Saturday, April 30, 2005

Reforming Social Security Makes More Sense Than Ever

I didn't get to hear all of the president's news conference this week, but what I did hear about his proposals for reforming Social Security (SS) impressed me very much. Most interesting to me was the overall strategy of his fix, and that brought into focus even more sharply than I laid out in my previous post on this subject.

The vision that the president displayed for all to see was that he wants to change the way people think about SS. Under the current pay-as-you-go system, the money we pay into the system as workers is used to pay those already retired, widowed, or orphaned. So you don't get the money you pay in. It's not "your money", as so many believe. He wants to change people's attitude about it by allowing those of us who want to to put part of that money aside in our own private account. That money will always be there for us and us alone.

Despite early attempts by the Democrats to deny the undeniable fate of SS if we do nothing, everyone now recognizes that SS is in trouble. The only disagreement is how to fix the problem. The president is showing leadership by proposing very minor changes. The Democrats, by their own admission, have no such plan. They don't know what to do except try to protect the current fundamentally flawed system.

One of the proposals put forth by the president this week was to consider reducing benefits to the wealthy, and raise benfits for the poor. The Democrats oppose this proposal as they did during the debates to "fix" SS in the previous decades because they don't want the American people to realize that this is just a welfare program for the poor. The Democrats want EVERYONE to receive SS benefits regardless of income or need. This view is mainly because the Democrats don't want to see one of the socialist bastions of the New Deal era modified so that it supports capitalism and and actually uses the concept of the free market and capitalism to improve the program. Their opposition isn't because they want to make the system better and help more people, it is purely political. They see one more source of their political power, the power of controlling the retirement prospects of the people, being devolved to the from the central government to the people. Despite their fervent statements about "being for the little guy", the Democrats don't trust the people to make the "right choices" about money.

The president understands that without significant tax increases, or significant reductions in payouts, by 2042 no one will recieve more than 70% of their promised benefits. The private accounts will not solve this problem, but it will lessen the burden on the SS trust fund. So the severity of the tax increases and/or benefit cuts will reduced by the amount of money diverted to private accounts that will generate far greater return than traditional SS money. Private accounts within the SS system will make the entire system more efficient, and better able to support more people.

Support the changes outlined by the president. They are right for SS, and their are right for our future.

This post also appears on Blogger News Network.

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