This letter appeared in the Wall Street Journal, December 10, 1998
Bankrupt Socialist Contraption
Your Dec. 1 editorial about Social Security (”The GOP Tax Increase”) is, like much of the debate over Social Security, unclear in its assumptions and disingenuous in its conclusion, specifically the idea that raising taxes is not inextricably linked to diverting revenues from Social Security to private savings. Social Security is not an “investment” in the classical sense of the term, nor do participants “save” any money when they make contributions. Current contributions pay current benefits, with any surplus going into the Treasury’s general fund.
The Social Security Administration receives an IOU from the Treasury representing the amount of contributions wrongfully diverted to general spending. These IOUs held by the Trust Funds are not “assets,” however, but are liabilities. By law, no private company can invest pension funds in its own debt, but its OK for Uncle Sam to steal surplus Social Security payroll contributions thanks to the duplicity of FDR.
Thus when Republicans call for tax cuts in the face of rising Social Security surpluses, they are attempting to do the right thing and give Americans back money that is not required to pay current benefits.
Meanwhile, Democrats prey upon the fears of the old and demonstrate their own avarice by bemoaning attempts to give working families back more of their own money! Ironically, Sens. Ernest Hollings (D., S.C.) and Patrick Moynihan (D., N.Y.) attempted to press this point earlier in the decade, but neither party was interested in cutting taxes at that time (remember: “read my lips”). Indeed, the Social Security Commission chaired by Fed Chairman Alan Greenspan did nothing to fix the system’s solvency and in reality raised taxes to help feed Washington’s spending machine.
The chief issue with Social Security is not how to save this bankrupt socialist contraption, but rather how to phase it out. Cutting payroll contributions is a good start, but the GOP is going to need to gird itself for the real battle: namely, cutting and/or means-testing benefits and eventually allowing younger Americans the opportunity to opt out of the Social Security system entirely. Now that would be worth fighting for.
Christopher Whalen
Croton-on-Hudson, N.Y.
