Robert Samuelson explains why I’m still not sold on Bush’s Social Security reform plan:
Bush hasn’t yet offered a detailed proposal, but he is expected to build on “Plan 2” of the President’s Commission to Strengthen Social Security, issued in December 2001. Workers could divert as much as $1,000 annually of their payroll taxes into “personal accounts” invested in stocks and bonds. Now, the CBO has evaluated Plan 2. In 2025 Plan 2 would reduce projected Social Security spending from 5.71 percent of gross domestic product to 5.27 percent of GDP, the agency estimates. This is a trivial cut of the combined spending of Social Security, Medicare and Medicaid. The effects of switching to personal accounts and diminishing “traditional” Social Security benefits are gradual. Indeed, because Bush plans to borrow to pay for personal accounts, his plan would probably raise federal spending in 2025.
Judged by this arithmetic, Bush’s Social Security program is a hoax. He’s claiming to make Social Security sustainable. In 40 to 50 years, Bush’s approach might work. But in the next 25 years — when the real budget problem occurs — it does little. Bush wants it both ways: He wants to appeal to younger voters by offering personal accounts; and he doesn’t want to offend older voters (including baby boomers) by cutting their benefits. This may be smart politics, but it’s lousy policy.
Really, I should be easy to sell on SS reform. Easy like a lonely drunk girl at last call. I understand that in its current form, SS can’t meet its promises. I understand that private accounts would increase Americans’ dismal savings rate. I understand that private accounts mean inheritable wealth, something too few Americans enjoy.
And as a libertarian crank, I understand that me having control over more of my money is just plain right.
But I’m not some lonely drunk girl; I’m a drunk guy with a serious (and quite personal) interest in the financial health of this nation. From what we’ve seen, however, Bush isn’t serious enough.