Cutting Social Security for Christians?
Topeka Capital Journal, November 19, 2004
Minuteman Media, November 17, 2004
Gates County Index (NC), December 1, 2004
Eastern Wake News (NC), December 2, 2004
Roanoke-Chowan (NC), November 30, 2004
High Point Enterprise (NC), December 4, 2004
Immediately after his re-election, President Bush announced that privatizing Social Security would be at the top of his second term agenda. While we don’t know his exact proposal yet, the basic plan from his Social Security commission called for cutting benefits, but allowing workers the option to offset some of the cuts by investing a portion of their Social Security taxes in the stock market. Ironically, this plan is likely to be especially harsh towards the conservative Christians whose votes were so crucial for Mr. Bush’s re-election.
The problem is simple. The president’s plan would allow workers to invest in the stock market only by purchasing broad market indexes, like the S&P 500, which includes 500 of the country’s largest corporations, or even broader indexes that try to encompass the whole stock market. Workers are required to invest in indexes, rather than individual stocks, to ensure they do not take excessive risks with their core retirement income.
Any individual stock, or group of stocks, can fall on hard times, as examples like Enron, WorldCom, or United have shown. But a broad index of stocks will only turn down if the whole stock market goes down. While market plunges do happen (the last crash was only four years ago), an index of stocks is a much less risky investment than a single stock or small group of stocks.
However, the problem with an index fund is that it includes companies that profit on investments that some may view as immoral. For example, a broad index fund would include companies that profit from selling weapons to repressive dictators. It would also include companies that adopt anti-labor policies in the United States and even violate U.S. labor laws. A broad index fund would also include companies that sell pornography, conduct stem cell research, and perform abortions.
The latter three sources of profit are likely to be highly objectionable to many of the conservative Christians that supported President Bush’s re-election. Presumably, many of these people would opt not to invest in the stock market, rather than share in the profits from such activities.
Of course, it would be possible to design funds that have screens on certain investments. But, if funds were designed with screens that met the concerns of one group, then presumably it would also be necessary to create funds with screens for issues that concern other segments of the population, like support of repressive regimes, and bad labor and environmental practices.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The End of Loser Liberalism: Making Markets Progressive. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.