Lock Box Legislation

[National Dialogue Moderator <moderator>]

		Lock Box Legislation

Good questions on the lock box, Bob Carlitz.  You've obviously been
keeping a close eye on activities on Capitol Hill!

On your first question, related to whether the lock box legislation
can prevent Congress from spending the social security surpluses
on other programs, the answer is no, it can not prevent Congress
from doing anything.  It can, however, make it harder for Congress
to spend the surpluses.  It also can focus attention, much more
clearly than now, on efforts to "raid" the surpluses.

If you are interested in ensuring that the social security surpluses
are saved and invested for social security, then personal retirement
accounts are the answer.  Personal accounts that are funded by
workers' payroll taxes and owned by workers provide a lock box with
(using your term) "teeth."  Once the funds are invested by workers,
they are available only to finance workers' future retirement
incomes.  The government has no further access to or claim on these
funds and must look elsewhere for back-door ways to fund pet
projects.

Is it gamesmanship?  Only if one considers it gamesmanship to
respond to the President's call to "save 62% of the surplus" for
social security--while preparing to spend part of the social security
surpluses on other government activities--with a bill (not a call)
intended to make it more difficult to spend any of the social
security surpluses on anything but social security.

The answer to your second question really depends on the proposal
and on what the general revenues are being used for.  It also
depends on whether you are interested in the effects of general
revenue financing on the overall budget--which would be determined
by the way various provisions were "scored" by budget committee
types--or whether you are really interested in its effects on the
government's overall indebtness, which is more pertinent to assessing
economic effects.   Different proposals can have widely different
effects on the overall budget as well as on the government's real
indebtedness.

The point I'd like to leave everyone with is that general revenues
(or explicit debt) should be used for purposes of easing the
transition to personal accounts.  It is reasonable and proper to
spread the burden of unfunded benefit promises extended in the
past.  It makes no sense to use general revenues (or explicit debt)
to fund personal accounts.  Accounts that are owned by individual
workers should be funded by individual workers.


Carolyn Weaver