SmartMoney magazine interviews Robert Bixby, executive director of the Concord Coalition, a non-partisan fiscal watchdog group on Bush’s social security “plans”.
In commenting on the Repubican party’s latest proposal to take present day social security surpluses and invest them in treasury bonds he states:
I think it’s a very incomplete proposal. For one thing, it doesn’t make any of those hard choices I just talked about. Secondly, it creates private accounts with a diminishing stream of money. The Social Security surplus is only going to be around for a few more years. It peaks in 2008. We’re not talking about a whole lot of money. If you start a system of private accounts, and that’s your funding, it doesn’t make sense because by 2016 it’s gone. It’s not a solution to anything, unless your only goal is to create private accounts. It doesn’t provide any new money and doesn’t make any hard choices to sustain the system. The cash surplus will only last another 10 years. Literally, it ends in 2017. What’s the point of doing that?
Regarding private accounts, Mr. Bixby states an additional source of money is required, not taking todays revenues and investing them. To a question about where this money might come from he responds…
I think we could have a system of mandatory savings accounts to be added on to Social Security. That would be the best way to incorporate private accounts into the current system. You’d still have to do things — like raise the retirement age or raise taxes — to address the solvency issue. There has to be new money. If new money does come in then it makes sense to put it in private accounts. The alternative to new money is to reduce benefits, and no one wants to do that. You could do the sort of accounts Bush wants to do without incurring huge deficits if you simultaneously reduce benefits… To me Social Security is a problem because it promises more benefits than it could afford to deliver. It doesn’t have a problem because it lacks personal accounts.
This does seem to be a fairly non-partisan article, although I don’t believe many groups are actually non-partisan, that’s a hard job! Read the whole article here.
