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Toomey and the Privatization of Social Security

Dave at 2 Political Junkies has a good piece about Toomey and his support for the privatization of Social Security, a proposal that I can’t believe any resident of Pennsylvania could truly support, except for the very rich. Dave links to other sources and the post identifies some of the more important fallacies in Toomey’s position. Especially useful is the information about Wall Street returns in relation to the inflation rate. So check out the whole post.

It refers back to this article at the Scranton Times-Tribune where Congressman Pat Toomey was defending his plans to privatize social security

When the stock market plummeted a few years ago, I like everyone else in a 401K type plan lost an enormous amount. “Enormous” is a relative term. The more you had invested, the greater the likelihood of loss. But seems to me it is the folks with the smaller amounts invested who are at greater risk. For example, if you have 2 million invested and you lost 45%, you are still left with a pretty good amount of change. This is a painful loss, but a million can still get you pretty far. If on the other hand, you had about $250,000, and lost 45%, you are in dire shape.   The amount you were starting with was not big enough to begin with and the amount left after the loss is ridiculously small.  Only the rich can tolerate such potential losses.

Most troubling for me are two points. First, Social Security isn’t really in trouble. It doesn’t impact the deficit in any way, and while it will be a problem at some point, and changes need to be considered, privatization itself won’t solve that problem. The only thing privatization accomplishes is a success in conservative party policy/ philosophy. Real people who are just getting by ought to be the goal of policy changes, not an ideological philosophy.

Second, is the other side of this issue. Conservatives are opposed to any regulation of Wall Street, so that the practices that allowed the most recent problems have not been corrected, and there is no protections in place to safeguard against future problems. We might as well suggest that people just gamble away their life savings in the lottery. In theory, I “get” privatization, but unless there is adequate regulation and oversight to make massive loss impossible, privatization will never succeed except for the rich.

For the sake of Pennsylvania’s seniors and hard working residents of any age, we must elect Joe Sestak, and stop any discussion of the privatization of Social Security.

via 2 Political Junkies: More On Toomey.

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