Greenspan on Social Security

Testifying before the Senate Banking Committee yesterday, Fed Chairman Alan Greenspan weighed in on President Bush's push to reform Social Security.

"If you're going to move to private accounts, which I approve of, I think you have to do it in a cautious, gradual way," Mr. Greenspan told members of the Senate Banking, Housing and Urban Affairs Committee, most of whom questioned him repeatedly on Social Security.

"I've always supported moves to full funding in the context of a private account," Mr. Greenspan said. "We've got a problem in that the existing pay-as-you-go system is not working, and we've got to change it."

I look back with some amazement when I think of the discussions my friends and I would have back in the 70's when inflation was ramping up.   At the time we viewed Greenspan as something of a prophet.  We could also be caught saying, "Gee, if only we could have the money we're dumping into Social Security in our own private accounts."  In those days I was much more of a libertarian purist.

Comments

[Scott]

Speaking of inflation, I had the pleasure of sitting in at a presentation by the eminent Paul Volcker when I was in college. He's actually taller than I am, something like 6'9". Brilliant guy.

[Tom Bowler]

I give Volcker, as Fed Chairman, most of the credit for stemming the inflationary tide we were in back then, and he was a Carter appointee. It just goes to show you Carter wasn't all bad. Unfortunately for Carter, inflation is a lagging indicator to the balance of money and wealth, so he doesn't get much credit.

[Clint Lovell]

Pay as you go? When did this happen? The awful truth about federal entitlement programs is that they have failed. Their failure to provide quality services, failure to provide and/or enjoy any kind of economies-of-scale, and failure to contain costs are all due to the fact they operate outside the free market.

Only the free market can create the kind of economic benefits we need now to fix Social Security. Tax increases can't do it. Benefit cuts won't be done and we can't borrow any more money that isn't backed by something other than the willpower to tax the masses one more time.

No, sooner or later, we are going to have to bite the bullet and privatize these programs. Look on the birght side though. If we completely privatized education and healthcare, we could erase the entirety of the current federal deficit and defease the $11 trillion in Trust Fund "borrowings" within 10 years, while providing social programs with the opportunity to be truly self-sufficient. No tax increases and no benefit cuts need be considered. If you think I'm joking you should download a copy of "The Fix For Social Security" (our website has a link), review the numbers, and read the policy directives and ask yourself what else out there makes more sense. Bet you can't read it just once.

Socialism is for broke woosies. Just ask the Europeans. They've tried to tax their way out of economic gaff after economic gaff and they are still hating life.

The only real question left to you is how long you want to wait and how much more money do you want to lose personally before you do the only thing that you know in your heart is the right thing (and cheap thing) to do.