Re: Stupidity Issue
From Kinsley article:
"On Social Security, he continues to say he'll get the trillion dollars needed for his partial privatization "out of the surplus." Does he not understand that the current surplus is committed to future benefits, which will have to be cut to make the numbers work? Or does he understand and not care? When he compares the "paltry 2 percent" return on Social Security with an alleged 6 percent return on private investments, does he know he's leaving out that trillion dollars in one case and including it in the other? Or has this fact failed to penetrate despite repeated exposures?"
I think it's Kinsley that doesn't understand. We have a *current* budget surplus. Allowing folks to redirect part of their Social Security benefits into private investment will, of course, reduce the amount of taxes collected at present; hence, the surplus will be reduced by that amount. What Kinsley and others who criticize the plan never seem to point out (or just don't understand) is that those who opt to redirect part of their Social Security to private investments give up part of their *future* Social Security benefit in exchange. This *reduces* the long-term required payout from the so called Social Security "trust fund" and thus compensates for the loss of immediate revenue.
Does anyone *really* believe what Gore says about putting money in a "lock box"? Fact: there is no Social Security "trust fund". Money collected today is what's used to pay *current* benefits; hence, if Social Security taxes are redirected to fund the private investment option, they will, of necessity, come from the current budget surplus. It's that simple and that's exactly what Bush has said (nothing disengenuous there at all). However, the second part of the arrangement (which Gore conveniently leaves out) is the part about reducing SS obligations in the future for those who choose the private investment option. Gore is critizing Bush's plan but he's only including half of the arrangement in his numbers.
Actually, Bush's plan is the one that really provides a "lock box" because it would allow individuals to set aside a designated amount of money that's actually invested and growing (a *real* "trust fund"). In a sense, it's similar to paying down the debt because it reduces future obligations.
The whole issue really boils down to a simple question: Will we be better off *long-term* if the government allows us to take some of our Social Security tax and invest it ourselves in exchange for a reduced Social Security benefit in the future? |
