Social Security: A Washington Times Op-ed I Could Almost Agree With

Via Mark Thoma, check out what Lawrence A. Hunter wrote in the Washington Times:

A worrisome sign the White House might actually pull off this scam came last week when one of the president’s biggest cheerleaders for his last pre-emptive strike – the Editors of National Review – said they were willing to take personal accounts off the table and accept a Social Security tax increase. Here we go again.

Well said. OK, Hunter digresses with:

By actuarial standards applicable to any private pension fund, the Social-Security Ponzi scheme already is insolvent, papered over by IOUs Congress has written to itself.

But he gets right back on track with:

Social Security’s near-term cash-flow situation, however, is quite good, scheduled to remain in surplus until 2017; until 2027 if the annual interest due the Trust Fund is taken into account, as it should be. Therefore, higher tax revenues today that enlarged and extended the surpluses would not improve the program’s solvency; they would only paper it over with more IOUs and magnify the size of the theft Congress perpetrates on the Trust Fund each year. If Congress wants to do something serious about Social Security’s solvency, it should stop the raid on Social Security, not expand it. Rather than rush to the nuclear options of raising taxes, cutting future benefits and raising the retirement age, if Congress would only stop stealing the Trust Fund surpluses and get about actually paying the Trust Fund the annual interest owed it and then start using those surpluses and interest payments to begin prefunding future retirees’ retirement, Social Security could be made solvent for decades to come without raising one new dollar in taxes or cutting a single dollar in future benefits or making old people work one year longer. Here’s a modest proposal: Why doesn’t the new Congress get itself straight with the American people, stop the raid on Social Security, begin paying the interest it owes to the Social Security Trust Fund and devote those interest payments along with the annual payroll-tax surpluses to financing a refundable tax credit to anyone opening a retirement account for a child younger than 18? Call them Head Start Retirement Accounts.

Translation – resolve the General Fund fiasco by either cutting spending or raising income taxes (well, Bruce Bartlett would go for consumption taxes while Greg Mankiw advocates taxes on gasoline).