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Obama Demagogues Private Enterprise


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Townhall:


Last weekend, President Obama pandered for votes by trashing Social Security privatization.
"I'd have thought that debate would've been put to rest once and for all by the financial crisis we've just experienced," Obama said. "(N)o one would want to place bets with Social Security on Wall Street."

Such demagoguery sells. It's probably been poll-tested. Many Americans fear privatizing anything they've come to view as government work. They object to privately managed roads, independent charter schools, private prisons, etc., despite private companies' repeated success at providing better service while lowering costs.

Private retirement accounts seem particularly threatening. Rep. Paul Ryan includes a version in his budget-reform package. But as The Washington Post said, "(F)ew GOP lawmakers today support the idea...."

What a shame.

Social Security is popular but unsustainable. Its commitments over the next 75 years exceed its expected revenue by $5.3 trillion. Politicians know this, but pander anyway.

Senate Majority Leader Harry Reid accused Sharron Angle, who's challenging Reid's re-election bid in Nevada, of "raiding" the Social Security trust fund because Angle has talked about phasing out Social Security. There are two problems with that statement -- as Reid must know: First, there never has been a trust fund! Your FICA tax payments were not saved or invested. Social Security transferred them to current retirees. Second, in return for IOUs, Congress raided Social Security's budget surplus every year and spent like any other tax revenue.

Now the days of surplus are over. Unless benefits are cut and the retirement age is raised, the deficits will only grow. When Social Security passed in 1935, most Americans died before age 65. There were many workers and few retirees. Ten years later, there were still almost 42 workers for each retiree. Five years afterward, the ratio slipped to about 17 to 1. Now it's 3.4 to 1. Thirty years from now, the ratio is projected to be 2 to 1.

That won't work. Workers cannot afford to give up half their earnings to pay others' retirement benefits.
It would be far better to begin partial privatization now.

But what about Obama's point that President George W. Bush's privatization plan would have been a disaster because the market crashed?snip
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Gotta love Stossel:

 

They would have had time to recover (unless government continued to screw up and cripple the private sector).
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