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Another Irrefutable Argument Against Privatizing Social Security
Try to forgive my obsession, but here is another proof that President Bush's designs for Social Security cannot work. This one's not mine. I first heard it from the actor and liberal activist Rob Reiner. Like the argument I have been hawking (see www.latimes.com/proof), this one doesn't merely suggest that Bush is making bad policy. It demonstrates with near-mathematical certainty that the idea he endorses can't work. Period. Bush might as well be proposing legislation that two plus two is five. And if that happened, there would be no shortage of Republicans prepared to endorse this view, experts on arithmetic to declare that it is a very difficult question, research to indicate that the answer may lie anywhere between 2.3 and 7.09, moderate Washington sages to urge caution, media to report both sides of the question, and media critics to accuse the media of a subtle bias in favor of two plus two is four. The Meathead Proposition (in honor of Reiner's most famous role) is this. The case that there is a Social Security crisis and the proposal to address it through "personal retirement accounts" both depend on assumptions about the course of the economy over the next few decades. These assumptions are highly speculative, but that's okay. What's not okay is to assume one thing when you claim there is a problem and something different when you claim that you've got the solution. Actually, Bush abruptly gave up his claim that privatization will solve the problem of a looming shortfall in Social Security funds. The truth is that privatization schemes assume that the shortfall will be addressed -- by borrowing trillions of dollars -- as part of the "transition" to privatization. But Bush still claims that letting people keep and invest for themselves part of what they now pay into Social Security during their working years will leave them better off than if they get the benefits they are now entitled to. How much better off depends on how much your government benefits will be reduced for every dollar you choose to keep and invest for yourself. That is one of the little details the White House hasn't yet enlightened us about. But this new system as a whole -- Social Security plus the private accounts -- must somehow produce more money than Social Security alone, or there is no point. [more]