Social Security Reform

We the People of the United States, in Order to form a more perfect Union…and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
The Constitution of the United States of America

As a very important source of strength and security, cherish public credit … not ungenerously throwing upon posterity the burthen which we ourselves ought to bear.
President George Washington’s Farewell Address

President George W. Bush admitted that his biggest regret from serving in the White House was not privatizing Social Security.

Reporting his acknowledgment, Elyse Siegel wrote in The Huffington Post:

[Bush] made the suggestion while speaking at a trade conference in the Windy City, where he discussed his legacy and also offered a glimpse into what readers can expect from his forthcoming memoir, Decision Points.

Apart from an American demographic that is aging, the trouble caused by Social Security arises from politicians insisting on putting all of the proverbial nest eggs in the same basket.  “We will not privatize Social Security,” Barack Obama says.  “The last thing we want to do is hand it over to Wall Street.”

Such rhetoric from Obama does nothing but scare people into believing that putting all of the revenue raised by Social Security taxes into a trust fund that invests only in Treasury bonds – yielding close to 0% in annual returns – is somehow better than a trust fund with a diversified portfolio of assets.

Not only is such a diversified portfolio for Social Security recommended by Obama’s director of choice for the Office of Management and Budget.  It’s also the investment policy pursued by the same executives criticized by Obama as “fat cats,” yet leading their organizations to record profits on Wall Street.

References

Barack Obama, “Remarks by the President at a Rally in Portland, Oregon,” October 21, 2010.

Peter A. Diamond and Peter R. Orszag, Saving Social Security: A Balanced Approach (Washington: Brookings Institution Press, 2005).

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