Third Way: Its Belief in 401(k)’s Is Not Well Founded; Pensions Are Better for the Non-Wealthy

A common thread of Third Way publications on federal pensions and Social Security is a strong faith in the 401(k)s. Because the private sector switched to them (at tremendous profit to executives and shareholders and tremendous cost to employees), Third Way strongly advocates for them. This move would absolutely come to the tremendous benefit of Third Way’s board of trustees, many of whom have Wall Street interests.

A PBS program, Frontline, outlined the situation in 2006. Having viewed the program, I take a dim view of Third Way’s proposals seeming to favor strongly flawed and expensive 401(k)s to make the Federal Employees Retirement System unaffordable (and ultimately transferred (at great profit) to Wall Street.

A thought: Suppose President George Bush succeeded in privatizing Social Security and then Wall Street crashed, wiping out Social Security funds. What would happen? I say at a minimum that profit-taking Wall Street firms should have all profits disgorged until such time that the Social Security program would have been made whole. If this result is uncomfortable, then Wall Street has absolutely no business handling Social Security or federal pension monies.

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