ALEC and Privatization of Social Security

Many of you never heard the mention of privatization of Social Security until GW brought it up, after his election in 2004 – but the concept has been around for a long time.

The Mackinac Center loves the idea: 

Privatizing Social Security

There is a better alternative. Social Security could be privatized, allowing people the freedom to invest their Social Security taxes in financial assets such as stocks and bonds. A privatized Social Security system would be essentially a mandatory savings program.

Mandatory savings – right into the profit sector.

Right into the hands of the crooks on Wall Street – all of whom are still not in jail after what they did to our economy (and are still doing).

The main push behind privatization started with the Koch Funded Cato Institute – but they had a glitch – no access to legislators and politicians to implement their plan so  … 

In a 1992 ALEC released “Private Long-Term Care Insurance: The Solution For The States” sent out to “educate” their members.  In that document you will find the following two paragraphs:

Legislators could substantially reduce their treasury’s future obligation to long-term care by enacting reasonable laws and regulations for private long-term care insurance. By helping the insurance market to function properly and by creating private sector alternatives to the financing of long-term care, individuals and families, not the government, can and will be able to provide for long-term care.

Yes – the focus on increasing business and profits to the profit sector members of the American Legislative Exchange Council (ALEC) - after all that is where ALEC gets their money to exist.

Before reading this next excerpt from the same 1992 document  it is important to remember that

In the United States, Social Security refers to the Old-Age, Survivors, and Disability Insurance (OASDI) federal program (Wiki)

Back to ALEC

It is important in discussing private long-term care insurance to point out that it is fundamentally different from both social welfare and social insurance. Social welfare provides income and services to financially eligible persons. Social insurance, such as Social Security and Medicare, provide income and acute health care to categorically eligible persons. Both social welfare and social insurance differ from private insurance in that they are not based on risk but on defined eligibility. Private insurance spreads risk. Social insurance spreads money.

  

And of course – ALEC has “model” legislation to support their ideas in 1992

ALEC’s version of Old Age Insurance – but it’s the for-profit model – for their banking and insurance for-profit members – of course.

ALEC’s Long-Term Care Model Legislation

Below is a brief description of each bill in ALEC’s Long-Term Care Model Legislation package.

The Reverse Mortgage Enabling Act

The “Reverse Mortgage Enabling Act” allows persons to meet their financial needs by accessing the equity in their homes via a reverse mortgage.

That one is a piece of policy that most people don’t associate with ALEC – but remember folks we are talking an ALEC document from 1992.  Reverse mortgages have huge – HUGE  - fees attached to them and there is a definite risk of losing your home with a reverse mortgage, at a time in your life when you home may be the only thing you still have.

The Long-Term Care Insurance Act

The “Long-Term Care Insurance Act” defines longterm care insurance as providing coverage for not less than 12 months for a variety of health, therapeutic, and personal services other than in an acute care unit of a hospital.

And it is expensive!

The Consumer Awareness Act on Long-Term Care Inflation Protection

The intent of this model bill is to provide buyers of long-term care insurance with the option of adding a mechanism to their plans which increases their benefits to keep pace with inflation.

And with this it gets more expensive.

The Consumer Awareness on Future Premium Rates for Long-Term Care Insurance

ALEC’s final model act requires that buyers be clearly notified that premiums may increase. Most long-term care policies feature level premiums, which means persons pay the same premium as they age. However, with some long-term care insurers, rates may have to be increased in the future, and buyers need to be aware of this possibility before they buy.

And with this it gets even more expensive.

The key is for government and the private sector to work together to develop and expand the private long-term care insurance market and to provide alternatives for the financing of long-term care.

Yep – there’s the ALEC for-profit corporate sector member gain on this.

1995 ALEC Annual Meeting

Agenda

Commerce and Economic Development Task Force

Once touted as a major success of the federal government. Social Security as we know it is collapsing. As early as 2012, Social Security taxes will no longer cover all of the benefits paid out as baby boomers retire and begin to receive their "entitlement." This bleak outlook has left many skeptical about the future of Social Security.  Increasingly, the privatization of Social Security is being called for as a viable alternative.

OOPS!

But it didn’t stop there  … 

At the end of the discussion, the Task Force will vote on a model resolution concerning the privatization of Social Security.

THAT WAS 1995 FOLKS – 1995!

Moving on later that year - ALEC figured it may as well hit all angles of the Social Security issue.

November 1995 ALEC FYI Newsletter

ALEC Adopts Budget-saving Resolution

The Tax and Fiscal Policy Task Force has unanimously adopted a resolution that calls for the Consumer Price Index (CPI) to be adjusted so that it more accurately reflects increases in the cost of living. The resolution was introduced by the ALEC Board of Directors at the October States' Federalism Summit in Cincinnati, Ohio, and it calls upon the U.S. Department of Labor to adopt a CPI standard that is reflective of the actual change in the "market-basket" mix of prices in the economy, effective this January. ALEC National Chairman, Colorado Senator Ray Powers, recently sent the Resolution to President Clinton, congressional leadership and the secretary of labor. The CPI, which economists have believed for years to be overstated, is used to adjust tax brackets and Social Security benefits for inflation. Economists have confirmed that the CPI does in fact overstate the actual inflation rate by about 1 percentage point a year and that could save as much as $280 billion in the federal budget over seven years in lower Social Security benefits and higher tax revenues.

Fast forward sixteen years to 2011 and guess what is still being thrown around, yep, CPI – that’s what happens when over 100 people in Congress are ALEC ALUMNI:

The alternative formula [CPI] could mean that a typical 65-year-old would receive $560 less in yearly Social Security payments a decade from now, and $984 less two decades out, according to an analysis by Syracuse University professor Eric Kingson, who is also co-director of the advocacy group Social Security Works.

The poll found that 66 percent of those surveyed opposed changes to the formula, climbing to 73 percent among those older than 55. The nationwide survey’s margin of error was plus or minus 3.5 percentage points.

Oh – but ALEC didn’t stop there.

In 1997 they brought the expert on privatization of social security to their annual meeting to brainwash ALEC members.

1997 ALEC Annual Meeting

Workshop Speaker

Peter Ferrara, General Counsel and Chief Economist, Americans for Tax Reform

Also known as:

“the policy Godfather of social security privatization”

“Ferrara led an often lonely twenty year battle that culminated in the Bush administration’s finally making social security privatization the centerpiece of domestic policy.”

And that year after the ALEC Annual Meeting you have this announcement about privatization of social security at the state level.

Media Release

August 19, 1997

Social Security Waiver Resolution as Model Legislation

Investor's Business Daily Guest Editorial

The nation's largest bipartisan individual membership association of state legislators has adopted Oregon's Social Security Waiver Resolution as Model Legislation. Three thousand state legislators belong to the American Legislative Exchange Council. They held their annual meeting in New Orleans last week.

The ALEC Commerce and Economic Development Task Force heard testimony from a number of speakers regarding the issue of Social Security and how to improve America's retirement system. Among the speakers was Steve Buckstein, president of Cascade Policy Institute, and Oregon State Senator Gene Derfler. Sen. Derfler is chair of the Oregon ALEC delegation. Buckstein and Derfler explained how Oregon's legislature approved Senate Concurrent Resolution 2. The resolution asks Congress to enact a waiver system so states can opt out of Social Security and design their own privatized retirement plans for all workers - public and private.

And yes – both Derfler and Buckstein are ALEC members – they have to be to introduce “model” legislation.

And it got national press

The institute proposes placing each worker’s payroll taxes into his own "Oregon Private Retirement Account," which would funnel the money into private investment vehicles such as stocks or mutual funds that would likely yield a higher return over time than the current Social Security system.

The transition to individual state plans would be bumpy, but many of the problems faced by the states would also face the nation if it privatizes Social Security.

The American Legislative Exchange Council is recommending the Oregon resolution as model legislation for other states,

And here’s the closing of the adopted ALEC “model” legislation

Be it Resolved by the Legislative Assembly of the State of Oregon:  

(1)   The Congress of the United States is urged to enact legislation amending the Social Security Act to allow the issuance of waivers to the states that will permit the design and implementation of alternatives to Social Security.

“implementation of alternatives to Social Security”

at the state level  ... 

Yeh – like that would have worked in today’s state budget deficit world.

Old people – go find a cardboard box under a bridge.

And that was seven years before GW took office.

But – even before GW – ALEC kept right on moving the “social security reform” privatization bandwagon – They had to for their corporate sector members – the banks and insurance companies.

From the 2001 ALEC Annual Report

In 2001 ALEC launched several media campaigns in the states. One of the highlights of the year included a major media campaign for ALEC’s annual Report Card on American Education. In addition, ALEC lent support to the Bush Administration with a nationwide media blitz backing senior cabinet nominations. Media campaigns were also launched in support of several administration initiatives affecting the states, including the President’s historic $1.3 trillion dollar tax cut, Trade Promotion Authority, and Social Security reform. ALEC staff members participated in several national press conferences and interviews.

Then came GW in 2004 and you have the following resolution from ALEC the following year.  AND GW and ALEC were really close – good buddies so to speak.

ALEC Commerce Task Force

ALEC Federal Forum

Copyright © July 2005

Commerce, Insurance, & Economic Development Task Force

Resolution Urging Congress to Modernize Social Security with Personal Retirement Accounts

But the whole privatization thing was not a done deal so they still haven’t taken it off the ALEC radar yet – even now -  too much money available there for ALEC from the profits to be made by ALEC bank and insurance profit sector members.

From 2010 in the comments of an article that I found form Colorado on the privatization of Social Security in a Congressional race:

YEP - There was a resolution in 2004 in Colorado – it was

Colorado Senate Joint Resolution 04-28

Please read this recap before you go on  to the next section of the entry.

And yes – Cadman is ALEC.

Here’s what that resolution actually looked like in South Carolina:

South Caroline

April 14, 2004

S. 928

Introduced by Senator Hawkins

A CONCURRENT RESOLUTION

TO REQUEST THAT THE CONGRESSIONAL DELEGATION OF THE STATE OF SOUTH CAROLINA WORK TO PASS SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS.

Whereas, demographic changes and cost increases will drain the existing Social Security system; and

Whereas, without significant changes to the system, costs will exceed revenues starting in 2018 and the system will not be able to pay any benefits by 2042; and

Whereas, not reforming the system will require a fifty percent tax increase on every working American or a thirty percent benefit cut; and

Whereas, allowing younger workers to invest a portion of their income in personal retirement accounts will keep the Social Security system solvent; and

Whereas, allowing younger workers to invest a portion of their income in personal retirement accounts will avoid any benefits cut or tax increases, or both; and

Whereas, allowing younger workers to invest a portion of their income in personal retirement accounts will provide additional savings to younger workers for greater retirement security. Now, therefore,

Be it resolved by the Senate, the House of Representatives concurring:

That the members of the South Carolina General Assembly request that our elected representatives and senators in the United States Congress support no increases in payroll taxes, no cuts to Social Security benefits, and optional Social Security Personal Retirement Accounts.

Be it further resolved that a copy of this resolution be forwarded to the South Carolina Congressional Delegation.

And we KNOW this is ALEC.

WHY????
Same or similar legislation - extremist rightwing - introduced in several states in the same year  ...
DUH!!!

Because if you review the documents found on Common Cause you will find that over 90% of ALL “model” legislation (and resolutions) introduced at ALEC meetings are written by ALEC corporate for-profit and Republican thinktank non-profit members - NOT legislators.

And because NONE of those for profit or nonprofit organizations have access to legislators to forward legislation like ALEC does.  They ALL write "model" legislation for ALEC - BUT Not one of them - Heritage Foundation – the Reason Foundation – the CATO Institute – the Mackinac Center - has access to legislators - ONLY ALEC!!!

And why the focus on privatization?
Well - it may be as sismple as this  --  

As noted in the minutes of a meeting of a group of the Frontiers for Freedom ( of which most of the members were also ALEC members):

In the long run, we must make the interests of both large corporations and the average man on the street more obviously congruent. Widespread ownership of stock is achieving this to some degree . Social Security reform which allows individuals to invest their retirement funds in mutual funds would make interest in a fair and sound business environment in the self-interest of everyone . Thus, the Left could not as easily pit corporate American against the "little guy" because the little guy would see in very real terms that his financial well-being is determined by how well corporate America does.

“sound business environment in self-interest of everyone”

Everyone?

Really????

REALLY?????

And why the focus on privatization?

To breed more ALECesque – corporate Republicans

Concerned with the well-being of Corporations and NOT with the well-being of society as a whole.

Old people – go find a cardboard box under a bridge.  The 1% needs your money!