 |
|
 |
|
Charles Jaco has written opinion and commentary pieces for dozens of magazines and newspapers. Each week, read and comment on a fresh on-line version. The discussion page enables you to share your view points world wide. If you would like to make a comment go to the " Join the discussion" link below. If you would like to view past editorials visit the Editorial Archive.
Editorial: 6/1/2000 It figures that in our "screw you, where's mine?" era Social Security would
become the hot campaign topic, at least for this month. The greedy geezers--led by the
AARP--are saying "Don't change the system!" What they're actually saying is "I want
my money to keep coming just the way it is now." The dot com SUV crowd--led by the
Republicans--says "I want the right to control my own retirement investments."
Translation--"Diddle current retirees and their benefits. I want mine." And the
Democrats--led by an alpha male tan suit that used to contain Al Gore--are saying "It's
all too risky," which means "We don't have a clue."
Before the every-generation-for-itself steel cage match gets started, let's
review what we have here. The World War II generation is getting a lot more money out
of Social Security than they ever paid into the system. That's because they were paying
lower taxes than current workers, and because they're living longer. That's why
Social Security taxes were jacked up in 1977. The pay-as-you-go system was running out
of money.
All that did was delay the inevitable, to wit: you can't fund the baby boomer's
retirement when there will be only two point something or other workers for every
retiree. For years now, the few level heads who've looked at the problem have said
to fix it, you can either raise taxes, or cut benefits, or both. This isn;t something
the average voter wants to hear, so guess what? They haven't been hearing it.
George W. Bush's plan would let Americans put around 15 per-cent of their total
contributions into a private account. While Bush shouts that part of the plan, he
whispers the rest. The rest is that average benefits for each retiree will be cut by
at least that amount, possibly much more. So the gamble is that each one of us will
be savvy enough to make up for the amount our benefits will be cut by doing well in the
market.
What he also fails to mention is that a chunk of the boomer genertation---say
between the ages of 44 and 52---will pay twice. Somebody has to cough up the money to
make sure the current generation of retirees get the benefits promised to them. So the
people in that eight-year age gropup will be paying the full Social Security tax they pay
now, plus the additional but optional 15 per-cent into the private accounts. Bush also
fails to look at how much it'll end up costing in administration fees. One of the big
scandals in Chile's otherwise successful privatized social security system is that
many of the people contributing to it ended up taking a loss because they were pillaged
by outrageous administration fees paid to stock fund managers.
But spin and selfushness knows no party or generation, so it's not surprising
that Gore and his allies in the white-haired Florida condo brigades should be taking some
pretty astonishing liberties with the truth themselves. Gore whinges that the Bush
plan is so risky that no one in their right mind would try it. That doesn't reflect
too well on the good people of Chile, Australia, Poland, or a dozen other countries
where previously government-run national retirement systems have been either totally
or partly privatized.
The condo commandoes bleat that the Bush plan is radical. It's hard to see how,
since 85 per-cent of Social Security contributions would stay right where they are.
The government would regulate the remaining 15 per-cent free market investments, just
like they do in every other country that's tried it. You could invest, say, in G.E.
stock but not in cousin Buster's cold fusion IPO.
The retirees and Gore claim current benefits would be in danger. Not if you
don't want mobs of voters angry at you they won't. Current benefits for current retirees
would stay where they are. The inflation adjustment might slow down, but that's it.
Remember, the 44 to 52 year olds will be paying the freight to make sure both systems can
keep going simultaneously.
The critics also ignore the fact that Americans have a quarter of a century's
experience managing their own retirement cash, from IRA's to SEP's to 401(k)'s. Darn
few of us invest in pork bellies as opposed to solid, sensible stock and bond funds.
Bush's plan might work. There's nothing radical about it. But maybe we could have
a more intelligent discussion if both sides would start telling the truth.
|
Visit the Editorial Archive.
|
|
[ News Views ] [ Coming Up ] [ Public Speaking ] [ News Boom ] |