Robert Reich
The best thing to have occurred during the Bush administration is something that did not happen. We did not privatize Social Security.
Had we done so, boomers facing retirement over the next few years would be even worse off than they are today. Now they’re struggling with pension plans worth less than they counted on, and home values that are tanking. At least they can rely on a monthly Social Security check.
But had we privatized, they’d be totally reliant on the stock market. And look what’s happened to the market: Compared to stock values ten years ago, the S&P 500 has risen a little over 1 percent a year, adjusted for inflation. Even Treasury bonds have done better. Go back nine years and there’s been no gain at all. Go back eight years and the market has been off an average of 1.4 percent a year.
Yes, I know, it’s been a rough time. First the tech bubble bursting, then 9/11, then Enron, then the housing bubble bursting, then the credit crunch. But that’s my point. We can’t necessarily rely on the stock market.
And anyone who thinks the market will shortly regain all the ground it’s lost has been drinking Wall Street cool-aid. The Fed can only do so much. The stimulus package is a laugh. Consumers paying much more for fuel and food and health insurance, with shrinking paychecks, large debts and declining home values, won’t be turning around this economy any time soon.
Sure, the stock market has done well over the past half century. But there have been decades like the 1970s and this one, so far, where it’s been a disaster. That’s why we have Social Security – so that if your timing is bad and you get caught in a downdraft, you still have something to fall back on in retirement.
If we had privatized, you’d have had nothing to fall back on. You’d crash.
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