• Text smaller
  • Text bigger

Speaking before a carefully selected crowd of sycophantic
special-interest
groups in Buffalo, New York, Clinton had one good idea. Concerning the
budget surplus, he said, “We could give it all back to you and hope you
spend it right.”

What a novel thought. Let’s call it “freedom.” But then he quickly
rejected
the idea. Instead, he proposed a scheme to socialize the stock market
and
spend the equivalent of the entire 1971 federal budget on new programs
to
benefit his most loyal partisans.

One of many scary ideas in Bill’s Fabian grab bag is his Social
Security
reform plan. It will make the last round of payroll tax increases from
the
early 1980s look innocuous by comparison. By diverting the program’s
surpluses into private investments, he would make the U.S. Treasury the
decisive player in picking Wall Street’s winners and losers.

(Sadly, Republicans who have spent the last year calling for a
version of
the same can’t escape blame for this policy fiasco. Not even the GOP
leadership is thinking clearly, with some telling the press Clinton’s
reform
plan is DOA and others saying they accept the idea in principle but want
to
make a few changes.)

Begin with the bottom-line question concerning Social Security:
should you
or the government be trusted to prepare for your old age? It was a great

tragedy for the country when FDR decided the answer in favor of the
government. He concocted a tax-and-spend scheme and called it insurance.

Generations have been looted early in life only to be rewarded late in
life
with loot taken from their own children’s family finances.

The social consequence has been to drive an economic wedge between
the
generations and make us all more dependent on Washington. Economically,
the
program has squandered trillions in wealth. Combined with punishing
capital-gains taxes, the program is the very reason household savings in
the
country has slipped below zero. Why save when the government does it for

you, then goes on to punish you if you attempt to save on your own?

Like the health care system in 1993, Clinton says the Social Security

system is headed toward crisis. Why, he assures us, in 2032, owing to
various demographic changes, the money will run out. The truth is that
he
has no idea what will happen in 2032, and he doesn’t care. All
projections
of the program’s finances are super-sensitive to minute changes in the
assumptions behind the models. He is claiming there is a crisis to trick
the
public into depending on him to solve it.

Even without a crisis, does the system need to be reformed? Sure. We
need
to be free from it entirely. Everyone needs to be given a choice: keep
paying the taxes and get a stream of government checks when you turn 65,
or
don’t pay a penny more and surrender all claims. In addition, the
retirement
age must be raised and benefits cut. A good part of the program would
vanish
immediately, and it wouldn’t take long for the whole game to end.

The trouble is that the freedom option has not been a consideration
in the
current policy debate. It seems that everyone inside the Beltway –
left,
right, socialist, or libertarian — believes we need some sort of
mandatory
national savings program. Every one of their reform plans is built
around
the idea that FDR was right. Clinton understands this fact all too well,
and
is using this assumption as the basis for his proposal that the program
be
made worse than it presently is.

But even among the plans that assume Washington must save for you,
his is
the worst by far. It heavily politicizes the financial sector of the
economy, and likely would lead to treating the stock market (like the
banking system) as too big to fail. But, as you might expect,
pension-fund
managers and large, politically connected public corporations have
already
warmed to the idea of enjoying billions in new subsidies from the
taxpayers.

What’s at stake is about $650 billion (with a “b”) and $1.2 trillion
(with
a “t”) in other people’s money over the next 15 years. In the end,
government would own part of the market, which would give it
unprecedented
influence over the country’s financial affairs. It would take us away
from a
capital market driven by the free choices of individuals to one swayed
by
the bureaucratic decisions of political forces.

No matter how much Clinton promises that decision about where to
invest
will be independent of politics, it is naive to think the government
won’t
assert an interest in who gets what. For example, will tobacco stocks be

purchased, even if they’re a great investment? Not likely. What about a
company like Shoney’s, which was bashed by Clinton loyalists a few years

back? Which firm is likely to benefit the most? The hated Microsoft or
the
beloved Dreamworks?

An “independent” panel charged with investing Social Security
surpluses
will be about as independent as the Federal Reserve, which is to say
independent in name only.

These proposals to “privatize” an essentially socialist program come
a
decade after former socialist countries took the decisive step of
creating,
for the first time, stock markets driven by private investment and
market
forces. How strange, how evil, that Clinton wants to take America in the

direction that Russia, China, and East Germany have only recently begun
to
claw themselves away from.

Clinton was correct the first time: he should give us our money back.

  • Text smaller
  • Text bigger
Note: Read our discussion guidelines before commenting.