It's good Social Security didn't change
TEXT OF COMMENTARY
KAI RYSSDAL: It feels like it's been a while, I know, but not too long ago the economy and the stock market were humming right along. Back then a lot of people thought it might be a good idea to let Social Security take advantage of that. Theory was we could all do a lot better in retirement if the money was in the market.
Commentator Robert Reich says we got lucky.
ROBERT REICH: The best thing to have happened during the Bush administration is something that did not happen. We did not privative 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. Treasury bonds have done better. Go back nine years, and there's been no gain at all.
Yes, I know, it's been a rough time. First the tech bubble bursting and then 9/11 and then Enron and then the housing bubble bursting and 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 over the last few years, 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.
Now 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 nothing to fall back on.
RYSSDAL: Robert Reich teaches public policy at the University of California, Berkeley. Farther down on his resume, he was the Secretary of Labor for President Clinton. His latest book is called "Supercapitalism."