Second of Three shoes about to drop. You may like the first two. You’re gonna hate the Third one.

The First Shoe was the health insurance industry. As the economy nosedived it dug into their profits. Employers either cut back on group plans or laid off employees, either case affecting the cash flow. Plus more and more young healthy people, prized by the health insurers due to the loss ratio, were electing to be uninsured. Hence the HIBOB (health insurance bail out bill) mandating people to purchase their product, in exchange for which they will now offer insurance to previously uninsured people. With high deductibles/premiums/copays plus words like “unreasonable” inserted into bills to negate the lifetime and yearly caps, these people may not receive any actual care but the industry will receive the premiums. First Shoe to fall, and a very popular one with Democrats.

Shoe number two is financial reform. Bush officially endorsed TBTF (Too Big To Fail ) which Obama continued. As the call from Main St for reform reached a fever pitch the president sent messages to the financial sector that he was on board. Reappointing Bernanke and cabinet positions for Summers and Geithner brought comfort to Wall St. Obama has shown occasional bluster but watering down derivatives reform and headquartering the Consumer Financial Protection Act within the Fed as well as language in Dodd’s bill cementing TBTF show this round too will go to the financial guys. Second Shoe and likely popular with Democrats too.

Ah but now we come to the Third Shoe and it’s a big one. Andre the Giant might not have fit into this one. Our Third Shoe is Social Security. The New Deal legislation which has kept many a family afloat. It saved my family’s ass when my dad passed away. The Right has demonized SS for years with little luck. Following the tech bubble they pushed hard for “ownership” counting on the fact that most Americans don’t understand SS is social insurance, not some kind of savings plan. Bush tried to privatize it but was opposed by Democrats, AARP and even much of his own party. Keep in mind the economy was booming. Also keep in mind had he won, the privatized accounts he pushed for would be digits in some virtual dumpster in cyberspace.

Things are different now. The economy’s in the tank and people are being frightened by fears of deficits and unfunded liabilities. They’re unfunded because the time hasn’t come to pay them yet. Think of your house payment-if interest and principal are 500,000.00 over 30 years-that’s a 500,000.00 unfunded liability. Cause it isn’t time to pay it yet. If you keep making your monthly house payment you’ll be fine. SS is the same. The most recent Trustee report shows it fully funded for 27 more years. No need to panic.

But that’s what the politicians and Wall St are counting on. Panic and greed and people not understanding that SS is OK. Obama’s position in 2008 was against privatization. He also favored a public option at that time too which went out the window once elected so Caveat Emptor.

The TBTF banks will continue to do what they’ve always done thanks to the coming industry-friendly finance reform bill. But this is key-because they still hold billions in toxic assets off their balance sheets they are effectively insolvent. If you forced them to declare those assets at true market value they would prove to be broke-in spite of the Bailout. So they NEED the SS money. The Republicans already stand for privatization, Bush Style. Funneling increasing percentages of FICA wages to Wall St for investment in equity and bonds. Some Democrats echo the talk of “Fixing” SS. It isn’t broke. When they say “Fixing” they mean give it to Wall St. So watch your president. Watch the Democrats. Third Shoe. It’s the big one.

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Posted by on March 26, 2010. Filed under Commentary. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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12 Responses to Second of Three shoes about to drop. You may like the first two. You’re gonna hate the Third one.

  1. Holte Ender

    March 26, 2010 at 10:31 pm

    What I think you are saying, and I’m not sure, is that the Democrats and the Obama Administration, are going to turn over our Social Security to Wall Street?

    • libhomo

      March 30, 2010 at 6:44 pm

      Obama has been inching towards handing Social Security over to Wall St, though I don’t know if he really will follow through on it.

  2. Bee

    March 26, 2010 at 10:43 pm

    I seriously doubt that will happen. There has always been big talk when it comes to SS, and the fear factors of “insolvency” have been batted around for 30 years already, but it’s the holy cow, and in the end, no one will touch it. Especially not with so many baby boomers retiring between what…now and the next 10 years?

  3. Beach Bum

    March 26, 2010 at 11:26 pm

    To be honest I have issues with the deficit myself, except that I want to puke with all the new found fiscal responsibility the republicans are reveling in. They refuse to admit that under Clinton we had a 200 billion dollar surplus and a good economy and that Bushy started the deficits with his tax cuts for the rich. Okay, I’ll give the point that the economy was in mild recession as Willy was leaving and that the Slickster in part helped create the framework for the current financial meltdown.

    We can dance all we want about the US government budget and how bad the books look. Especially with a CBO report out recently saying that the debt will be 90% of the GDP in 2020.

    This economic mess we are in will not be an easy thing to fix. Trade deficits, dependency on foreign oil, an ongoing loss of manufacturing jobs that play a decent wage, roads and bridges falling apart all across the nation, and the education system that despite lots of words since the 80’s when the scope of how bad Jack and Jill ain’t learning came to light all increase the problems exponentially.

    What’s my point? Well my friends I have the sinking suspicion that the money movers and general financial experts have done one of their cost benefit analysts and figure it will be more profitable to transfer their interests to new territory.

    In other words Wall Street rats are going to do as much as possible to loot the sinking ship before they scurry off to learn Mandarin and Cantonese.

    So I can see what I think Oso and Holte are alluding to, that Wall Street wants to “save” Social Security.

  4. osori

    March 27, 2010 at 12:02 am

    I believe in what Beach stated more effectively than I did-“Wall Street rats” will attempt to loot the sinking ship.

    I sure hope it doesn’t happen. What concerns me the most is the acceptance by so many that SS is already broke, or won’t be there when they need it.So if that mindset continues to be fed by the media and politicians on both sides of the aisle, people might be amenable to fixes which are really giveaways.

    Holte, not so much that Obama and the Dems want to take SS away, rather my fear is the Dems will join with the Reps and Wall St to siphon off current FICA payments thus making Trust Fund exhaustion a self-fulfilling prophecy.

    • Holte Ender

      March 27, 2010 at 9:17 am

      Agree about the rodents on Wall Street wanting to get their sticky fingers on the Social Security Trust Fund, but them wanting it and them getting it, are two different things. The voters get duped by politicians all the time, I have no idea how they could pull off Social Security theft. Do you?

    • Bee

      March 28, 2010 at 9:18 am

      Oso, I just remember what happened when Bush II, after the second “election”, started yammering about privatizing SS. It fell like a lead balloon, even within the republican party. I found it interesting that he waited until after the 2004 election to start talking about it. If all the retirement age & nearing-retirement-age people suddenly up and died, leaving nothing but 40-somethings as the oldest age bracket, then the powers that be might manage to privatize SS.

  5. osori

    March 27, 2010 at 12:21 am

    I would classify our economy being in “Shock Doctrine” territory with a corporatocracy/politicians willing to exploit the situation;figuratively rats looting the sinking ship.

    • BigHarryH

      March 27, 2010 at 11:27 am

      I’m with you on this, get yourself ready for one big con job, coming to a town near you.

    • libhomo

      March 30, 2010 at 6:45 pm

      Yeah, I’ve seen a lot of parallels with what Obama did on the wealthcare bill and how the Shock Doctrine has worked in other countries.

  6. MadMike

    March 27, 2010 at 9:08 am

    I am no fan of Wall Street and I have do doubt that they would love to figure out a way to get their hands on SS, but I don’t see that ever happening. It could have happened under Bush but never under a Democratic administration. I do agree however that we may be in “shock doctrine” territory. Great post again O-Man!!

  7. Gwedolyn H. Barry

    March 27, 2010 at 12:04 pm

    I think that passing HCR is going to have economic trigger effect in the positive … and it does remain to be seen. It will trigger jobs, spending and begin a correction economically. As to Social Security being taken over by Wall St… And Wall St ‘going over to China’ kind of projection… I’m a doubter. I don’t feel as though I have just witnessed any ‘sell out’ by the Democrat politicians in general. I think the President has presented himself as ‘bi=partisan’ and now proceeds in a new tack to speak out and push for Democratic agendas. I guess I’m saying things are looking more positive than negative and economically,
    taking a bit of individual responsibility is the only real action any of us, or I can make. I spend the extra $ when I can. I keep buying American and locally I support alternative energy projects.
    Health Care is not everything I wished for but what it does provide is so much more to be grateful for than to bitch about and when the opportunity presents to make further positive changes in it… I’ll be voting for that. I see HCR’s new law making a difference close to me that is going to be life saving. I don’t think its nice to shit where I eat…eh? I’ll support what has been accomplished and push on towards what there is more to achieve.
    Interesting points, Oso. My compliments, always. I don’t agree, but there’s a horse race in that! Yea? I do NOT think SS is broke or broken nor do I think Americans will allow any voting option to ‘take it out’ as it stands.
    Yeah, a bit o Pollyanna.
    I know.