Friday, April 29, 2005

The Metaphysics of Social Security

The reason President Bush's push for a partial quasi-privatization of Social Security is faltering is that he has not challenged the altruist morality behind the system—indeed, he has embraced that morality. So the only hope of passing his plan will be if he can make headway on a new theme he has been emphasizing recently: the metaphysics of Social Security.

He certainly doesn't put it that way, but there is a clear, deliberate trend in his statements of emphasizing the fact that Social Security represents "promises" and "a filing cabinet full of IOUs"—while private accounts represent "real assets" that won't "just go away" because of an arcane government rule (as Social Security benefits do when a spouse dies before age 62).

"Transcript of President Bush's Press Conference," New York Times, 4/28/05

"BUSH: I feel strongly that there needs to be voluntary personal savings accounts as a part of the Social Security system. I mean, it's got to be a part of the comprehensive package. And the reason I feel strongly about that is that we got a lot of debt out there, a lot of unfunded liabilities, and our workers need to be able to earn a better rate of return on their money to help deal with that debt.... Now, it's very important for our fellow citizens to understand there is not a bank account here in Washington, DC, where we take your payroll taxes and hold it for you and then give it back to you when you retire. Our system is called pay as you go. You pay into the system through your payroll taxes and the government spends it. It spends the money on the current retirees and with the money left over, it funds other government programs. And all that's left behind is file cabinets full of IOUs.

"The reason I believe that this ought to work is not only should a worker get a better rate of return, not only should we encourage ownership, but I want people to have real assets in the system. I want people to be able to say, Here is my mix of bonds and stocks that I own, and I can leave it whomever I want....

"One other point on Social Security that people have got to understand is that the system of today is not fair for a person whose spouse has died early. In other words, if you're a two-working family, like a lot of families are here in America, and two people working in your family, and the spouse dies early—before 62, for example—all of the money that the spouse has put into the system is held there, and then when the other spouse retires, he or she gets to choose the benefits from his or her own work or the other spouse's benefits, whichever is higher, but not both. See what I'm saying? Somebody who's worked all their life, the money they put into the system just goes away.... If you have a voluntary personal savings account and you die early, that's an asset you can leave to your spouse or to your children."