JWR Jeff JacobyBen WattenbergTony Snow
Mona CharenDr. Laura
Linda Chavez

Paul Greenberg Larry ElderJonathan S. Tobin
Thomas SowellMUGGERWalter Williams
Don FederCal Thomas
Political Cartoons
Left, Right & Center

Click on banner ad to support JWR

Jewish World Review Feb. 9, 1999/23 Shevat, 5759

Paul Greenberg

Paul Greenberg The social security game

(JWR) --- (http://www.jewishworldreview.com) CHARLES PONZI LIVED TOO SOON. Imagine what fun that confidence man could have had with a Ponzi scheme like Social Security, which depends on future investors to pay off current debts. Not being the federal government, Ponzi eventually ran out of investors. Which is the same problem facing Social Security down the road -- unless it makes some changes, a smaller generation of earners will be called on to support a larger generation of retirees.

What, Bill Clinton worry? The president points to a growing federal surplus and says it'll take care of everything. All we have to do is save it. Start a private pension plan here, some special savings accounts there, pay down the federal debt over yonder, and all will be well. No fuss, no muss, no sacrifice. All gravy. For some reason, the president's State of the Union patter about Social Security brought to mind the guys on city sidewalks who run three-card monte games.

What with all the presidential card-shuffling, nobody is supposed to notice that the budget surplus is the Social Security surplus. Last year, Social Security took in an estimated $484 billion and expended some $382 billion. The problem with Social Security is that, as the baby boomers retire, there won't be as many of them to contribute to that surplus. Instead, they'll need to be supported by the rest of us.

It is only by increasing the productivity of the next generation's workers that Social Security can be saved for the future. One way to do that would be to ease their tax burden, but a tax cut for all Americans is anathema to this administration. Its big-government reflexes have always been stronger than its grasp of the economic realities. So it balks at what may be the surest way to promote economic growth and really save Social Security: the Republicans' 10 percent tax cut for all.

Before everybody gets carried away, let it be noted that last year's total surplus ($70 billion) was only part of the surplus ($100 billion) that Social Security collected from all of us. Yet when Bill Clinton proposes to spend `only'' 40 percent of the budget surplus, we're all supposed to cheer because our president is "saving'' Social Security. P.T. Barnum had it right about one being born every minute.

If those saddled with these payroll taxes were allowed to keep more of their paycheck, they could invest it in savings for their own retirement. Or would you rather have a panel of experts save that money for you? And pick out your stocks and bonds, too?

Some mighty brainy people -- like the Federal Reserve's Alan Greenspan -- are leery of the government's buying a vast portfolio of stocks to buy, sell, manage and manipulate for the rest of us. Mr. Greenspan's voice is not one to dismiss. He's a combination guru, oracle and fine public servant.

But did it strike anyone else as strange that the head of the Federal Reserve System should oppose creating a system to invest a portion of Americans' Social Security taxes? After all, isn't the Fed, which manages the entire national currency, itself a public-private bureaucracy? And, despite the pressures, hasn't it managed to remain independent, insulated from politics?

The creation of the Federal Reserve System inspired a lot of doubts back in 1913, too. It sounded like a dangerous, revolutionary idea to a lot of Americans then. There's a reason this frontier society was just about the last of the industrialized nations to establish a central bank; we don't much cotton to powerful bureaucracies. And now even the head of our most powerful one, the Fed, warns against creating one. How American.

But if the Federal Reserve system worked out, why not an independent, federal, public-private Pension Board that would manage some of our savings?

Then again, just what would this new bureaucracy invest? The surplus that the president and Congress talk about is an illusion. If Congress put the Social Security budget into a separate account, it would be clearer that the federal government still runs a deficit. Or would that kind of candor be too much to expect of government?

Here's the clearest, best, least controversial part of the president's plan: Use the Social Security surplus to retire the national debt. That's one way to insure that the system can borrow the money to pay future beneficiaries. But can anyone be sure this administration, or future ones, won't just spend the money instead? Look at all those new programs the president proposed in his State of the Union address.

Yes, this president's proposal remains fuzzy -- but the Republicans' response may be even fuzzier. Whatever happened to the party that produced the Contract With America? Love it or loathe it, that platform had traction -- and responsibility. It told Americans what we could expect from one of our political parties, and the GOP delivered.

Now neither party can muster the political courage to come right out and say that saving Social Security might involve some actual sacrifice on the part of the voters -- like retiring a little later or paying a little higher premium. That would be actuarially sound but politically risky. And unspeakably responsible. responsible.


2/04/99: Our own Inspector Clouseau
2/01/99: Night scene, night thoughts
1/28/99: The decay of the art of lying
1/26/99:Impeachment: Short subjects
1/22/99:Bounce, glitz and tedium: The State of the Disunion
1/20/99: Destructive engagement: How to encourage tyranny
1/18/99: Martin Luther King: The radical as conservative?
1/11/99: Why America is apathetic about Bill's date with destiny
1/06/99:The year of Moronica
1/04/99:Clinton’s janitorial crew of two
12/29/98:The Senate will be on trial, too
12/29/98:A look down the avenue
12/22/98: The surreal impeachment
12/17/98: Another moment of truth approaches
12/15/98: The President's defenders: witnesses for the prosecution
12/10/98:The latest miracle cure: CensurePlus
12/03/98: Sentences at an airport Sentences at an airport
12/03/98: Games lawyers play
12/01/98: Ms. Magoo strikes again, or: Janet Reno and the law
11/26/98: The most American holiday
11/23/98: Same game, another round
11/18/98: Guide to the perplexed
11/09/98: A vote for apathy
11/03/98: Global village goes Clintonesque
11/02/98: Farewell to all that
10/30/98: New budget, same swollen government
10/26/98: Of life on the old plantation -- and death in the Middle East
10/22/98: Starr Wars (CONT'D)
10/19/98:Another retreat: weakness invites aggression
10/16/98: Profile in courage
10/14/98: A new voice out of Arkansas
10/09/98: Gerald Ford, Mr. Fix-It?
10/07/98: Impeachment Journal: Dept. of Doublespeak
10/01/98: The new tradition
9/25/98: Mr. President, PLEASE don't resign
9/23/98: The demolition of meaning
9/18/98: So help us G-d; The nature of the crisis
9/17/98: First impressions: on reading the Starr Report
9/15/98: George Wallace: All the South in one man
9/10/98: Here comes the judge
9/07/98: Toward impeachment
9/03/98: The politics of impeachment
9/01/98: The eagle can still soar
8/28/98: Boris Yeltsin's mind: a riddle pickled in an enigma
8/26/98: Clinton agonistes, or: Twisting in the wind
8/25/98: The rise of the English murder
8/24/98: Confess and attack: Slick comes semi-clean
8/19/98: Little Rock perspectives
8/14/98: Department of deja vu
8/12/98: The French would understand
8/10/98: A fable: The Rat in the Corner
8/07/98: Welcome to the roaring 90s
8/06/98: No surprises dept. -- promotion denied
8/03/98: Quotes of and for the week: take your pick
7/29/98: A subpoena for the president:
so what else is new?
7/27/98: Forget about Bubba, it's time to investigate Reno
7/23/98: Ghosts on the roof, 1998
7/21/98: The new elegance
7/16/98: In defense of manners
7/13/98: Another day, another delay: what's missing from the scandal news
7/9/98:The language-wars continue
7/7/98:The new Detente
7/2/98: Bubba in Beijing: history does occur twice
6/30/98: Hurry back, Mr. President -- to freedom
6/24/98: When Clinton follows Quayle's lead
6/22/98: Independence Day, 2002
6/18/98: Adventures in poli-speke

©1998, Los Angeles Times Syndicate