What would have happened if Bush's SS privatization had passed?

see title.

What do you think might have happened?
See forum title.

Millions of people would have been scammed out of it and been left without means of support in their old age. That after all is much of the point of any privatization scheme, to feed the weak and old to the sharks.

Specifically, the push for social security privatization happened right before the greatest stock market crash in recent memory. Would congress have scrambled to undo it? Would the bailout have been even bigger? Or was the privatization plan structured in such a way that it wouldn’t have mattered?

For the 100th time, Bush did not try to privatize Social Security.

Except that the plan wouldn’t kick in until 2009, so you’d be buying in at or near the bottom, if you opted into the plan when it was first available.

Here’s a link to the actual plan since the OP can’t be arsed to do a minimum amount of work to kick off a debate.

Thanks very much, John Mace. steronz, in the future please add more content to your OPs - adding some more specific questions, for example.

Some Social Security funds would have been invested in the market at its low point in 2009, and that would have sped the market recovery and given a much-needed boost to the Social Security funds. Much happiness would have ensued.

Well, maybe. If one’s final goal were a privitization of social security, this would have made a pretty good first step, no? Were we offered assurances that such was not the case, this far and no further? Need one remind of the many, many assurances offered by these people that proved to be…less than one might hope?

And yes, of course you’re right, buying in 2009 would be buying at the bottom. So far. But one could always purchase insurance against loss, preferably from a rock-solid firm like, oh, say, AIG.

Anyway, that all worked out so well for pension fund people, inspiring them to whole new careers as Wal-Mart greeters and cat-food connoisseurs. Hard to understand their skepticiism.

I had no idea you had such a gift for droll sarcasm. Display it more often, won’t you?

This is true, but the reduction in SS investments would mean that the government would would have to borrow funds from somewhere else, likely from China, at a higher rate than they pay the social security system. Add that to the fact that the plan involved borrowing an additional $2 trillion and I’m not sure the stock market boost would buy us happiness. Maybe, but it is a huge maybe.

No more than Obama’s HCRA was a first step to nationalizing the health care industry.

Well, maybe. But the reality is we don’t know what would have happened if Bush’s plan had been put into effect. **Bricker **could be right, or some other outcome could have been possible. Still, Bush’s plan was completely voluntary, so no one would have been forced to do anything he didn’t want to do. being the freedom loving folks that we are, what’s not to love about that? :slight_smile:

Stupid people and high school drop outs. They would have been forced, just like they were forced to get a bad mortgage to over pay for a house they couldn’t afford, with a second loan so they wouldn’t be forced to pay mortgage insurance. Those same simple morons would have been forced to sign up for shitty mutual funds.

Freedom only works for smart people. Everyone else needs the government.

Seriously, who has time to plan for their retirement? I’ve got shit to do, places to be. I can’t spend time learning what an expense ratio is or any of that complicated investing mumbo jumbo.

I want to just blinding trust that the government will take a bunch of my money now, then give it back to me later. I don’t know what interest is so I don’t even care if it beats inflation, what ever the hell that is.

My biggest problem with it was that it was completely unfunded, as your cite points out.

So, in addition to the potential outcomes listed above, there is one guaranteed outcome - more borrowing to pay current SS recipients, and a larger national debt.

The banks doing the investment would take a huge cut for running it. Social Security is run at about 2 percent of its income. That would have ended. Huge salaries would have gone to the top of the American money pyramid. Bankers would love it.
It is a huge pot of money in a very well run program. But bankers have had their eye on it for a long time. It they could filter 10 or 20 percent of it their way, they would be rolling in dough.

I’m speculating that the number of people who would have felt confident investing their future benefits in the stock market in 2009 would have been significantly lower than the number who were confident in 2007.

Objectively, it may be sensible to buy stocks right after a major crash when the prices are low but most people don’t do it. It may not even be completely irrational - a lot of people over-invest during a peak because they’re ignoring the risk. A crash reminds them of that risk and what the consequences would be if they lost their investment.

See, stupid people don’t like freedom. Forget buy low sell high. Real investing means buying at the top then dumping it all when it falls a year later, not bothering to wait for the eventual recovery. The best time to buy a house when prices are at all time highs, after all, house prices always go up.

Well, we might have been at the bottom in 2009, but no one knew we were at the bottom. I hope Bricker doesn’t try to time the market as an investment strategy.

There would be significant political pressure to reverse it, given that the Dems would be in charge, and given lots of projections about what the losses would be if it had started a few years earlier.
If not, there would be tons of sleazy ads trying to get people to invest in bad funds, just like the ones getting people to take all that money from their homes.
Even if this didn’t happen, people would make risky and bad decisions. Thaler and Sunstein report, in Nudge, that in Sweden, where people choose from a lot of investment options, the most popular is the best performing up to that point - an option which is over-valued.
Investing 101 says you increase risk for money you can afford to lose, and use a safer strategy for a base investment. SS makes money in 401Ks relatively more losable, so riskier investments are more acceptable. Would people invest their SS money in a significantly different way than they invest their 401K money? I’d like to see evidence of that - I doubt it. We are, after all, a nation of lottery players.

Indeed. I have heard that a good strategy is to get the hell out of an investment when Joe Blow from Peoria is buying it.
If you remember, we got told that the market has always, always,. gone up over 10 year periods. Until now. Karma is a bitch, isn’t it.

While emacknight is being sarcastic, he’s actually raising some valid points. Most people are not informed investors. A large group of uninformed investors would almost certainly be a problem in the market. Some of them would be making uninformed investments for themselves and creating a disruptive force. But the majority of them would simply be a pool of targets for predators. The predators would convince the suckers to put their money in unsound investments, pocket their cut, and then walk away when the investments crashed.

A libertarian might argue that anyone who lost their money deserved to lost it. But a realist would note that it’s difficult for an uninformed person to distinguish between a legitimate financial adviser and a conman who’s disguising himself as a legitimate financial adviser - being naive doesn’t mean you deserve to be victimized.

And that realist would also note that the national economy affects everyone. A crash caused by predators and idiots will also hurt cautious and informed investors.

True, but it’s still a good counterbalance to: OMG, the stock market crashed and would have taken us all with it!!!


No. The plan included only a few government approved investment options (5, I think), all pretty much conservative.

That would still be the case-- riskier funds only for 401K type investments.