[Boston-editorial] Column on Wall Street CEOs and Social Security Privatization

[Matthew Williams]

Thank you. We will be running this on the Boston Independent Media 
Center website. -- Matt Williams, editorial collective member

On Apr 13, 2005, at 5:42 PM, Betsy Leondar-Wright wrote:

> Hello,
> Please let me know if you’d be interested in running this column.
> Thanks,
> Betsy Leondar-Wright, Communications Director, United for a Fair 
> Economy
> 617-423-2148 x113
>
> Your Risk, Their Gain
> By Scott Klinger
>
> Would you be upset if someone spent millions of dollars to put your 
> future
> retirement funds into a casino, while taking no risks with their own 
> future?
>
> Say hello to the Wall Street CEOs whose companies are aggressively 
> lobbying
> for Social Security privatization.  Because of their bloated 
> compensation
> packages, these CEOs pay Social Security taxes only a few days a year.
>
> The President has leaned on his Wall Street patrons to help with his
> faltering Social Security crusade. They have stepped forward, albeit
> blushing from embarrassment at their conflict of interest. These firms 
> and
> their CEOs will handsomely profit from administering private accounts 
> and
> collect billions of dollars in management fees.
>
> Meet Kennedy Thompson, CEO of Wachovia Corporation, one of the Wall 
> Street
> financial firms that have been most active in efforts to privatize 
> Social
> Security.  The company supports the pro-privatization Alliance for 
> Worker
> Retirement Security and Citizens for Sound Economy.  Thompson is on the
> board of the Securities Industry Association, Wall Street's principal
> lobbying group, which has advocated for Social Security privatization 
> for
> over a decade.
>
> As the country's third largest retail brokerage firm, Wachovia is well
> positioned to cash in on the establishment of private accounts, such as
> those advocated by President Bush.
>
> In 2004, Wachovia CEO Thompson hauled in $13.3 million in executive
> compensation.  He was essentially done paying his Social Security 
> taxes for
> the year at end of January 2.
>
> How is this possible? In 2004, Social Security tax was paid only on the
> first $87,900 of earnings. In 2005, the earnings cap was raised to 
> $90,000.
> Over 94 percent of workers earn less than the earnings cap and have 
> Social
> Security tax withdrawn from their paychecks until Dec. 31, according 
> to the
> Economic Policy Institute. In other words, they pay Social Security 
> taxes on
> 100 percent of their wage income.  The effective rate of Social 
> Security
> taxes on these “Joe” and “Juanita” taxpayers is 12.4 percent (6.2%
> contributed directly by the employee, and 6.2% by the employer).
>
> But not CEOs like Kenneth Thompson.  His effective rate for Social 
> Security
> taxes was a microscopic 0.08 percent in 2004.
>
> So the average “Joe” taxpayer pays an elephant-sized rate of Social 
> Security
> taxes that is 152 times that of the flea-sized rate paid by CEO 
> Thompson.
> If Thompson paid the same effective rate as Joe Taxpayer, he would 
> have paid
> $1,654,644 in Social Security taxes, instead of $10,900.
>
> In 2004, the CEOs of the 26 leading Wall Street firms advocating for 
> social
> security earned an average of over $17.7 million.  Because of the 
> earnings
> cap, they were done paying their Social Security taxes an average of 
> four
> days into the new year.
>
> Seven of the CEOs were “taxpayers for a day.” Their salaries were so
> gargantuan, they exceeded the $87,900 earnings cap in eight hours or 
> less.
> These include the CEOs of Bear Stearns, Charles Schwab, Goldman Sachs,
> Lehman Brothers, and Morgan Stanley.
>
> The CEO of Wells Fargo, Richard M. Kovacevich, was the highest paid 
> among
> the financial services industry, collecting $52.1 million in 2004.  He 
> was
> done paying into Social Security after 4 hours, or during the Pre-game 
> show
> for the Rose Bowl on New Year's Day.
>
> These CEOs are not men who will be depending on their Social Security 
> check
> for their basic survival in their golden years. Yet they are advocating
> changes in the public pension program that could jeopardize the 
> security of
> working Americans. They won't taste the bitter medicine that they are
> prescribing for others.  But they will make billions for their 
> companies and
> millions for themselves.
>
> The Social Security system may face financial shortfalls after 2051.
> Privatizing Social Security will only worsen the problem, but there is 
> one
> elegant fix that would help.  We should eliminate the earnings cap so 
> that
> CEOs like Kenneth Thompson pay the same effective rate as Joe and 
> Juanita
> taxpayer. According to the Economic Policy Institute, this fix would
> eliminate 90% of the funding deficit projected by the Social Security
> Administration.
>
> If Wall Street CEOs pay into the system all year long, perhaps they'll 
> have
> a greater stake in ensuring that we have a rock-solid retirement 
> system that
> works for everyone, not just for their companies' profits.
>
> ***
>
> Scott Klinger (sklinger at responsiblewealth.org) is a researcher at 
> United for
> a Fair Economy and co-author of the new report, “Taxpayers for a Day: 
> Wall
> Street CEOs Have Most to Gain, Least to Risk, in Social Security
> Privatization Schemes.” The full report is available at
> http://www.faireconomy.org/WallStreetCEOS.
>
>
>
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