Social Security Privatization Causes Tussle Between Dodd, Bernanke (VIDEO)

A highlight of Tuesday's hearing with Federal Reserve Chairman Ben Bernanke was a 27-second exchange with Chris Dodd, chairman of the Senate Banking Committee, over privatizing Social Security.

Dodd asks, somewhat rhetorically, "Did I sense a breath, a sigh of relief that we didn't privatize Social Security?"

Bernanke at first refuses to concede the point, responding, "Well we never got that far in that proposal, chairman... I'm going to have to get back to the details..."

After being pushed, however, the Fed chair admits that if Social Security had been tied to the stock market "that would certainly be a problem."

The exchange followed a hullabaloo earlier this week over a New York Times story reporting that President Obama had considered announcing the formation of a Social Security task force during his "fiscal responsibility summit" on Monday. According to the paper, "several Democrats said that idea had been shelved, partly because of objections from House and Senate leaders."

At Monday's press briefing, Press Secretary Robert Gibbs avoided directly responding to the story. Instead, he answered repeated questions on the veracity of the story with comments such as:

"I think you will be able to see, both in what the President says on Tuesday and ultimately what is forwarded to Congress on Thursday, will demonstrate clearly the President's intention and desire to see our country return to a path of fiscal responsibility, and in doing so, through honest budgeting, making very tough decisions that the American people understand we have to make, and cutting this deficit in half by the end of his first term."

To a direct question as to whether he was disputing the story, Gibbs responded:

"Well, let me -- can you read back the -- [laughter.] Let me go back and look through. But regardless of what you call it, Chuck, the President is committed to dealing with the rising costs of retirement security and health security in this country."

WATCH:

Comments

[Collielady]

The smirk is what grinds me. More wealthy, elitist smirk.

[hchriste]

The term privatize what does it mean? Letting people put a part of SS into private investment probably a bad idea. However, the reason for SS to be in the dumps is because there really isn't any money in it, it is spent by the fed. The SS can only invest in the national debt or Treasury Bonds, therefore it is always in the hole. The SS Admininstration should be allowed to invest funds in safer investments such as Municipal Bonds and/ or State General Obligation Bonds. they would have a bigger fund because of better intrest and dividends and they would benifit the country at the same time.

[dadw5boys]

The Federal Reserve needs to mind it's business or it needs to go.

Americans will decide about their Social Security not a bunch of Private Bankers.

[schatsie]

It'sbad enough that 500.000 people have lost their homes in the last year because of outrageous health care CHARGES (not costs)....­and then they want to talk about privatizing SS,,,,just imagine where we would be now if that had happened..­. We would be worse off than MEXICO.

[Glengray]

The idea of privatizing social security is another republican con game. They were all lobbied by their wall street criminal donors to give them our hard-earned billions so they can create a bubble and gamble with our retirements. Just like they're going about touting tax cuts as the best way to stimulate the economy. What a crock of bull. They want to cut the capital gains tax as a means to stimulate the economy!
These republican crooks just never give up - they want us to give them tax cuts so they have more money to hide away in UBS and their money laundering banks.

[RedKnuckles]

The fundamental (and rather huge) misconception by repubs is that SS is a retirement investment program. It is not. Social Securtiy is an insurance program and safety net.

[Twopennygal]

Can Obama fire Bernanke?

[wonketteRAWKS]

This is something there should be no compromise on...socia­l security!

No privatization! No reduced benefits!

[Carneades]

The Credibility of Bernanke
Today's speech is no different than the multitude of Fed pronouncements that have preceded it, with talk of a recovery on the horizon, and anti-natio­nalization rhetoric. To be clear, we do not proclaim to possess a crystal ball capable of short term market prognostications. However, we do feel that there is at least some value in conducting the following exercise. The quotes below are from none other than Bernanke himself, taken from speeches/t­estimony/p­ronounceme­nts made during the previous twelve months.

February 14th, 2008 " At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt"

April 2nd, 2008 "monetary and fiscal policies are in train that should support a return to growthin the second half of this year and next year.''

July 15th, 2008, "Our banking system is well-capitalized"

October 15th, 2008, "Fortunately, the Congress and the Administration have acted at a time when the great majority of financial institutions, though stressed by highly volatile and difficult market conditions, remain strong and capable of fulfilling their critical function of providing new credit for our economy."

November 18th, 2008 "There are some signs that credit markets, while still quite strained, are improving"

We would submit that the quotes above are worth a thousand words/data/charts with respect to the credibility of the Bernanke.

www.TheValueatRisk.blogspot.com

[schatsie]

Excellent, so either he was telling the truth and stupid as dog dirt or he was lying....F­ire HIM!

[larry278]

Isn't any debate about the use of Social Security's funds more suited for those who discuss moot questions? There is no money in or for Social Security in a de facto sense. It's like securitizing loans that can't & won't be repaid. You have to be a gambler or fool to buy that kind of paper. You get a better deal in a casino. You get free drinks while you throw away money in a casino. But not at the 5 or 10 cent slot machines. Maybe, you have to use the 50 cent or above slots. I don't like slot machines or casinos & I'm also broke. There is no reason for me to go to a casino so I don't know how they operate. Besides, I don't drink.
I waste my time by watching the stock market from my computer.

[RG5626]

Are you of the George Bush school of "Treasury Bonds are just worthless pieces of paper"? It may indeed bankrupt the country paying back all the loans made against the Social Security "Trust Fund", but pay back we will.

[AZ AF VET]

We could have had a "Lock Box" for Social Security sigh!

[SEQUOIABISON]

There will be no changes to Social Security as long as Nancy Pelosi is Speaker, unless they are improvements or incremental COLA increases, never Privatization on her watch nor phony double speak about making it more solvent while actually trying to let it "wither on the vine", as Gingrich, Bush and his cohorts attempted.

[PamelaH1227]

Monies we worked for our whole life that went to SS for us to help survive on in retirement doesn't belong in the hands of those greedy scamming Republicans to scam us out of as they try to throw it into their inflated stock scams!

[MetalCanuck]

There is actually no money in social security so it reall doesn't matter.

[paixa3]

Totally false and I NEVER want to see SS privatised in ANY MANNER.

[JohnA581]

Actually there is money in the SS fund. Part of it gets raided every year to make up budget shortfalls. The government takes some of the money and leaves worthless "IOUs" in its place.

[RG5626]

Unfortunately, the Treasury bonds used as IOU's for SS are worth just as much as any other Treasury bonds. So we better start getting the deficit under control because there is a massive bill coming due in the next few decades.

[NotesFromME]

Actually there are huge surpluses in Social Security that are routinely robbed to pay Paul.

[twgbonehead]

Actually, SS is totally invested in T-Bills. Bush referred to these as "worthless pieces of paper". Of course, in the same speech, he promised that one of the new Individual Account options was going to be 100% T-Bills, which he called "The safest investment on the planet".

I guess Bush really DID understand how badly he screwed our economy; that worthless pieces of paper were the safest investment on the planet.

[robeson]

Actually it is a steady stream of money used to pay unfunded accounts. Take it off budget, and end unfunded projects.

[sixx]

"...and end unfunded projects" like wars of aggression.

[robeson]

The captain of the worst economic crisis since Hoover wants to steer Social Security.
Who are these people?

[ajax2]

Bernanke feels his Republican Right Wing economic agenda won't be complete until he wastes Social Security.

SS task force.
Day One. Declare Social Security money maker.
Day Two. Put Social Security funds off line.
Day Three. Abandon task force.