"Saving" Social Security

The New York Times brings us an editorial today, ostensibly about "saving" Social Security. The author, John Kasich, a retired Republican Member of Congress, states,

To repair Social Security, we have to be clear about what's destroying it. We'll soon be taking more money out of the system than we're putting into it, which means that one day it will go broke.

Um... last I checked, we took out all of the money that we put it, and used it to float current expenses, be they the present costs of Social Security or the other costs of government. Unless Mr. Kasich has found the keys to Al Gore's mythic lockbox, that's going to continue to happen for the indefinite future.

Under the Bush Administration's version of budget management, we can "afford" massive tax cuts for the richest Americans because we can "afford" to float a huge budget deficit. Why do different principles apply to Social Security? Could it be, perhaps, because the Bush Administration cares about tax cuts for the rich, whatever their cost, but doesn't really care about Social Security?

After explaining that tax revenues are not likely to grow quickly enough to keep pace with Social Security benefits, Kasich states,

We should also create Social Security savings accounts for those under 55. Workers could invest some of their payroll taxes in their own savings account in a mixture of conservative stocks and bonds, much as members of Congress and federal employees do. In exchange for investing a part of their payroll taxes, workers would give up some of their future Social Security benefit - probably about 25 cents for every dollar invested.

So workers "invest" in "their own savings account" - what workers can presently do on their own, if they choose, through IRA's? And these savings accounts will be guaranteed to appreciate in value at the same or greater pace than the rate of inflation, such that the workers will at least break even when they withdraw some of "their" money? If not, workers are supposed to be pleased when they retire to a net loss in the value of their accounts - a result not outside the realm of possibility, given the vagaries of the market and the management fees likely to be paid to the private companies managing these accounts.

And we are going to balance the Social Security budget by reducing benefits by $0.25 for every dollar we withdraw from the system, says the guy who also says that we're destroying Social Security because "We'll soon be taking more money out of the system than we're putting into it, which means that one day it will go broke"? That's some fancy accounting.

And I like this:

Older Americans would be exempt from both changes for a simple reason: our country's greatest legacy is that one generation sacrifices for the next. These people have already made their sacrifices on behalf of the baby boom generation. Now it's our turn. While this sacrifice is small compared to the sacrifices made by those who came before us, it's one that will safeguard Social Security for years to come.

Let me understand this... one generation sacrifices for the benefit of the next. Which means that the current population of retired Americans can't be asked to sacrifice for the benefit of working Americans (whom some might even call "the next generation"), or even for their own grandchildren, because... um... because they changed their own kids' diapers, or something? I guess I wasn't aware that it was a central tenet of American life that only the working masses should sacrifice for the good of the nation, and once you retired you were exempted from contributing to the nation's welfare, regardless of your means, or that there was some sort of quota system when it comes to "sacrificing for the next generation".