Frequent readers will know that I have little patience with the argument against private Social Security accounts that goes something like "Americans are too dumb to be trusted with their own retirement funds". Today, however, I am going to put that aside for perhaps a better question:
Can the government be trusted with our retirement funds?
This is the argument made by Brad DeLong and quoted in Marginal Revolution:
We need to raise our national savings rate. But if we just raise Social Security
taxes, Congress will treat these taxes as general revenue and spend them. Only
by funneling Social Security contributions into some vehicle that Congressional
representatives cannot interpret as a resource available to fund current
spending can we raise the national savings rate. And private accounts are the
best vehicle we can find to (a) accumulate contributions without (b) allowing
Congressional representatives to seize them as resources available to fund
current federal spending.
Congress has taken all the savings surpluses built up by Social Security over the past decades and it has spent them. Republicans have spent the money. Democrats have spent the money. It is gone, spent on cruise missiles and welfare moms and ethanol subsidies and PBS broadcasts and snail darter studies. No matter what verbal acrobatics people try to engage in to argue that there is a real "trust fund", the fact of the matter is that all that is in the Social Security till are IOU's that can only be redeemed by raising taxes.
The situation with Social Security is entirely equivalent to having invested your money in a mutual fund and only later finding the directors of the fund spent your money on themeselves rather than investing it in redeemable securities. The only differences are that:
- The proprietors of that bogus mutual fund may go to jail, but Congress won't
- Congress can raise taxes to get the money to bail themselves out of their malfeasance
Think of it this way:
- There were more real assets of value remaining in Enron in its bankruptcy to divide up among investors and creditors than remain in the Social Security "trust fund" to divide up among program contributors.
- There were more real assets of value remaining in the Teamsters retirement fund after years of being raped by organized crime than remain in the Social Security "trust fund"
Stop handing over our savings to such unsavory racketeers (ie. Congress). We certainly can't do a worse job for ourselves.