RE: Values

[Reed Davis <rdavis2@ix.netcom.com>]

Carolyn Lukensmeyer wrote:
>
> To begin the dialogue on Social Security I'd like propose two questions for
> us to consider:
>
> #1  What is the most important value that you and your family hold about
> Social Security?
>
> #2  What are the values that you most want your elected officials to
> protect as they consider making changes in the Social Security program?
>
Two important values which are currently lacking from the program are
openness and honesty.  One of the biggest problems with Social Security,
I think, is that it is so complex that few people can understand it, much
less evaluate it.  It is a combination of safety-net, insurance, and
retirement system.  It is a safety-net in that low-wage workers receive a
better rate of return than high-wage workers and one-earner couples receive
a better rate of return than two-earner couples, who likewise receive a
better rate of return than single workers.  This can be seen in figure 10
at http://www.urban.org/entitlements/aging.htm .  Social Security is
insurance in that retirees receive payments for their entire retirement
and receive it in the case of disability.  Finally, it is a retirement
plan in that benefits are determined by a worker's past wages (not by
their contributions, as many believe).

However, these functions (safety-net, insurance, and retirement system)
are so intertwined and buried in complex rules, they essentially receive
no public scrutiny.  Instead, pro-privatizers act as though it's a pure
retirement system, decrying it's low rate of return.  Likewise, those
concerned with its safety-net act as though that's its only function,
decrying the regressive FICA tax by which it is funded.  For this reason,
I think that we need to determine explicitly how much and what nature of
safety-net, insurance, and retirement program we want.  To do this, we
need to split Social Security up into its component parts, at least in
its accounting.

Many will say that Social Security cannot be split in any way, arguing
that this will destroy support for its safety-net.  This argument implies
that we "intellectuals" know that this safety-net should be supported but
that the masses do not.  Should we therefore develop a clear rationale
with which we can convince the masses to support a safety-net?  No, this
argument implies that we must fool them into supporting the safety-net
by hiding it inside a retirement program.  With such a foundation of
deception, it's little wonder that the program is in trouble.

This deception extends to some of the reform proposals.  For example,
Clinton proposes to save Social Security by applying a portion of the
surplus to it.  In fact, the essence of this proposal is to write Social
Security a two trillion dollar check that will have to made good by
taxpayers starting in 2034.  His proposal raises both the public and
gross federal debts above where they would be by current law.  This can
be seen from Clinton's own numbers from the latest U.S. Budget at
http://people.delphi.com/rd100/ssreform.html .

In summary, it's hard to see how we can hope to reform Social Security
until we can understand it.  Hence, I think the first step is to simplify
it and open it up to public scrutiny.  Then we can have a truly informed
debate on how to reform it.

Reed Davis