|
 |
Townhall...
Social Security: Why
America Can and Should Allow Private Accounts
By Howard Rich
The Social Security debate is no different than the debate over any
other government program – there are just a lot more zeroes involved.
Of course the more zeroes, the less willing Washington politicians
usually are to confront the problem – particularly when so-called
“guaranteed” benefits are at stake.
Still, there are three simple questions that can be asked of any
government program – including Social Security – which if answered
honestly will point us in the direction of sensible, sustainable
reforms.
First, is the outcome the program seeks to achieve consistent with the
founding ideals of this country (i.e. advancing liberty and prosperity
for all people)?
Second, is government’s involvement absolutely necessary in order to
achieve this outcome?
And finally (assuming the answer to the first two questions is ‘yes’),
should government’s role in achieving the outcome consist of directly
funding or managing a particular task? Or should the private sector
bear that responsibility – with government assuming a more limited
oversight or regulatory role?
The men who founded this nation – who risked their lives and liberties
in order to break free from a repressive government – carefully weighed
similar questions. It was important for them to enumerate and
prioritize government’s responsibilities – and just as importantly to
spell out its limitations. Otherwise the “more perfect union” they were
creating risked becoming every bit as repressive as the government it
was replacing.
Today, politicians rarely take into account these considerations. Our
entitlement culture has created a new definition of “core” government
functions – one that goes far beyond the scope of the U.S. Constitution
and which relies on trillions of borrowed dollars to sustain. In
defending the creation of “Obamacare” – yet another unsustainable
government entitlement – a former Democratic Majority Whip summed up
the prevailing sentiment when he said “there’s nothing in the
Constitution that says the federal government has anything to do with
most of the stuff we do.”
Truer words have never been spoken – of course this rare moment of
entitlement honesty is buried beneath an avalanche of big government
lies.
For starters, the Social Security “surplus” that politicians love to
talk about is a myth. While it is true that the system has collected
more in payroll taxes than it has doled out in benefits in recent
years, the resulting “surplus” is nothing but a stack of government
IOUs. According to the latest Trustees report, by 2015 the federal
government will have borrowed $3.25 trillion against the Social
Security Trust Fund.
These politicians also claim that Social Security is an inviolable
“contract” between the government and beneficiaries of the program –
classifying expenditures related to the program as “mandatory.” Both of
these characterizations are false.
“Entitlement to Social Security benefits is not a contractual right,”
the U.S. Supreme Court ruled in 1960.
Government has the authority to cut Social Security benefits anytime it
wants – just as it has previously exercised the authority to expand
those benefits on multiple occasions.
But now that Social Security is on the verge of insolvency benefits
must be cut – or else taxes will have to be raised. There is simply no
“third way” when it comes to managing the “third rail,” at least not if
we limit our solutions within the current (government) framework. In
fact for every year that this problem is ignored, the benefit cuts and
tax hikes necessary to bring Social Security into fiscal alignment grow
steeper – while the looming implosion creeps closer.
A decade ago the Congressional Budget Office (CBO) calculated that
entitlement spending – including Social Security – would completely
absorb the federal budget by the year 2060. Today that estimate has
been moved forward by thirty-five years to 2025.
But what if the existing framework were changed? What if we looked at
Social Security not as a program but as an objective? And what if we
assessed that objective through those three basic questions mentioned
earlier?
Obviously sustaining the prosperity of the American people through
their retirement years is a concept that is entirely consistent with
our nation’s founding ideals. But that doesn’t mean this worthwhile
objective is government’s responsibility – and even if it were, it
certainly doesn’t mean that a government program is the best method of
accomplishing that goal. In fact as far as retirement savings are
concerned, government produces a lousy rate of return compared to the
private sector – and has demonstrated a chronic inability to manage its
assets efficiently.
No wonder studies have shown that the even the lowest-risk voluntary
private accounts (those equally weighted in treasuries and bonds) would
produce a rate of return three times as high as Social Security – and
that’s assuming higher-than-anticipated management fees. Higher returns
mean additional consumer spending. Not only that, money which is
currently subsidizing unnecessary government consumption would instead
be used to grow the economy.
Permitting private accounts for Social Security would not break a
contract with the American people – it would efficiently fulfill one of
the founding ideals of our Republic. It would also help pull our nation
back from the brink of economic ruin.
And without putting too fine a point on it, there simply aren’t any
other options that don’t involve wrecking our economy.
Read it at Townhall
|
|
|
|
