Tuesday, March 29, 2005

Of deals, new and otherwise

As supportive as I am of America becoming more of an "ownership society", I am very skeptical of President Bush's social security reform plans. Borrowing billions of dollars to put into private accounts doesn't seem wise. It's akin to an individual building credit card debt to invest in the stock market. The only meaninful difference is that we're using the full faith and credit of the United States government to get good rates on that debt. With our twin deficits (trade and budget) continuing to climb with no sign of leveling, piling on the debt necessary to finance private social security accounts would put undue strain on the faith and credit we're depending on.

Rather we should get over the enormous baby boomer hump by reducing government spending, broadening the tax base, and cutting benefits. Eventually there will come a time, generations from now, when social security will have a surplus again. Only then can we safely shift into a private account system. The Bushies may be fearful that, by that time, new New Deal Democrats could be in power. But if Bush sinks our economy by taking on too much debt, he might bring about exactly what he fears, just as the last depression spawned the first New Deal.


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