Republicans love to lash out at Social Security as being emblematic of
"Big Government", when in fact, for as much as it costs, SS actually requires
very little bureaucracy and is administered quite efficiently. The more we
hear from the Bush administration about their "policy" proposal for SS reform,
the more ridicculous the whole idea seems. But did anyone ever imagine that
their "privatization" scheme would actually create a whole mess of new, messy
bureaucracy? Read on...
Form Greg Anrig, Jr. of
The Century Foundation:
President George W. Bush said that his plan for privatizing Social Security would be modeled after the Thrift Savings Plan (TSP) for federal employees. But Francis X. Cavanaugh, who served as the first executive director of the TSP from 1986 to 1994, has argued repeatedly that extending that system to Social Security would be an administrative nightmare for the government, businesses, and individuals.
TSP serves, and "works well" for ~3 million government workers, expanding
it to serve Social Security's 147 million beneficiaries would blow it up.
The current TSP has about 200 telephone counselors ... to respond to participant inquiries. Since there would be roughly 50 times as many "clients" under the president's plan, there would be a potential need for more than 10,000 counselors to maintain the same level of service. Many of those counselors, unlike those now at the TSP, would have to speak foreign languages. They also would ... be required to provide current market, investment, and transactional information affecting investment decisions.
Yuck.
Employers would be required to assume expenses and fiduciary responsibilities akin to what companies that provide 401(k) retirement plans now maintain. But more than 85 percent of businesses with fewer than 100 employees have no retirement plans and don't have the personnel, payroll, or systems staffs to do what employers offering 401(k)s do now.
What's good for Wall Street is not what's good for Main Street.
Based on surveys of administrative costs for firms that set up 401(k)s for companies with 10 or fewer employees, the annual cost per worker amounted to more than $300. For an account of $1,000 (the maximum under the president's proposal), a cost of $300 per worker would require more than a 40 percent investment return just to get the fund back to $1,000 at the end of the year.
I know that no one here, myself included, ever thought that this plan would be anything other than
a total boondoggle, but
the gulf between their rhetoric, and reality widens every day. It's just amazing.
This so-called "privatization" should really be call "corporatization", or "wall-street-ization". It not only increases the actual size (rather than just the spending) of the federal government, it does so by creating a huge bureaucratic bottleneck and then saddles small businesses with costly, and time-consuming paperwork burdens.
Not that it's going to pass or anything.