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Thursday, January 6, 2005
Don't mess with success
Now that the election is past, the Bush administration is considering a radical overhaul of Social Security (including privatizing accounts) that means young people will not get the same benefits as current retirees.
"Young people today recognize it's their money they're putting into Social Security," Senate Majority Leader Bill Frist told CNN. "They own that money. They would like to be able to invest in personal accounts if they want to, a nest egg that can help them in later retirement."
The various Republican plans have two significant glitches. First, it's not really a "nest egg" when benefits are being slashed for a person retiring in 2075 from $2,032 a month to $1,099 month (a 45 percent cut). It's hard to imagine how a small investment will make that difference up. And, second, and more important, we don't see why the government should run a Social Security investment portfolio when there are already Individual Retirement Accounts as well as company-sponsored instruments.
The biggest problem with Social Security is that Congress has been spending the trust fund surplus; the retirement system should have enough money to fully fund promised benefits until 2042. And even then, Social Security could retool to serve the next generation.
Social Security is, perhaps, the most successful government program in history. It could always be improved, but not by reshaping it as a government-run individual retirement account.
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