A few commenters took issue with my last post where I applauded Democrats for finally showing some spine on Social Security. They argued that Social Security is faltering and we need to do something to put it back on solvent footing. Thus, Democratic opposition to privatization is not something to be applauded but rather something to be protested. Now to start, I'm not sure I accept the claim that Social Security is dying as true. Kevin Drum has been excellent in showing how the Social Security projections have consistently been too pessimistic over the years. Furthermore, as has been noted over and over, once that magical 2018 barrier passes us by, Social Security will begin paying out more than it takes in, making it...like every other federal program. So I'm sorry, but it's pretty hard to motivate myself here.
However, let's take the claim at face value (after all, the Democrats did a fair bit of Social Security scare-mongering in their time as well). What I don't get is how Privatization will in any way, shape, or form, help the problem. Not even solve it, but help it. I've never seen any analysis that even purports to show how privatization will fix the short-term solvency crisis. I have seen tons of evidence showing how it would exacerbate the problem--by giving us a funding gap of several trillion dollars and by sucking away part of the funds in fees. This is why Talking Points Memo's constant refrain of Bush proposing "Social Security phase-out" actually carries some weight with me (and other more sober center-leftists as well, see this post on TNR's Etc. blog)--it actually appears to be the most likely upshot of his signature proposal.
So this is a call to all my Republican (or otherwise pro-privatization) pals. How does privatization help restore the Social Security system to solvency? I'm not interested on any other reasons why it's a good idea, just that particular facet of the argument. Thanks a bunch.
It seems to me that privatization helps social security gain solvency by removing x% of future ss monies from the feverish clutches of the federal gov't, thus the money will be in a real account and not disposable by our legislators.
ReplyDeleteFair 'nuff. I'll pen an essay about why private accounts might help SS solvency without griping the other issues I have regarding SS. Expect trackback before Monday.
ReplyDeleteOn the other hand, a few weeks ago, I wondered if anyone on the left might point to some good essays, arguments, or commentary as to why government should be in the retirement plan business in the first place. (I don't mean arguments for government retirement "safety net" plans. But as SS pays everyone, it's not a safety net but a retirement plan.)
A related question might be how much of the tax burden should be relagated to supporting retirement? And how much is too much?
My issue is that SS by design isn't just meant to pay retirees, but is also another income tax for the general budget. It's a wolf in sheep's clothing and it's about time someone undressed it. Privatization is an option where the current excess revenue from SS can go to supplement or even eliminate the shortfall the system is going to have later down the road. Of course using that money for it's intended purpose means less cash for other programs and I'd imagine that's where that two or three trillion dollar debt figure comes from. The other obvious option is to just raise taxes enough so the program stay's solvent. While I imagine that latter is the preferred solution of many of the Democratic politicians who deny the problem even exists, it's not going to happen. President Bush has clearly stated that he won’t support it. Personally, I'd rather the excess SS money go for what it's intended, and have the government trim up to get what it needs to get done done.
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