Text 12151, 104 rader
Skriven 2005-04-24 19:38:00 av Jeff Binkley (1:226/600)
Ärende: Social Security
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The part about the government spending future revenues before they are 
paid out is overlooked by the liberals...  This incurring much future 
debt...

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http://www.forbes.com/business/forbes/2005/0425/021.html

Fact and Comment Steve Forbes, 04.25.05, 12:00 AM ET 

Shift Gears, Mr. President 

The administration must drastically change course on Social Security. 
The possibility of reform diminishes daily as opponents relentlessly 
attack any idea of positive change by demagogic scare arguments. 
President Bush must put a specific, comprehensive proposal for reform on 
the table. Now. An actual plan would help the President rally public 
opinion and quickly dispel the following myths and fear-oriented 
arguments. 

• Myth: Benefits will be slashed. A White House plan would make it 
quickly clear that everyone above, say, the age of 45 or 50 would be 
unaffected by reform; their benefits would remain unchanged. 

Change would affect only younger people. The current system is headed 
for a fiscal abyss for them: They will face massively higher taxes 
and/or sharply reduced benefits. If young people understood how rickety 
the system is, most would choose to go with personal accounts rather 
than take their chances with the current program. Properly structured 
personal accounts would actually give them more for retirement than the 
existing Social Security system possibly could. A reformed program with 
personal accounts would guarantee each beneficiary a minimum payment, 
regardless of how their diversified accounts performed. No one would be 
left with nothing. (In reality there'd be no need for such a fallback 
because the accounts would provide payments far above the guaranteed 
minimums--even if they're indexed to inflation.) 

• Myth: Personal accounts are risky. The model for personal accounts 
would be the federal Thrift Savings Plan. (Millions of federal workers 
currently get their choice of well-diversified funds that are regulated 
for safety and soundness.) Participants could avoid the equity markets 
altogether by opting for government bond funds and bank CDs. There could 
be a provision that the mix of equities and fixed-income securities in 
each account would change over time: As one got older, the portion of 
funds invested in fixed-income instruments, such as bonds, would 
increase, thereby reducing stock market exposure. 

• Myth: Change would balloon the national debt. Social Security's 
unfunded liabilities--the money needed today to earn enough interest to 
pay future obligations--is anywhere from $4 trillion to $14 trillion, 
depending on your assumptions. In other words, the debt already exists. 
The question is, what do we do about it? 

Borrowing to finance a transition to a sounder system would be the 
responsible thing to do. Those bonds would be paid off decades from now, 
just like a mortgage. To say that the U.S. economy couldn't bear the 
burden of these new bonds is utterly preposterous. In the space of 4 
years during World War II, we borrowed the equivalent of three to five 
times the amount we'd need to borrow to save Social Security over a 20-
year period. And we did this with bonds yielding less than 3%. The 
nation's balance sheet could finance such a transition with no fiscal 
sweat. 

One point reformers should hammer home: Between now and 2014, Social 
Security will take in $2.3 trillion more in taxes than it pays out in 
benefits; however, in 2017 outlays will exceed income. What will happen 
to that $2.3 trillion in excess Social Security taxes between now and 
then? Washington politicians will spend it, giving IOUs to Social 
Security. The economy would be immeasurably helped if that money were 
invested in the economy instead of going toward politicians' pet 
projects. 

A specific reform would also knock down some pernicious ideas currently 
being floated, especially that of raising the income cap on Social 
Security taxes (now at $90,000) or eliminating the cap altogether, as 
was done with the Medicare tax. Raising the cap would severely harm the 
economy. It would increase the cost of labor, damaging job creation. The 
initial Social Security payroll tax in the late 1930s, for instance, 
helped send the economy into a tailspin. So did the higher taxes passed 
in the late 1970s. The higher Social Security levies enacted in the 
early 1980s were, thankfully, overwhelmed by the massive Reagan income 
tax reductions. 

The White House should be bold in its reform package. Instead of 
restricting young people to putting 4 percentage points (out of 12.4) 
into personal accounts and capping those contributions at $1,000 a year 
(and rising $100 a year thereafter), let them put in 6 to 8 percentage 
points, or if they're under 30 years old, 12.4. Or 12.4 percentage 
points of their first $25,000 of income. In short, let individual 
accounts get big from the get-go. 

Personal accounts would enable the economy to get bigger and stronger in 
the years ahead than it would be otherwise. A wealthier economy would 
help us to meet future obligations more readily, more easily. Bottom 
line: The Bush Administration's current course is headed toward 
political disaster. Only with a comprehensive proposal can the 
Administration effectively counter critics and win the support necessary 
for positive long-term change.



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