>>>>>>>>> James Wrote:
A magic $100 billion in savings? Sounds a lot like David Stockman's magic asterisk. No definition about where it is coming from. Indeed, it is unrelated to SS reform at all. What about that same $100 billion put towards the current SS? I don't think they considered that option.
I am not unalterably opposed to a CATO type plan. I just think they need to be a little more honest about what is involved, and not count on 'magic' savings to make their plan work. One of the reason our annual deficits are lots smaller than they used to be is that the Congress no longer allows those kinds of 'wishful thinking' assumptions when appropriations and taxes are considered.
And no consideration of how that $100 billion reduction in consumption will affect the economy. Or the instant creation of Trillions of dollars in the form of gov't bonds issued to SS recipients and those being 'recognized' for prior contributions. Remember that little thing called inflation? Don't think that the gov't's instant creation of money won't affect it.
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a) There's no magic $100B in savings; the failed magic trick stops with the end of SS as we know it. Those savings are real and come from payroll contributions, as suppossed to taxes, from all workers that choose to switch to the new system; b) Since the government's general revenues would be used to cover the cost of current retirees and baby boomers, there will basically be no reduction in consumption because retirees will receive their promised benefits; c) there will be no printing of new currency; thus, no inflation pressure. Workers that choose to switch will be given recognition bonds to mature at their 65th b-day.
Now, with this scenario, there is no magic; just the pill to swallow, which in my opinion is point b above. How do we pay the benefits of current and future retirees, those that didn't switch, under the old SS? Today, we have the greatest opportunity to finance the transition; surplus funds in both the SS trust fund, although this would require redemption of the IOUs, and the general fund, as well as continued economic growth and stability. If we fail to completely rethink our retirement funding strategy today, we will miss the best window of opportunity to achieve a relatively pain free transition. Once the transition is made, we will know when the old SS system would be retired (new workers will go into the PRA system), workers would accumulate wealth that belongs to them and their heirs, workers would be assured a safety net, and future workers will not have to bear the crunching effect of high taxation to cover the cost of the irresponsible policies of past generations; if we fail to do this today, it will be as much our responsibility as it is our parents and grandparents.
