There have been quite a few posts in the last week or so on the subject of Social Security reform. These posts have varied considerably in tone and content based on the interests, knowledge, politics, and point-of-view of the writers. Without further editorial comment here are some of the various interesting posts from around the blogosphere:
Brad DeLong: Ask Dr. Social Security Projections (UPDATED)
Matthew Yglesias: Annuitization, Pro or Con, A Suggestion
Kevin Drum: Social Security Around the World, Social Security Doom Mongering, Social Security Doom Mongering, Part 2, Real Problems vs. Fake Problems, Inflation and Social Security, Social Security and Me
South Knox Bubba: Social Security Scam
Michael Kinsley on Talking Points Memo
Joshua Marshall of Talking Points Memo: here, here, here, and here
Victor of The Dead Parrot Society: Wage-Indexing and Social Security, Social Security Phase-Out
Steve Verdon of Deinonychus antirrhopus: Social Security in the News, Social Safety Net, Flip Flopping, Social Security: The Moving Bankruptcy Date, When In Doubt Mislead, Mislead, Mislead, Comparing Social Security Rescue Plans, and Social Security, The CPI and Wage Indexing: A Followup
Jon Henke of Q&O Blog: SS Canary
McQ of Q&O Blog: Social Security Reform: Learn from Chile and improve upon their system
Clayton Cramer: Social Security Reform
This is not intended to be an exhaustive rundown but rather to include some pretty representative offerings. Many of these posts have links of their own which flesh out the discussion even more.
I’m not going to attempt to contribute anything to the economics of this. But I would like to make a few (what I believe to be) commonsense observations on what will and won’t happen in Social Security reform.
We’re not going to eliminate Social Security—either the payroll tax component which everybody agrees is regressive or the benefits part which everybody agrees is simultaneously too much and too little (too much for people who don’t need it, too little for those who do). The young will continue to pay for the old age of the previous generation exactly as thousands of previous generations have done. It won’t do them a bit of good to get angry or resentful about it.
We’re going to do this because we’ve promised to do it. And we’re going to do it because it’s the right thing to do. Satisfying these obligations may cause some re-ordering of spending priorities in government—get used to it because it’s going to happen. So stop hyperventilating.
We could have solved whatever problem there is years and years ago by saving and investing the revenues from FICA. Instead we chose to build up our military, go to the moon, build highways, educate children, pay air traffic controllers, and all of the thousands of things that the federal government does. Sure, some of the money was wasted. But it also went to pay for the world we have now. Deal with it.
Our system is not an anarcho-capitalistic system. We’re going to continue to have government and it’s going to continue to take money from some people and give it to other people. And we don’t have a syndicalist system. So it doesn’t matter a bit if you personally agree or disagree with the particular ways in which the federal government spends money.
No, we have a representative democracy (I’d like it to be a little more representative than it is right now) and things won’t be determined by experts or by the unfettered market or by what you personally like or dislike. It will be the same old, messy political system that’s been bumbling along for more than two hundred years.
How will we solve whatever problem there is? We won’t solve it with any grand solution whether that solution is privatization or anything else. We’ll solve it by borrowing a little, re-ordering spending a little, raising FICA max, and arranging that more of the people who don’t pay FICA now pay FICA. Maybe we’ll raise FICA marginal rates a little. I hope not. Maybe we’ll raise the Social Security retirement age. I hope not. Maybe we’ll reduce benefits. I hope not. Maybe we’ll eliminate FICA max entirely. I hope so. Maybe we’ll means-test benefits. I hope so.
Maybe we’ll also engage in some sort of enforced savings scheme that is currently being called privatization. I honestly don’t see how that will actually solve any of the problems that we actually have. Insofar as it reduces the amount of revenues at the Congress’s disposal the re-ordering of spending priorities, borrowing, etc. will still be necessary. And I honestly don’t see how forcing people to save for their own retirements will make them any freer than forcing them to pay for someone else’s.
So why don’t we wrap our minds around the idea that we will solve this problem in due course? And let’s figure out a solution to the problems posed by Medicare which is already in default (outlays exceed revenues) and which reflects a commitment two or three times the size of Social Security. Time’s a wastin’.