Newspaper article St Louis Post-Dispatch (MO)

Wall Street Quietly Pushes Privatizing of Social Security

Newspaper article St Louis Post-Dispatch (MO)

Wall Street Quietly Pushes Privatizing of Social Security

Article excerpt

Wall Street is putting its weight behind the movement in Washington to privatize Social Security as a way to head off the financial distress most experts say will hit by the year 2029.

Lobbyists for Wall Street are trying to stay behind the scenes as they argue for privatization because they and their firms so obviously stand to profit by the changes they are promoting, according to financial industry executives.

Representatives of mutual funds, brokerages, life insurance companies and banks are involved in the lobbying effort to have the government let Wall Street manage a slice of Social Security's money. The notion is that Wall Street can dramatically boost the system's investment returns and thereby raise additional funds to pay future benefits to the huge baby boom generation whose retirement threatens to deplete Social Security's reserves. Under privatization, workers might be allowed to divert, say, 2 percent of their payroll tax from Social Security into a private account that could be invested in individual securities or mutual funds. Workers would own and control these accounts. The "privatization" agenda has gained surprising political support on Capitol Hill and is expected to be debated at hearings in the next Congress, say Hill staffers. Soon after the November elections, the Social Security Advisory Council appointed by President Bill Clinton is expected to propose revisions in the system, including privatizing some portion of it. But any change won't occur soon. "The debate is still in the early stages," said Rob Shapiro, vice president of the Progressive Policy Institute, a Democratic Party-affiliated research group studying the matter. "We have yet to establish Social Security reform as a major public issue." Wall Street officials want to avoid or at least deflect accusations that they are seeking to transform Social Security to line their own purses, say to financial service industry representatives and others involved in the policy discussion. …

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