 |
 |
Social Security Buzz
July 10th 10:34:56 AM
If it weren’t for those dang “transition costs,” everyone seems to think, personal accounts would sail through Congress, no questions asked.
Patrick Barron, writing for the Evening Bulletin, thinks so.
So does Bruce Braley, a lawyer from Iowa running for a vacated seat in the H.O.R. If personal accounts were to pass, he thunders, “future generations both here and across the country will be saddled with decades of debt and no guaranteed retirement security.”
True, partial privatization of Social Security would require an initial injection of general revenue for it to get up on its feet and attain solvency. But by what accounting measure could anyone call a “cost” any plan that abolishes $12 trillion of debt for around one-sixth the price? As the liberal editorial board of the Washington Post put it two years ago, “In a soundly designed privatization, this transition cost would generate an equal and opposing transition benefit. The workers who divert part of their payroll tax into personal accounts would accept an offsetting cut in future Social Security payments from the government, thus reducing the nation’s debt to future recipients…. the net transition cost should be zero.”
No guaranteed retirement security? Give us a break. If he were describing Social Security’s current fiscal state rather than partial privatization, Braley’s political sound bite would ring true.
Considering that a medium income worker born after 1965 can count only on a rate-of-return of less than 2 percent on his or her Social Security taxes, juxtaposed with the fact that the average annual return on stocks has for decades been 6.7 percent above inflation, S4 opts for the later. Nevertheless, Braley looks at the same numbers and proceeds to call a personal-account pension program, the fruits of which he himself will enjoy if he is elected (the Thrift Savings Plan), risky. Must be the new math.
Posted by Ryan Walsh
|
|
|
|
|
