this article at the Scranton Times-Tribune where Congressman Pat Toomey was defending his plans to privatize social security (if only partially).
Wonkroom has done some work on this section where Congressman Wall Street explains his confidence in, well, Wall Street :
"I would argue that you don't really have to worry about a fluctuation in the stock market because this is a 45-year period of time, and you are gradually transitioning out of stocks as you get older and get closer to the point where you need to draw on those funds," he said.And now to the Wonkroom:
The stock market would rise and fall, but over 45 years an investor from a private account would end up ahead, he said.
"If you don't believe in that, then you're giving up on the American economy," he said. "I mean, there's never been a 20-year period in our history where we haven't had a positive performance in the stock market, much less a 40-year period. If we don't have growth over a 40-year period, we got serious problems."
Toomey argued that “there’s never been a 20-year period in our history where we haven’t had a positive performance in the stock market, much less a 40-year period,” so anyone subject to his scheme wouldn’t have to worry. However, as Center for American Progress economist Christian Weller noted in 2005 (before the financial meltdown of 2008), there have been plenty of sluggish periods in the U.S. stock market, and accounts need to earn above and beyond the rate of inflation just to stay in the blackWeller's piece from 2005 can be found here. Weller stated back then that those private accounts would have to earn at least 3 percent above inflation in order for there to be any net gains on those accounts. He went on:
Even Wall Street agrees that on average, people will have a hard time meeting this target.Meanwhile, of course, the money managers handling all that extra cash will still be collecting their fees.
So while it would be difficult, to say the least, for workers to get a net gain on the money in their private accounts, Wall Street still makes out very nicely indeed.
Toomey gets it wrong on Social Security, But can we see what a good deal this is for Wall Street?
Congressman Wall Street - wrong on Social Security.