Privatization, Raising the Retirement Age, and Milking Social Security.

Working through the 2016 Trustee's Report on Social Security for a paper on various reform proposals, I was suddenly struck with a vision for the optimal reform platform from the perspective of plutocrats. First, privatize the trust fund. It doesn't matter how you do it, as long as Wall Street types can take a cut, say .5% (which considering the size the trust fund would be ludicrously overpriced, but I'm a pessimist too), of the current trust fund which stands at about $2.3 trillion dollars right now, all in T-bills.

Next, (I suppose you could do this in any order, but it might be an easier sell to try and "save Social Security" by privatizing the trust fund, and then when that fails be forced to - reluctantly- make benefit cuts.) raise the retirement age to 66 or 67. The same end could be accomplished by making the checks smaller, but for some reason telling 65-year-olds with back pain, arthritis, and a physically stressful job to tough it out for two more years is more politically feasible. Anyway, the real trick is this: make sure that whatever reform program you adopt, you keep the trust fund intact and growing.

So instead of serving its intended purpose - as a cushion so retiring boomers wouldn't have to suffer benefit cuts- the trust fund becomes another big pile of money for Wall Street to manage. Some back-of-the-envelope math suggests that raising the retirement age to 67 would put the program in surplus for the next few decades at least. That's decades where Wall Street would get an extra $11.5 billion a year, growing with the trust fund.

Of course that would really be a drop in the bucket compared to the total profits of America's financial sector, and while 2.3 trillion dollars is a lot of money, there's ten times that much in US pension funds already. So this is hardly a must-have for the financial sector. And if the wizards of Wall Street manage to raise the revenues of the program enough to cover the cost of their management and deliver a profit to the taxpayers, then its a win-win. Except for all of those people who got shafted with benefit cuts.