Wednesday, February 25, 2004

Greenspan and SS

Greenspan's comments on Social Security are totally inappropriate given his job. But, if you want all those taxes that you paid for a mandatory pension/insurance program over your entire life to just disappear in a puff of smoke, vote Republican.

On the other hand, I worry less about this issue than some. People always tend to miss the political economy of this issue. Yes, yes, the boomers are retiring. Yes, yes, the mythical SS trust fund will be out of money in about 35 years unless we make tiny tiny tiny changes to the system now. Yes, yes, Medicare is getting more and more expense.

But, look, the real issue is that fact that those retiring boomers are going to be voting as well. Forget drug coverage - that's small potatoes. By about 2025, assuming we're still here, we'll be building thousands of free-of-charge luxury nursing homes.

Benefits for the elderly are in the long run going to increase, not decrease - the changing demographics of voters guarantees that. The only question is whether we start making them pay for it now while they're still working, or if we put the entire burden on younger workers.

...just one more comment. When I say I don't worry about this issue, the issue I mean was Benefits for Old People. What I do worry about, as does Greenspan, is the long run fiscal outlook of the country. Greenspan believes, apparently, that the way to solve the problem is to simply cut promised future SS benefits. Though, to have much of an impact those cuts would have to be pretty drastic.

So, that brings us to the preznit. The preznit keeps repeating his mantra from the 2000 election. Specifically:

As you know, in the 2000 campaign, I articulated a point of view that we ought to have personal savings accounts for younger workers that would make sure those younger workers receive benefits equal to or greater than that which is expected. I still maintain the same position, but I haven't seen his comments completely.

As I know, and as I assume Alan Greespan knows, but which I doubt Preznit Bush knows, is that this kind of transition-to-mandatory-private-plans in which you pay relatively old workers their full expected retirement benefits then over time phase out a bit of SS taxes for younger workers and funnel the money into private accounts has a price tag. A rather large price tag. Specifically, it'll cost, give or take, 1 trillion dollars out of general funds. Aside from the merits of such a plan, back in the good old Lockbox days, this was a feasible plan. The money was there.

Now, however, there isn't 1 trillion dollars sitting there to be used to partially-sorta-privatize social security even a little bit.

What Greenspan is advocating, literally, is robbing Al Gore's Lock Box.