…but not in the form of Social Security taxes, but in individual retirement accounts that in turn are put in “pooled plans run by professional managersâ€.
If you look at James’ speech, what he is proposing sounds innocuous, a supposed additional 3% of worker savings. But that is a nearly 25% increase over what workers are paying into Social Security now. Moreover, most experts agree that to the extent that Social Security needs fixing (30 forecasts are fraught), some not very onerous tweaks would do the trick. First and foremost would be to eliminate the payroll tax ceiling.
It’s not hard to see the long-term game plan. Social Security will be cut due to purported need to keep the budget balanced while funding bombing runs in the Middle East. It will be turned from a universal social safety net more and more into a welfare program. That in turn makes it easier to make more cuts, since its core supporters will be further and further down the food chain.
Moreover, the canard is the assumption that James makes: “…if these savings are invested correctly and earn a good return for the retiree.†Tell me how this happens in a world of ZIRP, NIRP, low growth, high private debt levels, and equity prices increasingly dependent on unsustainable stock buybacks?
There are fundamental problems with “saving and investing†for retirement as a mass solution, as opposed to for a relatively small group of high income individuals. One is that everyone’s financial asset is someone else’s financial liability. Expecting a return over the long-term GDP growth level on average isn’t attainable as the pool of financial claims keeps rising. That’s why, as Michael Hudson keeps pointing out, debt jubilees were a regular part of ancient civilization. The burden of outstanding claims became economically destructive and socially destabilizing. And as Keynes and others have pointed out in the more modern formulation, high savings rates produce the paradox of thrift: what seems virtuous on an individual level is destructive on a societal level.