Wednesday, September 22, 2004

Bush's $940 Billion Gift to Wall Street

Washington Post

President Bush's push to create individual investment accounts in the Social Security system would hand financial services firms a windfall totaling $940 billion over 75 years, according to a University of Chicago study to be released today.

Bush has expressed strong support for allowing workers to divert some of their Social Security taxes to accounts that could be invested in stocks and bonds. But he has never embraced a specific proposal to revamp Social Security, even after his own Social Security Commission presented him with three reform options. Goolsbee, an informal Kerry economic adviser, examined the option that is often cited as the most realistic.

[Goolsbee] estimated that annual management fees would be 0.8 percent, a conservative figure, he said, considering that management fees across the spectrum of mutual funds average 1.09 percent.

The result: Over 75 years, fees would total $940 billion, more than a quarter of the $3.7 trillion deficit the Social Security system will run over that time period. That would be the largest windfall in U.S. financial history, Goolsbee said, more than eight times the revenue loss that Wall Street suffered during the 2000-02 stock market collapse.

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