2.10.2005

I'm game (so far)

I found this article from "Reason", a libertarian monthly magazine and website, about the case for Social Security privatization. An interesting point: "The Democrats object that allowing workers to put some of their payroll taxes in personal accounts will worsen Social Security's financial condition, since the diverted money would not be available to pay benefits for current retirees. Although much depends on the final details of the plan and the number of people who participate, the administration estimates that making up the difference would cost $754 billion during the next decade.

But this cost will be offset over the long term by lower demands on payroll taxes, as future retirees draw more on their own accounts and less on standard benefits. Another way of looking at it is that establishing private accounts simply makes explicit some of the system's existing liabilities. It may not reduce them, but neither does it raise them."

There's reason (heh) enough to be leery of numbers as big as $754 billion coming from this administration, considering the way they sold Medicare reform. But, I'd be happy to give Socoal Security reform a chance simply to buck a system that seems more than a little antiquated. It turns out that FDR, the "father" of social security, supported the idea of voluntary personal accounts in 1935. Money quote: "In the important field of security for our old people, it seems necessary to adopt three principles: First, noncontributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps 30 years to come funds will have to be provided by the States and the Federal Government to meet these pensions. Second, compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans."

There should be no sacred cows where other people's lives are concerned. That Americans are used to Social Security working the way is does is no reason to keep it that way. Ideally, our government has a responsibility to enact it's programs in the most morally and financially efficacious fashion possible (that may sound redundant for some folks). If that means throwing what amounts to a tradition out the window, so be it.

1 comment:

Andrew said...

Yeah I’m pretty sure that the prescription drug plan will go down as the dumbest thing Bush did during his presidency. There is a certain part of me (okay the biggest part) that likes to view things with a strict utilitarian perspective and investing even more money in an almost completely unproductive population (retired people) strikes me as a misuse of economic resources. There’s a reason that 20 percent of Vegas Casino customers collect Social Security, the median age of Harley Davidson Owners is 55 and the AARP does a lucrative motorcycle insurance business. Old people don’t need more government benefits!

Goodbye public office…

Anyways, I just heard a report on NPR about the 10 year cost of the prescription drug benefit, and it’s expected to be about $720 Billon. Hmm, I wonder where we could get the money for private accounts.