Private Ownership, Collective Default

[struggle4progress]

The Bush proposals for Social Security are about dismantling the current system - and not saving it

BY TED MARMOR AND JERRY MASHAW
Ted Marmor and Jerry Mashaw, co-authors of "America’s Misunderstood Welfare State," teach at the law and management schools of Yale University.

January 10, 2005


President George W. Bush has promised to make Social Security secure for future generations, but claims not to have decided on the details for doing so. Perhaps not, but the trial balloons are getting pretty thick over the Rose Garden.

The emerging plan has three crucial elements. First, permit diversion of part of workers' FICA taxes into private accounts. Second, change the Social Security benefit formula from a wage-indexed to a price-indexed system. Third, exclude all proposals for increasing Social Security trust fund revenues if they involve any increases, however small, in anyone's taxes.

The first element, private accounts, does nothing to make Social Security financing secure. As a number of astute commentators have correctly argued, this part of the plan makes the short-term financing problem much worse. It can make the long-term picture better only by indulging in pie-in-the-sky economic assumptions. This balloon is suspended by nothing but hot air. Unfortunately, too many press reports simply repeat the illusions in the name of journalistic "balance."

The benefit formula change does make a difference. Indeed, it can bring the system back into close actuarial balance while preserving the purchasing power of today's benefits. Sound great? It's not. Indeed, this plan to secure Social Security is the exact equivalent of doing nothing at all. <snip>

http://www.newsday.com/news/opinion/ny-vpmarm104109988jan10,0,5380824.story?coll=ny-viewpoints-headlines

[FREEDOMRULES3]

1. as the sharks circle

all the traders in nyse are circling the wagon like sharks. once this is privatization thingy gets going they will inflate the market dramatically making chimp look like a genius until the money is invested. at this point when everyone buys inflated stocks the sharks will sell sell sell making millions of our hard earned ss dollars and put them in their accounts. once ss bombs out then the chimp society will claim it is bankrupt and annull the whole system. oh well not that it was gonna help me much anyway, i am going to have to work till i die anyway. i once loved this country, now i dont even recognise it anymore. man am i depressed. if the chimps little brother runs in 08 and wins i'm moving somewhere, not sure where but i wont stay in what was once the greatest country in the world.