September 22, 2003

THE REVOLUTIONARY VISION OF W:

Best way to save Social Security: The Congressional Budget Office came very close to endorsing personal accounts. (Timothy J. Penny, 9/23/03, CS Monitor)

Last week two more Democrats joined the presidential race. With so many candidates in the mix, it might seem reasonable to expect a diversity of opinion on major issues. Yet when it comes to Social Security's future, there is little being said by these candidates aside from a promise to protect the status quo. Most private-sector economists and policy analysts, however, have long warned that the status quo is unsustainable.

Many of these same experts have advocated transforming America's insolvent, "pay-as-you-go" Social Security program into a fully funded system of personal accounts, where individuals could invest their payroll taxes in diversified market investments, protecting Social Security funds from political misuse and building assets to pass on to their families. In a recent analysis the non-partisan Congressional Budget Office (CBO) came as close as a government entity ever has to endorsing personal accounts as the best way to increase savings and build assets for the future.

The widely overlooked June 16 CBO report, "Acquiring Financial Assets to Fund Future Entitlements" examined the options available to fund Social Security in the future. [...]

The CBO agrees with many private analysts that personal accounts - where Social Security money would be held by individuals rather than the government - offer the best chance for success: Assets set aside to fund future obligations are most likely to be insulated by a system in which ownership and control rest with individuals. In that circumstance, each participant has property rights and legal recourse to guard against the diversion of resources. If the money didn't belong to individual participants, future policymakers could find alternative uses for it - to create a new benefit, fund a new program, or perhaps cover a budget gap. [...]

Unfortunately, a little-read government report isn't going to lead this debate forward. For that, we need candidates who are willing to help the public understand that when it comes to Social Security's future, doing nothing is no longer an option.


Strange, wasn't there a candidate in 2000 who was savaged for proposing a very tiny step towards a private account system?

Posted by Orrin Judd at September 22, 2003 7:55 PM
Comments

Savaged he was, but he withstood the assualt, even through the recent market decline. For every voter 50 and under, the solvency of Social Security will be a major political issue in each upcoming election. And it is quite unusual how Tim Penney's piece ignores Bush.

Posted by: jim hamlen at September 22, 2003 11:33 PM

I hear an awful lot of moaning about evaporated 401-Ks, none about evaporated Social Security checks.

SSI has problems but the solution is obviously not private accounts.

Posted by: Harry Eagar at September 24, 2003 3:49 PM

Harry:

You checked the Social Security trust funds lately?

Posted by: oj at September 24, 2003 3:55 PM

They have always been empty. But there is an alternative source of cash flow.

If your 401-K was in Enron or LTV, nada.

Posted by: Harry Eagar at September 24, 2003 9:51 PM

401k: $6 trillion

Social Security:

Posted by: oj at September 24, 2003 9:53 PM
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