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04/24/2005: "A Bipartisan Solution to Social Security"

First, if anyone thinks this is going to be one of those tiresome serious entries, you can be assured that there is indeed a punch line. Today’s topic was inspired by a letter to the editor in the local paper (the one I get in addition to the NY Times). The reader admired the President for attempting to tackle the problems of Social Security, but had concerns about market volatility. Her solution? “Treasury Bonds are better.” My suggestion is that the Democratic leadership go to the President with the following proposal: “Mr. President, we suggest a compromise solution to the issues with Social Security that you’ve courageously surfaced. We have decided to go along with each individual worker have an established account with the Social Security Administration that personally track the payments each individual makes into the system. But rather than having Social Security money go to heirs, we offer a compromise in exchange for our support: use the money saved by not paying heirs to continue benefit payments beyond the point that the individual’s payments would have exceeded their payments into the system. Workers will doubtless appreciate the extra security, and it avoids the problem of the oldest, most vulnerable seniors becoming destitute as their working-career payments into the system are exhausted. Also, to address the concerns that so many citizens have with the stock market, we propose an alternative investment: US Treasury Bills, an investment vehicle employed by every financial institution.” I’m guessing that Bush would jump at the compromise, considering that it’s become clear that any successful plan must have bipartisan support. Happy ending, right? There is one other benefit, a benefit from the ease of implementing the proposed approach. It’s easily to implement because the proposal as described is exactly how Social Security already works!