A coalition of groups, calling themselves the Strengthen Social Security Coalition is on the forefront of trying to protect against social security cuts. I admire the coalition, as well as many of the participant organizations. They espouse seven principles, which I am all in agreement with, more or less. However, the coalition is putting pressure on the Fiscal Commission to be specific on just what they are going to do with social security, and I think that's fair. I think it's also fair that the coalition tell us the specifics of their principles as well. So I emailed Alex Lawson of the Coalition as well as filled out their web form asking for specificity. I sent both messages on August 6, and I have yet to hear back. Here are the questions I posed to him:
1. When you say "social security should not be privatized," most people understand that to mean individual accounts and private management. But if the government (i.e. the Social Security Administration) were to gradually invest 15-20% of the SSI trust fund in the stock market, would your coalition be against it? Many countries' public pension systems invest part of the money in the stock market.
2. I agree with the idea of not means-testing social security, but what is the coalition's position on the idea of linking benefit increases for wealthier recipients to a price index while keeping lower income beneficiaries' increases tied to a wage index, as they are now?
3. I am a little at a loss that you speak out strongly against any benefit cuts, yet do not seem concerned at all that in 2037, if nothing is done, social security will only be able to pay 75-80% of the benefits. Is that not effectively a cut?
4. You have published a paper by the EPI suggesting that increasing revenue can be done either by increasing the cap to which wages are taxed or by increasing the tax *rate* or a combination of both. Will the coalition support the recommendation (if it's given) to raise the social security tax *rate* for workers who are currently under the cap?
5. Are there any measures at all you support or are willing to consider to bridge the long term social security trust fund shortfall other than (or in addition to) raising the wage cap or tax rate?
With respect to the first question, no it's not privatization. Government investing some money in the private market is very different from individuals doing it for a few reasons. First, governments can wait until the market recovers, which an individual of retirement age cannot. While waiting if the government needs money to pay current benefits, they can borrow money at a very low interest rate to pay it (which will later be made up when the market recovers) - rates not available to individual borrowers with even the best credit histories. Of course, a ton of public pension funds from many states and many countries (including Canada and European countries) do so already. For more detail on this, see this article.
I would also seriously like the Coalition on the record about whether they would support a tax rate increase on the payroll taxes for the middle class (which in my judgment would be a mistake), and what they think about using different formulas to raise benefits for seniors who are rich than for those who are not.
I am a staunch proponent of social security, and I will not have any politician screw it up. It must remain a public program and a generational social contract. But I will also not have any of the fearmongering from people who use it as a baseball bat to beat up the Fiscal Commission without being specific themselves. Let's have a battle of the ideas, and an open exchange. There is nothing wrong with wanting to know what the Fiscal Commission is doing with specifics, just as everyone a group is advocating something to has every right to know the specifics of their principles.
Update on 10/12/2010 @ 2:40 PM Pacific: I have just received a reply from Alex Lawson telling me that a response from the coalition is on its way. I very much look forward to it.