THE CURRENT SOCIAL SECURITY DEBATE is fixated upon numbers: When will the system go bankrupt? Should the cap on taxable wages be raised? Should benefits be indexed to protect low-income workers? What will be the rate of return on private accounts? Since most of these figures are based on projections decades into the future, no one can speak with any certainty about them, no matter how insistent his or her tone.
We do know this: Sometime in the next 10-15 years, payroll taxes no longer will cover the cost of current benefits and the government will have to divert general revenue funds into the Social Security system. Up to that point, the government will have been using payroll taxes to buttress the general revenue funds. Then, in 2018, perhaps 2019 (pick your date), one or some combination of the following will occur: severe reductions in other government programs, larger deficits, higher taxes, later retirement ages, lower benefits. The longer these choices are postponed, the more expensive they become.
Will private savings accounts be in that mix? The debate on this point primarily is philosophical. The resistance to private accounts has become a key ingredient of the Democratic Party mantra. Liberal Democrats (this term has become a redundancy) claim that Social Security is a collective good, part of the fabric that binds the generations. Private savings accounts as a part of Social Security would rent this fabric and tear at society's cohesiveness. If one were to take this argument seriously, private accounts would steer us on the path to unrestraint, individualism, and private selfishness. The same objection applies to health savings accounts and school vouchers. They would lead America away from the friendly village where Hillary Clinton would like to see our children raised.
The Social Security program, as established in 1935, was designed to protect the elderly from abject poverty and financed on the first couple thousand dollars of income at a low percentage. Since then, it has become a massive transfer program with a heavy payroll tax on workers and employers (12.4%) and a generous supplement to upper income retirees. How can anyone argue that a program that places a heavy burden on young working people to pay the affluent elderly a generous retirement benefit is essential to maintaining the social fabric?
Apparently, many liberals do. They claim government programs that transfer wealth from one group to another are the glue of a...