The Social Security debate continues to be infuriating. Pardon me while I release some smoke from the top of my pate.
There are a number of strange arguments floating around out there as part of the desperate effort to try to get the American people to buy President Bush’s Social Security pig-in-a-fiscal-poke. Something happens when you put these arguments side by side: They undermine one another.
Consider, if you will, this comment from someone named Craig on my most recent Social Security post. As far as I can tell, Craig has cut-and-pasted big chunks of long quotes from two different Washington Times columns into his comment, one by Thomas Sowell and another by John Palffy. (I’ll write off the failure to attribute these quotes to oversight since the commenter does say “Please read the following info.”)
Sowell argues that the Social Security Trust Fund is a mere “legal and accounting fiction” because one arm of the government is putting its excess cash into the hands of another, in the form of the IOUs known as Treasury bonds. As I and others keep noting, the idea that Treasury bonds are mere fictions is one that would be news to the vast number of institutions and individuals around the world who consider them the bluest of blue chip investments. What this argument really says is that the government doesn’t have to make good on those bonds — they’re just a “fiction” — when they’re purchased with our Social Security taxes, set aside to handle the future shortfalls of the system, and held in trust for the retirements of America’s working people. The U.S. government would never default on the bonds purchased by another country’s central bank — but hey, if the American people put their retirement money in such a form, the government is sure to renege on the debt. We’re so sure it’s going to renege that we’re getting ready to ditch the most successful and beloved U.S. government program in history.
Why will the government default? Apparently, we’re to believe, because it can. “Liberals are desperate to keep Social Security as it is, because that would mean they can continue spending your money as they see fit,” Sowell writes. Funny, though; the money was fine until Bush’s conservatives started cutting taxes four years ago. “Our money” was frittered away not by “liberals” but by the current administration — on dividend tax cuts, estate tax cuts, wars of choice and other elective policies. Those policies could be reversed as easily, maybe more easily, than privatizing Social Security.
But this all gets more interesting in the second half of Craig’s post, where he moves from Sowell’s argument to Palffy’s. Palffy wants us to put aside the silly notion that privatization means our retirement funds will be at risk. How foolish to imagine that there is any reason to worry about placing Social Security money in private markets rather than in the government’s hands! But since the pesky AARP is stirring up those excitable seniors again, Palffy has a plan to soothe our graying hairs: Why, we can require that all those private (excuse me, “personal”) accounts invest their money in one safe place. That ultra-reliable investment? Inflation-protected Treasury bonds!
So much for the idea that private accounts restore free-market choice. Under this plan, Social Security pretty much remains exactly the same, except that there are little chunks of money in Treasury bonds that have our names on them instead of one big chunk of bonds with Social Security’s name on it. The government is still holding all that money for us, and if we’re to believe Sowell and his ilk, the government can’t resist getting its greedy Big Government paws on any money in sight, so there’s just as much reason under the new plan as under the existing one to expect the perfidious liberals in Congress (despite their minority status!) to default on its obligations.
This round-trip doesn’t get us very far at all, does it? The spinning is desperate, contradictory, ultimately inane. That’s what happens when your stated plans of “reform” don’t match your actual goal (eliminating Social Security). Or maybe the Washington Times’ columnists, and their advocates among the population of blog commenters, need new marching orders from the White House: They did such a good job on the “private/personal” switcheroo.
In the end, there’s one thing I can agree with the conservatives on: Social Security is only as safe as the lawmakers in Washington allow it to be. Sowell & co. say we must fear because we can’t trust the government to keep Social Security afloat. But the government he is telling us will betray Social Security isn’t in the hands of the “liberals” upon whom his finger points. It is the Bush administration that has endangered Social Security, and it is the Bush administration that now wishes to end Social Security as we know it. It may get its way. But let’s make sure the American people understand who’s responsible for the ensuing debacle.
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