Clinton's Likeliest SS Move

re: Off the Table

Paul Jacob writes demoaning Mrs. Clinton's statements on Social Security Reform. He is correct that, in the general election, no one talks about tax increases and in the Democratic Primary, no one talks about Social Security Personal Accounts (even though Ron Brown was the first to bring it up in 1992 to attach the first George Bush for financing the government with payroll taxes).

I don't believe Mrs. Clinton will support a broad based payroll tax increase. It is more likely she will advocate raising the income caps, which are indexed to inflation but not to the percentage of income covered. If only the top 10% of income was excluded, the caps would be a bit higher and the program would be solvent. Too solvent. So solvent that it would never need repayment from the Social Security Trust fund, which is programmed in for the retirement of the Baby Boomers.

This brings up the 2017 date that Mr. Jacobs mentions. That is the date when, according to schedule, Social Security will spend down its trust fund assets. It will be solvent, but the government will not be. In order to avoid recessionary cuts in the rest of the budget or a broad based income tax hike, more government borrowing or a tax increase at the wealthiest taxpayers will be required. This was programmed in. What was not programmed in were decreases to the top tax rates or the dividend tax cut, both of which have hasted the government's insolvency. With the Chinese making noise about changing their currency of choice for their massive reserves, this is not a good thing for interest rates unless these tax cuts are allowed to expire, which is almost a sure thing given the likely composition of Congress.

This brings us back to Private Accounts. The justification for private accounts is not the superior return of the private sector asset base. Anyone currently taking a hit in the market knows that the market goes down as well as up, which is not appropriate for a broad based retirement fund that serves as a safety net. Rather, private accounts are needed so that the government stops spending the money, which it must do by law. An additional benefit is that they can be used to help workers gain more of a say in the workplace, provided that workers can invest them in their own employers and that in doing so they can vote for designated board representatives, rather than for a Unitary Board under the control of management. This would be the kind of left wing reform that may make Private Accounts attractive to the progressives, although because it is cheaper it may hurt the business of the investments advisors who so support the proposal as a way to make a fast buck.

As an anarcho-syndicalist, that is the Social Security reform that I would support.

Michael Bindner

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