Mark Thoma has argued that DeMint’s GROW proposal would not improve Social Security’s long-run solvency. As its free lunch proponents often try to sell DeMint’s ideas, Mark is absolutely correct. But now the Heritage Foundation tries to explain how a GROW proposal would reduce the alleged long-run insolvency problem:
The proposal would reduce traditional Social Security benefit that workers receive by an amount equal in real terms, more or less, to the surplus funds deposited in their accounts.
In other words, the Heritage Foundation thinks DeMint’s “GROW” proposal is really a benefit cut? Actually, it is more akin to taking a dollar out of one’s left pocket and placing it into one’s right pocket.
The DeMint plan does nothing to reduce the long-term insolvency problem of the overall Federal government -where the main issue is the massive General Fund deficit created by the fiscal irresponsibility since 2001 when the GOP assumed leadership in Washington. But the Heritage Foundation is correct in saying it does nothing to worsen it either precisely because it does not increase the future benefits to young workers at all. And yet, the proponents of this proposal try to claim that it will make young workers better off even as it somehow reduces the long-term insolvency problem of the overall Federal government. Unless money grows on trees – you can’t have it both ways. But this realization has never stopped the privatization crowd from lying to young workers.