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JOHN STOSSEL IS RIGHT ABOUT SOCIAL SECURITY

John Stossel is a wonderful and prominent libertarian voice today.  His article on Social Security at Real Clear Politics is right on point.

Social Security is popular but unsustainable. Its commitments over the next 75 years exceed its expected revenue by $5.3 trillion (http://tinyurl.com/29nclg7). Politicians know this, but pander anyway.

He caught Senator Harry Reid being less than upright about this issue:

Senate Majority Leader Harry Reid accused Sharron Angle, who’s challenging Reid’s re-election bid in Nevada, of “raiding” the Social Security trust fund because Angle has talked about phasing out Social Security. There are two problems with that statement — as Reid must know: First, there never has been a trust fund! Your FICA tax payments were not saved or invested. Social Security transferred them to current retirees. Second, in return for IOUs, Congress raided Social Security’s budget surplus every year and spent like any other tax revenue.

Now the days of surplus are over. Unless benefits are cut and the retirement age is raised, the deficits will only grow. When Social Security passed in 1935, most Americans died before age 65. There were many workers and few retirees. Ten years later, there were still almost 42 workers for each retiree. Five years afterward, the ratio slipped to about 17 to 1. Now it’s 3.4 to 1. Thirty years from now, the ratio is projected to be 2 to 1 (http://tinyurl.com/7zpktt).

Stossel suggests it is time for “partial privatization”; and I agree. Stossel also cites Cato Institute and the American Enterprise Institute to show that the stock crash of 2008 would not have hindered investment in a privatized system:

Obama is just wrong. For one thing, under the privatization plans backed by the Cato Institute and others (http://tinyurl.com/28t2xju), retirees and near-retirees wouldn’t have been affected by the 2008 stock-market decline. Only younger workers would have diverted some of their money from government to capital markets. They would have had time to recover (unless government continued to screw up and cripple the private sector).

Second, even with the 2008 decline, the picture is not nearly as bad as Obama implies. Andrew Biggs of the American Enterprise Institute ran the numbers (http://tinyurl.com/2wqtdd7) for a hypothetical worker who retired in 2008, right after the market crash, after a career under a partially privatized Social Security program.

But let’s call “privatization of Social Security” something else:  Choice for young adults.  The system is unsustainable; everybody knows it.  Many Democrats have decided to use this issue to scare seniors.  I think it’s despicable.  We must all get together and solve the problem and help all Americans – seniors and younger adults as well.  The best plan is the Paul Ryan roadmap but it may not be perfect.  But something must be done.

About Elwood Sanders

Elwood “Sandy” Sanders is a Hanover attorney who is an Appellate Procedure Consultant for Lantagne Legal Printing and has written ten scholarly legal articles. Sandy was also Virginia’s first Appellate Defender and also helped bring curling in VA! (None of these titles imply any endorsement of Sanders’ views)

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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