During the 2005 debate, President Bush endorsed an idea that would inflict no cuts whatsoever on low-income workers and would allow the value of middle-class retirees’ benefits to rise, albeit less quickly than now scheduled. Because this formula (devised by a Democrat named Robert Pozen) spreads the burden fairly, Democrats who worry about rising inequality should be open to it.
Brad DeLong goes after the lead:
They no longer regard “privatization” – the diversion of payroll taxes into personal accounts – as the starting point for negotiation. The solvency of Social Security, not a desire to promote an “ownership society,” is their main concern.
So the only morsel left for this Angrybear to devour is this:
The next question is where to put the extra revenue: into the notional Social Security trust fund or into personal accounts. The administration will prefer private accounts, partly because it would like a face-saving link to the president’s 2005 proposal but also because personal accounts provide a way of walling the revenue off from the general budget and so reduce the government’s tendency to spend it. Meanwhile, Democrats will prefer to put the money into the trust fund. They reason that any personal account created as part of a reform that cuts Social Security benefits is headed the wrong way: toward replacing the security of the traditional guaranteed benefit with the uncertainty of 401(k)-type investments. Judging from the hints flying around Washington, the administration sees how to bridge this divide. Democrats may be allergic to personal Social Security accounts, but they are enthusiastic about other ideas for personal retirement accounts that just don’t have “Social Security” in the title. For example, Gene Sperling, a former Clinton adviser, has called for a “Universal 401(k)” that would extend the benefits of 401(k) saving to workers whose companies don’t offer such accounts. In Sperling’s vision, everyone would get the chance to contribute to an account and receive a government contribution as a match, with the most generous match going to low-income workers.
My goodness – has George W. Bush start listening to those of us on the left and is now pushing for add-on accounts? Does Mallaby understand that this position would be a complete flip-flop for the GOP? Not that it isn’t a great idea, but Mallaby should let his readers know that it was Bush and his privatization crowd that opposed this idea.
Dean Baker has more.