Study Says Bush Social Security Plan Would Help Banks and Hurt Seniors

Plan Would Benefit Financial Institutions and Increase Deficit

A study by University of Chicago business school professor Austan Goolsbee focuses on President Bush’s plan to partially privatize Social Security, and finds that financial institutions stand to gain from the Bush plan—at the expense of seniors.

According to the study, the financial services industry would reap a $940 billion windfall in fees and other administrative charges for managing private accounts, while expenses could take 20 percent of the typical beneficiary's account.

This plan would significantly impact the financial health of women, who make up an estimated 60 percent of Social Security recipients.

In response to Bush's announcement of the plan, AARP, an organization with more than 35 million members, issued the following statement criticizing Bush’s privatization plan for Social Security:

“AARP opposes creating private retirement accounts by diverting funds from Social Security. "Shifting money from Social Security into private accounts jeopardizes the secure benefit people know today.

“According to some estimates, the government would have to borrow over $2 trillion in the next ten years to fund these carve-out proposals, creating a huge increase in U.S. debt.

“AARP will fight to protect and strengthen Social Security. While Social Security needs modest changes, the secure benefit it provides should not be put at risk. “

For more information on AARPs stand on Social Security, see An Open Letter to AARP Members.

Note: What does Social Security privatization mean? For details on the Bush Social Security plan, and more information about the current and future status of Social Security, see Future of Social Security Benefits: FAQ & Examples.