I'm going to venture into a topic about which I am uncomfortable with my knowledge-social security. So, having said that, I fully welcome a good fisking if I'm wrong.
Ann Althouse wrote twice in the past two days about Mitch McConnell's failure to answer Tim Russert's question, "What does private personal accounts do to fix the solvency problem?" She notes that no one has a short answer. Well, I'm going to take a crack at it.
Private personal accounts don't fix the solvency problem. They are a preperation for the invariable insolvency of Social Security. That is the 800 pound elephant in the closet that no one wants to talk about.
It seems clear that there are two ways to keep the pay as you go social security system solvent. Jack up social security taxes and/or raise the retirement age so you have to pay fewer people. The private account plan assumes that doing so would be a difficult burden on seniors, on the economy, etc. So what do you do? You plan for the day when social security isn't there anymore by getting people to save/invest. By starting private accounts now, you allow for a healthy tansition period before there is an actual crisis. During this transition period, you allow people to build the alternate means of their retirement.
Now, why will Republicans not flat out say this? Because Democrats can use it as a massive scare tactic. They'd be screaming in the streets, "The Republicans want to destroy social security and take away your retirement!" Those who would be most frightened would be those that will be long gone by the time Social Security reaches insolvency, though.
Given that, why won't Democrats go on the offensive? Because they fear the plan may actually make sense, especially to younger voters. They can't use the facts as a stick to bludgeon the Republicans. They need Republicans to present the 800 pound elephant to the public so they can bludgeon them with rhetoric.
Okay fair readers, give me your criticism.
3 comments:
The answer is simple. When my generation, the baby-boomers, are deceased, simply cut off the next generation. They won't/don't have the numbers to do much about it and the younger generation won't oppose it too strongly. Fortunately my generation has the numbers and clout so if necessary, some of your children won't have a school to attend and some of you won't have roads to drive on, or police protection but you can bet your a** that we will have our checks. We are the ones that hit the streets as activists and protestors, now we are educated and earning and have major clout and we have the numbers, baby. We vote and we have alot of money. You 'youngsters' need invest in dog food companies because that is what the next generation of geezers will have to live on.
The missing equation is that social security will be means tested. Those with private SS accounts will exceed the threshold and will, therefore, not draw from the available social security funds. If 30% elect to invest in private SS accounts, the money will be available for others.
The secondary benefit of this is that blue collar Americans who do not currently have 401 accounts will also have capital to pass on to heirs. The 401 Accounts and Social Security investment accounts will also invest in the American stock market, providing capital for continued growth and continued American ownership of American businesses.
It's a win win.
That sounds about right to me. J. Rice's comment is also very well put.
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