The nation’s largest pension fund, formally known as the California Public Employees’ Retirement System, threw its weight behind a growing chorus of critics who oppose President Bush’s plans to privatize the American Social Security system, CBS MarketWatch reports.

A senior official at Calpers, which manages a staggering $178 billion of retirement assets for 1.4 million public employees in California, said Bush’s privatization scheme would lead to higher interest rates on Treasury bonds, corporate bonds and mortgages.

Calpers backed Bush’s other critics who say tax revenue shortfalls stemming from the privatizing scheme will force the government to borrow an additional $2 billion at a time when the country is struggling to fund recent tax cuts and an expensive war in Iraq.

Bush entrenched his position by making privatization a centerpiece of his nascent second term in office. His proposal for amending Social Security involves new provisions enabling American workers to defer a portion of their Social Security taxes into retirement vehicles like 401(k) plans or individual retirement accounts.

Bush defended his privatization agenda as a necessary step to reducing the burden on the already underfunded Social Security system. In recent speeches, Bush called the plan a natural extension of Western-style capitalism that is based on private ownership.

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