FreedomTalks

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Today, in the Social Security debate, the pain caucus emphasizes the unfunded liabilities of Social Security. It is even willing to offer Democrats a tax increase for some concession on the benefit side. For this group, Social Security reform is mainly about balancing the Social Security budget.

Meanwhile, today’s turks want to focus on the political and economic positives of personal accounts. Large personal accounts, such as those proposed under the current Ryan-Sununu legislation, would allow workers to invest their Social Security tax money in their directly owned personal accounts, amounting in essence to the largest tax cut in world history.

The pain caucus is appalled that there are no benefit cuts to balance out this personal-account proposal. “Big personal accounts,” goes the argument, “do nothing to address Social Security’s liabilities.” But pain-caucus members fail to understand that personal accounts shift Social Security benefits out of the public sector and into the private sector. Big personal accounts, like those proposed in Ryan-Sununu, would shift 100 percent of Social Security retirement benefits to the personal accounts over time. As a consequence, all of Social Security’s liabilities for such retirement benefits would be eliminated, resulting in the largest reduction in government spending ever. By comparison, the politically suicidal benefit cuts advanced by the pain caucus would be piddling and ideologically inadequate.

This entry was posted on Thursday, February 22nd, 2007 at 4:28 pm and is filed under Social Security. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.