More Krugman on Social Security: Gambling with your retirement.

Before you read this column, Al Ormsby's letter to the Times Union, Albany, makes some very powerful points about the Social Security question. And it is worth noting that President Bush himself admitted that the proposed "private accounts" will do nothing to allay the possibility of future insolvency of the program. Therefore we are dealing with an ideological proposal masquerading as a financial solution.
Here goes Al Ormsby:
In response to David C. Johnson’s 2/1/05 letter to the editor concerning the date that the Social Security Trust Fund is supposed to come up short it should be noted that it is quite possible that the reason why Mark Wheeler and Dr. Ruta choose the 2042 date rather than the 2018 date is because they believed our Presidents to be honest men. When President Bush says that his tax cuts are not being financed by the Social Security Trust Fund why not believe him? When former President Regan said the same thing about the financing of our military build up in the 1980’s was he not telling us the truth? In both the past and current situations, what the government does to finance deficit is referred to as borrowing. If the IOU’s that Mr. Johnson refers to are of no value then the term borrowing should be changed to stealing. Let’s say I write Mr. Johnson a personal check in exchange for cash. When he goes to the bank to redeem his money he finds out that the check is no good. Now, is that borrowing Mr. Johnson’s money or stealing it? The fact is that the money behind those IOU’s has already been shelled out by the working people of this country. In my 31 years of working under the cover of Social Security, money was supposedly being withdrawn from my pay check to assist me and my fellow Americans in our old age [as well as for disability and death benefits].During these 31 years this deduction appearing under the pay stub heading “FICA” was being collected at an incredibly regressive rate. A person making 150,000 a year paid one half the percentage of their total income that I paid. A person making 300,000 a year paid one quarter. And of course it goes on and on. The more you make the less of a percentage you pay. Now, if I or my fellow Americans ever thought that tanks, airplanes, missile systems, or just the operating expensive of government was being financed by our “FICA” deductions we would have long ago been up in arms. It goes without saying that a tax in which the percent of income you contribute is correspondingly reduced as your income increases is not an appropriate method of funding our government. But we need ant worry, Presidents Regan and Bush would never use our “FICA” deductions for other than what they were intended. These Presidents are honorable men not common thieves. Therefore Mr. Johnson should take note that those IOU’s are as good as gold since the honor of theUnited States as well as the integrity of its leaders stand behind them. Not to mention again they have already been paid for by we the people.                                            However, God forbid, in case I am wrong and these Presidents are really just common thieves, maybe as Mr. Johnson notes, raising taxes will be necessary to make good on the IOU’s. Mr. Johnson implies that this is a terrible alternative. However if we raise taxes on the higher incomes, who have proportionally contributed the least to the Trust Fund, would it not be the fairest way of balancing the books? Remember, the people who have proportionally contributed the most have already paid. There is nothing unwise or inappropriate about this type of tax increase since we are really talking about the repaying of borrowed money that financed general tax revenues. This is not “class warfare” but simply asking those who proportionally under paid for the military hardware and tax cuts to return to those who proportionally over paid what was taken from their Trust Fund under the guise of “borrowing.” The bottom line is we should not be so quick to give up on a system that is workable if appropriately managed. If crooks have stolen its money it is not the concept that is at fault, but the theft. As a financial advisor Mr. Johnson should know that no financial plan can work if its assets are allowed to be periodically raided by thieves. If Mr. Johnson needs proof of this fact all he has to do is look to Enron or corporate America’s other pension plans. -------------                                  Albert Ormsby: Former Social Security Disability-Analyst, Unit supervisor, Hearing Officer and Module Manager. Saratoga Springs N.Y.
and now Paul Krugman: The New York Times > Opinion > Op-Ed Columnist: Gambling With Your Retirement