I have to wonder, why has there been such widespread silence
about the single most signicant policy proposal of this whole
campaign so far? I refer to Fred Thompson's
plan, announced late last week, to reform Social Security. It
is as courageous a move by any presidential candidate as we have
seen for many years. And while I haven't had time to study all its
details, on first perusal it looks very solid. It combines "add-on"
private accounts with the change in COLA adjustments he long has
been advocating, namely to tie them to prices instead of wages. The
changed formula alone should take care of an incredibly large chunk
of the long-term Social Security unfunded liability.
Here's the thing: From a conservative economic standpoint, the
plan is not perfect. But it would mark a HUGE improvement over what
we have now. It would extend the solvency of the system by many
decades, and it would bolster private savings and investment.
Why not perfect? Frankly, the total switch from prices to wages
may be a bridge too far. I prefer what I understand to be the Pozen
Plan, namely an income-based sliding scale between a wage-based
COLA and a price-based COLA. I really do think conservatives need
to be aware that lower-income beneficiaries are also likely to be
less able to fully take advantage of add-on accounts and thus would
need slightly more generous guarantees in the bais plan, via
slightly higher COLAS.
But again, I invite correction on my understanding of these
things, because I really have had only a few minutes to delve into
Thompson's details while I cite the Pizen Plan from memory.
But the least perfect thing about the Thompson Plan is that it
provides for add-on personal accounts rather than personal accounts
WITHIN the existing system. I'll save for another time the
dissertation over why the latter is preferable to the former. bit
suffice it to say that conservatives have good reason for long
preferring the latter.
Nevertheless, those criticisms amoung to nitpicking. Overall,
Thompson is very much on the right track, and he shows great
political courage in taking on half of the single most important
long-term economic issue facing this country (the other half being
the long-term Medicare mess). On this proposal, conservatives ought
to be rallying to Thompson's defense, not greeting him with
silence.
topics:
Social Security, Medicare
