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June 23, 2005
Bennett Plan + DeMint/Ryan Idea = Good Social Security Plan
Senator Jim DeMint and Congressman Jack Ryan have just put forward a plan to stop the raid on the Social Security surplus by diverting payroll tax dollars that are not spent into individual accounts, in the form of Treasury bonds.
The Wall Street Journal approves, and hints at how the politics will play out.
Wisconsin Congressman Paul Ryan and South Carolina Senator Jim DeMint are calling for legislation to bring an immediate halt to the ongoing political raid on the surplus payroll taxes collected by Social Security. Congress now spends that cash on current programs--from cotton subsidies, to defense, to the Dr. Seuss Museum. Every day that Congress fails to act, another $200 million is spent rather than being saved for future retirement. Daniel Patrick Moynihan once called this "thievery," and if corporate America were engaged in this type of accounting fraud Eliot Spitzer would be hauling CEOs to jail.
You tell 'em! But while the WSJ is taking a moment to highlight the ongoing absurdity of the Social Security program's structure, USA Today gives a more balanced update.
The plan has one distinct virtue. It would prevent that money from being used to fund other areas of government, a long-standing practice used to partially mask grossly irresponsible deficit spending.But for every one part substance, the plan contains nine parts gimmick...
Perhaps its most troubling aspect, however, is that it's being sold as something different from what its authors hope it will become. Creating private accounts only to shut off their funding after a decade, just when the surplus becomes a deficit, makes little sense.
Okay, point taken. But there's another plan on the table: the Bennett Plan. Pardon the source of the quote, but here's the NYT:
[Bush] gave tepid approval to a proposal by Robert Bennett, the stalwart conservative senator from Utah, to restore the system's solvency in a way that would not include private accounts... Mr. Bennett's plan includes drastic and unnecessarily large cuts in Social Security benefits, but at least he is being straightforward in offering a plan that addresses the real problem Americans want solved.
This is a highly misleading description, because 1) there are no benefit cuts, merely a cut in the growth rate of benefits, 2) the NYT, usually keen on class warfare, neglects to mention that the reduced benefit growth rate will apply only to the better-off (including the middle class, but the poor will be protected), and 3) the cuts are by no means "unnecessarily large," but actually (I think) fall somewhat short of restoring solvency, though they're still a huge step in the right direction.
But in addition to restoring solvency, the Bennett Plan would increase the Social Security surplus over time, by reducing scheduled benefits without reducing payroll tax receipts.
And if the surplus were channeled into individual accounts, a larger surplus just means larger individual accounts.
Brilliant! Now let's hope it passes.
Posted by Good Samaritan at June 23, 2005 08:15 AM
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