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Fascist Social Security Reform
A few days ago President Bush said:
I am one of those people. I believe, and have believed ever since I learned how Social Security works, that I will not receive anything back from the system.
I believe that by the time I become eligible for retirement benefits, the system will be means-tested. Since I also believe I will be rich, I will not qualify. I will have paid my taxes (12.40% on income under $87900, including the employer portion) every year for my entire working life, certainly over a quarter million dollars, and will not get any of it back. Not a dime.
If you ever wonder why young people get worked up about Social Security, that is the reason. This isn't empty political positioning — I sincerely believe that I and other young workers are being taken advantage of.
I agree Medicare/Medicaid are bigger problems. My preferred solution is to wind down and end the programs. I have never heard any serious advocacy for any other solution. I do hope that the collapse of TennCare will provide ammunition for Medicare/Medicaid reform when the time comes. I do not fault Bush for not trying to fix those programs — rather, I fault him for making them worse with his prescription drug benefit. That's why I'm confident that Medicare/Medicaid reform will not occur during this presidency.
Brad's other two examples of bigger problems are really the same thing, the General Fund deficit, although I'm mystified that he thinks Social Security contributes to that problem only starting in 2020 — it actually starts contributing to it in 2009, the first year when the Social Security surplus (which helps cover the General Fund deficit) begins decreasing.
As an aside, none of the dates floating around in this debate (SS surplus begins decreasing, SS surplus becomes negative, SS "trust fund" exhausted) matter very much. All changes will be gradual. Nothing will happen suddenly, unless you believe present law forcing severe benefit cuts when the "trust fund" is exhausted will still be in effect when that happens. I don't.
What can I say? The irony is obvious: Social Security is such a system, pay-as-you-go with younger workers (Peter) being robbed to pay benefits to retirees (Paul). I agree it's not a good idea, though my "it" is the Social Security system itself.
Further, the criticism is wrong. Private accounts funded by cuts in contributions are a case of robbing Peter to pay Peter. The point of private accounts is that you retain ownership of those funds, even if you can't fully control them. (Attention Bush-haters who think he's a fascist: This is fascism, de jure but not de facto ownership, not that other nonsense you prattle about.)
Bush hasn't even advanced a specific plan yet. This criticism is empty — and silly, and beneath a Professor to make.
Personally, I want out of the Social Security system. It has problems. It's going to rob me throughout my life for no personal benefit.
If I were given the option to opt-out today, paying no more Social Security taxes and giving up eligibility for benefits, and forever losing all the money I've paid into the system so far, I would do it without hesitation.
I don't think I'll be given that option. But it looks like I'll be given the option of a private account, through which I'll be able to retain "ownership" of at least a very small portion of my money. In principle, that is why I support Bush's reform. When the details emerge I'm sure I'll find things I don't like about it, but it's unlikely to be worse than the current system, which will rob me my entire life and give me nothing in return.
But please don't call me an apologist for fascism. I'm just taking the lesser of two evils — fascism and socialism. Capitalism isn't even on the table. Such is the nature of entitlement programs.
I think the answer is, "yes we do", until free-market ideas prevail in the culture and make broad political change possible. Until then, we're stuck with the system we've got, and incremental improvement is all we'll get.
I've watched the Palestinians make this mistake over and over again. They reject incremental improvements in their relationship with Israel because they think that by refusing, the Israelis will make an even sweeter offer. But that doesn't happen. Decades pass and generations turn over, waiting and waiting for the perfection that never comes, ignoring the improvement they could have had. They've made the perfect the enemy of the good.
You've already identified why Bush won't cut the payroll tax — he does mind the fiscal consequences. Plus, it would be political suicide, not a good way to start his second term. (At least he pledged not to raise the payroll taxes!)
I hate forced savings. Simultaneously, I recognize that forced savings are better than outright robbery. If I can turn even a small part of this robbery into forced savings, that's an improvement.
I would oppose partial privatization if I believed it were possible to get a better deal by holding out. But in this political climate, I don't. It's too soon, culturally, to get what I really want — freedom.
I think individual opt-out is an idea that might work politically. It has precedent, too, e.g. religious objectors have been allowed to opt out in the past. I don't think partial privatization makes individual opt-out any more difficult, politically, and it might even make it easier.