The Wall Street Journal recently published a discussion on the pros and cons of privatizing Social Security (“Should Social Security Be Privatized?”, March 27). Gus Sauter did a decent job outlining the positive aspects of this pathway showing that privatization is better for both retirees and taxpayers. On the other hand, Nancy Altman claimed that privatization would weaken people’s economic security, but filled her argument with erroneous information.
Nancy claims that Social Security is insurance and not a retirement savings plan — but that could not be farther from the truth. A retirement plan is exactly what it is, is how it was sold, and how it is even referred to on the government’s Social Security website. The problem is that the amounts paid in are not invested and therefore not sufficient to pay the promised benefits, which the federal government fraudulently hides by not recording the true cost of the program in the annual budget.
Therein lies the problem. By not doing that with their accounting, the federal government is able to simultaneously mischaracterize Social Security as a tax that is drafted from every wage earner’s paycheck. If wage-earners had been given the option to save and invest their own money instead, they could have easily earned a better return on it; if they wanted more fiscal security, they could buy an annuity.
Nancy goes on to describe Social Security more “universal, secure, fair and efficient — but at the same exact time, her article casually mentions “a projected shortfall.” In fact, the projected shortfall is some $30 Trillion – which in fact shows that it is not universal secure or fair (since it is in fact insolvent), nor it is efficient (it has lower costs because it does not invest the funds it collects). Her solution of making higher earners pay more is duplicitous – it simply has higher earners make pension contributions that inure solely to other people (this is known in the real world as embezzlement).
Nancy claims that a minimum-wage worker pays 6.2% of his income in Social Security taxes, but a person earning $1 million contributes “only eight-tenths of 1% of all their wages.” But this would only be a valid point if the retirement pension was based proportionately on income. And she certainly knows that it is not. As it is, social security is already a welfare system, with higher earners getting benefits much less than proportional to the amount they contribute.
Nancy’s entire rationale for supporting Social Security? “Government is permanent.” It’s too bad that the prior generation’s funding For Social Security has already been spent — the antithesis of permanent. It would be laughable if it wasn’t so tragic. If we privatize Social Security, it would give folks at least a fighting chance with their own money.