Sunday, June 19, 2005

Selling Personal Accounts Using Crack Dealer Tactics

President Bush has said he'd like to get some good ideas on the table about Social Security reform. I guess getting good ideas on the table also means some bad ideas get put on the table as well. Senator Jim DeMint (R-SC) suddenly seems to be getting some traction with his proposal to perform fiscal alchemy. Instead of putting excess Social Security tax revenue into the dubious "trust fund", he wants to use the surplus to create private accounts. He acknowledges that this will do absolutely nothing in regard to addressing the underlying structural problems in the system (which can only be solved by raising taxes, cutting benefits, or changing the retirement age). He also acknowledges that redirecting surplus Social Security funds will exacerbate general budget problems. In other words, just charge it on the national credit card, and worry about it later. He's pitching this not as a comprehensive solution, but just as a way to "gain momentum". Momentum toward what? Certainly not a solution. Momentum toward the impending fiscal crisis, more likely. Come 2017, Social Security will still start to fall short, but we'll have an even greater national debt load than we otherwise would have, and we'll have a constituency who will have enjoyed 12 years of personal accounts become angry that the gravy train has run out of steam and demanding that Congress "fix" it. This is basically crack-dealer marketing tactics: your first hit is free, but then you pay the price after you're addicted. The cynical view is that the government is dictating that everyone make forced contributions to an IRA-equivalent, while the national debt gets increased. Some conservatives will spin this as giving people back their own money, while "starving the beast". I'm glad that the President has committed himself to finding a solution to Social Security's ills, but this is no solution. Let's just pray that enough Senators have the sense to recognize a shell game when they see one.

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