Thursday, July 10, 2008

Social Security

And why John McCain is pretty wrong about it.
If John McCain wanted to throw the election, he certainly handed his opponent a rhetorical gift.

MCCAIN: Thank you very much. I’d like to start out by giving you a little straight talk. Under the present set-up, because we've mortgaged our children's futures, you will not have Social Security benefits that present-day retirees have unless we fix it. And Americans have got to understand that.

Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that's a disgrace. It's an absolute disgrace, and it's got to be fixed.

When I was a lot younger, in my Alex P. Keaton days, I thought something similar to this. I thought I was responsible enough to handle my savings and didn't need the government to hold it for me.

Then I got educated and recognized that this is how the Social Security system works. Younger workers pay into the system and that money gets directed to older workers. It started in the 1930s from scratch so that was the only way it could get kicked off. There's no holding cell for payroll taxes marked for every working American that gets kicked back afterwards.

The thing is that, using such a system, Social Security is one of the most amazingly effective government programs ever devised. It's also not in any kind of crisis that can't be fixed with a few tweaks. You want an entitlement problem, let me take you to Medicare Island. Social Security is about 193rd on the list of fiscal items that require help.

So when McCain calls the functional way that Social Security has worked for 75 years a disgrace, what you can conclude is that he wants to destroy the system. He's on the record as favoring private accounts, even in this bear market. We know all the reasons why that is so, not the least of which is that it would be a trilion-dollar present for the financial services industry.

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