Rep. John Boozman (R-AR), who has his party’s nomination for the Senate, has been taking some flack from Sen. Blanche Lincoln (D-AR) for being an enthusiastic supporter of privatizing Social Security. The Boozman camp is pushing back, claiming that Boozman does not support privatizing Social Security, but merely the creation of private Social Security accounts, according to Arkansas Republican Party spokeswoman Alice Stewart:
He supports a plan to allow young workers to divert a portion of their payroll taxes into personal investment accounts, these would be safe investments.
If that sounds a lot like privatization, that’s because it is. Like former Rep. Pat Toomey (R-PA), Boozeman is trying to relabel privatization with something that sounds more appealing: “personal investment.” But make no mistake: proponents of privatization didn’t change their plan, they just stopped calling it privatization when they realized that the word freaks people out. “The right discovered that ‘privatization’ polled badly. And suddenly, the term was a liberal plot,” Paul Krugman noted.
And Boozman has been an unabashed supporter of privatization. In 2001, he said that “the future of Social Security is dependent on creating a vehicle for private investment.” “I believe we must implement President Bush’s proposal to provide younger workers with the opportunity to invest part of their Social Security taxes in personal retirement accounts,” he added. Boozman has also at least entertained the notion of supporting Rep. Paul Ryan’s (R-WI) Roadmap for America’s Future, which would create privatized Social Security accounts.
Perhaps the most insidious part of Boozman’s plan is the assertion that only “safe investments” will be part of privatized accounts. As the Cunning Realist pointed out, proponents of privatization held up companies like Lehman Brothers, AIG, and Citigroup — the poster-children of the economic collapse — as fail-safe bets for retirement accounts:
Would the government have allowed the Bear Stearns and Lehman outcomes had the Social Security system been chock full of those stocks? Remember, both were former blue chips, the sort of companies that proponents of private accounts insisted any new system would be limited to. The same for Citi, AIG, Fannie Mae, and others. How much pressure would the Fed and Treasury have felt — and what more would have been done — to keep those afloat and/or out of penny stock land?
Remember, even if we do nothing to Social Security at all, it can pay full benefits until 2037 and 75 percent of benefits for decades after that, which is very close to current benefit levels when adjusted for inflation. There is no Social Security crisis, and those pushing for privatization are using the public’s fear of deficits to push for a policy prescription they’ve desired for years.