President Trump’s promise not to cut one dime from Social Security and Medicare doesn’t square with the fiscal cliff these programs are headed for. To save the system, benefits must be cut, taxes must be raised, or both.
Or else replace the system.
No wonder, then, that John Stossel insists we “Fix Social Security Before It Goes Broke,” and rescues a decades-old proposal: “private accounts,” which he says “would certainly pay retirees more than Social Security will ever pay.”
In Chile, where they have tried this, private accounts have worked out pretty well, contributing to the once-impoverished country’s rise to “the richest country in Latin America.”
Had the United States adopted such a system, at Social Security’s inception, the amount of capital flowing into projects big and small would have not merely prevented the stagflation of the Seventies and brought us almost unimaginable wealth, it might have turned political eyes towards accountability, prudence and stability.
But, because Social Security was set up as a Pay As We Go system, we paid … and the money went.
It got so messed up that by the 1980s Ronald Reagan charged Alan Greenspan with “fixing” it. That “fix” mainly meant increasing taxation. The decades of revenue surge over outflow was spent by Congress for war and handouts. And now we’re reaching a repeat of the late 1970s’ Social Security insolvency.
Meanwhile, Chilean leftists “hold street protests against private accounts,” Stosssel reminds us. “They’re angry because capitalists get a slice of the pie.”
Back in the USA, Democrats demand that more benefits be wrung from Social Security. Are they dead set on proving why socialism doesn’t work?
This is Common Sense. I’m Paul Jacob.
3 replies on “The Problem with Public Accounts”
The problem with reform proposals is that Dem politicians will accuse Republicans of wanting to throw grandma out with the garbage. President Bush just TALKED about privatizing a small portion of social security taxes to permit investment in the stock market and Dems,predictably, howled accusing the Republicans of wanting to gut social security. I suspect that true reform will come only when we are faced with true crisis.
A very conservative way to reform social security would be to permit accounts to be invested in a treasury inflation protected security (TIPS) with a guaranteed return of 2% above the inflation rate and to have the account owned by the individual. That is, is anything in the account remains at the time of death, that sum is part of the decedent’s estate and may be bequeathed by will or pass by intestate succession if there is no will.
Leftists are leftists the world over, whether they call themselves socialists, communists, or democrats.
Not to defend SocSec, but Paul’s statement that the govt. must probably raise taxes and cut benefits is simply wrong. SocSec can be saved, even in its present form, by making a few simple changes.
1) raise the retirement age by one month/year over the next decade. 2) raise the earnings cap (yes, this is a tax hike, but it’s a targeted one that won’t affect most SS contributors) and 3) means test. Any one of these 3 would probably save SS as we know it; some combination of the 3 would make it actually robust going forward and not negatively impact millions of the elderly poor who’d be decimated by benefit cuts. Such easy steps should not ignite the wrath of Dems like privatization proposals do, yet they (GOPs, too) seem unwilling to go even this far, for reasons that remain obscure to me.…