As has been pointed out in previous articles, one of the major reasons President Bush is pushing for privatization of Social Security is that privatization will immensely benefit large corporations and wealthy Americans. Not only will they benefit from rising stock prices, they will also be able to borrow easily as capital flow increases.
And business leaders are not shy about expressing their wishes. Concerns of a growing Federal deficit and a sinking dollar caused executive confidence to stall this month, but general optimistic sentiment about investment opportunities in the United States lessened the blow. As a result, the leading economic indicator dropped slightly by 1.9 points, according to 480 executives surveyed this month. Overall executive confidence, sitting at 169.9 points, is at levels similar to June and August of last year.
Every component index fell in January, too, except for current confidence, which rose by 1.9 points. Conversely, future confidence fell by 4.4 points, resulting in the largest gap between current and future confidence we have ever seen. 36.2 points currently split the two component indices. Long-term economic concerns seem to be the greatest cause for alarm, especially future confidence and fear of the dollar and the deficit. These long-term problems may suggest some kind of eventual fall off in CEO Confidence. In other words, while the CEOs are highly concerned about the future of America and its competitiveness due to poor economic policies in last four years, they are hoping that with privatization of Social Security they can benefit in the short term.
Investment Confidence, the lowest index, just about broke even this month, and it has been hovering around 145 points for the past six months. Stagnation is coming from more systemic problems in America's economy, causing "sincere concern about the effects of federal deficit as well as the trade deficit on the strength of the dollar and our position as a debtor nation," said one CEO, voicing the opinion of many respondents this month. In addition, rising interest rates and a slow start to 2005 have created some mixed sentiment among America's top dogs.
Still, "a weak dollar and record trade deficits" are not the whole picture. A large contributor to our long-term deficit problem, Social Security, has been inspected this month by additional polling from Chief Executive Group. The message is clear. Almost 90% of CEOs (88.7%) think the U.S. should reform Social Security. Compared to other developed nations, "other countries are way ahead of the curve in allowing its citizens control over their retirement funds," says one CEO who wished to remain anonymous. It is pretty clear why CEO want to remain anonymous - most of them do not have the courage to face American people.
They believe by and large that this problem, if not properly attended to, could wreak havoc on our economy for decades to come, sending the value of our dollar even lower and plunging us deeper into debt. CEOs cited the adoption of mandatory savings accounts, similar to those proposed by President Bush, as the second most necessary reform, trailing only our need to increase the availability of tax-sheltered retirement accounts. "CEOs would like to see reforms like those proposed by our President and more," said Edward M. Kopko, Chairman and CEO of Chief Executive Magazine. "They feel that some serious overhaul of our social security system is necessary to promote the creation of jobs and sustain economic growth. CEOs are saying America is already having problems with losing jobs overseas, and can't afford to be a laggard in the context of retirement funding as well."
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