J&C on Bush's Social Security "Fix" - A Citizen's Guide to Indiana

As a general rule, I like to stay away from national politics, since it is covered much better elsewhere. But today’s Lafayette Journal and Courier has an opinion piece that I think deserves a brief response. Specifically:

The piece Critics scoff at Bush’s contention that Social Security will be flat broke by 2041, about the time today’s 28-year-old hits 65 and about the time the system is projected to pay out 74 percent of the expected benefits even without a fix. Still, hand that 26 percent cut in promised benefits to today’s Social Security recipients and see how it goes over. Sounds like a system of diminishing returns to us.

That’s not to say President Bush’s private accounts are the total answer.

A couple of points:

If Social Security is able to pay out 74% of projected benefits then it is not “flat broke.” Part of what Bush’s detractors object to is his descriptions of the problem which are both deliberately frightening and wrong. An ad campaign by the AARP likens Bush’s approach to tearing down the house because one has a clogged drain.

Bush’s privatization is not the total answer. It’s not even part of the answer. Bush’s people have used a rosy set of numbers to show how well private accounts will perform (something like a 3.4% per year growth in the economy) while using a grim set of numbers to show how badly Social Security needs a fix. Private accounts do nothing to fix the projected social security shortfall that warrants the problems creating private accounts would cause — either borrowing money to cover the gap caused by the cut out used to start up private accounts or raising taxes sufficient to start the program.

This problem was supposedly addressed when Greenspan’s commission obtained a steep increase in the payroll taxes in 1983.

Bush shouldn’t even start worrying about Social Security until he’s fixed his addiction to deficit spending. At least Social Security is solvent currently. We can’t say the same for the general fund which is actually borrowing from the Social Security trust fund to pay for current expenditures. Those huge deficits are a problem that are both clearer and more present than any problems with Social Security. Before the J&C demands detractors to recognize a potential problem for Social Security, it ought to require the Bush administration to acknowledge that any such problems are small in comparison to more current fiscal problems.

For an exhaustive discussion of why Bush’s proposed social security solutions don’t fix the problems he alleges, be sure to read Josh Marshall’s Talking Points Memo.

J&C on Bush’s Social Security “Fix”

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