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Wading into the choppy waters of the Social Security privatization debate isn’t for the faint of heart. Reading through the media’s coverage of the “crisis” over the past several months reveals a level of confusion — or an outright lack of curiosity — over exactly what the president is proposing and who is or isn’t supporting it.
Of course, if either the president or Congress would actually put forward a concrete plan for privatization this might all be a different story. But even with the falsehoods and distortions that accompany any vague promises of political change, the truth is somewhere out there, fluttering in the changing winds of speculation and spin.
Newsweek, which earlier printed a comprehensive and insightful cover story on the issue, does an about-face this week and adds to the confusion with a story provocatively entitled “Don’t Show Us the Money: Why Wall Street is sitting out the Social Security wars.” Read past the headline and the premise contained within it, though, and it turns out that the Street has been an active backer of privatization. We find that the Investment Company Institute (ICI) — a national association for the mutual fund industry — and the Securities Industry Association (SIA) have “publicly endorsed” the president for kicking off the debate about Social Security, while “[t]he SIA also issued a report that touts private accounts in broad brush,” and that “some Wall Street firms have actively tried to “educate” their brokerage customers about the need for private accounts.” Does that sound like “sitting out?”
The piece also notes that brokerage houses Charles Schwab and Edward Jones have taken heat from the AFL-CIO, which opposes privatization, causing Edward Jones to drop out of a coalition of companies supporting the president’s plan. The Wall Street Journal has also recently noted that “Edward Jones has worked behind the scenes for years to support private accounts.”
In addition to this, USA Today reported earlier this month that Charles Schwab’s chief financial strategist, Liz Ann Sonders, testified in favor of Bush’s phase-out plan at the president’s economic summit in December. The paper also notes that some firms may be holding out for an actual plan to be floated before they sign on.
Securities industry officials have met recently with key congressional and White House staff, urging them to push for Social Security reform. But the serious lobbying will begin when lawmakers propose bills, says SIA spokesman Dan Michaelis. The SIA supports private accounts, but Michaelis noted that Bush’s speech was just the kickoff of a long legislative season.
As with much else Social Security-related, Josh Marshall jumped out ahead of the story over a week ago on his blog, calling out Jones, Schwab and the Frank Russell Company as “pied pipers of private accounts.”
Given all this, it is hard to imagine what Newsweek was trying to get at in its piece. Just because the financial industry has largely kept its head down on the issue — even as it loads its ammo for the fight to come — hardly means it is “sitting out” anything.
A lousy headline propounding a false thesis confounded by the very story to which it is attached is a curious way to explore the thorny issues that politicians and citizens must grapple with in weeks to come.
And it doesn’t help anyone’s cause.
–Paul McLeary
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