Hillary Clinton proposes new 401(k) retirement accounts. Isn’t this privatizing Social Security?

Instead of proposing that we finally put back the tax money that is supposed to be in the Social Security Trust Fund, Sen. Hillary Clinton is proposing that we spend tax money to match new 401(k) retirement accounts.

Isn’t this abandoning Social Security? The Social Security Trust Fund sits there with $2 trillion in IOU’s, and instead of filling the fund with the cash that should be there, Clinton wants to fund a separate retirement program.

Or isn’t the Clinton plan, in effect, privatizing Social Security? Unless there’s more to the plan than she has announced, Clinton’s proposal means letting Social Security benefits shrivel by 20 or 30 percent over the next few decades and pushing tax dollars into private 401(k) accounts.

A crisis denier. As Social Security approaches meltdown, Hillary Clinton comes up with partial privatization, and it’s on the same day she tells The Washington Post:

“I don’t believe it [Social Security] is in a crisis.”

Had a Republican proposed the Clinton plan, Democrats would have declared it the end of the world. It would have been called a philosophical surrender, scuttling the guaranteed, defined benefit that Franklin Roosevelt meant for Social Security. It would have been called risky -- those 401(k) accounts go down, you know, when the stock market drops.

Instead, all quiet on the Democratic front.

Like the Bush plan. Clinton’s proposal -- similar to one put forward years ago by her husband -- isn’t bad, really, as long as we simultaneously do something immediately to restore Social Security’s siphoned funds. President Bush’s Social Security proposal of two and a half years ago wasn’t bad, either. Its effect would have been similar to Clinton’s. It would have allowed workers to put some of their federal retirement dollars into the stock market.

Clinton hopes to fund her plan with the estate tax -- “the death tax.” Bush hinted, through then-Congressman Bill Thomas, that he’d have funded his plan with a value-added tax on imports and exports.

Using the “privatization” banner to scare older Americans, the Democrats blocked Bush’s plan in 2005, principally for partisan reasons. They didn’t want to see a Republican president save Social Security. As a result, Social Security is much closer to collapse.

Not to fear. If Senator Clinton can dodge the fear tactics, maybe her partial privatization can pass.

Frank Warner

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See also: Hillary Clinton says it’s ‘smarter’ to have no rescue plan for Social Security; Barack Obama says she’s ducking.

See also: The other ‘Groundhog Day’: The Social Security that is never fixed.

See also: Obama and Clinton finally are asked to debate Social Security.

Comments

[Christopher Taylor]

Of a sort, yes, and its the kind of economic program that the right tends to celebrate and embrace. Certainly its better than the goofy 5k baby bond she liked.

[Frank Warner]

I have the feeling even Republicans would not want to go too far with partial privatization of Social Security. The Democrats should relax on that point.

If privatization went too far, Congress soon would be tempted to limit or influence which stocks can be bought in Social Security plans. After a time, Congress might even order certain arbitrarily unpopular stocks divested. We'd suddenly discover that Congress directly controls Wall Street.

We liberals don't want Wall Street controlling Congress, and I don't think liberals or conservatives really want Congress taking over Wall Street.